With uncertainty in the global economy. . .
Will you choose the right path or be left behind?
Avasant and Avasense Confidential 2
Challenges Solution Capabilities & Features
AvaSenseAvaSenseAvaSenseAvaSense™
is Avasant’s web-based Contract and Vendor Management solution
designed to deliver governance best practices to support managed services and
other key enterprise agreements
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Avasant and AvaSense Background
• Avasant is a global management consulting company focused on
– Strategic sourcing
– Enterprise optimization
– Globalization
• Avasant team has experience of 1000+ plus consulting assignments Avasant team has experience of 1000+ plus consulting assignments across 40 countries.
• Avasant customers include Fortune 500 companies and public sector.
• AvaSense is wholly owned subsidiary of Avasant focused on building and marketing Outsourcing and Software License Governance Solutions.
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Agenda
• Outsourcing Market and Best Practices
• The AvaSense™ Solution
• Case study
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Today’s Outsourcing Relationships
Come with High Expectations
• Larger Size
• Longer duration
• Complex service levels
• Larger number of Programs• Larger number of Programs
• Diverse internal groups
• Higher impact on top and bottom line
• High impact end-customer experience
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Given what’s at stake, good Contract Governance and
Relationship Management have become imperative.
Importance of Outsourcing
Governance
� Breakdowns in trust
� Build-up of negative
partisan perceptions
Alliances are failing because partners are unable to work together effectively
Foremost Cause of Outsourced Services Failure among large
Companies
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� Questioning of one
another’s motives
� Festering conflicts
� Little joint problem
solving
� Feelings of
disrespect/coercion
30%
6%
64%
Poor or Damaged
Relationships Between Firms
Bad Legal and Financial Terms and Conditions
Poor Strategyand Business Planning
Impact of Poor Governance
Poor working relationships
affect both Service Recipient
and Service Provider leading
to sub-optimal results
Service Recipient Perspective
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Service Provider Perspective
Poor Governance Puts 30% of Annual
Contract Value at Risk
+15%
Added Value Through Effective Governance
� Customer satisfaction
� Delivery of value-added projects on time and on budget
� Quick response time to requests
� Innovation and thought leadership
� Resources freed internally to do other work
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Annual Contract Value
� Resource waste due to inability to trust/delegate
� Greater need to monitor/audit
� Frequent conflict escalation
� Low internal customer satisfaction
� Ineffective execution & follow-through
� Lack of clarity around roles and responsibilities
� Decisions made based on limited information
Lost Value Through Poor Governance
-15%
Added Value Through Effective Governance
Analyst Community Agrees
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“Respondents report that on average their enterprises lose 9% of their
revenues due to regulatory penalties, missed deadlines, lost sales,
maverick pricing, and transactional errors.”
“Ineffective control and management of supplier contracts costs
businesses $153 billion per year in missed savings opportunities”
Source: Aberdeen Group
There is some awareness….
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However, Contract Automation alone is not enough. Governance should
include ability to capture, define every single matrix and process around
contract and ability to monitor and manage these matrix and processes.
Organizations must Invest in Outsourcing
Governance Solutions to . . .
• Streamline Operations
– Contract Visibility through report and dashboards
– Automation of Contract Processes
– Centralized repository for single source of truth.
• Improve Performance Management• Improve Performance Management
– SLA Creation and tacking
– Program and Project KPI visibility
– Ability to respond to exceptions and issues.
– Proactive alerts and notification for important milestones
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Organizations must Invest in Outsourcing
Governance Solution to . . .
• Mitigate Risk– Identify risks through detailed analysis of execution
– Effective processes to respond to risks.
– Complete visibility compliance and audit.
• Drive Financial Management• Drive Financial Management– Track spending
– Processes around invoice and spend approvals.
– SLA accountability
– Forecasting and budgeting for better cash flow management
– Elimination of unwanted programs.
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Good Governance in Sourcing
• Understand your sourcing strategy and objectives– What to source externally– Objectives
• Establish a baseline– Costs– Service levels
• Short-term focus on cost-cutting– Deal starts to go bad within a year
• Poor communication– Morale plummets– Exodus of most valuable staff members
• Inadequate service levels– Performance becomes a matter of opinion
Keys to Success Common Pitfalls
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– Service levels
• Conduct a careful provider selection process– Obtain 3rd party adviser– Competitive process
– Proactive management
• Develop a good contract– Change mechanisms, benchmarking,
innovation process– Performance-based
• Vigilantly manage the relationship– Retained organization roles– Well-defined governance process
– Performance becomes a matter of opinion– Performance not tied to pricing
• No benchmarks– Do we have a good deal (service levels,
pricing)?
• Insufficient Resources– Relationship not managed to achieve original
objectives
• Failure to recognize risk– Unrecognized risks are unmitigated risks
Governance Organization Best Practice
Manage Risk ThresholdsManage Risk Reviews
Manage Sourcing RoadmapManage Program Communications
Manage Training & Education
Analyze/Monitor Sourcing Marketplace & TrendsDevelop/Maintain Outcomes (Objectives)
Develop/Maintain PrinciplesDevelop/Maintain Tower -Specific Strategies
1. Develop Sourcing Strategy
9. Manage Program & Communications
10. Manage Sourcing RiskManage Risk Thresholds
Manage Risk Reviews
Manage Sourcing RoadmapManage Program Communications
Manage Training & Education
Analyze/Monitor Sourcing Marketplace & TrendsDevelop/Maintain Outcomes (Objectives)
Develop/Maintain PrinciplesDevelop/Maintain Tower -Specific Strategies
1. Develop Sourcing Strategy
9. Manage Program & Communications
10. Manage Sourcing RiskManage Risk Thresholds
Manage Risk Reviews
Manage Program Communications
Manage Training & Education
Analyze/Monitor Sourcing Marketplace & TrendsDevelop/Maintain Outcomes (Objectives)
Manage Sourcing RoadmapDevelop/Maintain Service Specific Strategies
Perform Capacity Planning
Manage Delivery Demand
Facilitate Multi-Provider Operational Interfaces
1. Strategic Sourcing Management
2. Sourcing Program Management
3. Risk ManagementRisk Mitigation
Strategy
Business Mgmt.
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Maintain ScorecardsManage SLA/Contract Compliance
Maintain CI/Benchmarking
Manage Regulatory ComplianceManage Standards Compliance
Manage Security/Controls Compliance
Manage Sourcing FinancialsManage Reconciliation & Payment
Manage Contract & License NegotiationsMaintain Contract and Manage Compliance
Resolve Contract DisputesManage Licenses and Compiance Verifications
Set Provider Goals & ObjectivesManage Supply Infractions
Manage Multi -Provider Interaction Manage Staff Augmentation
7. Manage Contract & License Admin
8. Manage Financials
6. Manage Compliance
5. Manage Sourcing Performance
3. Manage Delivery Demand
4. Manage Provider Relationship
Maintain ScorecardsManage SLA/Contract Compliance
Maintain CI/Benchmarking
Manage Regulatory ComplianceManage Standards Compliance
Manage Security/Controls Compliance
Manage Sourcing FinancialsManage Reconciliation & Payment
Manage Contract & License NegotiationsMaintain Contract and Manage Compliance
Resolve Contract DisputesManage Licenses and ComplianceVerifications
Set Provider Goals & ObjectivesManage Supply Infractions
Manage Multi -Provider Interaction Manage Staff Augmentation
7. Contract Management
8. Manage Financials
6. Manage Compliance
5. Manage Sourcing Performance
3. Manage Delivery Demand
4. Manage Provider Relationship
Maintain ScorecardsManage SLA/Contract Compliance
Maintain CI/Benchmarking
Manage Regulatory ComplianceManage Standards Compliance
Manage Security/Controls Compliance
Manage Sourcing Financials
Manage Reconciliation & Payment
Set Provider Goals & ObjectivesManage Supply Infractions
Manage Multi -Provider Interaction
Manage Provider Relationship
Manage Delivery Demand
Fulfill Project Resource Requests
9. Financial Management
6. Compliance Management
8. Performance Management
4. Demand Management
5. Relationship Management
Resolve Imbalances in Delivery & Demand
Business Mgmt.
Contract Mgmt.
Source: Avasant
Contract Management
Contract Capture
• What did we agree on ?– Guided Contract capture
• All agreement types– MSAs, SOW’s,
Service/License/Maintenance agreements, Amendments
• Lifecycle terms• Lifecycle terms– License term, renewals ,termination rights
and consequences
• Actionable resource and milestone information – Transitions, monthly management cost,
projects and hardware /software resources
• Financial terms– Baseline cost, ARC’s, RRC’s , T & M rates,
milestone based payments and rewards and penalties
• Optional Excel upload of contract data
Avasant and Avasense ©2011
Contract Management..
Contract Governance
• Best Practice processes
– For contracting and governance
• Compliance and Audit trail
– Tracking of new change orders to
tracking key contract milestonestracking key contract milestones
• Milestone alerts
– Notifications for pending review,
disputes and approvals
• Tracking and automation
– Projects, service requests, change
requests and task orders including
estimation, approvals, initiation,
delivery and termination activities
Avasant and Avasense ©2011
Financial Management
• Rate cards and consumption levels tracking.
• Service credits and Claw-back calculations
• Earn-backs, invoice listing
• Invoice Management processes– Pre-build and processes for review – Pre-build and processes for review
and approval of supplier invoices
• Detailed pre-build and configurable financial reports
• Alignment with pricing metric benchmarks
• Leverage financial information– Re-negotiate financial and non-
financial license terms with Service Provider/Vendors
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Performance Management
• Track performance metrics– Configure and measure custom SLA’s
– Analysis and reporting of metrics /SLAs such as up-time, response cycle time, quality across service categories and supplier locations
• Best practice performance review processes– Support operational, tactical, strategic – Support operational, tactical, strategic
reviews and reporting processes
– Support SLA reviews
– Automated detection and reconciliation of Service Credits and Charge Backs
• Integration with financial management– Ensures compliance of Invoice with
outcomes of Performance Management reviews
• Tracking performance of internal program objectives and strategies
Avasant and Avasense ©2011
Relationship Management
• Service Provider Spend and Analysis– Overview of the budgets and spend
analysis
– Root cause issues like resource attrition and percentage of onshore offshore resources
• Track and monitor• Track and monitor– Relationship, and scope across
multiple service providers and entire portfolio of outsourced services.
• Relationship Alignment– Align at the right levels with key
Service Providers/Vendors to maximize benefits/discounts
• Service Providers comparison matrix
Avasant and Avasense ©2011
Software License Management
• Manage utilization– Monitor and manage current and future
license utilization
• Manage license allocation
• Leverage data for other uses– CMDB and service management tools
• Compliance Management and risk analysisanalysis– Actual license usage against contracted
amounts
– Territorial rights, transfer rights and license grant
• Analysis of one-time and recurring spend– Analyze relative to market best
practices
• Product Renewal Schedule & Risk Analysis
• Analyze complex fee terms– Combined software
license/Maintenance/bundled fees across agreements
Avasant and Avasense ©2011
Key Differentiators of Avasense
Drill-down reports
User Friendly
Web based interface
Standards based
Integration
Pre-capture Best practice Governance Processes and Matrix - Configurable
Actionable and Configurable Dashboards, reports, SLA’s and scorecards
End to End Visibility with Drill down to finer details
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Enterprise Class
Technology Foundation Light-
weight
Best Practice Based
Process Flows
SaaS Based
details
Built on enterprise class BI, BPM and DM technology platforms
Ability to deploy On premise as well as on cloud
Security Focus, Audit Trails, Field Level Permissions
User Friendly web based interface.