How to increase transparency for strategic decisions

More and more railway transport companies are actively questioning their own strategic positioning and evaluating possibilities for a focus on their value creation. The outsourcing of individual stages of the value chain is considered in many cases. The main driver of these considerations is primarily to become more efficient by choosing a specialized outsourcing partner.

Aim of the project

In one specific case, hpo was commissioned to investigate the possible advantages and disadvantages of outsourcing the maintenance activities of a Swiss utility company. What would be the short and long-term effects?

Approach

Together with the customer, hpo evaluated three possible outsourcing options:

• the outsourcing of the entire maintenance to a third-party provider;
• the outsourcing of heavy maintenance only;
• the takeover of the entire maintenance by a jointly newly founded company (joint venture).

In order to better understand the key value creation stages, interfaces, and market participants and to be able to make a statement about the effects of outsourcing on the strategic positioning of the customer, an industry model was developed together with an internal project team. The industry model is an analysis and modeling tool for positioning the company in the market.

It is used to identify the value creation stages within an industry. This allows the interfaces between the value creation stages and the market services per stage to be presented in a clear and precise manner. Relevant players (customers, suppliers, partners, competitors, authorities, etc.) can be classified in the industry model and their specific roles made visible. The industry model is seen by customers as a “unique map” to discuss strategic positioning issues.

With the help of the industry model, hpo was able to show the client possible synergy and conflict potentials of the individual outsourcing variants in a transparent and clearly understandable way. Other criteria which were part of the evaluation included:

• the complexity of the control system;
• the dependency on potential suppliers;
• the possible cultural challenges and tensions at the interfaces between the railway transport company and outsourcing partner;
• possible effects on the reputation of our client.

Results

The analyses enabled our customer to draw on a much broader information base and thus make an informed decision about the future of maintenance.