There are deals... and then there are ISG deals!

IT systems have been deeply and extensively integrated in companies' businesses for a few decades now, especially in the more developed world. Many companies who were early adopters often end up with multitude of applications and infrastructure components with lot of redundancy, many unused apps, scanty documentation and lost knowledge. Over the past several years, "rationalizing" such IT has been a prominent pitch from system integrators.

As IT systems became huge and complex, services around those also had to be well structured. And since they are most commonly outsourced now, the contracting of such 'support & maintenance' services also demands careful and comprehensive detailing. Finding the right IT services partner is a mammoth task fraught with risks hard to foresee.

There's also considerable amount of risk for a service provider entering into such engagements, as they base their offers, proposals and contractual agreements on very little information and lots of assumptions. Even due diligence exercises don't reveal many details. The competitive selection process forces them to paint lot of rosy pictures. And pricing is extremely tight these days because of the constant pressure to reduce, be more productive, automate, invoke AI, and so on. So they end up squeezing wherever they can - effort, cost, margin, price - while committing the moon and the stars in addition to the earth - all in a couple of years' time.

Often times, large companies engage consultants - third party advisers (TPA's) - to facilitate the whole vendor selection process. It does make sense as TPA's bring in relevant experience and understanding of the vendor landscape. They also claim to specialize in such selection processes such that the best vendor is chosen to serve the client interests perfectly.

In an effort to position and differentiate themselves, TPA's have developed different approaches to go about the whole process of IT services vendor selection. In very broad terms, the TPA's offer on three dimensions

• Documentation
• RFP package creation
• Contract documents
• ...
• Process
• Managing the prospective vendors including communication and information sharing
• Defining the process and timelines, e.g.,
• Pre-RFP interactions
• RFP release
• Vendor briefing
• Q&A - from vendors on the RFP and responses back from the customer
• Pre-submission presentation(s) by vendors - sometimes called CAS (Customer Alignment Session)
• Submission of the responses by vendors
• Defense presentations by vendors to customers
• Short-listing for subsequent stages
• Due-diligence by short-listed vendors through meetings with customer SME's
• Further information sharing for response refinement
• Revised submission by short-listed vendors
• Defense of revised proposals, discussions, agreements - disagreements
• Commercial negotiations
• Best and final offer (BAFO) from the vendors
• Final selection
• Contract drafting
• Negotiations on clauses, redlining, agreements
• Contract signing
• ...
• Facilitating the whole process
• Experience
• Offering advice, suggestions and recommendations

Having worked on IT services deals from service providers' sides for a long time, there is one TPA whose deals / RFP's presales folks on this side hate to work on although they might fake being excited - it's ISG.

I must mention that there are many other TPA's which follow approach similar to ISG's. I am taking ISG as an example as it seems to be the most prominent TPA with this kind of approach and sets the standard for TPA-led deals.

Here are some interesting characteristics of those deals:

• Excessive documentation just for proposals: ISG develops the RFP package for clients, each package composed of hundreds of documents, each in a certain standard 'ISG' format which they love. The package would be composed of a large number of these documents which are sort of draft contract documents - say exhibits and appendices - in addition to a few which provide information needed to respond to the RFP. Each vendor participating in the race has to review the entire set of documents, enter their responses wherever required and agree to each word written in those documents. A lot of these documents have relevance when the vendor is close to contracting. Contract, though, is generally an item for discussion much later, once the technical clutter is overcome, and just a couple of vendors remain in race. However, ISG makes every vendor devote resources to work on all the documents and in the process leads to hundreds of person hours of wasted effort in multiple companies.
• Rigid Templates: ISG swears by its templates for everything. Some of those are needlessly confusing or over-engineered to sound scientific. An example is their pricing template.
• Process rigor: In the name of making the process rigorous ISG often does 2 things
• Share information in lots or share updates to info already shared. This not only creates anxiety among the poor vendor architects working on developing response to the RFP, but also often makes a lot of expended work redundant when key data points change or come later, assumptions get invalidated, etc.
• Tight timelines. For all the extra work that needs to be done by large teams at each vendor company, ISG would allot extremely tight timelines. For example, a large $100 Mn worth of RFP which would typically have 150-200 page core technical proposal and another 200-300 pages of documentation covering all aspects of the potential contract. A typical IT services vendor would have a core team of 20-30 people actively contributing to this response. Then there will be 20-30 leaders over multiple levels who'd be making all the noises, asking questions and reviewing. Then there will be many many meetings daily just for all these guys to sync up on various things, leaving almost no time to work for those who are supposed to put their heads together and create the solution for the customer ask. It just becomes a boiler room on vendors' side, with the additional pressure of aligning all stakeholders, getting everyone's blessings, redoing many things coz new information came in, and turning it all over to ISG in 30 days - the typical timeline.
• Insane milestones: In addition to deliverables that are voluminous and detailed to the point of redundancy, they often seem to enjoy setting milestones that make it impossible to work with. E.g., a presentation just 1-2 days after the proposal submission, final Q&A responses 2-3 days before the proposal submission, etc.
• Large volume of repetitive and visibly redundant work: This has been highlighted before in several ways but needs a separate mention as well. Instead of boiling the ocean with each vendor, most of whom would not even reach close to contracting, it would make more sense to go ahead in steps. Contractual clauses agreed in haste in the proposal stages would be discussed later in detail between the right personnel anyway, and can therefore be taken up at a more appropriate stage. For example, while core technical elements and commercials are fluid, what's the point of agreeing about change control up front?
• Extremely limited facetime with clients: During various stages of the deal, vendors are allowed very limited interaction with clients. It is hard to figure out whether the proposals address client objectives. And depending on the kind of due-diligence offered, there are chances that a lot of critical information is discovered even by the 'winner' while taking over the actual work, the so called 'transition'.

ISG is a very high profile TPA for IT outsourcing deals. Their method really saves lot of effort for themselves and their clients when finalizing vendors, and in the contractual formalities. Their templates, especially, make it easy for them to assemble, communicate and consume information from vendors and to present it in the most insightful ways, given that these templates have been used repeatedly and have become their standard, which helps in working faster with all the information. Such a templatized and well-defined process-centric approach definitely derisks vendor selection process for their clients. And over time they have built a vast portfolio of deals executed based on the same template, and am sure, incorporated learnings to make it better. And perhaps that's the very reason ISG, and the like, are hired.

However, the job of a consultant or TPA is to make the overall process efficient and the outcome successful 'for all parties', not just the party that's paying them. For all the vendors participating in such selection processes, the wastage in terms of resources and the impact in terms of stress on all of the personnel engaged is tremendous.

I must add that all large and traditional IT services companies - Indian or non-Indian - have become bulky and inefficient. There is more leadership than necessary, more reviewers than doers, more talkers than hands-on executors. And even among the doers, the skillset per person is extremely limited and bounded. So, for large deals they end up with a large team with lots of people bringing in tiny chunks of capability. Then there are 'leaders' who pretty much just review and comment, and there are multiple levels of those - pushing up the review and trickling down the comments as the deal approaches submission. And at the lowest level are a small set of people who actually understand, define and write. They are pushed and crushed to the point of break down.

Have you worked on ISG deals? Or others with similar approach? What's your take?

Find ourselves when AI becomes us!

A friend of mine is struggling with a "bright" b-school intern he hired recently. The intern just can't stop using AI. Even for stuff that needs a personal touch, he just can't do it by himself and needs the AI output. And by AI, I am only referring to ChatGPT and the like. There is an extremely strong tendency among the current generation of students to resort to these LLM tools for all kinds of tasks, be it analytical, creative, linguistic and clerical. And there is a gradual loss of judgement about how quality of the output could be better with human touch.

While we hear that AI will only free our times to do things of higher order, I doubt we, most of us, have much interest or aptitude ourselves in doing things of higher order, coz even for those tasks we are letting AI take a shot, followed by our laziness willing to settle for what we got. It may be true that AI will never match what a human mind can accomplish, but most of us are neither used to do such amazing things nor are our minds trained and warmed up sufficiently to take up activities of higher order like to "create", visualize something new and beautiful, of meaning that has never been ascribed before, yet makes sense that can't be questioned.

We are all excited that AI is improving by leaps and bounds. It will soon do most of what we thought our lives are all about until now. To make the newer generations more capable of thriving with AI, instead of dumbing themselves down, we have to rethink education, mental grooming, work, contribution and creativity - starting from first principles.

We have to find ourselves, while AI becomes us!

This topic needs open and unhindered discussion. Please do share your views.

You may have the urge, but I hope you won't prompt ChatGPT for something nice to say 🙂.

TingTongTang - Chapter # 0

I was placed in this world by God. I was all alone around that place. It was a beautiful place. The best place ever. I felt hungry. I ate fruits. I figured out fire. I started cooking plant stuff. I figured I could kill animals and cook them too. Some of them were delicious.

One day I was wandering and I met a female of my species. She was the most beautiful woman. We started living together. We built a home. We divided tasks to enable our survival. I plucked fruits and veggies as I liked roaming and had a taller body. I sometimes managed to hunt rabbits too. She cooked. We both ate. It worked.

She got better at cooking. I got better at hunting-gathering. One day during my riverside nap - I call it my personal time - I had a dream of the old times, when I was plucking, killing, cooking and eating it all. It woke me up, shook me to the core. Why was I giving someone else the privilege of cooking for me the food I gathered? And look what it had done to me - I forgot how to cook!

I couldn't let the thought go. But I somehow convinced myself to live with it as I didn't quite enjoy cooking anyway.

Days passed. I came across many more people who were like me. They too had figured out the stuff I did, although with some variations. Like I ate bananas, potatoes and rabbits. They ate other fruits, veggies and animals. Some of them discovered rice. Some did wheat. Some did corn. And 'Sorghum'. They had to figure out the most edible forms of everything from the wild and mass-produce them. They let me taste some of their stuff. I let them have some of mine. Things got crazy one day. We did a potluck - everyone ate everyone's food, and it was amazing. The best potluck ever.

But there was one problem. Some food needed more work. Some did less. So we couldn't just give and take. We invented money to value them based on how difficult it was to produce. I figured if someone needed my stuff more desperately, I could ask for more money for it as the person would be willing to pay if he liked it a lot, or if I just sprinkled more sugar on my stuff. It worked.

Initially there were many types of money floating around in our community, and it got confusing to exchange one for another, or price things in various monies. The popularity of my bananas, potatoes and dead rabbits made me everyone's favorite, especially after a sprinkle of sugar, my secret ingredient. And I had leadership skills. I guess my riverside ponderings made my mind exceptionally talented. I made a compelling case for everyone to work with my money for transacting and that I'd free everyone else of bothering about how much to print, what color, what rate, etc. Everyone saw my good intentions. There indeed was the chaos which I wanted to fix. I was willing to offer my money for everyone to work with in exchange for theirs, and take the whole management of money on myself. I became an instant hero. Some called me a saint. I fixed up an exchange mechanism for monies, some rates, based on who had what stuff - fruits, veggies and animals. There was push to add skills into the pricing mechanism, and I felt it was justified, e.g., cooking made a lot of difference in making food tasty. And my female partner did it well. She learnt it from me, I must not forget to add. Once the exchange rates were agreed, from then on all buying and selling between people would be with my money.

Our little world was beautiful. My money made all buying and selling so fair and easy. I printed the money, everyone got what they wanted based on the exchange mechanism agreed. There were rich and poor. I was among the rich. I bought from everyone, coz I loved to eat, and eat a lot. It was perfect.

One day while drinking some mind-bending stuff someone sold me, I had a beautiful insight. 'Why don't I make some extra money for myself, like print it just like that? Why should I base it on fruits, vegetables and skills?' That way I didn't have to worry about bananas, potatoes, rabbits and cooking. But I did like bananas, potatoes and rabbits. And more than me, a lot of other people liked them, especially with the sugar. I had also enjoyed cooking once upon a time, but then my female partner did it for me without complaining, so I didn't bother any more.

Just then I had a brilliant idea. I'd pick some poor folks, train them on how to find bananas, potatoes, rabbits and cook them. I'd also give them some of my extra printed money - I have a lot of spare money lying idle anyway. I'd give them enough so that they were excited. Once I had the stuff from them, I'd sell it to other people for higher price. I used money to make more money. It worked. Like magic.

I started enjoying the game even more when I found that I could print money at will and buy whatever I wanted. Nobody complained as I was buying from them. But this poor guy whom I taught to produce the stuff that was originally my expertise - he became better at it than me. Now everyone started buying directly from him at much lower price than they did from me. Nobody wanted the pricier stuff I was offering them. I sometimes tried to get my own bananas, potatoes and rabbits, but I was told they were too old fashioned. I had lost my expertise. All this that stopped the flow of money back to me.

Me being me, I loved to eat stuff everyone made, so I bought from everyone. I just couldn't stop eating. 'What's the point of life otherwise?' I'd ask myself. So I went on printing more money to buy stuff, without bothering about bananas, potatoes, rabbits and cooking - which were my products once upon a time. I became a champion in money-games. I'd sell people virtual stuff for real money - stuff which people could sell me back and get more money than they bought it for. This was smart. Since I alone had rights over the money, I could make as much of it as I wanted.

Anyone moving to other monies must be dealt with through fear, and occasional punishment, I realized. Every evening I'd go to the river side and gather sharp sticks and stones. I even had a fish farm where I reared Piranhas. I made friends with people who looked like me. Those who weren't so pretty liked to please me. I felt like a king. I offered to protect my friends and occasionally threw stones and sticks on bad guys... and I charged money for it.

I grew old. Deep down I started feeling that something was not right. I longed for the times when I plucked my fruits and veggies, hunted for rabbits and cooked with my hands. Now everyone was selling me stuff, and not buying anything from me. It felt so wrong. I felt betrayed.

What if I didn't buy stuff from others? Oops, No, I thought. I couldn't go back to finding the best bananas, potatoes and rabbits... and learning to cook again. These guys spoiled me. I decided I'd punish them by making them pay me to sell things to me. I announced. They didn't like it at first. I persisted. I pushed hard. And imposed what I called tingtongtang tax on all products anyone sold to me.

This was pure genius. I had to design a new way of transacting with tingtongtang. Anyone wanting to sell stuff to me had to come to my doorstep with the stuff. I placed a box there. He would tell me the price. I would add tingtongtang tax to it, calculate the total price, put the money in front of him. The beauty of this transaction was that the guy would only get the money for the original price of the stuff. The tingtongtang tax part would have to be put into the box. My box. Gradually as I'd buy more stuff, and I love to buy, the box would be full in no time.

If some of these guys tried to become my partners, like the one who cooked for me, I'd have to forego some of the tingtongtang tax. I must make sure that didn't happen, I'd make it very difficult. Otherwise, I might have to pluck, gather and hunt again... well, not something I enjoy doing too much.

Soon I'd have boxes and boxes of new money. I'd be wealthy. It's the most beautiful plan.

Voice of the Scholar

There is an oft-made observation in its two variants depending on which side you are talking to that academic research is far removed from Industry or that industry is far removed from academic research. And interestingly it's the academicians who recognize the gap, more than the industry does - perhaps understandably so coz of their observer and subject relationship where the latter is often not even aware of being observed.

Most academic research in strategic management is backward looking, especially the part which observes behavior of people or collections of people (say firms), looks for patterns and builds or contributes to theory around it. It's unlikely that those people or collections of people would look towards the same studies to draw upon which were built by observing them in the first place. It probably takes corporate (or political) blunders combined with I told you so from a research paper buried behind a payment gateway for solutions to emerge. Consultants are uniquely placed to advise the right course before blunders happen, but (a) they rarely have the right level, coverage and understanding of academic research, and (b) they are paid by individuals who actually know what they want to hear. And then there is politics, power and ego. There's also the view that leaders must go with their gut feel, be creative, experiment, and 'innovate'. And try crazy stuff at times - no euphemisms. Research based on generalizations from the past struggles to offer adequate inputs to such leaders, especially when they believe they know what they need to. On the positive side, a lot of good things have happened by people taking paths and approaches that weren't considered viable or wise before, or that were just not thought about. And which were later picked up by scholars to study and write more about.

While the conundrum is here to stay, academic research must look for other channels for sharing with wider world. If research papers can't be made free, as they too need a revenue model - and most of them are difficult to understand for non-PhD types anyway - authors must take personal initiative to disseminate their learnings from various platforms to audience that can benefit from the research work. They can use AI tools to simplify, summarize and customize. Certainly, the world will benefit if most of the academic community finds a voice that is both heard and understood.