is5114 - lecture 6
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19 Feb 2014 IS5114
IS5114 – Information Technology Outsourcing 2013/2014 – Semester 2
Selection of Service Providers
Dr Kwong Yuk Wah Adjunct Associate Professor
Department of Information SystemsSchool of Computing
National University of Singapore
19 Feb 2014 IS5114 2
Developing the RFP (1)
Client’s Roles and Responsibilities Service Provider’s Roles and Responsibilities
a. Define the RFP process and project schedule
b. Define the outsourcing project team organisation and its role and responsibility
c. Determine criteria for selecting members of the project team
d. Determine strategies for information gathering
e. Define outsourcing scope and requirements
f. Write the RFP - Clearly establish service definitions, service levels, expectation, requirements and service level agreement (SLA)
g. Develop service provider evaluation strategy and criteria
a. Establish scope of outsourcingb. Provide information to support client to
develop the right requirements and service level agreement (SLA)
c. Determine if scope is within its core competencies
d. Establish value proposition and a sales strategy
e. Identify potential key partners and alliances
f. Identify high-level risksg. Determine competitive positionh. Estimate the total cost required to support
the project (during presales and delivery)i. Evaluate if the project should be pursuedj. Identify team members with the right
expertise to respond to the RFP, when issued
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Developing the RFP (2)
• The RFP Process– Setting up the project organization– Develop the project schedule– Identifying relevant technology options and potential services
providers– Estimate the project budget– Perform a cost and benefit analysis– Developing evaluation criteria– Developing the RFP– Defining strategies for service provider due diligence– Reviewing and approving the RFP for release to the service providers
• Forming the Outsourcing Project team– Business operations– Information Technology– Finance and Legal– Human Resource
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Developing the RFP (3)
• Strategies for Information Gathering– Request for Information (RFI)– Engaging a Consultant
• Definition of Outsourcing Scope and Requirements– Performance requirements– Operational requirements– Maintainability requirements– Portability requirements– Security requirements– Usability requirements– Look and feel requirements– Technology requirements
• Service Provider Evaluation Strategy and Process– Evaluation framework and criteria
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An Overview
Service Provider Evaluation and Selection
Selecting Service Providers
· Evaluation framework for assessing service provider proposals
· Assessment of potential service provider presentations
· Assessment of proposals· Risk assessment· Making the selection decision
Soliciting Potential Service Provider Proposals
· Issuing the RFP· Providing information to
potential service providers· Facilitating potential service
provider due diligence checks
Source: Singapore Computer Society
Roles and ResponsibilitiesProposal Solicitation Process
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Client Service Providera. Issuing the RFP b. Briefing potential service
providers and answering queriesc. Facilitating potential service
providers’ due diligence checks
a. Assembling a team with the right expertise to respond to the RFP
b. Identifying key personnel for project team members
c. Attending the briefing sessiond. Asking relevant questions and
seeking clarifications on points of ambiguity in the RFP
e. Looking into project sizing and developing solutions
f. Structuring a proposal to meet client requirements as well as internal business objectives
Source: Singapore Computer Society
Roles and ResponsibilitiesService Provider Selection Process
19 Feb 2014 IS5114 7
Source: Singapore Computer Society
Client Service Providera. Setting up an evaluation
frameworkb. Assessing submitted
proposalsc. Interviewing the key staff
of potential service providers
a. Making presentations of the proposal
b. Responding to client’s queries
c. Handling client interviews of key staff
d. Selling the merits of its proposal throughout the evaluation process
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Some Industry Best Practice
• Request for Proposal (RFP) document is also known as Tender Specifications or Tender Document
• It is a formal request for proposals by service provider through a tendering process
• Open Tender offers a fair and transparent method for seeking proposals or tender bids from the service providers
• Request for Information (RFI) is a method for the buyers to gather information based on initial high-level requirement
• RFI can be a pre-qualification exercise to shortlist potential service providers before the tender exercise
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Some Industry Jargons
• Supplier• Service Provider • Tenderers• Successful Tenderers• Contractor• Main/Prime Contractor• Sub-Contractor
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Typical RFP Document
• Cover letter • RFP administration process/Instructions to Tenderers• Conditions of Contract/Terms and Conditions (T&C)• Project Overview• Scope of Work• Business/Functional Requirements• Technical Requirements• Pricing tables• Evaluation Criteria• Appendices, such as Non-Disclosure Agreement
(NDA)
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Evaluation Framework
• Overarching Principle : Fairness and Transparency • Define the evaluation process• Establish a set of detailed evaluation criteria for
assessing the suitability of potential service providers’ proposals
• Select the proposals meeting the following requirements– Business– Technical – Legal– Financial
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Governance for Evaluation
• Follow the organization's corporate governance– Proper check-and-balance and segregation of duties– Financial authority, i.e. the approval limits
• A typical governance structure for evaluation
Approval Committee
Review Committee
Evaluation Committee
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Evaluation Criteria• Objectives of outsourcing • The deliverables expected from the service provider• The acceptance criteria for those deliverables• The track record of the service providers and its
ability to deliver– Understanding of the requirements– Soundness of the proposed solution
• Completeness of the proposals• Compliance to the requirements
– Business– Technical – Legal
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Vendor Selection
• Different service providers for different outsourcing deals, i.e. Utilities, Enhancement and Transformational
• Business drivers and the type of service providers that can best meet the outsourcing objectives
• The ability of the potential service providers’ solution to meet the project objectives
• The qualification of the potential service providers and their project team
• Risk• Price/Tender bids
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Risk Assessment
• The degree to which the service provider understands the scope and complexity of the requirements or scope of work– Soundness of the proposed solution– Reasonableness of the project or delivery schedule– Under quote
• The cost being underestimated by the service provider• The service provider’s ability to meet project schedules and
timelines• The adequacy of staff and other resources to be allocated for
the project• The financial stability of the service provider
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Prices
• Development Cost• Annual Maintenance• Performance Guarantee Period (PGP)• Warranties• Support cost• Replacement cost• Change Requests (CRs)• Total Cost of Ownership
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Selection Decision
• Quantitative factors - Pre-determined scoring method
• Qualitative factors that involve some degree of subjective judgment
Evaluation Criteria
Weight Tenderer 1 ….. Tenderer n
Score Weighted score Score Weighted Score
Meeting Requirements
X1%
Cost X2%
Risk X3%
Total 100%
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Cloud Computing - Jargons
• IaaS – Infrastructure as a ServiceCompute resources, i.e. servers, network technology, storage, and data centre space, as a service. E.g. Amazon EC2
• PaaS – Platform as a ServiceA software development and runtime environment as a service. E.g. Google App Engine, Force.com
• SaaS – Software as a ServiceBusiness applications as a service. E.g. Salesforce.com, Accenture SAP Cloud
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Take-Away From This Lecture
• Selection of Service Provider• Reference : Singapore Computer Society, Body of
Knowledge, COMIT
