Principles and Practices for Orchestrating Digital Value Chains

In this post I want to provide an overview of typical subjects I expect management teams of global operating vendors are looking into these days. I discuss the topic in two different posts as there are several items that the typical senior manager is busy with these days. Low margins A combination of the economic situation, new entrants in the market and over capacity results in a permanent pressure on vendors’ margins, especially in the area of ‘standard’ services and products. I expect this to result in a consolidation wave among Tier 2 and 3 players as soon as capital becomes less expensive to come by (so in 1-2 years). This should enable these smaller players to achieve economies of scale similar to the Tier 1 players. A combination of consolidation and a broad service portfolio is how these players earn their living. Above average margins may be achieved only by innovation, customisation of services or serving niche markets. An in-dept understanding of the client's business an...

One of the key deliverables of the project aiming to get into a relationship with a 3rd party is the contract. A contract typically consists of a Master Agreement and exhibits/schedules. Together they are the legal ‘translation’ of all intentions, obligations and requirements of the relationship. Many of the requirements are related to price, quality, governance, intellectual property, exit and a dozen of other topics. The topics I would like to explore in this post is the difference between compliance and legal risk. The reason I think this is relevant is the different departments that typically deal with both types of risk. Not having a clear distinction might thus result in two departments managing and mitigating the same risk or not managing certain risks are all as both assume the other department takes care of it. In more general terms are the following risk categories the most relevant to an outsource relationship (I leave out financial risk, as that is to me the result of any o...