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VENDOR BASE FLEXIBILITY3gamma lunchseminarium 23 April

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About 3gamma

3gamma Capabilities

IT Strategy and Governance

IT Sourcing

IT Operational Excellence

IT Project Management and Delivery

We are an independent consultancy firm specializing in IT management We offer practical, results-oriented advisory and consulting services based on significant IS/IT experience We can assist any organization through the entire IT sourcing life-cycle, enhancing IT effectiveness and improving

operational efficiency We are 100 consultants in Stockholm, Gothenburg, Malmo, Manchester, Helsinki and New Jersey

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Vendor base flexibility – why is the topic on the agenda?

Development of the outsourcing landscape

Outsourcing maturity – but still a growing market (2nd and 3rd wave of outsourcing)

Business drivers – from cost focus to value for money (innovation, time to market, capabilities)

From single-sourcing to multi-sourcing

Shorter contract periods

Shift of ”what” and ”how” – asset-light (cloud services) consumption , effect based delivery models, end-to-end service integration

Insourcing…

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Vendor base flexibility – why is the topic on the agenda?

Companies are not satisfied with the delivered services

Costs higher than expected – eroding business case

Limited vendor ability and contract support for effect based delivery

Quality of delivery not satisfactory – dispute over SLAs and penalty charges

Underestimating the effort to manage vendors and to build a retained organization with the right capabilities

…but still many companies choose to renew contracts with existing vendors

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Why is it difficult to shift vendor?

Not considering the entire outsourcing life-cycle; primarily focus on contractual aspects and exit strategy in contract

Lock-in effects built in when developing the sourcing strategy (processes, tools, architecture and integration, capabilities/people) making it difficult to shift vendor

Lack of capability and capacity to manage vendor in run phase to avoid and limit potential lock-in effects

Limited experience of how to shift vendor – how to do it, without disrupting business operations

The business risk – Stuck with a vendor not delivering the right service, at the right quality and at the right cost

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Strategies for creating vendor base flexibility (1/2)

Adopt an end-to-end and multi-disciplinary mindset and approach - considering entire outsourcing life cycle, combining Business/IT and legal outsourcing expertise

o Sourcing strategy (how you define and cluster sourcing objects, architecture and integration considerations)

o Outsourcing contract – exit strategy

o In-contract, before renewal of contract – vendor shift readiness assessment

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Strategies for creating vendor base flexibility (2/2)

Regularly assess internal “vendor shift readiness”o Riskso Lock-in mechanisms (processes, architecture,

integration, tools etc.)o Contracto Change efforto External market capability

Actively manage your vendor base (as opposed to the other way around) and be aware of potential lock-in effects and how to limit them

Develop and maintain execution capability – ability to transfer services from one vendor to another vendor (or insource)

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Service integration in a multi-sourcing environment – different options for creating flexibility and control

Type 1. Retained integrator”Client responsible for service integration”

Type 2. Third party”Integration is delegated to a third party”

Type 3. Guardian vendor”Single vendor responsible for service integration”

Type 4. Prime contractor”Single vendor accountable for all services”

England3gamma LtdSuite D, Silk PointHulley Road MacclesfieldCheshire SK10 2LLPhone +44 161 219 8240

Group Head Office3gamma GroupDrottningtorget 5SE-411 03 GöteborgSwedenPhone: +46 31 309 7910

Stockholm3gamma Sweden ABDrottninggatan 92-94SE-111 36 StockholmSwedenPhone: +46 8 748 0330

Göteborg3gamma Sweden ABDrottningtorget 5SE-411 03 GöteborgSwedenPhone: +46 31 309 7910

Malmö3gamma Sweden ABWTC TeknikportalenSkeppsgatan 19SE-211 19 MalmöSwedenPhone : +46 40 627 04 05

Finland3gamma OYSentnerikuja 2FI-00440 HelsinkiPhone +358 50 3 748 371

USA3gamma Americas LLC4 Rupells RoadClinton, NJ 08809USAPhone: +1 908 894-5126