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Outsourcing – Risking Breakthrough…. A Risk Professionals Guide to Strategic Value from Outsourcing… Roger Bach London, December 2004. Outsourcing – The Holy Grail ?. Outsourcing – The Holy Grail ?. …will outsourcing deliver the radical improvements we as an industry - PowerPoint PPT Presentation
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Securities Institute - Risk Forum
Outsourcing – Risking Breakthrough… A Risk Professionals Guide to Strategic Value from Outsourcing…
Roger Bach London, December 2004
SI - Risk Forum
Outsourcing
Outsourcing – The Holy Grail ?
Outsourcing – The Holy Grail ?
…will outsourcing deliver the radical improvements
we as an industry seek to achieve ?
SI - Risk Forum
Outsourcing
Outsourcing – The Holy Grail ?
What is new about outsourcing today ?
Outsourcing is Not New !
So What is New Now ?And is it going to Deliver ?
…take Custody Outsourcing
…a mature business with several large global players…
SI - Risk Forum
Outsourcing
Outsourcing - The Traditional View
Traditional Outsourcing Wisdom…
…All routine support or non core activities are prime targets for outsourcing…
Achieve management focus on core competencies Higher quality and productivity at reduced costs Eliminate capital outlay for non core activities Eliminate/Reduce risks from non core activities Buy-in capabilities not available in-house
SI - Risk Forum
Outsourcing
Outsourcing - The Traditional View
Traditional Benefits of Outsourcing…
Quick response Reduces risk Reduces cost Reduced capital
…helps achieve strategic focus and delivers many tactical benefits…
Flexibility and choice Predictability of costs Service innovation Flexible capacity
SI - Risk Forum
Outsourcing
Outsourcing - The Traditional View
Traditional Triggers for Outsourcing…
…I’m in a mess… get me out of here…
Perennial problems in peripheral activities
Quickfix for missing capabilities
Tactical cost or risk reductions
SI - Risk Forum
Outsourcing
The Picture on the Ground…
The Picture on the Ground…
…84 out of 100 small and medium sized firms in the city use outsourcing…
SOURCE: Recent FSA study
SI - Risk Forum
Outsourcing
The Picture on the Ground…
The Picture on the Ground…
…large proportion of fund managers use outsourcing…
Various Sources
SI - Risk Forum
Outsourcing
The Picture on the Ground…
The Picture on the Ground…
…the message we are getting is that outsourcing is increasing at a very substantial pace…
Hector Sants 28-09-04
SI - Risk Forum
Outsourcing
The Picture on the Ground…
The Picture on the Ground…
…and some firms are now reporting problems to us…
Hector Sants 28-09-04
!
SI - Risk Forum
Outsourcing
Growing Wave of Problems
Latest wave meets growing problems…
…Latest surveys show growing dissatisfaction with outsourcing…
66% of companies are disappointed or feel envisaged benefits are not being achieved (PA Consulting ’04)
in international poll of 150 companies 40% of respondents claimed it outsourcing had been a failure or delivered fewer benefits than expected ( Proudfoot 2004)
SI - Risk Forum
Outsourcing
Outsourcing – Symptoms of Trouble
Outsourcing - Symptoms of Trouble
What’s is Going Wrong ?
Failure to deliver expected tactical benefits
Failure to contribute to strategic success
Static contracts fail to adapt to change
Global deals - unwieldy & lacking focus ?
One-size-fits-all seems to fit no-one-at-all
SI - Risk Forum
Outsourcing
Outsourcing - To Stay Prominent
…is dead – long live Outsourcing !
Outsourcing
is here to
STAY
SI - Risk Forum
Outsourcing
The Outsourcing Equation
Value Created Value Destroyed
When Does Outsourcing Fail ?
+Cost SavingsValue Added
-Transaction Costs
SI - Risk Forum
Outsourcing
The Outsourcing Equation
Risk
Tra
nsa
ctio
n C
ost
s
Transaction Cost Potential Value Added Cost Saving Potential Profit
What makes Outsourcing Profitable ?
SI - Risk Forum
Outsourcing
Chore or Core ?
Chore
Core
High Impact
Low Impact
Stra
tegi
c
Out
sour
cing
Trad
ition
al
Out
sour
cing
Vent
ure
Part
nering
Cor
eBu
sine
ss
How to Map Your Outsourcing Landscape ?
• IT Outsourcing
•Marketing Fulfilment
• Canteen Services
• HR & Payroll
• Portfolio Management
• Client Services
• Reference and Market Data
SI - Risk Forum
Outsourcing
Shaping Outsourcing Initiatives –Traditional
Why What How Who
20 % 80 %
The Traditional Process…
SI - Risk Forum
Outsourcing
Shaping Outsourcing Initiatives –Traditional
Why What How Who
80 % 20 %
A Better Balance !
SI - Risk Forum
Outsourcing
Shaping Outsourcing Initiatives –Traditional
Why What How Who
50 % 20 %
The Ideal Balance !
30 %
SI - Risk Forum
Outsourcing
The Outsourcing Continuum
Profit
Risk
Control
Resource
The Outsourcing Continuum
Client Supplier
SI - Risk Forum
Outsourcing
Outsourcing – Conclusion
Outsourcing - Conclusion
Where do I go from here…?
Understand your Strategy & Capabilities
Know how outsourcing works as a Strategic Tool
Decide Why & How outsourcing fits your strategy
Choose the size-that-fits-you Define WHAT to achieve & maintain your course
SI - Risk Forum
Outsourcing
Contact Information
Speaker Contact
Roger Bach
Email: [email protected]: +44 (07905) 117433
Marcelle von Wendland
Email: [email protected]: +44 (07931) 500727
Contributing Consultant
www.bancstreet.com this website will include further background material and links to sites with information related to the topic of this talk.
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