ICT Outsourcing: Is it an Option?

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Partners in Building UAE's Security & Economy

Our Vision: To be a role model and reference point in proofing individual identity and build wealth informatics that guarantees innovative and sophisticated services for the benefit of UAE

Federal Authority| هيئــــــــة اتحــــــــــــادية

Presented by Dr. Ali M. Al-Khouri In: ICT Outsourcing Summit – Organised by Saudi Computer Society & NASEBA. 8-9 September 2013 | Riyadh | Kingdom of Saudi Arabia

ICT Outsourcing Is it an option?


www.emiratesid.ae © 2010 Emirates Identity Authority. All rights reserved


Table of contents

Introduction

View Point 1- In-house potential v/s outsourcing

View Point 2- Outsourcing’s role in developing knowledge based economies

View Point 3- Fuelling local skills and companies (on-shoring vs off-shoring)

Conclusion- Benefits of IT Outsourcing

1

2

3

4

5




Introduction 1

Table of contents


Federal Authority| هيئــــــــة اتحــــــــــــادية Our Vision: To be a role model and reference point in proofing individual identity and build wealth informatics that guarantees innovative and sophisticated services for the benefit of UAE

Introduction: ICT as enabler .. 1

• In today’s business world, IT is an integral part of business operations.

• No longer a discrete functional department, producing report, or processing financial data.

• Facilitate business and enable Organisations to develop competitive advantage.



Characteristic Roles 1

Information & Communication

Technologies

Business Goals and Strategy

alignment with

lower costs

Facilitate Business

Automate Business Processes

Optimized Business Activities

enabling

support

business decision making

improve Business

Communications

Enhance Customer Relations

(information in real time)

(contributes to the bottomlines)



IT in the Business 1

IT departments play a major role in the

transition and transformation of an

organization’s journey of process

optimization.

critical Strategic Alignment




IT departments thus have a lot of

functional activities that result in their own set of typical

operations and projects





In many cases, it is seen that the IT

department runs on operations in parallel to the organization’s business operations.




IT Areas in the Business

• Infrastructure management • Data center management • Application management • Systems integration

• Help desk services • Testing and validation services • R&D Services • Information Security Services.

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IN-HOUSE OR OUTSOURCE??

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1 IT thus works with various service providers or vendors to create, maintain, or reengineer a company's business architecture and systems. The key areas of IT Operations include:



IT Areas in the Business 1

• Tasks and activities are enormous and need dedicated resources.

• This brings the business organization into a quandary: - should the organization focus on these IT

Activity areas (that albeit aid the business)?, or

- focus on the business itself that brings in the revenue?

- Are the costs incurred on IT justified that the business can spend on?



IT Areas in the Business 1

• Although critical, tend to divert organisations from core functions.

• Many organizations moved into IT Consulting businesses while their core businesses were probably edible oil production or cloth weaving.

• When businesses are clear about their focus areas of revenue, IT departments can be safely considered as potential outsource areas.



Outsourcing: is it a new phenomenon? 1

• New phenomenon or invented for the new economy?

• Existed since man sought to produce goods!

• No one organization could ever build everything from within.

• Business have always depended on vendors, partners to supply parts or services that were required for the goods that were designed and produced.



Outsourcing: is it a new phenomenon? 1

• As economies developed and information technology aided the growth, IT became a new service.

• And then, as the organizations realized that IT was becoming more a bane than a boon, IT started to be treated as another commodity necessary to run business operations and thus could be outsourced.

• It all started with Kodak in 1989 when their IT operations was given to IBM to handle so that Kodak could focus on what they did best - make cameras.

• It is a separate issue that IBM itself started outsourcing their own IT business operations for cost optimization. This came with globalization!!



Outsourcing: is it a new phenomenon? 1 • Evolved into a rather mature business

operations in the last 25 years.

• New businesses setup to meet IT requirements.

• Brick and mortar business could focus on their business and IT is available as a service commodity enabling the business.

• However, the IT Outsourcing has no single model for operations.

• IT requirements of organizations are as diverse as their business requirements. Even organizations involved in similar businesses have different business and therefore different IT requirements.

Outsource?



IT Outsourcing Framework: Need for a Strategy?

Organization Objectives

IT Strategy

Enterprise Risks

IT Risks

Corporate Governance

IT Governance

Outsource Strategy

ROI Cost /Benefit

IT Areas to Outsource

IT Human Resources

Partner & Vendor Mgmt

SLA & OLA Management

KPI Management

1



IT Outsourcing Framework: Consideration?


IT Strategy

Enterprise Risks

IT Risks


IT Governance

Outsource Strategy

ROI Cost /Benefit


IT Human Resources



KPI Management

1

IT as an integral part of the business operations and derive the strategy based on multiple factors



IT Outsourcing Framework: what to outsource?


IT Strategy

Enterprise Risks

IT Risks


IT Governance

Outsource Strategy

ROI Cost /Benefit


IT Human Resources



KPI Management

1

determine the CAPEX and OPEX




View Point 1 In-house potential v/s outsourcing 2 … determining whether IT is to be outsourced at all ?

Table of contents



In-House or Outsource? A Practitioner’s Viewpoint… 2

• strong proponent of “Focus on Core Business”.. • all non-core activities like IT should be outsourced..



In-House or Outsource? challenges faced when non-core activities 2

IN-HOUSE CHALLENGES OUTSOURCE SOLUTIONS

Harnessing potential is a continuous process and expensive with a specific training and development budget

No training or internal resource development budgets.

High Maintenance – requires supervision, management, leadership, training.

Lower maintenance since the outsource is bound by SLAs and OLAs leaving the organization to manage the SLA/OLA

System Management needs continuous updates- management against obsolescence

Systems and IT Process management is owned and managed by the outsource partner with the organization needing to manage only service levels

High Capital Expenditure owing to ownership of infrastructure

High Operating Expenditure with no or very low CAPEX. The OPEX is offset by the cost of internal operations

Risk of Employee Turnover and resource continuity

Outsource partner manages their resources with organization focused on OLAs and service continuity



• As the world grows digital and geographic boundaries become less and less obscure, the global economy is driven by IT.

• Information Management has evolved to Knowledge Management and Knowledge is shared.

• This takes Outsourcing to a new paradigm.

Digital World 3




Table of contents

View Point 2 Outsourcing’s role in developing knowledge based economies

3



• Is all about Globalization.

• Universal access to knowledge and knowledge is ubiquitous.

• Digital Economy drives the Knowledge Economy diminishing geographical borders.

• Tapping knowledge across geographical borders automatically results in outsourcing.

• One Connected World!

Knowledge Economy and Outsourcing 3



• Technology transformed physical infrastructure available on demand as a service: Cloud Services..

• Data centers: provide computing platforms as a service.

• Knowledge workers are available on demand. HR as a service.

• .. all facilitated outsourcing activities.

Knowledge Economy and Outsourcing 3



Typically Characterized by • Costs of Labor

• Access to Knowledge Workers

• Demand and Capacity Management

• Performance and Service Delivery Improvement

• Digital Economy

Outsourcing: technological in nature? 3




Table of contents

View Point 3 Fuelling local skills and companies (on-shoring vs off-shoring)

4



National Human Capital Development 4

managing partners and technology

Service Delivery Managers focused on customer relationships and service delivery

Mode of Outsourcing and Contract models (like Build- Own- Operate- Transfer)

human resource development and transformation takes place in the organization



IT Service Delivery Active Directory Management and Administration

Server Administration

Storage Administration

Backup Administration

Network Administration

Security Administration

Database Administration

E-mail/ MS Exchange Administration

Help Desk Administration and Management

IT Incident Management

IT Problem and Resolution Management

IT Change Management

IT Asset Management- License Management

IT Systems Maintenance

Areas of Knowledge Development 4

IT experts are available on-site

Provide shadow teams that can work together with the experts

Knowledge transfer

On-Shore Outsourcing



IT Resource provisioning • New Server Provisioning- Capacity Management • New User Provisioning • New Storage provisioning- Capacity Management • New Backup provisioning • Additional Memory and Processing (CPU)

capabilities provisioning- Capacity Management • New Mail Box Provisioning- Capacity

Management

IT Monitoring • Server Performance Monitoring and Reporting • Network Performance Monitoring and Reporting • Network Security and Threats Monitoring and

Reporting • Communication System Performance Monitoring

and Reporting • Application Performance Monitoring

Areas of Process Development 4

reduces operations costs

management teams get developed managing the

technology partners

development of systems and business analysis that focus on

information analysis & help organizational decision

making.

Off-Shore Outsourcing



Application Services Oracle ERP Maintenance, Administration and Management SharePoint Maintenance, Administration and Management EPM Maintenance, Administration and Management Blackberry Maintenance, Administration and Management CRM (when implemented) Maintenance, Administration and Management

Intranet Services Internal HR e-Services Maintenance, Administration and Management Kiosks Hardware Maintenance, Administration and Management CRM Services (Internal) • Configuration of applications, hardware, databases and operating systems • Documentation (Operations Manuals, Standard Operating Procedures, Policy

Manuals)

Areas of IT Services Development 4

Off-Shore Outsourcing

Other key areas of development that could benefit for off-shore or near-shore outsourcing are Application Development and Implementation Services:




Table of contents

Conclusion Benefits of IT Outsourcing 5 improving organizational performance by enabling organizations to remain focused on their core businesses.



IT Outsource Approach 5



Doubting Feasibility: 3 Phased Approach 5

outsource partner starts managing IT resources in existing state

IT Optimization Managing IT resources in existing state

Sustaining benefits



IT Outsource Transition Methodology 5



Conclusion- IT Outsource Benefits 5

• Standardized IT Service Management and delivery with SLAs increasing internal IT Customer Satisfaction

• Work on BYOD basis where users can get IT Services such as Domain Access, Office 365, Help Desk, Document Access, Security Services on the cloud

• OLAs leading to optimal performance of IT Assets leading to better utilization of the IT hardware resources and thereby better utilization of power and space.



Conclusion: Knowledge Workers 5

• Better utilization of human resources: We can redeploy the current skilled resources to: - Focus on core function and processes.

- Utilize current skilled resources in critical projects since they will be free from day to day operations - this will lead to better IT Project Management and better delivery from IT Projects.

- Lower Operating costs




Thank You Dr. Ali M. Al-Khouri

Director General | Emirates Identity Authority | UAE [email protected] | www.emiratesid.ae