1. DePaul University – School of CTI IS 565 IT Outsourcing Management
Application Outsourcing
Dave Galen
4th February 2008

2. Today’s Discussion
Who is Accenture?
What outsourcing trends are reshaping IT and business process delivery models?
IT Outsourcing:
What is Application Outsourcing?
What is Business Process Outsourcing?
What are the Risks and Mitigation Strategies? Group Discussion
Questions

3. FACTS & FIGURES, WHAT WE DO, SERVICES WE OFFER
Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses.
FACTS & FIGURES, WHAT WE DO, SERVICES WE OFFER
ACCENTURE GLOBAL:
Net Revenues: US$19.7 billion for fiscal 2007 (12 mos. ended Aug. 31, 2007)
Exchange/Ticker: NYSE/ACN
Employees: More than 175,000 (including approximately 4,400 partners)
Global Reach: More than 110 offices in 48 countries
Geographic Regions:
Americas
Asia Pacific
Europe/Middle East/Africa
We help clients:
Identify and enter new markets.
Increase revenues in existing markets.
Improve operational performance.
Deliver their products and services more effectively and efficiently.
Services we offer include:
Business consulting.
Systems integration.
Application outsourcing.
IT infrastructure outsourcing.
Business process outsourcing.
Accenture serves approximately 2,500 clients that span the full range of industries around the world.
We serve 94 of the Fortune Global 100, two-thirds of the Fortune Global 500 and government agencies in 26 countries.
Of our top 100 clients in fiscal 2004, all 100 have been clients for at least five years and 85 have been clients for at least 10 years.

4. Technology & Systems Integration Outsourcing & BPO Businesses
Accenture delivers its services and solutions through five operating groups…
ACCENTURE ORGANIZATION MODEL
Comm. &
High Tech
Financial Services
Public Service
Products
Resources
Communications
Electronics & High Tech
Media & Entertainment
Banking
Capital Markets
Insurance
Serving sectors:
Defense
Postal
Education
Revenue
Human Services
Immigration
Justice/Security
Election Services
Automotive
Health Services
Industrial Equipment
Pharmaceuticals & Medical Products
Retail & Consumer
Transportation & Travel Services
Chemicals
Energy
Forest Products
Metals & Mining
Utilities
This industry focus provides Accenture’s professionals with a thorough understanding of industry evolution, business issues and applicable technologies, enabling Accenture to deliver solutions tailored to each client's industry.
Business Consulting
Technology & Systems Integration
Outsourcing & BPO Businesses

5. Outsourcing Trends

6. Which one is MOST important? Why?
The parachute analogy
What are the client’s (for example, the military) top 3 buyer values when buying parachutes?
Which one is MOST important? Why?

7. What are the benefits to outsourcing?
Top 10 Reasons Companies Outsource (2005)
Reduce and Control Operating Costs
17%
Improve Company Focus
16%
Gain Access to World-Class Capabilities
12%
Free Resources for Other Purposes
12%
Resources Not Available Internally 8%
Reduce Time to Market 6%
Take Advantage of Off-Shore Capabilities 6%
Accelerate Reengineering Benefits 4%
Share Risks 3%
Function Difficult to Manage or Out of Control 3% 0% 5%
10%
15%
20%
Note: Data is based on 1,410 new members surveyed by The Outsourcing Institute.
Source: Outsourcing Institute, Eighth Annual Outsourcing Index, Vol. 3 No. 4, Winter 2005.

8. More CIOs are Turning to Outsourcing to Stay Competitive
Analysts predict the Application Outsourcing market will continue to have broad uptake and high growth.
Relative Market Adoption
Annual Market Growth
10-12%
Infrastructure
Outsourcing
9-11%
5-8%
Application
Outsourcing
Business Process
Outsourcing
Infrastructure
Outsourcing
Business Process
Outsourcing
Application
Outsourcing

9. Why Outsourcing? Why Now?
Gain Greater Management
Control and Flexibility
Lower Total Cost
of Ownership
Increase Value from
Application Investments
Improve Application Performance

10. What is your Current View on a Sourcing Solution?
Degree of Comfort with a Sense of Loss of Control
Status Quo
Fully leveraged model
Co-Source
Outsource
Onshore
Outsource
Offshore
Insource
Onshore Staff Augmentation
Offshore
Staff Augmentation
Sliding position indicates current client mindset

11. Companies are Bundling Outsourcing Services to Gain Additional Benefits
Bundled Solutions
Today’s
Topics
Finance Services
HR Services
Procurement Services
Learning Services
Customer Contact Services
Enterprise Data Management Services
Industry Specific Services
Application Services
Infrastructure Services

12. Benefits of Bundling Outsourcing Services
Improve competitive positioning: quick saving in cycle times and costs enable companies to compete much more aggressively on price and performance
Simplify the governance process: investing in a relationship with one provider, companies have only one relationship to manage, reducing administrative and contact activity
Reduce redundancies and costs: operating multiple processes from a single platform reduces hardware redundancy, development, maintenance and licensing costs
Improve performance: automating manual processes and activities such as error handling can result in increased productivity and reduced time to compete

13. Application Outsourcing

14. Companies are Bundling Outsourcing Services to Gain Additional Benefits
Bundled Solutions
Today’s
Topics
Finance Services
HR Services
Procurement Services
Learning Services
Customer Contact Services
Enterprise Data Management Services
Industry Specific Services
Application Services
Infrastructure Services

15. Let’s Go On a Cruise!!

16. Accenture’s Application Outsourcing Approach
“Casinos & Lounges”
“Engine Room”

17. Accenture’s Flexible Spectrum of Application Outsourcing Services
Our application outsourcing services are tailored to our client’s needs…

18. High Level Application Support Scope of Services – The “What”
The following diagram illustrates typical application support services.
Client Sponsors and
Leadership
Strategy
Business Processes
Discretionary Application Development Work
(not included as part of basic offering)
New Applications &
Major Releases
New Development Projects
Service Management
Ad-hoc &
Minor Enhancements
Application Support Team
Release & Configuration Management
Vendor
Patches &
Document
Change
Requests
& Control
Management
Non-Discretionary Application Management Support Work
Level 2
Help &
Vendor Support
Level 3
Break / Fix
Support
Oracle
Technical
Support
Telecommunications
Management
WAN
Support
LAN
Support
Infrastructure
Support Team
Level 1
Help Desk
Desktop
Support
Hardware
Support
OS Management
/ Data Center
Operations
Disaster
Recovery

19. Service Management and Business Operations
Distribution of ADM Work Types within Base and Optional Services – The “How”
ADM (Application Development & Maintenance) Work Types occur within base non-discretionary and optional discretionary categories.
Other Dev. Projects :
Separately bid efforts
Business value based
Large Projects
Implementing new business units
Committed Dev. Projects :
Optional Services
Based on committed project spend
Large Projects
Major Enhancements
Software upgrades
New modules / functions implemented
Discretionary :
Capacity based
Schedule / budget measured
Resource based
Coordinated with Non-Discretionary work
Minor Enhancements
Small Change Requests
Ad-hoc User Requests
New Reports & Interfaces D R I v E T O
Non-Discretionary :
Break / Fix Requests
Problem Management
Application Maintenance
Application Patches
Technical Support
Coordinated with Discretionary work
Service based
SLA measured and committed
Fixed price
Workload / cost driver based
Change Control & Documentation
User Questions & Help Desk Support
Base Services $0
Service Management and Business Operations

20. Global Delivery Center Network – Onshore, Nearshore, and Offshore – The “Where”
Core network with 50,000+ people
Deep Client Knowledge, Industry & Platform Skills
Certification – (e.g., India -- CMM Level 5, ISO9001, eSCM, COPC, BS7799, SAS70; Manila -- CMM Level 5, ISO9001, eSCM, COPC)
SLA and metrics-based approach
Extensive range of skills and capabilities
24x7 development and maintenance
Strong technology alliances
Onshore / offshore delivery expertise since 1985

21. “A Day in the Life of” Application Outsourcing
Accenture not only provides day-to-day application support, we also plan for future needs to ensure a long-term solution.
Day to Day
Monthly
Quarterly
Yearly
Service Management
Manage relationships (Retained HR IT organization, PeopleSoft)
Track SLA metrics
Prioritize and approve discretionary work
SLA reporting
Enhancement planning
Demand management
SLA management - measuring, reporting, analyzing, revising
Continuous improvement planning
Annual budget planning
Contract management
Strategic Planning
Application Maintenance & Development
Break Fix work
Minor enhancements
Regulatory/compliance changes
Minor software upgrades
Release management for “bundled” enhancements
Root cause analysis
Proactive patch management
Coordinate software releases with retained IT organization
Major software upgrades (as agreed by plan)
Customer Support
Resolve problems forwarded by Call Center
Prioritize and escalate issues
Training for new rollouts / upgrades
Proactive customer communications
Customer satisfaction survey
Technical Support
Assist in performance tuning
Request database management activities
Report on Performance Metrics
Capacity planning
Assist with database maintenance planning
Assist in planning for changes / upgrades

22. Business Process Outsourcing

23. Companies are Bundling Outsourcing Services to Gain Additional Benefits
Bundled Solutions
Today’s
Topics
Finance Services
HR Services
Procurement Services
Learning Services
Customer Contact Services
Enterprise Data Management Services
Industry Specific Services
Application Services
Infrastructure Services

24. Accenture Outsourcing Portfolio
Copyright © 2007 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

25. Accenture BPO Business Process Model

26. Accenture Finance and Accounting BPO Services What We Do
Redefine
Increased Value
Extended finance capabilities using new competencies, processes and ways of working
Accenture change capability applied to organization transformation
Robust technology solutions provide a platform for growth enabling successful change at lower cost
Clear management information provides clarity of performance initiatives.
Increased Effectiveness
Back-office functions truly become front-office capabilities. Continuous improvement is embedded into the economics
Re-engineer
Evaluation and implementation of best-practice processes
Increased ability of Finance to focus on strategic tasks
Rationalize
Processes adopt best demonstrated levels
Efficient transaction processing
Reduced costs
Increased Efficiency
Reducing the cost and resources to execute finance processes.
Decreased
Cost

27. Scope Of Services Overview
Tier 3 – Business Analytics and Performance Management
Tier 2 – Income Statement, Cash Flow and Balance Sheet Optimization
Tier 1 – Compliance and Recovery Management
Performance
and value
Key metrics focus
Risk/reward sharing
Value-
Added
Services
Record to Report
End-to-end processes
Cost-effective/efficient processes
Variable and flexible pricing
Global scale and complexity
Procure to
Pay
Acquire to
Retire
Order to
Cash
Cash
and
Banking
Core
Services
Document Management
Management Operating System
Application Management
Retained
Finance
Services
Finance Strategy
Organization
Design
Skills
and
Competency
Change
Management
Business case achievement
New finance capabilities

28. Scope Of Services Procure To Pay
Supplier & Spend Analytics
Value-Added Services
Cash Discount Mgmt
Prevention (4+ Way Match)
Fraud Detection
Post Payment Audit
Purchase Requisition
Purchase Order
Goods/ Services Receipt
Invoice Receipt & Capture
Invoice Match
Invoice Approval
Payment Processing
Core Services
Demand & Planning
Contracts & Policies
Stock & Inventory Management
Supplier Management
Exception Resolution
Business Approvals
Payment Approvals
Retained Services
Compliance (Internal + External)

29. Procure to Pay Capability Overview
Service Definition
End-to-end transaction processing services from supplier to customer including 3rd party management
Analytics and insight-driven value-added services such as compliance and analytics for supplier mgmt
Process refinement and optimization services such as enhanced PO compliance, reduced exceptions and supplier payment cycle time
Value Proposition
Automated, streamlined and industrialized Procure-to-Pay transaction capability
Focus on driving value over and above the transaction itself by deploying proprietary assets and solutions. For example, profit recovery and analytics
Integration of invoice-to-pay back end process with front end procurement
Assets & Solutions
Profit recovery & analytics services and tools including prevention capability.
Accenture Vendor Payment Services (VPS) – a modular suite of technology assets including integrated document management solution, electronic invoicing, Intelligent character recognition, electronic workflow and vendor self help
Metrics
20m+ AP invoices processed per annum with a combined invoice value of >$100bn
Supplier invoices received from >30 countries
>10m imaged documents per annum across 50 countries served
60% of our clients use our VPS asset over and above their ERP systems
Experience & Credentials
>90% of Accenture Finance and Accounting BPO contracts have a payables component. Example results include:
~$30m recovered through AP contract compliance
30% improvement in invoices paid on time to take advantage of early payment discounts
Improved invoice data entry productivity by 100%
Continuous Improvement
Increased PO compliance
Reductions in duplicates, exceptions and overpayments e.g. $2m reduction in cash loss
Standardized controls across countries and business units
Reduction in supplier cycle times to better manage DPO e.g. 65% reduction in invoices on hold – equivalent to freeing up $18m

30. Accenture Delivery Centre Network Regional Management Nodes
Europe
Prague, Bratislava,
Warsaw, Bucharest
China
Shanghai and Dalian
Rest of
Europe
Americas
UK/I
India
Asia-Pacific
North America
Mauritius
India
Bangalore and
Chennai
Manila

31. Risks & Mitigating Strategies - Discussion

32. Areas of Minimal Concern
What are the perceived barriers to outsourcing? (READ AS AREAS OF RISK!!!)
Uncertain geopolitical conditions require buyers to think more strategically and weigh risk versus reward when choosing how and where work is performed.
Geopolitical Concerns
Employers more candid with employees re: outsourcing endeavors; Finding new, higher-value roles for employees who would have been displaced
Employee Backlash
Fear about negative customer reaction and publicity continues to keep buyers from publicly discussing outsourcing endeavors; potentially increases tendency for employee backlash
Customer Reaction
Negative Publicity
Tends to be more of a concern on the provider-side due to pending/recently passed state and local legislation in the US that prohibits outsourcing activities under certain conditions
Legislation
Severance Costs
A sound human capital management strategy is required in order to control costs and mitigate morale issues
Political Pressure
Areas of Minimal Concern
Few buyers are worried about competitor criticism (because everyone is doing it), union pressures (because most IT jobs are non-unionized) and market reaction (because it can be a financially sound decision). Few buyers expressed concerns about political pressure, though this will likely increase as a concern with the approach of the U.S. Presidential campaign in 2008.
Market Reaction
Union Pressure
Competitor Criticism
2005
2006
Low
Level of Concern
High
Diamondcluster Global ITO Study.

33. Risks and Mitigation – Group Discussion
Area of Risk
Mitigation Strategy 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. 6.

34. Risks and Mitigation - Examples
Explanation
Mitigation Approach
Transition and operations management
Ability to ensure timely set up of new capability based on defined timelines; including trained teams, management and infrastructure
Adhere to detailed, defined implementation plan
Conduct early recruitment of key management personnel with relevant experience
Pre-select infrastructure vendor(s) based on prior experience and track record
Business continuity
Ability to avoid disruption of business operations and achievement of SLAs
Ensure redundancy and contingency is built into the planned infrastructure
Plan for an alternate connectivity solution
Retain limited onshore capability and improve the capacity through process re-engineering
Geopolitical
Ability to maintain a stable government which supports business growth at the service delivery location
Perform up-front due diligence on political risks
Ensure ongoing tracking of political issues
Multiple Delivery Centers
Morale of employees at existing operations
Ability to sustain the degree of ongoing commitment and stability of continued ongoing opportunities at current location
Ensure adequate, ongoing communication with all stakeholders
Hold one-on-one discussions with leadership of the current operations
Maintain targeted and positive communication to the market

35. Questions?