Peter meets...Pieter Buijs

The Outsourcing market is changing!

 

Pieter Buijs is the CTO of Atos Origin Netherlands, a European IT services company with more than 50.000 people worldwide. Atos Origin is one of the interesting players in the field of Outsourcing. During this interview Pieter explains what Atos Origin would like to be to their customers, discuss the changing market conditions and the relationship between customers and vendors. Pieter makes interesting statements on the issue of business- IT alignment and the role of the CIO. We will start out with the market.

 

Nowadays almost every company has Outsourcing on its Radar, when did it all start?

 

More than 20 years ago big companies were faced with increasing IT costs and growing back logs. Therefore they were looking for possibilities to improve their IT performance. They turned to IT providers to diminish their back logs and decrease the IT cost significantly. Atos Origin was one of the companies that provided outsourcing services to the big companies and started to grow on the emerging outsourcing market. More than 80% of the turnover comes from say 60 big customers. Pieter calls this the “traditional” outsourcing. The traditional outsourcing is aimed on improving the efficiency, focuses on the total IT operations and in most cases there is only one provider involved. This is not the case anymore in 2008. The markets are changing.

 

How is the outsourcing market changing?

 

Anno 2008 most big companies don’t select one provider as their outsourcing partner. The customers do look very carefully at the portfolio of each provider. They would like to know which solutions contribute best in terms of costs and quality to the success of their companies. So they are not putting all the eggs in one basket anymore. This leads to the question which provider has the best solution for a specific part of the IT infrastructure. Multi provider policies are quite common in the outsourcing markets today. So the relationship between customer and provider is changing.

 

Can you describe the different phases in the relationship between customer and provider?

 

Pieter uses a very clear model to explain the changing relationship over time between the customer and provider. He likes to share his thoughts with our readers by explaining his Relationship Growth Model, depicted as follows:

 

(see pdf for the Relationship Growth Model)

 

Phase 1 is the traditional outsourcing focused on IT cost reduction. Often the whole IT operation will be outsourced with a guaranteed cost reduction during the contract period.
When the customer becomes more selective in phase 2 they will shift their focus to the Total Cost of Ownership. Not only the IT costs, but all the related business costs are in scope. The customer will ask the provider to improve its business processes. A Solution portfolio is important for the provider to distinguish itself from its competitors. Both phases 1 and 2 are characterized by the focus on efficiency. It is all about cost savings.
Phases 3 and 4 are focused on improving the effectiveness of IT in order to enable customers to earn more money. It is about innovative thinking, how to enable the business with IT solutions that gives the business a competitive advantage. It is not easy to transform from the efficiency phases into the effectiveness phases. It is business driven, what is the added value of IT solutions and how much money can we earn?

 

Is Atos Origin only focusing on big customers?

 

Referring to his Relationship Growth Model Pieter emphases that each phase has its own characteristic. In the first two phases a company makes more general choices than in phases 3 and 4. The choices you have to make become more specific the higher you are in the Growth Model. The strategy of Atos Origin is to differentiate on customer behavior in the different phases. For the bigger companies the relationship model for phases 3 and 4 applies, while the smaller companies are served with the model described in phases 1 and 2. This means that almost all companies above 500 employees are potential prospects.

 

What are the most important business questions you get from the market?

 

Almost all business leaders mention the complexity of IT operations which leads to slow reaction times, while the market changes are increasing. It takes too long to introduce new products and concepts into the market. So often is asked to improve afore mentioned situation.
In order to reduce complexity it is wise to standardize the technical infrastructure. On the one hand you earn money by lowering the operating costs and on the other hand it is an enabler for the simplification of the application portfolio of the customer. Historically grown every big company has a lot of different applications, which leads to high maintenance costs and slow reaction times. The simplification of the Application landscape leads to an increase in effectiveness and flexibility.

 

What is your opinion on business IT alignment?

 

According to Pieter there is still a nice gap between business and IT thinking. The nature of an IT expert is to explain how the beautiful technical solution works, while the business people like to know what you can do with it. Pieter hopes that services oriented thinking will help to close the gap between the Demand and Supply side of IT.
It is important to focus on the business solution side instead of keeping the beam lights on the technological solution. It will not be easy to shift the attention because the technological solution provider will tell everybody that their technique will solve the business problem. Pieter is very clear in his statement that everybody should focus on what you can do with the solution instead of the how to build it.

It is not easy to close the gap between business and IT, how does Atos Origin tackle this problem?

 

Like many of its competitors Atos Origin has bought a consultancy business, namely the business division of KPMG. In its approach of business IT alignment Atos Origin has integrated the consultancy approach in the way it creates Solutions. Through its Consult, Built and Operate approach Atos Origin delivers Life Cycle Solutions to its customers. A prerequisite is that the customer has an open mind and likes to evaluate their business processes in order to improve effectiveness. Part of the problem is the cultural aspect. Not many top managers are really interested in business processes. Pieter believes that this cultural problem solves itself when the new generation managers take the lead in the business. They are accustomed to work with IT from their childhood and they demand solutions to work with instead of technological explanations. Talking about the cultural aspect Pieter reminds us of a nice comparison between the evolution of IT and the evolution of mankind. With the consent of Gartner he depicts this as follows:

 

(see pdf for Gartner model)

 

Starting in the 60’s with the complex mainframes, followed in the 70’s by the minicomputer and in the 80’s by the personal computer. In the first three decades of IT the depicted men are not walking erect. Only in the 90’s the IT manager, who is still a man walks erect. The big change comes in the new 21st Century. Gartner introduces the Google manager and that manager is not a man, but a woman! With Google mankind just uses IT instead of asking how it works. Just ask question in every form you like and you will get an answer. Young people are used to do this at home and they will introduce this behavior into the companies. The power shifts to the users who will tell IT what they want instead of being dependent of a technical solution. So whether we like it or not change and innovation are on its way.

What is the approach of Atos Origin towards Innovation?

Being a favorite subject of Pieter, he likes to answer this question with the following diagram:

(see pdf for diagram)

Innovation of products/services and processes is important for a company to realize a healthy growth. The innovations can be driven by the business or the technology. When people talk about innovation they often mean technology driven innovation like the introduction of a new technological platform likes Vista. But if it is not clear what the business can do with all the new possibilities the introduction will be a failure. So if innovation comes from the technological side you have the obligation to focus on new business processes in order to benefit from it.
It is the wish of Pieter that the CIO will act as a Change Agent. That he or she will focus on the business critical processes and ask what kind of innovation is necessary to improve the effectiveness in order to earn more money. More business driven innovations are the key to success.
 

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