Outsourcing of Strategic it as Term Paper

• Length: 10 pages
• Sources: 10
• Subject: Business
• Type: Term Paper
• Paper: #21065041
• Related Topic: Kraft Foods, Ibm, Procurement

Excerpt from Term Paper :

Once the outsourcing agreement ends, it is possible for the supplier to sell the information to the client's competitors (Schniederjans, Schniederjans and Schniederjans, 2005)

It would require long periods of time for the outsourcing operations to be implemented and retrieve the desired results

The organizational change generated mutations in the organizational culture and stood increased chances of being welcomed with reticence on the part of the Unilever employees

It would be necessary to convince IBM to implement a managerial process based on customer satisfaction (van Dijk, 2009)

Throughout the duration of the outsourcing contract, several lessons were learned by the managerial team at Unilever. All these lessons represent retained capabilities which will help the company improve its future operations and as such its future results. Some of the most notable of these lessons include:

In order to succeed, strong organizational culture and governance are pivotal

Partnerships with strong teams increase success rates

It is important to implement change management strategies

Unite the two teams under the umbrella of the same goals

Capitalize on the expertise of the supplier, but value the relationship with them

Offer and expect trust and transparency

Clearly establish goals but also allow flexibility

Allocate sufficient resources to the outsourcing contract

Maintain key people (van Dijk, 2009)

Finally, it is crucial to engage all stakeholder categories in the change process (Gottschalk and Solli-Saether, 2005).

5. Supplier Perspective

The initial contract was expected to generate positive outcomes not just for Unilever, but for IBM as well. The it company was already established as a reputable leader of Information Technology services, but its partnering with Unilever -- a multinational corporation with complex operations -- and the success in such a challenging partnership would additionally enhance the company's reputation as it would prove its capabilities. From this standpoint then, it becomes obvious that the IBM selection of Unilever as a partner was an adequate decision.

Aside this however, there were also the financial outcomes which would be retrieved from the customers. In other words, the value of the contract with Unilever was to be a dual one, with financial gains on one side and reputation gains on the other side. Yet, throughout the supplier selection process, several advantages and disadvantages could have been observed. Some of the advantages of IBM in the Unilever outsourcing contract include:

IBM had a vast expertise in outsourcing contracts with various clients and it had even managed to diversify its offering

The provider had proven their ability to adapt their it solutions to fit the needs of each individual customer

The IBM brand was strong and reputable all over the world and Unilever could gain advertising advantages from the contract

IBM possessed experience with financial transactional services, the specific service palette desired by Unilever

Some of the disadvantages for IBM in the Unilever outsourcing contract refer to the following:

The large size of IBM and their increased number of customers could materialize in low levels of flexibility and a reduced interest in the distinctive desires of their individual customers

IBM would offer its financial transactional services from three different global locations, element which might materialize in more difficult communication between client and purveyor.

Aside from the disadvantages revealed to the customer, the deal could also pose risks for IBM. For instance, the Unilever operations could have been too disperse or too complex for IBM to handle them efficiently. Also, the costs of the endeavor might have run too high to generate any profitability.

Aside the material and reputation gains which prove that the contract with Unilever was fruitful, the conclusion is also supported by the satisfaction of the client. Due to the positive results achieved, Unilever and IBM extended their contract in 2008 to also include the offering of it services to Unilever Latin America. The contract would be applicable for five years and, through it, "IBM will help Unilever integrate and standardize its procurement practices throughout Latin America. IBM will consolidate spend management and help reduce overall procurement costs across Unilever's Latin American operations. The procurement of many of the products and services that Unilever Latin America uses to run its business will be handled by IBM, including it, office equipment, travel, marketing, and technical services" (Savvas, 2009).

Finally, evidence of the successful partnership between the Americana and Anglo-Dutch companies comes from the Outsourcing Excellence Awards. The group is sponsored by the Everest Group and by Forbes and it has designated the Unilever-IBM partnership the highest outsourcing award -- the first place winners of the Outsourcing Excellence Award for Best Business Process Outsourcing in 2009. Upon receiving the award, Christian Kaufmann and Jean-Stephane Payraudeau, managing director of Finance and Business Services at IBM, respectively director and Senior Project Executive at IBM., stated: "We are proud of our joint achievements over the past three years. The successful partnership between IBM and Unilever Europe along with an ambitious transformation agenda will continue delivering significant and sustainable benefits for Unilever Europe" (IBM, 2009).

6. Recommendations

The partnership between IBM and Unilever has materialized into more successes than the two partners had initially estimated. Yet, in order for the triumphs to continue to characterize their relationship, it is important that the two companies consider the following:

Remaining alert to all changes in the environment, be them social, economic, technological or otherwise. It crucial that both IBM and well as Unilever recognize the rapidly by which the world evolves and it is pivotal that they continually enhance their ability of identifying the emergent changes and efficiently responding to them

IBM and Unilever should recognize the importance of the partnership in terms of the relations it generates rather than just the financial outcomes. Unilever and IBM should continue to respect each other and not focus exclusively on money gains

They should always emphasize on the people, be them employees, partners, colleagues or subalterns. People are the ones who implement change and who drive success and they are to be integrated, cherished and rewarded

They should look for new ways to improve their relationship; they should learn from the mistakes and turn them into valuable lessons which support future success.

Both individually as well as in the partnership, IBM and Unilever ought to seek diversification of their processes and operations in order to generate more stability and independence.

References:

Carmel, E., Tija, P., 2005, Offshoring Information Technology: Sourcing and Outsourcing to a Global Workforce, Cambridge University Press, ISBN 0521843553

Gottschalk, P., Solli-Saether, H., 2005, Critical Success Factors: From it Outsourcing Theories: An Empirical Study, Industrial Management and Data Systems, Vol. 105, No. 6

Savvas, a., 2008, Unilever Extends IBM Procurement Outsourcing Contract, Computer Weekly, http://www.computerweekly.com/Articles/2008/01/02/228696/unilever-extends-ibm-procurement-outsourcing-contract.htm last accessed on May 13, 2010

Schniederjans, M.J., Schniederjans, a.M., Schniederjans, D.G., 2005, Outsourcing and Insourcing in an International Context, M.E. Sharpe, ISBN 076561586X

2005, Unilever Signs 7-Year Contract with IBM for Financial Transaction Services Outsourcing, Real Wire, http://www.realwire.com/release_detail.asp?ReleaseID=3377 last accessed on May 13, 2010

2009, IBM and Unilever Europe Win Top Outsourcing Excellence Award for Best BPO Relationship 2009, IBM, http://www-935.ibm.com/services/us/igs/pdf/unilever-award-press-release.pdf last accessed on May 13, 2010

IBM 2009 Annual Report, http://www.ibm.com/annualreport/2009/2009_ibm_annual.pdf last accessed on May 13, 2010

Unilever 2009 Annual Report, http://www.unilever.com/images/ir_7_Financial_statements_AR09_tcm13-208078.pdf last accessed on May 13, 2010

2010, International Business Machines Corporation, Hoovers, http://hoovers.com/company/International_Business_Machines_Corporation/rfksji-1-1njea3.html last accessed on May 13, 2010

2010, Unilever, Hoovers, http://hoovers.com/company/Unilever/crxhif-1-1njea3.html last accessed on May 13, 2010