Friday, April 3, 2009

Partnership Maturity Model (PMM): A tool for setting strategic direction for technology captives or offshore development centers (ODC)

Partnership Maturity Model (PMM) was presented by Dr. Bob Hoekstra, then CEO of Philips Innovation Center in 2004. One can see the influence of the prevalent model CMM on the number of levels (5) and the nomenclature (PMM vs CMM). Nevertheless, I feel it is a useful tool in setting strategic direction for technology captives and ODC centers part of IT services firms. We used the PMM in our research on technology captives in India.

My view on the differentiating competency at each level is:

Level-1 (Resource center): Make resources with basic competencies (such as programming, testing in specific technology platforms .Net, Java, Mainframe)
Level-2 (Offshore Development Center): Manage a project independently and deliver on time, with quality and on budget for a given specification.
Level-3 (Center of Excellence): Influence technology / product roadmap
Level-4 (Innovation Center): Own technology / product roadmap
Level-5 (Highly Valued Partner): Form strategic business partnership and become a key player in partner’s market leadership

Anyone familiar with Indian IT industry would be able to relate to the first two levels of PMM. The real challenge lies in maturing at level-3. My friend Ramprasad who is the MD of BridgeCo India has used PMM to set vision for his center. While articulating a key challenge influencing roadmap (level-3), RamP says, “The market (Internet Radio) is in the developed world. If we have to influence and then own roadmaps, we need to figure out a way to remain on top of the market dynamics, sitting in Bangalore”.

During our research we observed that RamP’s challenge is not unique. In fact, we observed that there is a chasm at level-3 as shown in the figure below. By adopting newer approaches of managing efficiency like CMMI, Six sigma, SCRUM, firms are not getting any better at creating value. I also used Niagara Falls metaphor to explain the cost-value chasm here.

I have seen captives or ODCs taking following approaches to mature at level-3 or crossing cost-value chasm:
  1. Own a framework / platform roadmap: This is perhaps the easiest of the three approaches. Many IDCs have substantial ownership of (mostly software) frameworks / platforms including test automation frameworks. Customers for these platforms are product teams (mostly internal). The centers can influence / own roadmaps of these frameworks. As I work with different clients, I see this either happening already or firms taking steps towards this direction.
  2. Partner with BPO: What started as a different kind of business (call-center) has suddenly become a critical asset in gaining deep insights about the customer. Technology center in partnership with BPO can identify opportunities & propose solutions to create substantial customer value. For example, Progeon (BPO) was started as a subsidiary company of Infosys in 2002 with $20 funding from Citicorp. Infosys brought Progeon into its fold by buying Citicorp’s 23% stake in 2006. In 2008, Infosys introduced platform based BPO solution for procure-to-pay services as part of a systematic effort to create non-linearity in its business model.
  3. Start with local market: A few India centers like GE Healthcare and Adobe are contributing to creating products specific to India market. For example, GE Healthcare is creating an R&D lab with a simulated hospital work environment and aims to double India revenue in next 3 to 5 years. In case of Adobe, Naresh Gupta MD of Adobe India also holds Adobe’s print and publishing portfolio. e.g. see (or listen to) Naresh’s interview on globalization and emerging markets published in May 2008.

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