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CONFIDENTIAL January 2012
Public Sector Outsourcing: Perception, Reality & Case Studies
Outsourcing & ProcessImprovement In The Public SectorOutsourcing & ProcessImprovement In The Public Sector
Christian HesselhojManaging DirectorGOX GlobalT: +44 (0) 207 993 8991W: www.goxglobal.comE: chesselhoj@goxglobal.com
Richard MetzExecutive DirectorGOX GlobalT: +44 (0) 207 993 8991W: www.goxglobal.comE: richard.metz@goxglobal.com
A True Outsourcing Story: The Public’s Perception
Approximately 10 years ago, a local council outsourced its most visible services
…Services that every resident sees, depends heavily upon, and would be up in arms iftaken away – waste management & environmental services
…A long-term contract was awarded to a large outsourcer that specialises in these services,and their Logo is on every truck and machine – highly visible to all council residents.
…This company is not English… it’s not even from the Commonwealth. It’s the French-based Veolia Environmental Services
…Residents of this council are very pleased with these services, and appear to have noconcern about how these services are sourced and delivered.
CONFIDENTIAL Outsourcing Means Getting More With Less Or The SameOutsourcing Means Getting More With Less Or The SameThe Public is Reminded Daily that the Public Sector Outsources – To Their BenefitThe Public is Reminded Daily that the Public Sector Outsources – To Their Benefit
Approximately 10 years ago, a local council outsourced its most visible services
…Services that every resident sees, depends heavily upon, and would be up in arms iftaken away – waste management & environmental services
…A long-term contract was awarded to a large outsourcer that specialises in these services,and their Logo is on every truck and machine – highly visible to all council residents.
…This company is not English… it’s not even from the Commonwealth. It’s the French-based Veolia Environmental Services
…Residents of this council are very pleased with these services, and appear to have noconcern about how these services are sourced and delivered.
Practicing What We Preach… Our Outsourcing Landscape
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
Tax , Accountancy,Payroll
(Cambridgshire)
Tax , Accountancy,Payroll
(Cambridgshire)
Sales & MarketingAdvisory
(Wiltshire)
Sales & MarketingAdvisory
(Wiltshire)
eMail, Storage, BackUps
(Cloud)
eMail, Storage, BackUps
(Cloud)
Customer RelationshipManagement
(Cloud)
Customer RelationshipManagement
(Cloud)
Core BusinessCore Business Business ProcessesBusiness ProcessesTechnologyTechnology
CONFIDENTIALMaintain a stable business operation; maximise investment in core competenciesMaintain a stable business operation; maximise investment in core competencies
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
Sales & MarketingAdvisory
(Wiltshire)
Sales & MarketingAdvisory
(Wiltshire)
Web Development &Testing(India)
Web Development &Testing(India)
eMarketing(London)
eMarketing(London)
Customer RelationshipManagement
(Cloud)
Customer RelationshipManagement
(Cloud)
Website Management& Hosting
(Birmingham)
Website Management& Hosting
(Birmingham)
Technology ProjectResources
(UK, Europe, India)
Technology ProjectResources
(UK, Europe, India)Customer Call Handling
(London)Customer Call Handling
(London)
Specialist Advisors(Greater London)
Specialist Advisors(Greater London)
And Why We Chose To Outsource…
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
Tax , Accountancy,Payroll
(Cambridgshire)
Tax , Accountancy,Payroll
(Cambridgshire)
Sales & MarketingAdvisory
(Wiltshire)
Sales & MarketingAdvisory
(Wiltshire)
eMail, Storage, BackUps
(Cloud)
eMail, Storage, BackUps
(Cloud)
Customer RelationshipManagement
(Cloud)
Customer RelationshipManagement
(Cloud)
Core BusinessCore Business Business ProcessesBusiness ProcessesTechnologyTechnology
BetterBetterCheaperCheaper
FlexibilityFlexibility
BetterBetterCheaperCheaper
BetterBetterCheaperCheaper
BetterBetterSAVEMONEY TO
INVEST HERE
SAVEMONEY TO
INVEST HERE
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
IN-HOUSE GOX TEAM
Consultants & Strategists
Programme/Project Managers
Business Analysts
1 Marketing & FinanceSpecialist
Sales & MarketingAdvisory
(Wiltshire)
Sales & MarketingAdvisory
(Wiltshire)
Web Development &Testing(India)
Web Development &Testing(India)
eMarketing(London)
eMarketing(London)
Customer RelationshipManagement
(Cloud)
Customer RelationshipManagement
(Cloud)
Website Management& Hosting
(Birmingham)
Website Management& Hosting
(Birmingham)
Technology ProjectResources
(UK, Europe, India)
Technology ProjectResources
(UK, Europe, India)Customer Call Handling
(London)Customer Call Handling
(London)
Specialist Advisors(Greater London)
Specialist Advisors(Greater London)
They can provide a better service thanwe could in house
They can provide a better service thanwe could in house
It is cheaper than us trying to provide theequivalent service in house
It is cheaper than us trying to provide theequivalent service in house
We have more flexibility (e.g. to increaseor decrease amount of service)
We have more flexibility (e.g. to increaseor decrease amount of service)
Legend:
BetterBetterCheaperCheaper
FlexibilityFlexibility
BetterBetter
CheaperCheaperFlexibilityFlexibility FlexibilityFlexibility
FlexibilityFlexibility
BetterBetterFlexibilityFlexibility
BetterBetterFlexibilityFlexibility
CheaperCheaperFlexibilityFlexibility
SAVEMONEY TO
INVEST HERE
SAVEMONEY TO
INVEST HERE
Myth: We Need To Outsource Everything
The Myth…
Outsourcers won’t take us seriously
We won’t get a good price on smaller deals
It’s impossible to manage a partiallyoutsourced function
CONFIDENTIAL You Are The Customer. You Call The Shots.You Are The Customer. You Call The Shots.
The Reality…
Outsourcers want public sector business
Successful outsourcing programmes can beaggressive or incremental.
Contract growth can and should be tied toachieving agreed financial targets
Myth: Outsourcing Reduces Flexibility
The Myth…
Outsourcing contracts are rigid – every change willcost a bundle
Outsourcing contracts need to be for 5 years at aminimum
Once we’ve outsourced a service, there’s no goingback
CONFIDENTIALOutsourcing is not a “necessary evil” – it’s a powerful tool in lean and wealthy timesOutsourcing is not a “necessary evil” – it’s a powerful tool in lean and wealthy times
The Myth…
Outsourcing contracts are rigid – every change willcost a bundle
Outsourcing contracts need to be for 5 years at aminimum
Once we’ve outsourced a service, there’s no goingback
The Reality…
Contracts are becoming ever shorter, smaller andmore flexible
It is the client’s right (and imperative) to maintaincontrol of the relationship
Outsourcing enables true capacity management(ramping services up or down without requiringinvestment)
Myth: Outsourcing Means Job Elimination
The Myth…
Outsourcing means that jobs will leave the country
Outsourcing means that we will need to fire large groupsof employees
Outsourcing represents a net decrease in jobs
The Reality…
Most, if not all, back office services can be outsourced forsavings, flexibility and/or quality inside the UK
Outsourcing can be very successful even if there is aparadigm that no employee be forcefully made redundant
Outsourcing, if anything, represents a net increase in jobs –people are still delivering services; their employers are simplydifferent.
CONFIDENTIAL Automation Eliminates Jobs – Outsourcing Improves ThemAutomation Eliminates Jobs – Outsourcing Improves Them
The Reality…
Most, if not all, back office services can be outsourced forsavings, flexibility and/or quality inside the UK
Outsourcing can be very successful even if there is aparadigm that no employee be forcefully made redundant
Outsourcing, if anything, represents a net increase in jobs –people are still delivering services; their employers are simplydifferent.
On The Perception Of Outsourcing…
Which is more negative?
Outsourcing certain HR & Payroll functions to save 20- 30%
Closing public libraries or reducing service center hours
Which is more negative?
Moving a back office function from Central London to alower cost area of Britain to save 60% on property costs and 20– 25% on labor costs
Raising council taxes to make up the shortfall
CONFIDENTIAL Outsourcing Means Getting More With Less Or The SameOutsourcing Means Getting More With Less Or The SameOutsourcing Could Be The Key To Maintaining Positive Public Perception!!Outsourcing Could Be The Key To Maintaining Positive Public Perception!!
Which is more negative?
Moving a back office function from Central London to alower cost area of Britain to save 60% on property costs and 20– 25% on labor costs
Raising council taxes to make up the shortfall
Which is more negative?
Outsourcing to a company that specialises in waste removaland environmental cleaning
Reducing the frequency of waste collection services
Outsourcing Key Learnings & Takeaways
Don’t fear being “too small” or needing to “outsource the lot” to get a favourable deal – outsourcing can be verysuccessful regardless of deal size.
Vendor Management: You have the ability to get a far better service than a similarly sized client by taking positivecontrol of the relationship. Further, healthy outsourcing relationships require continuous improvement throughouttheir life cycles and extensive re-examination every few years.
Contract Flexibility: Even large outsourcing contracts can be designed to be flexible in meeting inevitable thoughsomewhat unpredictable changes in requirements.
It’s About The People: It is better to have an “A-Team” from a “B-Vendor” than the “B-Team” from an “A-Vendor”.
It’s OK To Trust Your Vendor – Though Beware Dependency: Despite the legal world’s best efforts, contractscannot dictate a successful relationship. A vendor and client in a mutually strong (i.e. not dependent) relationshipwill be able to succeed without the heavy hand of the contract.
Distributed Governance – Performance Management Down The Company Ladder: Engage and empower peopleto influence (or at least freely report on) vendor performance from the top down. Most issues arise at the projectmanager or individual contributor level – and can spin out of control before the issue is addressed at the relationshipmanagement level.
CONFIDENTIAL
Don’t fear being “too small” or needing to “outsource the lot” to get a favourable deal – outsourcing can be verysuccessful regardless of deal size.
Vendor Management: You have the ability to get a far better service than a similarly sized client by taking positivecontrol of the relationship. Further, healthy outsourcing relationships require continuous improvement throughouttheir life cycles and extensive re-examination every few years.
Contract Flexibility: Even large outsourcing contracts can be designed to be flexible in meeting inevitable thoughsomewhat unpredictable changes in requirements.
It’s About The People: It is better to have an “A-Team” from a “B-Vendor” than the “B-Team” from an “A-Vendor”.
It’s OK To Trust Your Vendor – Though Beware Dependency: Despite the legal world’s best efforts, contractscannot dictate a successful relationship. A vendor and client in a mutually strong (i.e. not dependent) relationshipwill be able to succeed without the heavy hand of the contract.
Distributed Governance – Performance Management Down The Company Ladder: Engage and empower peopleto influence (or at least freely report on) vendor performance from the top down. Most issues arise at the projectmanager or individual contributor level – and can spin out of control before the issue is addressed at the relationshipmanagement level.
Appendix A – Case Studies
CONFIDENTIAL
Appendix A – Case Studies
Lean & Digitise
Case Summary
Public sector organisation with IT entirelymanaged in-house
Decision made to move to a service basedsolution
Complete overhaul and leaning of processes
Virtualization of all servers and PC
Migration of in-house computing services toexternal outsourcers, including:
- ERP- email services- Disaster Recovery
Controlled migration ensured virtually noimpact to the business
Key Points & Learnings
Open to change
Training is vital
Need a strong Project Management Office
Increased security
Communication .. Communication ..Communication
CONFIDENTIAL Reduced Overall IT Budget By 40%Reduced Overall IT Budget By 40%
Case Summary
Public sector organisation with IT entirelymanaged in-house
Decision made to move to a service basedsolution
Complete overhaul and leaning of processes
Virtualization of all servers and PC
Migration of in-house computing services toexternal outsourcers, including:
- ERP- email services- Disaster Recovery
Controlled migration ensured virtually noimpact to the business
Key Points & Learnings
Open to change
Training is vital
Need a strong Project Management Office
Increased security
Communication .. Communication ..Communication
Key Facts
Total Project Time: 12 months
Investment Cost: (£400,000)
• Payback Period – Less Than 12 Months
• Annualized Savings: £700,000
Key Process Improvements
Lean Processes and Automation -- Procurement
Case Summary
Manufacturing and Service unit of a largemultinational company
Complete revision of procurement processes,from requirements gathering to cashdisbursement
End to end approach:- electronic bidding- exchange of documents with suppliers- document de-materialization- spend analysis
Multi-generation project, starting with quickwins
Key Points & Learning
Set up a strong Committee
Have an excellent Project Leader
Classify your purchases
Go in steps, but define the full architecture atthe beginning
Involve key suppliers from the beginning
CONFIDENTIALCombining Traditional Process Improvement With Digitisation For Maximum ResultsCombining Traditional Process Improvement With Digitisation For Maximum Results
Case Summary
Manufacturing and Service unit of a largemultinational company
Complete revision of procurement processes,from requirements gathering to cashdisbursement
End to end approach:- electronic bidding- exchange of documents with suppliers- document de-materialization- spend analysis
Multi-generation project, starting with quickwins
Key Points & Learning
Set up a strong Committee
Have an excellent Project Leader
Classify your purchases
Go in steps, but define the full architecture atthe beginning
Involve key suppliers from the beginning
Key Facts
Total Project Time: 9 months
Investment Cost: (£200,000)
• Payback Period – Less Than 6 Months
• Annualized Savings: £500,000
Key Process Improvements
Costs Savings – Cloud Computing
Case Summary
Organisation with approximately 10,000computing end users
Migration of in-house computing services(MS Exchange-based) to Google BusinessApplications
Services included eMail, file sharing andstorage.
Current technology supported fully in-house,requiring maintenance, support, power,security and ongoing kit investment costs
Decision made to move to a service “cloud”based solution
Controlled migration ensured virtually noimpact to the business
Key Points & Learning’s
Small but meaningful investment in planningand sourcing
3 to 5 year financial forecasting toincorporate “step costs” such as new hardwareand license costs
Followed clear industry direction
CONFIDENTIAL 75% Cost Reduction; Better Service; No Unexpected Costs75% Cost Reduction; Better Service; No Unexpected Costs
Case Summary
Organisation with approximately 10,000computing end users
Migration of in-house computing services(MS Exchange-based) to Google BusinessApplications
Services included eMail, file sharing andstorage.
Current technology supported fully in-house,requiring maintenance, support, power,security and ongoing kit investment costs
Decision made to move to a service “cloud”based solution
Controlled migration ensured virtually noimpact to the business
Key FactsTotal Project Time: 12 Months Investment Cost: (£250,000)
• Payback Period – Less Than 3 Months• Annualized Savings: £1,400,000 (Costof Approximately £40Per User instead of£180)
Business Disruption: Virtually Zero
Cost Savings – Infrastructure Outsourcing
Case Summary
Local UK Housing Association
35,000 properties under management
Annual procurement spent of £150MM
80,000 customers
Needed a partner to help update & improvethe entire Legacy Infrastructure
1. Hosted data centre
2. VOIP
3. Service Desk
4. Networking
Key Points & Learning’s
Minimal investment needed in infrastructureas provider is delivering a service
Return of investment was achieved in lessthan 12 months
Access and usage of latest technology forphone, networks and data backup
CONFIDENTIAL Focus On Your Customer Needs….Don’t Try To Be Technology CompanyFocus On Your Customer Needs….Don’t Try To Be Technology Company
Case Summary
Local UK Housing Association
35,000 properties under management
Annual procurement spent of £150MM
80,000 customers
Needed a partner to help update & improvethe entire Legacy Infrastructure
1. Hosted data centre
2. VOIP
3. Service Desk
4. Networking
Key Facts
Contract Length: 36 Months
Investment Cost: (£250,000)
• Payback Period – Less Than 9 Months
• Annualized Savings: £400,000
Business Disruption: Virtually Zero
Cost Savings – Technology Transformation
Case Summary
Internal Programme overhaul – completesystem & technology refresh
Lacked several necessary skills in-house
Sought an outsourcing arrangement tocompliment & build the capabilities of theinternal team.
Core Requirements were:
1. Lower cost
2. No Long-Term Dependency
3. Team Scalability & Flexibility
Key Points & Learning’s
Fully integrated near-shore team in less than16 weeks
Investment of £50k in setting up theengagement
Supplier & client shared contractual risk
CONFIDENTIAL Client Used Outsourcer To Build Stronger Competencies In-HouseClient Used Outsourcer To Build Stronger Competencies In-House
Case Summary
Internal Programme overhaul – completesystem & technology refresh
Lacked several necessary skills in-house
Sought an outsourcing arrangement tocompliment & build the capabilities of theinternal team.
Core Requirements were:
1. Lower cost
2. No Long-Term Dependency
3. Team Scalability & Flexibility
Key Facts
Contract Length: 12 Months
Investment Cost: (£300,000)
• Payback Period – Less Than 9 Months
• Annualized Savings: £365,000
IT Leader is now promoting this deliverymodel across 4 other businesses
Payroll Outsourcing
Case Summary
5,000 Employee Mid Market Business
Payroll Process Automation & Outsourcing
Automated Payroll System Provisioned ByThe Outsourcer (Oracle Based)
Utility Based Pricing For Automated Activities
Ongoing Investment Factored Into Run RatePricing
Key Points & Learnings
Outsourcing For A Better Process AND CostReductions
Close Client Involvement During TheTransition Process Was Essential
Key Facts
Total Project Time: 3 Month Transition;Ongoing
Investment Cost: Internal Effort / Training(est. £75,000)
• Payback Period – Less Than 4 Months
• Annualized Savings: £350,000
CONFIDENTIAL Fixing The Process As They Outsourced; 50% Ongoing Cost ReductionFixing The Process As They Outsourced; 50% Ongoing Cost Reduction
Case Summary
5,000 Employee Mid Market Business
Payroll Process Automation & Outsourcing
Automated Payroll System Provisioned ByThe Outsourcer (Oracle Based)
Utility Based Pricing For Automated Activities
Ongoing Investment Factored Into Run RatePricing
Key Facts
Total Project Time: 3 Month Transition;Ongoing
Investment Cost: Internal Effort / Training(est. £75,000)
• Payback Period – Less Than 4 Months
• Annualized Savings: £350,000
Local Council Study: Liverpool City Council
Case Summary
Liverpool City Council’s Adult Social Caredepartment manages the delivery of social careservices to thousands of adults and olderpeople in the Liverpool local authority area
Disparate IT systems and poor reporting ofcritical data
Decision made to outsource reporting to adata integrator specialist
Complete overhaul of databases & reportingmodel
Delivered real-time data analytical capabilities
Migration of in-house IT reporting services toexternal outsourcers, including:
• Data Modeling
• Reporting
Key Points & Learnings
Manual efforts reduced so staff can spendtime on valuable data analysis
Data quality improvement due to automation
Increased security
Improved flexibility……reports can be run on-demand or scheduled
CONFIDENTIAL Significant improvements in productivity for operational staffSignificant improvements in productivity for operational staff
Case Summary
Liverpool City Council’s Adult Social Caredepartment manages the delivery of social careservices to thousands of adults and olderpeople in the Liverpool local authority area
Disparate IT systems and poor reporting ofcritical data
Decision made to outsource reporting to adata integrator specialist
Complete overhaul of databases & reportingmodel
Delivered real-time data analytical capabilities
Migration of in-house IT reporting services toexternal outsourcers, including:
• Data Modeling
• Reporting
Key Points & Learnings
Manual efforts reduced so staff can spendtime on valuable data analysis
Data quality improvement due to automation
Increased security
Improved flexibility……reports can be run on-demand or scheduled
Key Facts
Total Project Time: 12 months
Investment Cost: (£150,000)
• Payback Period – Less Than 12 Months
Key Reporting Improvements
Local Council Study: Lancashire County Council
Case SummaryLancashire County Council was faced withincreasing pressure to provide many diverseand detailed performance reports to centralgovernment .
Data stored in many different systems
4-5 days of querying in getting to the correctdata (very slow and cumbersome)
Centralise all information storage, and toovercome the many data quality issues
Multi-generation project, starting with quickwins
Key Points & Learning
Set up a strong Data Committee
Have an excellent Project Leader
Go in steps, but define the data model & fullreporting architecture at the beginning
Involve specialist BI suppliers from the beginning
CONFIDENTIAL Combining Best Practice BI Methodologies For Maximum ResultsCombining Best Practice BI Methodologies For Maximum Results
Case SummaryLancashire County Council was faced withincreasing pressure to provide many diverseand detailed performance reports to centralgovernment .
Data stored in many different systems
4-5 days of querying in getting to the correctdata (very slow and cumbersome)
Centralise all information storage, and toovercome the many data quality issues
Multi-generation project, starting with quickwins
Key Facts
Total Project Time: 9 months
Investment Cost: (£200,000)
• Payback Period – Less Than 6 Months
Dramatic improvement in its ability to providemanagement information, both for centralgovernment and also for local management andoperational staff
Appendix BMethodology & Testimonials
CONFIDENTIAL
Appendix BMethodology & Testimonials
LEAN Approach
TargetMetricTargetMetric
LEANProcessLEANProcess
OptimalTechnology
OptimalTechnology
RightPeopleRightPeople
• CostReduction• Growth• Retention• Quality
• Organization• Cost• Skills• Sourcing
• Business Alignment• Complexity• Cycle Time• Defects• Non Value Added• Wait Time
• Cost• Sourcing• Complexity• Performance• Risk
CONFIDENTIAL
• CostReduction• Growth• Retention• Quality
Choose the right metric, establish an objective and improve the underlying people,process and technology to reach your goal.
• Organization• Cost• Skills• Sourcing
• Business Alignment• Complexity• Cycle Time• Defects• Non Value Added• Wait Time
• Cost• Sourcing• Complexity• Performance• Risk
Outsourcing Approach
Governance & ExitGovernance & ExitIntegrationIntegrationSourcingSourcingPlanningPlanning
Understand Detailed CostBasis (Benchmarking)
Review Prior Experiences
Review (Selected) IT AreasFor Outsourcing Suitability
Business Strategy
People
Processes
Technology
Create Financial Model
Agree On Targets &Expected Cost Reduction
Three Year Sourcing &Operational Roadmap
Run Sourcing Process
Introduce KeySuppliers
Delivery Model
Interviews
Negotiation
Establish Contracts
Risk Mitigation Planning
Governance Planning
Prepare Internal Teams
Onboard OutsourcedTeam
Project Management
Progress Along Roadmap
Supplier RelationshipManagement
Core OperationalGovernance
CONFIDENTIAL
Understand Detailed CostBasis (Benchmarking)
Review Prior Experiences
Review (Selected) IT AreasFor Outsourcing Suitability
Business Strategy
People
Processes
Technology
Create Financial Model
Agree On Targets &Expected Cost Reduction
Three Year Sourcing &Operational Roadmap
Run Sourcing Process
Introduce KeySuppliers
Delivery Model
Interviews
Negotiation
Establish Contracts
Risk Mitigation Planning
Governance Planning
Prepare Internal Teams
Onboard OutsourcedTeam
Project Management
Progress Along Roadmap
Supplier RelationshipManagement
Core OperationalGovernance
Project BasedOutsourcing
Project BasedOutsourcing
Augmentation /Replacement
Augmentation /Replacement Core Team +
ProjectsCore Team +
Projects
Service BasedService Based
Work-Unit Based(Utility)
Work-Unit Based(Utility)
Multi-sourcedMulti-sourced
In HouseIn House
Outcome BasedAgreements
Outcome BasedAgreements
Single SourcedSingle Sourced
Sourcing - Choosing The Right Service Model
Core Competencies
Sensitivity Of IP
Complexity Of Systems
Process Maturity
Outcome BasedAgreements
Capacity Requirement Forecast
Predictability Of Workload
Financial Considerations
Business Culture
There Is No “Best” Model – Every Situation Is DifferentThere Is No “Best” Model – Every Situation Is Different
Deep Expertise Supported By Proven Tools & Processes…
As-Is Process Map To Be Process Map
Risk & Mitigation Analysis Governance PlanOverview
The purpose of the Integration & Governance Recommendation: GOX can only provide guidanceand a high level framework, it is up to CLIENT & VENDOR to define a productive workingrelationship in the coming weeks in the kick-off meetings. This document includes the following:
1. Key steps for integration in April and May 2011 (slide 3-6)
2. The team structure and dynamics for communication (slide 7)
3. Understand the escalation paths for the engagement (slide 8)
• Failure to partner in the initial 8 weeks: Ensure successful kick-off and team building event in both Minskand London in April/May 2011
• Unfavourable contract terms negotiated in April 2011: GOX will ensure both CLIENT & VENDORhave reasonable terms included in MSA and SOW
• VENDOR not knowledgeable about customer's business: Architect and senior developers spend timeonsite learning it from the team in addition to CLIENT regular coaching VENDOR team on CLIENTbusiness
• Deficient process or scope management: John B. and Oleg work on finalising scope in April 2011
• Poorly defined roles and responsibilities: This is joint responsibilities between VENDOR and CLIENT toclearly define, document and assign roles & responsibilities in the kick off meetings. Make sure people arebought into the plan & vision.
Integration Pitfalls To Avoid
CONFIDENTIAL Page 2
Integration
CONFIDENTIAL Page 3
Personnel Management Goals:
• This is a high level personnel management strategy that is very similar to those used in managing in-houseresources. We recommend a combination of:
• Process (goal setting, periodic performance reviews, 1 on 1 and 360 (resource rates manager) sessions)
• Motivation (offering training & certification, role rotations, on-site visits or short-term work placements,financial incentives)
• Interpersonal (designating in-house sponsors, team building, inclusion and communication).
Team Management Goals:
• Designated key resources have been interviewed, vetted and selected by CLIENT. (Alex, Sergey, Yaroslav)
• Empowerment – reinforcing the right level of empowerment within the CLIENT and the outsourcedteam. We need to show control and technical/process skill to discourage “cowboys”, while at the same timeencouraging (and rewarding) creative contribution.
• Openness – this is of particular importance, and must be addressed at all levels. Issues and concerns oftenstart at the execution level, but do not manifest themselves until they’ve mushroomed and causedmanagement to get involved. CLIENT will foster an environment with absolutely no barriers tocommunication or collaboration. Daily stand up meetings will help address this point.
• Loyalty – Ultimately, we look to develop a team that identifies as strongly with CLIENT (if not morestrongly), than they do with the outsourcer. This will reduce the risk of turnover, increase productivity, andhelp promote openness. VENDOR has a retention rate of 90% which is high by local standards.
Integration
CONFIDENTIAL Page 4
Identifying Key Players:
A key player like Oleg will be used to get top resources for CLIENT . Further, Michael (Owner) willbe involved from an escalation perspective to ensure on time delivery and within agreed cost estimate.
• Communication & Work Culture: Belarus culture is about being open and direct and this suitsCLIENT.
• Perception of authority: They all report to John and Oleg.
• Communication styles and frequencies: Daily meetings and clearly assigned responsibilities (TBD ingreater detail in upcoming kick off meeting in April)
• Leadership styles: Ask team if they prefer hands on micro management or to be left alone. It could bethat the CLIENT team requires a different style from the VENDOR team (more sugar coating)
• CLIENT and VENDOR values (Are they shared and closely aligned). This has to be monitored weekly
Integration
CONFIDENTIAL Page 5
Tactical Management & Technology:
• Shift management – ensuring that differences in time zones do not cause unnecessary delays orlower productivity.
• Collaboration tools – effectively using Skype, Migogo and leverage as many current tools used byboth teams.
• Effective communication – How to make chats/emails/conference calls and meetings moreefficient. When working with Belarus, be clear and concise and confirm understanding whenassigning actions.
Integration Timelines
CONFIDENTIAL Page 6
Key Steps and Timeline:
• Finalise team hires 2nd week of April
• Team workshop and kick off meetings: April 18th Minsk
• Organise onsite visits for Alex (Architect) for 2 weeks: April 25th to May 6th
• Fully integrated team by May 13th
• Team in a successful operating rhythm by June 1st
How to measure success:
• Define success criteria for project & detailed measurable goals for first sprint (Get approval and buy-in from both CLIENT and VENDOR Team & management
• Did the team meet all deliverables? What can be improved for the next sprint?
• Continuous improvement to the operating model ask both CLIENT and VENDOR team forregular feedback
XXXXAlex XXXX
XXXXXXXX
Sergey
Monitoring and contractual
Sprint and milestone communication
1 QA
Yaroslav 1 Dev
Alex P
Sean Ilyas
Remy Bradley
Jiten
Daily project communicationIssue & Bug TrackingCode Review systemBuild toolsContinuous IntegrationSupport andconsultancy
EmailSkypeScreen Sharing: Skype, MikogoPhone & Mobile
Team Structure and Governance ModelGovernance Plan (Continued)
CONFIDENTIAL Page 8
Escalation Paths Explained
• Final decision is with J XXX / XXX for scope definition
• If a milestone/sprint date is not met- Escalate to John/Oleg- John/Oleg communicate to James and Michael- Identify root cause for failure- Find solution for next release to avoid repeating mistake
• If there are any concerns with existing contractual obligations set up conference call betweenxxx/xxxxxx
• If it is not possible to resolve issues via conference call plan for onsite work-out at CLIENTLondon
• IT projects are about people, contracts only provide a guidance, so ensure to manage by influencingpeople and not by referring to contracts
Deep Expertise Supported By Proven Tools & Processes…
Stakeholder Analysis & Action PlanTechnology Decision Matrices
CONFIDENTIAL
-£400,000
-£300,000
-£200,000
-£100,000
£0
£100,000
£200,000
£300,000
£400,000
-£80,000
-£60,000
-£40,000
-£20,000
£0
£20,000
£40,000
£60,000
£80,000
£100,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35
Cumulative Savings Net Savings Total Cost Total Savings
PaybackInvestment Phase
*Cumulative Savings On Left Axis, X-Axis Is In Months
RECO
MM
ENDE
D
Value AnalysisJ J A S O N D J F M A M J J S O N D
In-House Data Center RationalisationContinue Current Virtualisation ProjectEliminate Obsolete HardwareData Deduplication
PlanningFinalise To-Be Support Organisation (Internal v External)Short List Delivery ModelsLong-List Vendors
Core Sourcing ProcessVendor Information Packs & Initial EngagementRFI/RFPProposals & Negotiation
Integration/TransitionSteady State
Internal CommitmentInternal Stakeholder "Buy In" ProcessHR Planning (Redundancy / Redeployments)Agree "To Be" SLAs (esp. VIPs)Tollgate: Outsource / Keep In House
PlanningFinalise To-Be Support Organisation (Internal v External)Short List Delivery Models
2011 2012
Stream 1: Infrastructure Outsourcig
Stream 2: Help Desk
Action Roadmap
GOX's expertise and vetted vendor network enabled us to thoroughly assess severalpotential partners, conduct a formal sourcing process, and select a best-fit partner in a
matter of 2 months. We have greatly expanded our capability and capacity at incrediblycompetitive rates.
John Brennan, Head Of IT Development, eFinancialCareers
GOX enabled us to source an offshore partner at less than 50% of our anticipated cost. Theyhelped us plan, manage risk and successfully govern the project from inception to delivery
Robert Clayton, CIO, Energy Intelligence
Testimonials
GOX designed and delivered an outsourced model that enables us to deliver quality service toa demanding clientele (primarily large banking and insurance companies) with virtually no
start-up or fixed ongoing costs
Jan Pruis, Head of BD, Prodiance Corporation
GOX enabled us to source an offshore partner at less than 50% of our anticipated cost. Theyhelped us plan, manage risk and successfully govern the project from inception to delivery
Robert Clayton, CIO, Energy Intelligence
We wanted a partner that would provide an independent, honest, detailed and fully costedassessment of our requirements and to help develop a plan for implementation. GOX
exceeded our expectations. They used their wealth of expertise and worldwide contacts todeliver a comprehensive and innovative assessment which has enabled Synergy Housing to
plan for our future requirements
Derek Wilkes, Head Of IT, Synergy Housing Association
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