master outsourcing
DESCRIPTION
www.argosy-inc.com. Master Outsourcing. (Or Else!) By Beth Perdue. Argosy, Inc. • 293 K Street • Boston, MA 02127 Tel. 617-269-1677 •[email protected]. Topics. Trends and facts Top 10 risks Outsourcing contracts Relationships In closing…. Topic 1. Trends and Facts. - PowerPoint PPT PresentationTRANSCRIPT
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Master Outsourcing
(Or Else!)
By Beth Perdue
Argosy, Inc.•293 K Street•Boston, MA 02127Tel. 617-269-1677•[email protected]
www.argosy-inc.com
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Topics
1. Trends and facts
2. Top 10 risks
3. Outsourcing contracts
4. Relationships
5. In closing…
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Trends and Facts
• 80% of U.S. Companies discuss • 40% complete pilot program or more• Offshore dominant – grows 20%+ annually
Source: Computerworld, Gartner Group
Topic 1
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Hidden Costs
• Supplier searching
• Contracting
• Contract management
• Post-outsourcing reintegration
• Who tracks them?
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Thinking of Outsourcing?
• Not necessarily cheaper
• At least, not right away
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Downside
• Big- name companies bringing it back – Dell, Lehman Brothers, Conseco
• Still have offshore operations
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Have You Ever Seen a Grown Man Cry?
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Top 10 Risks
Topic 2
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1. Cost-reduction Expectations
Top 10 Risks
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Top 10 Risks
2. Data Security/ Protection
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How Patient Files Got to Pakistan
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Personal Info Outsourced Abroad
Medical records
Bank records Debt records
Credit histories Brokerage records
Social Security numbers
Tax documents
Insurance records
Credit card numbers
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Where It Goes
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Meet Ankit
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Why More Risk Overseas?
• Security not priority
• Using small/mid-sized firms• Software piracy means few patches • Lack tough laws and legal tools
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Take Nothing For Granted
• Penetration testing
• Background checks
• Device restrictions
• Visit, manage, audit
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3. Process Discipline
Top 10 Risks
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You can learn a lot from fast food
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Start With Out-tasking
• Keep command, control, coordination
• Assign well-defined tasks
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4. Intellectual Property Drain
Top 10 Risks
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5. Supplier Failure to Deliver
Top 10 Risks
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6. Scope Creep
Top 10 Risks
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Top 10 Risks
7. Government Oversight/ Regulation
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Top 10 Risks
8. Border Concerns
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Top 10 Risks
9. Turnover of Key Personnel
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Top 10 Risks
10. Knowledge Transfer
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Outsourcing Contracts
Topic 3
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When the only tool you own is a hammer, every
problem begins to resemble a nail.
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Incomplete by Nature
• Assets
• Uncertainty & measurement
• Frequency
• Time & costs
Outsourcing Contracts
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Prices and Adjustments
• Contract length
• Cost-savings program or index
Outsourcing Contracts
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Prices and Adjustments
• Benchmarking
• Baselining
• Multiple suppliers
Outsourcing Contracts
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This here's Miss Bonnie Parker. I'm Clyde Barrow...We rob banks.
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Intellectual Property Rights
• Transferred licenses– Software developed by supplier– Processes developed by supplier
• Transfer to another supplier
Outsourcing Contracts
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Licenses Don’t Travel Well
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Is It Your Software or the Outsourcer’s?
• Either way can work
• Flexible licenses
Outsourcing Contracts
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Get Better Licenses
• Asset management
• Know your opponent
• Timing
Outsourcing Contracts
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Contract Structure
1. Framework contract
2. SLAs– By geography and business unit, then service
– By service
– Degree of completion
Outsourcing Contracts
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Contract Structure
1. Degree of exclusivitySole supplier
Preferred supplier
2. Liability
3. TerminationBankruptcy,force majeure, default
Change in ownership
Business needs
Outsourcing Contracts
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Metrics
• Keep an eye on offshore practices
• Service (customer)
• Process (supplier)
Outsourcing Contracts
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Minimize Risk
• Objectives
• Meeting structures – Keep minutes
• Disputes
Outsourcing Contracts
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Relationships
Topic 4
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Let’s Call the Whole Thing Off
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Bringing It Back
• Provider – – Had financial difficulties– Failed to deliver on commitments
• Buyer consolidated vendors
Relationships
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Change Suppliers
• Knowledge
• Documentation
• Transfer process
Relationships
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Business Continuation
• Preserve price & service
• Unilateral right
Relationships
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Transition Cooperation
• Efforts
• Disclosure
• Licenses & agreements
Relationships
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In Closing…
Topic 5
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Selective Outsourcing
• Big risks– Requirements– Specifications– Business smarts
• Make outsourcing a core competency
In Closing…
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Satisfaction Isn’t Guaranteed
• Inflated expectations– Cost savings– Productivity
• You don’t get what you expect, you get what you inspect
In Closing…
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“I haven’t failed. I’ve found ten thousand ways that don’t work.”