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276 Chapter 10 • Global, Ethics, and Security Management

Outsourcing Best Practices
Balancing outsourcing and in-sourcing approaches can be a complex process, but the relationship
can yield very successful results when done correctly. To maintain a higher success rate with
outsourcing and offshoring ERP implementations, two best practices have emerged. First, a better
way to manage the offshore relationship through a practice called “in-sourcing,” where good ERP
15
managers invite a representative or entire team to work on-site. This allows the project manager
to supervise the work personally to ensure that agreed-upon metrics are met, as well as to facili-
tate the collaboration that is only possible when the entire team is colocated in the same office. The
second emerging best practice is for the creation of a formal governance process to manage the
offshore relationship. A report by Meta Group in Stamford, Connecticut, said, “Vendor governance is
becoming a critical success factor and must include global relationships and business-process
outsourcing with formal methodologies followed to refine quality and improve consistency.” 16
Companies considering outsourcing must first understand what they want to accomplish,
benchmark their current costs and level of quality, and then build an infrastructure to ensure the
expected value is realized. A good example of this relationship is shown in the McCormick and
Patni Systems vignette.

McCormick and Patni Systems Offshoring Partnership

McCormick and Patni Systems partnered together on McCormick’s global SAP implementa-
tion. McCormick, a Fortune 500 company, is a global leader in the manufacture, marketing, and
distribution of spices, seasonings, and flavors to the food industry worldwide. Patni, based in
Mumbai, India, is one of the leading global IT and business solutions providers with more than
12,000 clients supported from 23 offices across the Americas, Europe, Asia, and eight offshore
development centers in India. In order to enhance its competitiveness, McCormick wanted to
improve the time to availability for its products and enhance the overall efficiency of its
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business channels. They searched and found a global partner that provided a cost-effective
solution by scaling resources up and down as they rolled out SAP to more than six worldwide
manufacturing locations. Patni provided the collaborative approach they were looking for—
leveraging local engagement teams to ensure a strong customer focus. Patni’s cross-functional
team aligned with McCormick’s business model to conduct on-site activities, such as
functional/technical specifications and integration testing, while delivering offshore tasks, such
as effort estimation, technical analysis, and development. The in-house (“in-sourcing”) team
focused on the quick resolution of project issues so that the offshore team could continue to
provide quality deliverables—on time and on budget. This relationship was successful because
of the flexibility of Patni’s technical resources and the creativity of McCormick’s management
team. Jeff Malat, director of process solutions and ERP implementations at McCormick,
describes the engagement as follows: “Patni has demonstrated a high degree of flexibility,
scalability, and service orientation to enable us to meet the strategic goals for some of our
largest IT initiatives. Their sheer commitment, execution excellence, and ability to work with us
to envision our overall program had made a tremendous difference.” 18

15 www.projectsatwork.com/article.cfm?ID=223467 (accessed February 2001).
16 Ibid.
17 www.patni.com/resource-center/collateral/manufacturing/McCormick_SAP_ERP.html# (accessed February 2001).
18 Ibid.