achieving success in outsourcing and managed services deals

Achieving Success in Outsourcing &

Managed Services Deals

Paul Allen, Head of IPT, Middle East

Bahrain

18 September 2012

Agenda

Intellectual Property & Technology Group

The Essence of Outsourcing

Outsourcing Globally

Outsourcing Regionally

Secrets of Sourcing Success

Procurement Planning & Preparation

18 September 2012 2Achieving Success in Outsourcing & Managed Services Deals

INTELLECTUAL PROPERTY &

TECHNOLOGY GROUP

Background

Head of Intellectual Property & Technology(Middle East)

Over 12 years international experience: privateand public sector delivery of IT & T projectsand outsourcing.

"impresses clients with his modern outlook andcommercial knowledge" (Chambers &Partners, 2012)

valued for his "responsiveness, commercialityand client-facing approach" (Legal 500, 2012)

Currently leading on one of the region's largestIT projects.

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Paul AllenPartner

Achieving Success in Outsourcing & Managed Services Deals 18 September 2012

Our Middle East IPT Team

18 September 2012Achieving Success in Outsourcing & Managed Services Deals

Ken Dearsley(Senior Counsel)

Paul Allen(Head of IPT)

Lamiaa Kheir Bek(Paralegal)

Jamie Ryder(Legal Consultant)

Bachir Abouchakra(Senior Legal Consultant)

Robert Flaws(Legal Consultant)

Katie Withers(Senior Legal Consultant)

Miranda Showler(Legal Consultant)

Peter Elliott(Trainee Legal Consultant)

Eamon Holley(Senior Legal Consultant)

IPT's Four Pillars


Intellectual Property & Commercial

Technology & Sourcing

Media & Sport

Telecommunications

Technology, Media & Telecoms

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Tier 1 ranking, Chambers Global (2011, 2012)

"particular expertise in outsourcing matters, and regularlyadvises high-profile entities on GCC-wide issues. It also advises

key industry names on transactions pertaining to a range ofplatforms, including television, internet and mobile

telecommunications." (Chambers & Partners, 2012)

Tier 1 ranking, Legal 500 (2008– 2012)

"DLA Piper Middle East LLP's TMT practice is 'excellent, withon-the-ground local law knowledge that many other international

law firms lack.'" (Legal 500, 2012)


Global Sourcing Portal


http://www.dlapiperoutsourcing.com/

THE ESSENCE OF

OUTSOURCING

OUTSOURCING GLOBALLY

Overview of Outsourcing

Projected growth of outsourcing industry:

2013 = 10.3% increase

2014 = 8% increase


REGIONAL TRENDS

GCC Outsourcing Trends


SECRETS OF SOURCING

SUCCESS

What is Sourcing Success?


What are some other Indicators of

Success?

Procurement budget

Procurement timeline


Business disruption

Legal risks

Public/shareholder perception

Stakeholderengagement/satisfaction

Win/win relationship

Vendor model

Internal relationships

Service commitments

Quality commitments

Flexible arrangement

Customer/supplier relationship

Transitional arrangements

Exit options

Change management

Governance

Continuous improvement

Ongoing competitiveness

Data protection

Employment issues

etc

Why do procurements fail?

Root Cause Analysis

What is Failure?

What do we mean by “failure”?

Failure is:

termination, non-renewal, litigation

non materialisation of benefits

unfulfilled expectations


Case Study 1

Customer

large national retailer

organisational growth through M&A

disparate IT systems and providers

Objectives

reduce opex and capex

improve application management

Solution

multi-vendor outsourcing, onshore/offshore resource

Problem encountered

one of the key applications could not be outsourced due to licencerestraints

Root Cause

poor due diligence


Case Study 2

Customer

global insurance organisation

operating in a highly regulated environment

decentralised training and development function

Objective

reduce opex/capex

deliver consistent, holistic training program consistent with riskmanagement strategies

Solution

single vendor outsourcing of training and development function

Problem encountered

stakeholder disagreement meant that the project stalled

Root cause

poor stakeholder management


Case Study 3

Customer

financial services entity

Objectives

seeking to implement a technology program

Solution

outsourced the build, implementation and operation of the technologysolution

Problem encountered

failed delivery

Root Cause

contract not fit-for-purpose


Case Study 4

Customer

mobile operator

Objectives

reduce opex and capex

access skills

outsource risk

Solution

managed service for network operation and maintenance

Problem encountered

unexpected increase in procurement timeline and cost

Root Cause

non-competitive procurement process


The Secrets!

The Secrets!

1. Know your objectives – begin with the end in mind

2. Plan and prepare properly – including due diligence


The Secrets!

1. Know your objectives – begin with the end in mind

2. PLAN AND PREPARE PROPERLY – INCLUDINGDUE DILIGENCE

3. Project manage from start to finish

4. Establish clear lines of communication

5. Employ the "KISS" principle

6. Appoint the right resources

leadership

experience

talent

knowledge

authority


7. Set roles and responsibilities (RACI)

8. Get business case approval

9. Support through governance

“wash-up” meetings

escalation of issues

risk registers

stakeholder management

10. GET THE CONTRACT RIGHT

MYTH BUSTING!

Myth Busting

What we hear

“It’s all about the relationship”.

“We have to beat the other side”.


Myth Busting

What we hear

“One size fits all.”

“Anyone can do procurement.”


Myth Busting

What we hear

“If the commercial terms are right,

the rest will follow.”

“We can negotiate the contract later.”


Myth Busting

What we hear

“The contract is something you put

in the drawer and forget about.”

“Lawyers are too expensive – only involve them at the end.”

“Lawyers only cause problems – don’t involve them at all!”


Myth Busting

What we hear

“Even if something does go wrong,

I’ll be long gone by that time.”

“What does it matter if we get it wrong, no one is going tocheck anyway.”


Always Remember…

Best practice is not anoption, it’s a must!


Central Bank of Bahrain (CBB)

Rulebook


• Material outsourcing arrangements must have prior approval by CBB

• Failure to comply = no approval

• Requirements include:

• performing risk assessment

• producing an outsourcing agreement

• having alternative outsourcing arrangementsin place

• ensuring the cbb has 'timely access' torelevant info

PLANNING & PREPARATION

Costs of a well planned and implementedprocurement are generally negligible compared

to loss you may incur in the absence of the same

Planning and Preparation

What is being procured?

Objectives of the procurement

Choose vendor approach

Choose procurement approach

Establish a sensible timeline

Choose contracting approach

Identify and allocate funds

Establish the procurement team

Prepare procurement documentation

Prepare for negotiations

Due diligence – throughout procurement


Outsourcing Requirements Builder


http://www.dlapiperorb.com/index.html

What Do We Need to Cover?


What Positions Should We Take?


http://www.dlapiper.uk.com/contractdashboard/demo/

Questions

achieving success in outsourcing and managed services deals

Business

intellectual

senior legal

legal consultant

achieving

sourcing success

chambers amp

outsourcing

paul allen