Innovating through Best-Sourcing
The structural changes in the markets have forced content providers to reexamine their marketing and delivery strategies. To remain competitive and keep their products current to market demands, they needed to innovate and evolve rapidly. However, due to shrinking margins, content providers lacked the technology or the resources to make revolutionary changes. This included:
- 1. Expand content sources to non-traditional markets
- 2. Evolve strategies to compete with free content
- 3. Dramatically reduce costs to cater to newer markets
- 4. Technology innovation to enhance discoverability of content
For content providers, survival was not about making evolutionary changes or reducing costs. It was more about building a completely new value chain and business model. The challenge for companies in the content industry was that they had been largely stable for decades and innovation and change were not part of their culture. However, over the last few years, a few of the more progressive companies have made huge strides in reinventing themselves to be the publishers of the future.
Globalization of content requires content to be collected from highly fragmented sources such as patent offices, universities, and local research institutes, at country and regional levels. Since this is a very localized process and requires local knowledge, content providers could not handle it on their own. The more successful providers created a network of collaboration partners in each region to assist in the data collection process. The role of these partners is to identify content sources, create business relationships to ensure steady flow of content, and manage local relationships. Quality and reach of collaboration of partners not only helped overcome the challenges of dealing with distributed content sources but also in differentiation through increased coverage of content.
The other challenge that emerged out of the globalization of content creation is the number of languages involved. Content providers traditionally dealt with English and a few European languages for a majority of their requirements. However, in the new scenario they had to deal with content in more than 20 languages that all needed to be translated to English. Translation of scientific documents is a specialized task and needs to be handled in-country by teams that understand both the content as well as language. Once again, this forced content providers to outsource language translation to country-specific partners. Some content providers, who did not want to deal with these complexities, outsourced their translation requirements to one provider who in turn had a network of in-country translators. The need to handle a multitude of languages also brought about investment in translation tools that automated a significant part of the process.
Simultaneously, content publishers needed to reduce their costs dramatically to compete with free content and also meet the demands of new customers in emerging economies who were not willing to pay the same prices as the traditional customers for content.
Curating content, before it is published, is a complex process with a number of steps and sub-steps. Content providers had to find a solution that reduced costs but at the same time maintained the quality of output. After experimenting with a few models, the more successful providers arrived at what is referred to as a “best-sourcing” model. To create this model, providers “de-coupled” the entire process into multiple groups of sub-processes, based on the complexity of work and skill set required. As illustrated in Fig. 7.2 , some publishers grouped the sub-processes into three categories. Category 1 consisted of simple tasks that were repetitive, human-intensive and did not require much knowledge of the domain (e.g., typesetting). Category 2 involved tasks that were more complex,
Fig. 7.2 Content creation process in the STM industry
Fig. 7.3 Evolving to best-sourcing in the STM industry
needed some domain knowledge and could be automated to some extent (e.g., abstraction). Category 3 contained tasks that required extensive knowledge of the domain (e.g., editing). Once processes were disaggregated, content providers outsourced the tasks to the best location and partner that suited the task and at the same time provided the lowest cost solution. As shown in Fig. 7.3, Category 1 activities were outsourced to partners in smaller cities in India/Mexico/Philippines (where costs were far lower). Category 2 activities were primarily outsourced to larger cities in India and Philippines while Category 3 activities were retained in North America. A process that was once being handled out of a central office in New York City, was now being managed out of 3 global locations, coordinated with the help of workflow and collaboration tools.
While cost reduction is a clear benefit of this strategy, innovation and improvement in quality were equally important. The STM industry requires expert talent in various fields including Chemistry, Physics,
Engineering, Medicine, and Pharmaceuticals. By best-sourcing the process, content providers now have access to large pools of highly qualified technical resources across the globe. This allows them to increase the volume of content being processed at much better quality levels. This became even more critical as publishers needed to move to digital platforms and large quantities of historical content had to be converted from paper to digital formats. In an attempt to differentiate themselves, best-sourcing partners invested significantly to create a number of new tools and technologies that helped automate processes and increase quality and productivity of their output. For example, emerging markets, like India and China, are increasingly becoming consumers of content. “The demand for scientific and technical materials in any particular market is linked directly to the level of research and development spending. The commitment to R&D is long established in the U.S. and Europe. Now R&D spending is on the rise in places like China and India, so publishers have increased their presence in those markets” (Simba, 2009). However, the business models required to succeed in these markets have to be different from those in the traditional markets both in terms of overall costs and subscription models. Best-sourcing helped lower overall costs of content production and allowed content companies to provide pricing models more suited to these markets. Similarly, as content creation gets more international, collaborative and inter-disciplinary content providers need to differentiate by providing technology and platforms that support these changing needs. To tackle the challenges of discoverability, content providers need to move away from simple indexing to complex taxonomy and ontologies based classification. Once again providers were forced to look beyond their traditional geographies to find technology solutions in countries like Israel and Russia and then back this up with human cura- tion in countries like India.
Providers also best-sourced a significant part of these investments to their global partners, thus reducing their need to make the investments internally. The providers were willing to make these investments as it helped them to differentiate against their competitors. Also by defraying the investment costs across multiple clients and engagements, the partners could offer these technology solutions at much lower costs to the content providers. From a content provider’s perspective, this gave them instant access to best-in-class technologies and helped them to be nimble as newer technologies emerged. Best-sourcing helped content providers to become more cost effective, flexible, and expand their global reach. In a decade, the more successful content providers transformed themselves by “best-sourcing” their processes, technology, and innovation. As each partner was constantly progressing and innovating not only to be efficient, but to meet market demands, an eco-system of innovation without any significant investments from content providers was evolving. Concisely, the process of best-sourcing generated layers of innovative solutions from multiple partners.