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Published byEmmalee Darnall Modified over 9 years ago
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2 Introduction Industry trends Engagement models Governance Innovation Case Study Summary & Wrap Up Agenda
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3 Industry Trends
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Project-based Outtasking SUPPLIER Project-based Outsourcing VENDOR Programmatic Outsourcing BUSINESS PARTNER Strategic Sourcing STRATEGIC PARTNERSHIP 1980s1990searly 2000s2010s Evolution of Outsourcing Vendors 4
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The offshore outsourcing trend and practice is due for a transformation. Client concerns about changing business objectives, the proliferation of “as-a-service” offerings, and demand for deep industry specialization suggest that only the most collaborative, innovative, and trusted vendors will succeed. Forrester 5
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The number of external IT service providers that buyers use, on average, is already too high. Organizations continue to show a wider interest in outsourcing. Organizations are looking for better ways to manage strategic providers. Clients are less tolerant of finger pointing in a cost-focused market. Alliance offerings from outsourcers are gaining traction. Outsourcing Trends - Gartner 6
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7 Key Theme Engagement Models
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Time and materials (still the most common). Portfolio-based pricing based on SLAs. Managed Services (Volume-based). Managed Services (Metrics-based). Co-Innovation. Hybrid. Engagement Models 8
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9 This allows the client IT to engage with the organization better, as an enabler of business results, going beyond the traditional role as a procurer of services Areas which can provide high returns in terms of business alignment for time & effort invested Activities which can be competently performed by mature vendors with some oversight by the Client IT Organization Typical Split of IT Organization focus in Staff-augmentation Typical Split of IT Organization focus in managed services IT Direction Setting Vendor Performance Management Business Liaison IT Project Management IT Direction Setting Partner Performance Management IT Project Management 10% 15% 25% 50% 35% 20% 35% 10% Technology visioning, Architecture direction Relationship metrics, Value monitoring and management Business value monitoring and management Day-to-day monitoring of project progress Business Liaison Enables the IT organization to focus on areas where it can add value vs. primarily monitoring Managed Services
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10 LOB 1 Consolidation is the natural evolution of most outsourcing strategies Pre-Outsourcing In House Arbitrary OutsourcingLogical Outsourcing Outsourcing adoption timeline 80’s/90’s 2000’s 2010’s Minimal use of contractors Local work High cost Lower productivity, e.g. no global delivery Widespread use of contractors Adoption of global delivery Contract awards largely driven by hourly rates Ad hoc selection of vendors Peak benefits achieved within several years Focus on handful of key “strategic vendors” to do vast majority of work Adoption of new commercial models focused on results, not inputs Contracts awarded based on work history, capabilities and synergies with existing work In -House In House LOB 2LOB 3 LOB 1 LOB 2 LOB 3 In -House Vendor A Vendor B LOB 1 LOB 2 LOB 3 In -House Vendor A Vendor C Vendor Consolidation
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11 Key Theme Governance
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An ability to adapt effectively in a rapidly-evolving high-pressured environment Effective management of program scope Effective management of program stakeholders Efficient resolution of problems and addressing the “gray areas” of the contract Ability to review and provide approval to explore new avenues for innovation and improvement Reduced coordination costs Less time wasted due to poorly-managed conflict Effective governance leads to both value creation and reduced cost of coordination for the Client and Sourcing Partner Value of Governance 12
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Source - EquaTerra Governance - Root causes of Transition Failure 13
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14 Key Theme Innovation
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Improved cost savings, customer service, revenue, and productivity, require innovation 15
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18 Case Study
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THANK YOU 19
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