maximizing value by innovating managed services€¦ · maximizing value by innovating managed...

Maximizing Value by

Innovating Managed Services

Time Warner

Ashish MalhotraVP, Global IT Workforce Management

Neo Group

Atul VashisthaChairman

sig.org/eval

A presentation by Time Warner and Neo Group

MAXIMIZING VALUE BY INNOVATING

MANAGED SERVICES

ASHISH MALHOTRA, TIME WARNER

ATUL VASHISTHA, NEO GROUP

SIG GLOBAL SUMMIT 2016

Carlsbad, CA

4

© 2016 Neo Group Inc. Proprietary

• Globalization Strategy

• Sourcing

• Location strategy

• Health Checks

• Renegotiations

• Governance

Since 1999, we have been helping clients

accelerate benefits and minimize risks associated

with global in-house services and sourcing

We have a Singular focus on the global services

and sourcing supply chain

We achieve outcomes through deep IP, real-time

analytics, globally recognized experts, proven

methodologies and co-creation with our clients

NEO GROUP OVERVIEW

We deliver results through three distinct and linked solutions and services:

ADVISORY SERVICESGOVERNANCE

SOLUTIONS

• Design

• Run and support

• Ongoing Governance

Services, such as, Resource,

Contract and Performance

Management Services

SUPPLY WISDOM

• Country

• City

• Supplier

• Outsourced Service Desk

• Monitoring Subscription

Services


How do we balance between staff-augmentation, managed capacity and

managed services?

How do we ensure what is right for managed services?

How do we manage risks of sourcing in a managed services model?

How do we minimize the liabilities - contractual staff and with suppliers?

How do we ensure performance and relationship alignment with suppliers?

AGENDA5

BASIC

Functional & Technical Expertise

Project Team Task Management

Process & Methodology Compliance

Project Issues Management

Manage Project Inputs

STRATEGIC

Soft Skills + Global View

Stakeholder Influence

Strategic Alignment (Quality + Value Delivery)

Managing Risks in Delivering Value

Own Program / Project Outcomes

6

Types of Engagement

Delivery Models

WHYshould a BuyerManager usethis model

WHAT is the

Buyer really purchasing

WHO is responsible for managing

the team

WHEN does the

engagement end

WHERE are the team

members located

HOWis the

engagement being paid for

StaffAugmentation

Unstructuredbody of work

Able to manageindividual resources

Willing to endureall risks

People

Brains bythe hour

Buyer Manager When the Buyer Manager no longer requires the skill

The Buyer Manager decides the location of the team members

Time & Materials

Billable hours based on Individual ratesand skills

Capacity Ongoing, highlyrepeatable work

Able to manage a process/factory

Willing to share riskwith a provider

A set ofrelated skills

Production capacity

Combined Buyer, Manager, and 3rd-Party Provider Manager

When the workactivity has been shifted to another set of resources (internal or external)

The Buyer Manager and Provider Manager agree on the location of the team members

Pre-established block of work hours

Blended rates

FixedDeliverable

Defined beginningand defined end

Able to manage toa workplan

Willing to share riskwith a provider

Deliverables 3rd-Party Provider When the deliverable is completed

The Provider Manager decides on the locationof the team members

Firm Fixed Fee

Based on reaching milestones

ManagedService

Ongoing engagementwith specific outcomes

Able to managecompliance to SLAs

Willing to sharerisk with a provider

Outcomes

Performance

3rd-Party Provider When the work activity has been shifted to another set of resources (internal or external)

The Provider Manager decides on the location of the team members

Monthly FixedFee

Based on performance

TYPES OF OPERATING MODELS


• What portion of your outsourcing Managed Services?

• What portion do you expect it to be by 2020?

POLL7

8

While it is important to understand and manage all of the components of a sourced engagement, there are a select set of management activities that require a considerable level of focus, on an on-going basis, in order to ensure the success of the engagement.

CRITICAL SUCCESS FACTORS

Management Activities

StaffAugmentation

CapacityFixed

DeliverableManaged

Service

Activities In Scope

Activities Not In Scope

List of Deliverables

Acceptance Criteria

List of Responsibilities

Assumptions and Dependencies

Risks and Mitigation Plans

Communication and Escalation

Change Control

Pricing and Invoicing Schedule

Knowledge Transfer/Transition

Governance and Reporting

Service Level Agreements & Credits

Productivity Improvements

Quality Improvements

Warranties

Critical Success Factors (CSFs) must be closely managed to ensure the opportunity successful engagement

The selection of one operating model over another will be primarily driven by the Manager’s desire to manageand control the outcome of the engagement, coupled with the need to assume responsibility for managing inherent risks.

CHOOSING THE APPROPRIATE OPERATING MODELS

9

The Buyer Manager can significantly reduce their risk by engaging Third-Party Providers

to provide Fixed Deliverables or Managed Services whenever possible.

LowL MediumM HighH

Outsourcing

Operating

Models

Example

Engagements

Level of

Perceived Control

Level of

Endured Risk

Buyer 3rd Party Buyer 3rd Party

Staff

Augmentation

• Oracle Database Analyst

• Java Application Architect

• Business Analyst

H L H L

Capacity

• Testing Centers of Excellence

• Virtual bench of common

or repeatable skillM M M M

Fixed

Deliverable

• Requirements Analysis Phase

• Application Construction Phase

• Full life-cycle App. Development

M M L H

Managed

Service

• Legacy Application Maintenance

• Infrastructure Maintenance

• Remote Server Monitoring

M M L H

R Responsible for completing that step in the process

A Accountable for ensuring that the step is completed

C Consulted prior to the completion of the step

I Informed of the results once the step is completed

10

The responsibilities for each engagement activity can be best portrayed in a responsibility assignment matrix, often referred to as a RACI chart. Based on the selected type of sourcing engagement, certain responsibilities will shift from Buyer to the Provider.

ROLES AND RESPONSIBILITIES

STAFF

AUGMENTATION

Buyer Roles Provider Roles

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Plan Project R,A C,I

Analyze Req. C,I R,A

Design Software I C,I R,A I

Build software I C C,A I R

Test Software I C,I R,A

FIXED

DELIVERABLES


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Analyze Req. I A,C I R

Design Software I A,C I C R I

Build software I A,C I C R I

Test Software I A,C I C R

CAPACITY


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Plan Project R,A C,I C,I

Analyze Req. C,I R,A

Design Software I C,I R,A I

Build software I C.I A,C I R I

Test Software I A,C I C R

MANAGED

SERVICES


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Plan Project A,C R,A C,I

Analyze Req. A,I C,I R

Design Software A,I I C,I R I

Build software A,I I C C I

Test Software A,I I C,I R

STAFF

AUGMENTATION


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Plan Project R,A

Analyze Req. R,A

Design Software R,A

Build software A R

Test Software R,A

FIXED

DELIVERABLES


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Plan Project A R

Analyze Req. A R

Design Software A R

Build software A R

Test Software A R

CAPACITY


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Plan Project R,A

Analyze Req. R,A

Design Software R,A

Build software A R

Test Software A R

MANAGED

SERVICES


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Plan Project A R

Analyze Req. A R

Design Software A R

Build software A R

Test Software A R

11

The (SOW) defines the specific components of a sourced engagement, with each requiring differing levels of detail, based on the type of engagement model that is selected. (e.g., Staff Augmentation, Capacity, Fixed Deliverable, Managed Service, or Hybrid)

THE STATEMENT OF WORK (SOW)

SOW Components

Staff

AugmentationCapacity

Fixed

Deliverable

Managed

Service

Activities In Scope L M VH H

Activities Not In Scope – M VH H

List of Deliverables – L H H

Acceptance Criteria – L VH H

List of Responsibilities L L H H

Assumptions and Dependencies – M H H

Risks and Mitigation Plans – M H H

Communication and Escalation L M H H

Change Control – L VH VH

Pricing and Invoicing Schedule L L VH H

Knowledge Transfer/Transition – L M H

Governance and Reporting L M H H

SLAs & Credits L M H VH

Productivity Improvements – H L H

Quality Improvements – H L H

Warranties – M H VH

Completion of all SOW sections

is important but there is a key

set of components that must be

well thought out to ensure the

greatest opportunity for

success. If these components

are not fully understood prior

to engagement initiation, the

result is likely to be

mismanaged expectations

between Buyer management and

the Provider.

L Low M Medium

H High VH Very High

12

OUTCOMES VS. TASKS

Clients Manage

The focus and activities of internal staff differ when managing outcomes vs. tasks.

Outcomes

Requirements

Communication

Performance

Results

Relationships

Expectations

Manage the Result

Service Level Agreements

Knowledge Management

Provider Governance

Program Reporting

Steering Committee

Escalation Process

Critical Success Factors

Tasks

Scope

Time

Resources

Activities

Process

Deliverables

Manage the Work

People

Talent Management

Domain Expertise

Project Management

Facilities

Quality Assurance


FOCUS WILL BE ON MANAGING PERFORMANCE13

“Not everything that counts can be counted, and

not everything that can be counted, counts.”

- Albert Einstein

Any managed services model is based on expected results / outcomes –

achieved through adoption of leading practices and embraced by stakeholders

and followed with the right spirit and rigor

Effective measures to monitor and deliver on the service levels (expected

outcomes) is critical to the adoption of managed services - adoption is typically

slower than expected across organizations

Continuous improvements is an on-going process – maturity is reached over a

period of sustained efforts

Monitor and measure performance indicators that “actually” impact the

business when service levels aren’t met


DEFINE CONSISTENT & EXTENSIVE SERVICE LEVELS14

It is important to follow a consistent service level framework

Used In-house

New Created

In-house

Supplier Provided

Business Provided

Co-Developed

SOURCES

Impact

- What affects the business

Peer Shared

EVALUATE & DEFINE

CRITICAL

SERVICE LEVELS (CSL)

Leading & Lagging Indicators

CRITICAL DELIVERABLES

REPORTING

SERVICE LEVELS (RSL)

MONITOR –

“What Really Matters”

Influence

– Will it have an influencing

effect on the outcomes

– Will it manage stakeholders

expectations

Measurable

– Can it be measured

objectively

Relationship

- Will the measures contribute to

knowledge sharing and on-going

improvements


METRICS IMPACT SIGNIFICANTLY – UNDERSTAND RATIONALE15

Notes

RationaleProcess Frequency

SLA Monitoring

SLA Analysis and reporting

Calculate & monitor utilization

Calculate Performance Credit, Earn-back

Validate RCA and track progress

Validate Performance Credit, Earn-back

Manage Continuous Improvement (SLAs)

Review service level applicability

Publish Business/IT Availability Index

Review

Financial Impact

Control

Capacity Estimation/Productivity

Operational Excellence

Financial Impact

Continuous Improvement

Business Continuity

Redefining SLAs

Hiring Fulfillment / Metrics Business Continuity

Daily / Weekly

Monthly

Daily

Yearly

Yearly

Ongoing

Ongoing

Quarterly

Monthly

Monthly

Client Provider

Monitor critical deliverables CSATYearly

Engagement Operational Health - check Ops and Relationship ImprovementsQuarterly

Cultural Integration – One-Team-Team Operational ExcellenceOn-Going

Project Reporting ControlMonthly

Contractual Compliance Audits CSAT Legal ComplianceYearly

16

GOVERNANCE REPORTS AND TREND ANALYSIS

Governance reports should include a select set of lagging indicators, in the form of SLAs, and an even smaller set of leading indicators, in the form of KPIs.

Selection of SLAs and KPIs

The value of choosing the right KPIs

The Provider is meeting the SLAs, but the engagement is failing

The governance reports should contain 4 to 6 SLAs, and 1or 2 KPIs, that are felt to be the most important factors tothe business. These 5 to 8 items will form the basis of meaningful ‘heads-up’ metrics on the Manager’s dashboard.

Even though a Provider is meeting their contractual obligations, the KPIs may indicate a downward trend in the performance of the business which should warrant action.

If the correct measures have been used in the governance report, and the KPIs are truly leading indicators, then critical issues can be dealt with proactively versus managing failed actions or results.

The selected SLAs and KPIs may change over the life of the engagement, based on the changingneeds of the business and the area of engagement that require management focus.

17

Consider implementing a robust governance model with simple interfaces that increase delivery options and efficiency.

Function

Impact:

Cost ––– Risk Key Success Factors

1Service

Management

• Proactive vendor management (VMO)• Detailed metrics and KPIs• Process automation with multi-vendor

control capability• Effective problem management

2 PMO

• Understand demand impact on invoice• Clear projection by categories• Actively manage risks and issues• Run projects to audit ready methodology

3 Build

• Demand process clarity• Change mgt. controls• Predictable releases• Clear resource levels (e.g. shared roles)

4 Operate

• Efficient “one & done” metrics• Proactive management• Problem management remediation• Automation aligned with delivery

5 Strategy

• Clear priorities for Cost, Risk, and Quality• Enterprise reference architecture• Defined application objectives• Close alignment with business operation

6 Governance

• Maintain compliance with standard technology and processes

• Oversight to achieve standardization• Manage issues based on strategic priorities

H

M

M

H

H

M

H

H

L

H

M

M

PMO Build Operate

Strategy

Service Management

Governance

To

wer

s

Tactical Strategic

Less

More

Balanced and

efficient sourcing

based upon:

• Service clarity

• Standardprocedures

• Stable processes

• Simple interfaces

• Measures andcontrols

Flexible

Workforce

Line of Business

1

2 3 4

5

6

Contractors Employees

Vendors Partners

ROBUST APPROACH TO GOVERNANCE

18

AVOID COMMON PITFALLS

Lack of buy-in from demand managers negatively impacts

the provider’s ability to deliver and may negate SLAs put in place for the outcome

Ensure that internal staff is informed about the managed service model and strategy.

Train managers for their new roles and responsibilities in a managed service operating mode.

Make sure provider is qualified to deliver a

managed service

Providers that are unprepared for managed outcome models rarely deliver the product on time or within the budget allocated. New negotiation ensues related to change order and overtime.

Understand providers capabilities and examples ofhow previous engagements were delivered during selection process.

Beware the T&Mengagement masquerading

as Managed Service

Set the right expectation up front and in contracts. Often, the client thinks they are contracted for managed service and the provider thinks the client is ultimately responsible for the outcome.

Similarly, a client may sign up for managed service but consume on a staff augmentation model, which may also lead to unexpected outcomes.

Understand the level of knowledge transfer effort

required

If you do not devote enough time to this, there is no way a provider can deliver the desired outcome.


ENSURE GOVERNANCE IS ALIGNED TO GOALS19

Strategic Governance

Functional Governance

Project Governance

Coordination, communication & control between

process owners

Provide for knowledge management

Opportunity Identification & enable demand

aggregation

Cross-functional, cross-geography, cross-vendor

alignment

Manage global sourcing activities and

contracts

Manage vendor relationships, performance

and resources

Manage scope and integration

Reporting

Align business strategy & global services

initiatives

Guide execution of enterprise wide global

sourcing initiatives

Ensure adequate risk mitigation and controls

Program sponsorship


MANAGE THE RELATIONSHIP20

Client of Choice initiatives

RACI

Tracking issues to closure

Communications strategy & management

Meetings and visits (meeting cadence)

CSAT

Employee recognition programs

One Team

New opportunities

Relationship feedback

CORE TEAM /

GMO

Financial

Management

Performance

Management

Contract

Management

Relationship

Management

Resource

Management

HR

Fin

an

ce

Pro

cure

ment

Corporate Services

Leg

al

Security

Glo

bal A

ud

it

GOVERNANCE – RELATIONSHIP MANAGEMENT

FOCUS

Level 4

Level 3

Level 2

Level 1

Continuous Low Performance / SLA ratings

Unresolved Client / Provider difficulties

Issues impacting MSA / SOW

Issues Unresolved at Level 3

Falling Performance / SLA ratings

Non- Action on Action Item (ATRs) / Recurring Issues

Issues Unresolved at Level 2

Fall in Performance / SLA ratings

Unresolved Task Request Prioritization

Work Load Adjustments

Quality / Productivity / Other issues not

resolved at Level 1

Project Issues

Process Deviations / Non-

Compliance

Task Request Prioritization

First Level for Quality/

Production Issues

ParticipantsEscalation Categories

CIO, GMO,

Procurement,

HR, Finance,

Legal

Pillar Head,

Project Manager,

Resource

Manager

Project Manager,

Resource

Manager

Project Teams

CEO, SBU Head,

Delivery Head

SBU Head,

Delivery Head,

Program

Manager

Program

Manager /

Offshore Delivery

Manager

Project Teams

Client Provider

The key steps in the dispute resolution mechanism is to conduct periodic reviews of all project issues. The periodic reviews largely help in

resolving the disputes at an early stage.

ESCALATION PYRAMID

Urgency Impact Prioritization Example Timeline

High High High

Continuous Low Performance / SLA ratings

Unresolved Client / Provider difficulties

Issues impacting MSA / SOW

Issues majorly impacting business

90% in 6hrs &

100% in 12hrs

Low High Medium

Falling Performance / SLA ratings

Non- Action on Action Item (ATRs)

Recurring Issues on Quality / Productivity

Unresolved Task Request Prioritization

Work load adjustment issues

Issues impacting business

New resourcing issue

Reporting validation issue

80% in 12hrs &

100% in 24hrs

High Low Medium

Low Low Low

Project Issues

Process deviations / non-compliance

Task request prioritization issues

75% in 24hrs &

100% in 48hrs

ENGAGEMENT ISSUES PRIORITIZATION

CSAT Framework

New Sourcing Opportunities

Requirement Fulfillment

Solution Design & Delivery

PersonnelCommercial

Interface

Performance & Reporting

Relationship Management

CUSTOMER SATISFACTION


FOCUS ON PERFORMANCE & VALUE21

Service Levels / Performance Metrics monitoring & reporting

Analyze trends in service areas (Service Levels)

Schedule Management - Reorganize work processes to include offshore teams

Offshore workflow / workload management – monitoring & validating time-sheets & utilization

Review workload distribution across resources

Recommend productivity enhancements

Monitor continuous performance improvement efforts

Perform monthly operations reviews

CORE TEAM /

GMO

Financial

Management

Performance

Management

Contract

Management

Relationship

Management

Resource

Management

HR

Fin

an

ce

Pro

cure

ment

Corporate Services

Leg

al

Security

Glo

bal A

ud

it

FOCUS ON PERFORMANCE / OUTCOMES

GOVERNANCE - REPORTING

Pillar Heads

Resource

Manager

Project

Manager

CIO /

Provider

Stakeholders

GMO

Reporting Flow

Reports copied to GMO and Feedback Loop

Validated Reports Consolidated Reports

Variances Reports. Continuous Improvements

Feedback / Action Items

Notes

RationaleProcess Frequency

SLA Monitoring

SLA Analysis and reporting

Calculate & monitor utilization

Calculate Performance Credit, Earn-back

Validate RCA and track progress

Validate Performance Credit, Earn-back

Manage Continuous Improvement (SLAs)

Review service level applicability

Publish Business/IT Availability Index

Review

Financial Impact

Control

Capacity Estimation/Productivity

Operational Excellence

Financial Impact


Business Continuity

Redefining SLAs

Hiring Fulfillment / Metrics Business Continuity

Daily / Weekly

Monthly

Daily

Yearly

Yearly

Ongoing

Ongoing

Quarterly

Monthly

Monthly

Client Provider

Monitor critical deliverables CSATYearly

Engagement Operational Health - check Ops and Relationship ImprovementsQuarterly

Cultural Integration – One-Team-Team Operational ExcellenceOn-Going

Project Reporting ControlMonthly

Contractual Compliance Audits CSAT Legal ComplianceYearly

GOVERNANCE – QUALITY IMPACT BEYOND PROJECTS

Share Point Folder Management Structure

Syntel Engagement

Governance

Owner: GMO Relationship

Manager

Financial Management

Owner: IT Admin / Finance

Performance Management

Owner: Project Managers &

Resource Managers

Contract Management


Manager

Relationship Management


Manager

Resource Management

Owner: Resource Managers

Invoicing Process

Documentation

Monthly Invoices

with Time Sheets

– as a listing

SL Validation &

Reporting Process

Weekly / Monthly

Reports

Quarterly / Annual

Reports

Service Credit

Computation

Model

Operational Issue

Log – as a listing

Change Request

Process

Change Request

Approval Forms

Change Request


MSA / SoW

Key Contractual

Terms – Ready

Reckoner

Resource

Selection Process

On-boarding / Off-

boarding Process

Resource Tracker

– as a listing

Requirements

Form / JD

Issue Resolution /

Escalation

Process

Engagement Issue


Governance

Documentation

- Structure

- RACI

CSATMonthly Payout –

as a listing

Service Credits

Adjustments – as

a listing

Overall

Performance

Dashboard

Knowledge / Research

Owner: GMO

Industry Best

Practices

Knowledge

Artifacts

Reference

Documents

All documents to be uploaded / archived in

Share Point within 48 hours of finalization /

publication

GOVERNANCE – KNOWLEDGE MANAGEMENT

22

Sourcing has evolved from a tactical labor arbitrage model that started in the manufacturing sector, to a much broader strategic model. As Providers mature by commercializing their services, they have begun to provide more value-based offerings that are being leveraged by companies for business transformation.

TRANSFORMATIONAL OPPORTUNITIES

Service capabilities grow as cost per transaction declines

• Control reactive operations by systematically addressing complexity drivers, while improving service delivery processes

• Service demand and capacity improvements result from changes designedto control volume while increasing response speed

• Transformed enterprise environment produces a service delivery continuumwhile simultaneously improving cost basis and service quality

Asserting a new service continuum

• Operational Efficiencies: establishes service control based on transformed services

• Optimization: iterative transformation addresses complexity and value potential increases as services improve

• Service Excellence: predictable quality results from process improvement,team knowledge, and tool enhancement

• Measurable Results: business benefits that optimize bottom line andimprove responsiveness

TransformingSustaining Value

CBI IT

Infrastructure

Service Portfolio

ServiceCapabilities

Operational Processes

Virtualize Standardize Rationalize

Process

ResourceIndependence


• SourcingOptionality

• ResilientProcesses

• IncreasedThroughput

• EconomicTransparency

• Reduced“Run” Risk

Scalable Demand Response

Predictable Service Quality

Capability Asymptote: marksservice constraint without transformation investment

Chaotic Reactive Stable Proactive1 2 3 4 5

Predictive

C1

C2

Traditional IT

Outsourcing

Limited benefits:cost reduction fueledby labor arbitrage

TransformationOutsourcingPotential

New service continuumwhere costs decline asservice increases Transform

Cost based ontechnical complexityand process


THANK YOU23

NEO GROUP

GLOBAL HEADQUARTERS6200 Stoneridge Mall Road, 3rd Floor

Pleasanton, CA 94588, USA

ASIA-PACIFIC HEADQUARTERSNo 13, 1st Floor, C Block,

Embassy Heights, Magrath Road,

Bangalore - 560025

AMSTERDAM, NETHERLANDS

AUSTIN, TEXAS

BOGOTA, COLOMBIA

LONDON, UK

NEW YORK, USA

ATLANTA, USA

SAO PAOLO, BRAZIL

SILICON VALLEY, USA

SYDNEY, AUSTRALIA

ATUL VASHISTHAChairman, Neo Group

[email protected]

978.707.9769

ASHISH MALHOTRAVP, Workforce Management, Time Warner

[email protected]

[email protected]

www.neogroup.com

mailto:[email protected]


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ATUL VASHISTHAChairman, Neo Group

[email protected]

978.707.9769

ASHISH MALHOTRAVP, Workforce Management, Time Warner

[email protected]

