1. Master Outsourcing (Or Else!) By Beth Perdue Argosy, Inc.293 K StreetBoston, MA 02127 Tel. 617-269-1677beth@argosy-inc.com www.argosy-inc.com

2. 2 Topics 1.Trends and facts 2.Top 10 risks 3.Outsourcing contracts 4.Relationships 5.In closing…

3. 3 Trends and Facts 80% of U.S. Companies discuss 40% complete pilot program or more Offshore dominant – grows 20%+ annually Source: Computerworld, Gartner Group Topic 1

4. 4 Hidden Costs Supplier searching Contracting Contract management Post-outsourcing reintegration Who tracks them?

5. 5 Thinking of Outsourcing? Not necessarily cheaper At least, not right away

6. 6 Downside Big- name companies bringing it back –Dell, Lehman Brothers, Conseco Still have offshore operations

7. 7 Have You Ever Seen a Grown Man Cry?

8. Top 10 Risks Topic 2

9. 9 1. Cost-reduction Expectations Top 10 Risks

10. 10 Top 10 Risks 2. Data Security/ Protection

11. 11 How Patient Files Got to Pakistan

12. 12 Personal Info Outsourced Abroad Medical records Bank recordsDebt records Credit historiesBrokerage records Social Security numbers Tax documentsInsurance records Credit card numbers

13. 13 Where It Goes

14. 14 Meet Ankit

15. 15 Why More Risk Overseas? Security not priority Using small/mid-sized firms Software piracy means few patches Lack tough laws and legal tools

16. 16 Take Nothing For Granted Penetration testing Background checks Device restrictions Visit, manage, audit

17. 17 3. Process Discipline Top 10 Risks

18. 18 You can learn a lot from fast food

19. 19 Start With Out-tasking Keep command, control, coordination Assign well-defined tasks

20. 20 4. Intellectual Property Drain Top 10 Risks

21. 21 5. Supplier Failure to Deliver Top 10 Risks

22. 22 6. Scope Creep Top 10 Risks

23. 23 Top 10 Risks 7. Government Oversight/ Regulation

24. 24 Top 10 Risks 8. Border Concerns

25. 25 Top 10 Risks 9. Turnover of Key Personnel

26. 26 Top 10 Risks 10. Knowledge Transfer

27. Outsourcing Contracts Topic 3

28. 28 When the only tool you own is a hammer, every problem begins to resemble a nail.

29. 29 Incomplete by Nature Assets Uncertainty & measurement Frequency Time & costs Outsourcing Contracts

30. 30 Prices and Adjustments Contract length Cost-savings program or index Outsourcing Contracts

31. 31 Prices and Adjustments Benchmarking Baselining Multiple suppliers Outsourcing Contracts

32. 32 This here's Miss Bonnie Parker. I'm Clyde Barrow... We rob banks.

33. 33 Intellectual Property Rights Transferred licenses –Software developed by supplier –Processes developed by supplier Transfer to another supplier Outsourcing Contracts

34. 34 Licenses Don’t Travel Well

35. 35 Is It Your Software or the Outsourcer’s? Either way can work Flexible licenses Outsourcing Contracts

36. 36 Get Better Licenses Asset management Know your opponent Timing Outsourcing Contracts

37. 37 Contract Structure 1.Framework contract 2.SLAs –By geography and business unit, then service –By service –Degree of completion Outsourcing Contracts

38. 38 Contract Structure 1.Degree of exclusivity Sole supplier Preferred supplier 2.Liability 3.Termination Bankruptcy,force majeure, default Change in ownership Business needs Outsourcing Contracts

39. 39 Metrics Keep an eye on offshore practices Service (customer) Process (supplier) Outsourcing Contracts

40. 40 Minimize Risk Objectives Meeting structures –Keep minutes Disputes Outsourcing Contracts

41. Relationships Topic 4

42. 42 Let’s Call the Whole Thing Off

43. 43 Bringing It Back Provider – –Had financial difficulties –Failed to deliver on commitments Buyer consolidated vendors Relationships

44. 44 Change Suppliers Knowledge Documentation Transfer process Relationships

45. 45 Business Continuation Preserve price & service Unilateral right Relationships

46. 46 Transition Cooperation Efforts Disclosure Licenses & agreements Relationships

47. In Closing… Topic 5

48. 48 Selective Outsourcing Big risks –Requirements –Specifications –Business smarts Make outsourcing a core competency In Closing…

49. 49 Satisfaction Isn’t Guaranteed Inflated expectations –Cost savings –Productivity You don’t get what you expect, you get what you inspect In Closing…

50. 50 “I haven’t failed. I’ve found ten thousand ways that don’t work.”