Boundary Spanning by Design: Insights From a Vendor Perspective Presented by Todd Cook

Paper written by Wendy Du and Shan L. Pan Todd Cook Boundary Spanning by Design:Insights From a Vendor PerspectivePresented by Todd Cook

Introduction • IT Outsourcing • IT Outsourcing Mechanisms • Boundary Spanning Strategy • Case Study: Carta Corporation • Case Study: Magma Global Support Center • Conclusion • Quiz

IT Outsourcing • IT outsourcing is expected to reach $160 billion by 2012 • Outsourcing needs to meet the objectives of both the client and the vendor • Issues arise from opportunistic behavior, conflicts, and boundaries

IT Outsourcing • Client • Decreases transaction/production costs, increase access to advance technologies, and focus on strategic competence • Vendor • Focus on project quality and efficiency, access domain knowledge of the client, and improve its market reputation

IT Outsourcing Mechanisms • IT outsourcing mechanisms are broken into 4 categories • Organizational control, partnership management, contract management, and boundary spanning • Used to prevent and control conflicts that may arise

IT Outsourcing Mechanisms • Organizational control • Reconciles conflicts between stakeholders and marshal resources in the same direction • Contract management • Limits opportunistic behavior between vendors and clients • Often invokes partnership management

IT Outsourcing Mechanisms • Partnership management • Used to complement contract management due to complications in ITO relationships • Boundary spanning • Collaborate on sharing knowledge across vendors and clients

Boundary Spanning Strategy • Discussed at both the organizational-level and the group-level • Groups are the major units that handle communication • Interaction and communication primarily occurs at the group level within an organization

Boundary Spanning Strategy • Occupational boundaries and language and cultural boundaries are problematic • Vendors and clients may have different levels of technical and communication expertise • There are three types of boundary spanning strategies • Based on orientation, content, and structure

Boundary Spanning Strategy • Orientation • Respond to and anticipate the environment • Content • Professionally-driven and socially driven strategies • Structure • Narrow-engagement strategy and broad-engagement strategy invoke spanners • Spanners operate on the periphery to act as an intermediary between the organization and the elements outside of it

Boundary Spanning Strategy • Narrow-engagement strategy • Having a limited number of boundary spanners can increase efficiency and reduce errors • Broad-engagement strategy • Sharing of boundary spanning roles may reduce workload on individual spanners and may offer more opportunities for information • Assigns as many spanners as possible to the client

Boundary Spanning Strategy • Boundary spanning strategies are patterns of activity that a group or organization demonstrates over a period of time Technical and communicative expertise T Technical expertise CT Boundary Spanning Strategy Narrow-Engagement Strategy Broad-Engagement Strategy Vendor Client Vendor Client T CT T T CT CT T CT

Carta Corporation • 17 years ago Carta Corporation was a small startup company with fewer than 10 employees • Originally a software and network research lab • Today, Carta Corporation is a leading Chinese IT provider with over 15,000 staff and 9,000 clients worldwide

Carta Corporation • Utilized boundary-spanning practices to bridge a strategic partnership between Carta and Aldo corporation, a leading Japanese electronics company • Boundary spanning practices evolved into three phases

Carta Corporation • Phase 1: 1991-1996 • Recruiting engineers with advanced technical abilities • Carta sought help from parent company North University to lobby research labs to partner with or join Carta • Acquired a management information lab and a virtue networking research lab both with about 25 experienced engineers

Carta Corporation • Phase 2: 1996-2000 • Restructuring the communication model • Communications between key clients was handled primarily by engineers • Improved communication skills or replaced engineers • Engagement level reduced to a Window Project Manager • Only Window Project Manager communicated between client and engineering team

Carta Corporation • Phase 3: 2000-present • Further enhancing engineers’ abilities • By 2003 Carta outsourced $30 million in business • Started to recruit low-cost fresh graduates well trained in coding • Built own IT institute • 3 campuses with over 25,000 students

Magma Global Support Center • A subsidiary of Magma AG best known for its enterprise resource planning • Has 47,000 employees in over 120 countries • Consolidated small local support centers into large-scale global support centers in countries with low labor cost

Magma Global Support Center • Phase 1: 1997-2004 • Creating a communication model • Complexity and lack of trained personal caused major problems at the China support center • Developed message-solving mechanism which allowed consultants to interact directly with clients • Allowed for faster response times and a joint effort to resolve issues

Magma Global Support Center • Phase 2: 2004-2008 • Recruiting engineers with technical and communicative abilities • Located recruiting offices in Dalian and Shanghai to have access to high-end consultants • Sponsored a double-major program at a top university to top students • Recruited over-seas • Intensive training program with the MS mechanism and technical areas

Magma Global Support Center • Phase 3: 2008-present • Further enhancing the communication model • Implemented the Support Advisory Center team to proactively engage clients • Surveyed clients to raise issues and log messages • Eliminates issues before they emerge

Carta Corporation Carta Magma Boundary Spanning Capability Polarized Capability Most employees have technical ability but lack communicative ability. The recruitment targets engineers and training focuses on technical knowledge Ambidextrous Capability Most employees have both technical ability and communicative ability. The recruitment targets on ambidextrous employees and training focuses on both technical and communicative abilities Boundary Spanning Strategy Narrow-Engagement Strategy Broad-Engagement Strategy Vendor Client Vendor Client T CT T T CT CT T CT

Magma AG Carta Magma Boundary Spanning Strategy Narrow-Engagement Strategy Broad-Engagement Strategy Vendor Client Vendor Client T CT T T CT CT T CT Both information assimilation and releasing are channeled and guarded by the Window. Internal engineers remain isolated from the client Everyone is assigned a role as the boundary spanner. They are contacted based on their experience and the area of the issue. Everyone can communicate with the client who can communicate with multiple consultants

Conclusion • ITO is a thriving industry which shows strong future growth • Many conflicts may arise during the course of an ITO agreement due to cultural and communication boundaries • Boundary spanners can be used to span the differences and improve communication and efficiency

Conclusion • Boundary spanning has two important themes • Boundary spanner • Intermediaries between the organization and the elements outside of it • Boundary spanning strategy • Narrow-engagement or broad-engagement strategies that are professionally or socially driven by organizations that respond to and anticipate the vendor-client environment

Quiz Which of the following statements are true statements? • A) Partnership management reconciles conflicts between stakeholders and marshal resources in the same direction • B) Organizational control complements contract management • C) Boundary spanning is a collaboration of knowledge sharing across vendors and clients • D) None of the above • E) All of the above

Boundary Spanning by Design: Insights From a Vendor Perspective Presented by Todd Cook