Harvard Business Review -Porter Model Essays

Harvard Business Review -Porter Model Essays Harvard Business Review -Porter Model Essay Harvard Business Review -Porter Model Essay Infosys Consulting (ICI) emerged from Infosys Technologies as a business and information technology consulting firm with a unique strategy. ICI applied Infosys’ Global Delivery Model (GDM) to consulting and leveraged the parent company’s client relationships to attain projects. Based on 24-hour workforce and cheaper off-shore labor, ICI’s strategy allows them to cut down costs and implementation time for projects. While the parent company offers strategic advantages, ICI and Infosys often clash due to overlap in the two companies abilities to complete customer engagements. Although ICI and Infosys are separate entities the two work closely together, thus both must work hard to interface with one another. ICI’s unique organization and strategy creates a value chain which sets them apart from their competitors and produces great benefits for their clients. ICI created the GDM value chain for their consulting services, the â€Å"1-1-3 model,† which consisted of giving the client one onsite ICI resource, one onsite Infosys Technologies resource, and three offshore Infosys Technologies resources. This model allows ICI to cut costs with a blended rate of $100 per hour due to the cheaper labor of the offshore resources. Utilizing the offshore resources also allows ICI to shorten the length of the project from design to implementation as someone can be working on the project all hours of the day. During the day, the onsite team works with the client to observe the company’s processes and create a design. During the night, the offshore team can work on converting the design into software configuration which can then be presented and tested with the client the next day. : This allows the team to complete the project much faster than if the entire team was in the same time zone and allows the client to provide daily input into what they want in the end. The 1-1-3 strategy improved ICI’s operational effectiveness as they performed the same implementation faster than major rivals like IBM or Accenture. IBM and Accenture, who focus efforts with onshore representatives, cannot easily implement a 24-hour work schedule. Their focus on onshore representatives also forces them to charge higher blended rates, ranging from $175 to $225. IBM and Accenture cannot easily reposition themselves to match ICI’s strategy as they would need to scale down their US presence. Leading offshore consulting companies also cannot easily implement ICI’s strategy of creating a US subsidiary as they currently are managed through their technology businesses. Mimicking ICI’s structure requires significant investment in recruiting which these companies did not have readily available. To use ICI’s 1-1-3 model, ICI made several tradeoffs. One tradeoff is the result of implementing the GDM with 24-hour workdays. Using a 24-hour workday means that meetings can be scheduled at all times of the day often causing employees to be stretched thin. Employees cannot work â€Å"normal† work hours as they are needed across many time zones. ICI also made a tradeoff between using low-cost off shore labor and having clear communication between onsite and offsite workers. This forces consultants to work past normal business hours and plan for time differences. ICI chose to make this tradeoff because this strategy fits well with the rest of their value chain. Activities completed by offshore employees overnight allow onshore employees to start each day one step further in the process and move forward in the design cycle. In this way the two sets of activities, both onshore and offshore, reinforce one another and the company can optimize their efforts. ICI also made a tradeoff when it came to their consulting fees. ICI could charge high rates like IBM and Accenture, thus taking a higher profit margin, but ICI was willing to sacrifice profit in the short term for a higher market share in the long term. Infosys Technology created a channel for ICI to attract customers as Infosys, with an established brand and long list of previous customers, referred their customers to ICI. Infosys‘ strategic needs based positioning was the main reason for creating ICI. In creating ICI, Infosys strove to satisfy a larger fraction of their customers’ technology needs. ICI came from Infosys identifying the opportunity to work for the client earlier, to define issues, create solutions, and implement them. However, tensions emerged between ICI and Infosys Technologies’ Enterprise Solutions business units over which entity would lead client relationships and engagements. ICI is a completely separate entity with its own culture, leadership, and growth; this created a divide between ICI and the parent company. ICI and Infosys constantly work on improving communication and collaboration between one another as it is paramount to the success of the organization. However, while this divide exists it will remain one of ICI’s largest weaknesses. Infosys must continue to invest in their value chain to keep and create a competitive advantage. Infosys currently invests in creating subsidiaries, such as ICI in the US, in other countries to expand their business. An important part of creating these subsidiaries is investing in top tier talent recruitment, ICI management works to recruit MBA graduates and implement a referral-based system to target the top 10 percent of consultants from other firms. ICI interviewed and took on about half of the employees from Infosys’ original consulting division but the overall goal was to create a more diverse work force and hire from within the local country. ICI also worked to expand the number of consultants in countries like China and Australia to extend their global reach. Our action plan to improve ICI’s competitive position starts with investing more money in marketing to improve the brand name of ICI. One of the advantages IBM and Accenture have is their strong brand loyalty, recognition and global client base. ICI also needs to establish themselves as a competitor, retain their clients and make their advantages to their customers known. ICI invests time and energy into satisfying their customers and should advertise these benefits. ICI is unique in their value based pricing, which allows cost to be based on metrics that determine success from the client’s perspective. Sometimes engagements are structured such that ICI gets paid based on the outcome of the project and whether these metrics were achieved. This strategy ensures that the client will get what they want and pay for what they get. Our action plan also includes clearly defining the domain of ICI in relation to Infosys Technologies. One possibility is to merge the Infosys Technologies’ Enterprise Business Solutions unit into ICI, eliminating problems with placing engagements. This problem could also be solved by clearly defining a method to classify a client engagement under ICI or Infosys. Another action item is to unify the leadership between ICI and Infosys to eliminate friction on interfacing. This could be done by developing a communication strategy or by creating a common leadership team. Clarifying domain issues and unifying leadership will help to better establish an overall culture at ICI and make them more successful in the future.