Principles and Practices for Orchestrating Digital Value Chains

The outsourcing of activities is a trend which started in the seventies with car manufacturers and has since then progressed into almost every aspect of our economy. Think of Indians analyzing x-ray pictures for European/American hospitals, South Africans administering mortgage requests and Philippine’s doing the salary administration. The main drivers behind this wave of outsourcing are technological advances and the breaking down of national trade barriers. The same technology enabling outsourcing also allows for an increasingly intimate relation between company and customer. Books, pizza’s, insurances, movies; almost everything can be ordered these days by TV, laptop or PDA. The technology behind these advances are however so complex that most companies have to rely on external technology partners/service providers to design and manage the technology. The pressure to work with external partners is increased further by the relentless pressure to lower cost, increase quality and inn...

Centralisation, either in a shared service center or another form, promises lower cost, a more consistent quality level and faster decision making by consolidation of responsibilities. Putting theory to practice is however not always that simple. Cultural difference, disagreement over the new process standard and lack of governance by the internal ‘clients’ towards the SSC are well known issues which may limit the realization of benefits. As these issues have been discussed already in-depth by various writers will I not cover them again. An issue which is less frequently mentioned is the more strategic question whether the shared service center fits within the business model. In other words, was the creation the shared service center based on a ‘me too’ decision of was it part of well thought about strategy. Take for example UPS and FedEx. UPS en FedEx deliver both packages, but have a totally different business model. UPS has one standard process and does not allow for many excepti...