Case Study: How Fossil Realized a 44% Cost-Savings Strategy

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Whether your company’s focus is to build smart applications or update mobile apps for end-users, to increase intelligence using advanced algorithms, or to look at opportunities to automate internal operations to drive high-value outcomes, there’s no denying that digital plays an increasing role in everyday operations of companies across all verticals and sizes.

As companies worldwide push to drive digital transformation, procurement leaders are being challenged to strategically influence spending, amidst a global climate full of talent scarcity and the need for immediate cost optimization.

Through a strategic partnership with Fossil, we helped the executive leadership team to increase quality, productivity and utilization as they moved from working with a 300-person offshore team to a 180 person Global Insourcing Center “GIC” team through our unique offshore model.

THE CUSTOMER

A US-based, vertically integrated global retail and manufacturing company that specializes in a diverse portfolio of lifestyle accessories. This industry powerhouse operates an extensive brand portfolio and a wholesale distribution network across 150 countries and 500 retail locations.

THE PROBLEM

The company had an extensive outsourcing presence in India for years but recently had been adversely affected by cost overruns, under-performing contractors, and poor resource management processes. All were creating a significant drag on productivity and profitability and distracting from the core focus of being a fashion trendsetter and market innovator.

The objectives established for the outsourcing operation were not in dispute. The culprit was the deteriorating execution. The company wanted to regain control in its approach to outsourcing.

THE SOLUTION

After extensive evaluation, the company partnered with SMC Squared to strategically “right-source” the execution.

“Given our experience with poor-performing IT Service providers, many on our team were initially very skeptical. We had tremendous cost challenges combined with a heavy IT demand from our growing business,” noted the development director. That quickly changed when the right-sourcing project got underway.

The SMC Squared US Enablement team worked with them to define a vision and operational plan using SAM, their Strategic Assessment Model. SAM is a management tool that enables everyone involved to deeply understand the unique history, needs, expectations, and current capabilities all from the same perspective.

“We achieved a 44% cost savings as compared to our old IT services strategy. The handcuffs came off, and our ability to impact talent and mitigate risk improved,” said CIO Mary Von Anhen.

“SMC Squared’s US Enablement framework really made the difference. While we were focused on getting the talent hired cost-effectively, that was only half the story. We also needed to change how our team in the US operated. This wasn’t the old IT Services throw-it-over-the-wall, let-the-Account-Manager-handle-it-all business as usual process. Instead, we saw a complete transformation of our local team that enabled them to maximize the delivery performance within the context of our Global One Team.”

SMC Squared’s Global Insource Center model was proposed through this collaborative approach, tailored for companies that already have an entity in India. It is designed to virtually eliminate all the start-up risk while adding a highly-productive, cost-effective global IT team to complement the Company’s local teams. Watch Von Anhen share additional insights on her experience on their cost-cutting strategy on HMG Strategy, the world’s leading platform for connecting technology executives. 

SMC Squared's proven approach and local connections in India were invaluable in successfully building out the team quickly, from placing the organizational cornerstone of the insourcing center’s technology director to the onboarding of other critical hires meeting the Company’s skills and experience requirements.

It didn’t take long for the Company to reap the benefit of partnering with SMC Squared. Within a year, they realized a 44% savings in total-cost-of-ownership compared with their old IT sourcing strategy. Now, they have a fully-functioning, high-performing India-based IT team delivering a 50% boost in productivity with a 1:1 US FTE equivalency that exceeds all development quality standards.

Now with their three-year strategy underway, the partnership with SMC Squared has eliminated poor performing IT practices and bottlenecks, resulting in high productivity and healthy communications.  

I had the pleasure of speaking with SIG CEO and President Dawn Tiura on the Sourcing Industry Landscape podcast, where we discussed our experience with Fossil and the most common challenges we’ve seen with offshoring and outsourcing IT.


 

 

Patricia Connolly, CEO and Co-Founder, SMC Squared

Dr. Patricia Connolly is CEO and Founding Partner of SMC Squared, her latest tech company that focuses on optimizing offshore IT services for US companies.  Patricia continues to innovate and embrace leadership roles that have spanned F500 roles, think tank and Big 4 consulting, academia, and start-ups.   Recently recognized as an EY Entrepreneur of the Year award nominee and featured in DCEO, Patricia shares a passion for diversity and women in leadership, especially at executive and board roles.  

Currently pursuing her Master of Arts in Theology from the University of Notre Dame, Patricia also holds a B.A. in Computer Science/MIS from the University of Minnesota, and Graduate Degrees from the University of St. Thomas, Minneapolis, MN including an MBA, International Business, and PhD., Risk, Corporate Strategy. 

Patricia and SMC Squared will share more about their innovative approach to outsourcing and cost-savings strategies at the upcoming SIG Global Executive Summit.