optimizing sourcing - sigassets.sig.org/s3fs-public/working-council_sourcing... · organizations...

5/24/17

Time Topic Responsible

2:00pm Welcome & Introductions Snehal Sindhvad (SIG)

2:05pm SIG Working Group Concept & Structure Snehal Sindhvad (SIG)

2:15pm The Sourcing Lifecycle John Bree (NEO)

3:00pm Meeting Concludes

Snehal Sindhvad

SIG – Member Services

[email protected]

John Bree

NEO Group

[email protected]

Working Council Leadership Team

Ensure that SIG Members have a resource to turn to when they have questions concerning how organizations develop their sourcing strategies;

Provide an environment for SIG Members to network and develop relationships with subject-matter experts, thought leaders and practitioners in this business area;

Discuss sourcing strategies with SIG Members and focus on initial value assessments and optimal decision-making. This council will develop a general framework to help ensure that your business strategy is driving your decisions.

The Charter or Purpose of this Working Council is:

Working Councils are open to all SIG Members

Buy-Side participation is the core of our success!

John Bree is our Sell-side Council Leader

© 1999-2017 Neo Group Inc. Proprietary

SOURCING LIFECYCLE

“The right outcomes with the right person in the right place at the right

time with the right skills and at the right price! Too much to ask?”

- Bob Rosetta, MD, Global Head of Citi’s Resource & Location Strategy


Governance Planning

Communications and Change Management

THE SOURCING

LIFECYCLE

- WHAT IS THE

OBJECTIVE?- COST

- QUALITY

- SPEED TO MARKET

- NEED FOR TALENT

- ………

SOURCING LIFECYCLEBEGINS WITH OBJECTIVES

9

• Transition Design

and Support

• Governance Design

and Support

• Health Check

• Supplier and

Location Monitoring

• Program and Project

Management

• Governance As A

Service

• Readiness

Assessment

• Maturity Assessment

• Opportunity

Identification

• Global Business

Services

• Sourcing Strategy

• Service Design

• Process Optimization

• Spend Analytics

• Sourcing Analytics

• Location

Assessment

• Supplier

Assessment

• RFP Process

• Partner Selection

• Global In-House

(GIC)

• Vendor

Consolidation

• Re-negotiations

• Benchmarking

• Research

STRATEGY SOURCING GOVERNANCE


SOURCING EVOLUTION INDEXFROM COST FOCUS TO STRATEGIC VALUE

10

BASIC

LABOR

ARBITRAGE

I

Beginning

the journey

EVOLVING

LABOR

EFFICIENCY

II

Moving up

the curve

MATURE

PROCESS

EXCELLENCE

III

Comparable

with local

peers

ADVANCED

OPERATIONS

EXCELLENCE

IV

Better than

most local

peers

LEADERSHIP

STRATEGIC

VALUE

V

On par with

world class

programs

© Neo Group

Companies who leverage global services successfully, typically progress through a five-

stage evolution – moving from a cost focus to one of strategic business enablement


SOURCING & GOVERNANCE MATURITYIS REQUIRED FOR SOURCING EVOLUTION

Manage Value

Manage Portfolio

Manage Demand

Manage SupplyI. Reactive

II. Proactive

III. Rationalized

V. Aligned

IV. Optimized Manage Outcomes

Includes Global In-House Centers and Partners

3

© Neo Group


Portfolio Data Input Multi-dimensional Analysis Opportunity Recommendation by Scenarios

All Functions/ Processes

(per Data Collected)

Operational Requirements

Business Impact and

Risk

Skill Requirements

Role Interaction and

Criticality

Documentation and Training

Technologies and Tools

GLOBALYZESM

START WITH IDENTIFYING

THE RIGHT OPPORTUNITIES

Source: Neo SourcePrismSM

4


THEN CHOOSE THE RIGHT MODEL13

A structured framework should be put in practice for choosing the right engagement

model

Source: Neo Group

Key Inputs

•Strategy

•Objectives

•Transformation Opportunities

•Requirements

Critical Factors

•Criticality – Core/Non-core

•Project Risks

•Requisite Controls

•Cost Effectiveness

•Knowledge – Past / Present / Retention

•Vendor Performance –SLAs / CSAT

•Governance -Outcomes

Decision

•Supplier

•What goes where -Portfolio Assessment

•Contracting

•Engagement Model

•Governance Framework

Planning

•Project Scoping

•Pricing

•Resources

•Measurements & Monitor – Tollgates, Reviews, Approvals, SLAs, etc.

•Governance Structure & Modalities

•Health checks -Continuous Improvements

Implementation

•Project Charter

•Project Plan

•Communications & Change Management

•Training

•Knowledge Management Systems

•Meeting & Reporting Cadence

•Published SLAs & Outcomes

Within Client’s Organization In Collaboration with Supplier

HR

Fin

ance

Pro

cure

men

t

Corporate ServicesL

egal

Sec

uri

ty

Glo

bal

Au

dit

EFFECTIVE GOVERNANCE FOCUSED ON OUTCOMES


SOURCING ENGAGEMENT MODELSDEPEND ON PRICING & GOVERNANCE CHOICES

14

Multiple sourcing models

Most use the following or a combination of these for their operations

Governance Based Model

Pricing Based ModelTime & Material

Fixed Price

Managed Capacity

As name suggests, the model is Price based

Guidelines based on pricing of the work order

Based on governance strategies deployed for

projects

Client Managed

Supplier Managed

Co - Managed

Transaction Based

Managed ServicesMost commonly seen as staff

augmentation, managed capacity and

managed services


EXAMPLE: CHOOSING THE RIGHT MODEL15

Business

Staff Augmentation Capacity Model Managed Services

Core Non Core

Controls

Resource

Deployment

Visibility

Need to Control

Resources

Control Via

Deliverables

Cost Predictability

Time & Material, Ever-

changing Projections

Fixed Measurable

Budgets

Knowledge Management

Knowledge of

Individuals

Experience and Expertise

of Firm/CoE

Service Level Discipline/Maturity

Unstructured

SLAsStructured SLAs

Vendor Capability

Early Stage Leading Practices, Continuous

Improvements, Innovation

Criticality

High LowResource

Retention

High Low


USE REAL-TIME DATA, TRENDS AND ANALYTICSTO SUPPORT SOURCING DECISIONS

16

Source: Supply WisdomSM


MACRO ECONOMIC

ATTRACTIVENESS

• Macro Economic Indicators

• Currency attractiveness

GEOPOLITICAL ATTRACTIVENESS

• Political risk

• Crime rate

• Terrorism/Ethnic tension/Social

unrest

FINANCIAL ATTRACTIVENESS

• Salary Level (ITO, BPO, KPO) for

entry level

• Salary growth (ITO, BPO, KPO) for

entry level

• Rent (Grade 1 CBD)

• Rent growth

• Cost of living Increase

INDUSTRY ATTRACTIVENESS

• Industry size ITO

• Industry size BPO

• Industry size KPO

• Projected Industry growth ITO

• Projected Industry growth BPO

• Mature Service Providers

BUSINESS ENVIRONMENT

ATTRACTIVENESS

• Ease of doing business

• Quality of life

• Cultural compatibility/Support

facilities for expats

• Access to healthcare

• Pollution levels

• Quality of education

• Business and support amenities/5

star rooms

INFRASTRUCTURE

ATTRACTIVENESS

• Government support/incentive

• FDI attractiveness

• Power supply

• Transportation

• Software parks/SEZ’s

HUMAN RESOURCES

ATTRACTIVENESS

• Scalability risk

• Number of Industry employees

• Attrition – Overall and client

LOCATION

ASSESSMENT

MODEL

KNOW WHAT TO DO WHERE17

© Neo Group


CAPTIVE/IN-HOUSEIS ANOTHER OPTION

18

Foundational

Elements

GBS Building

Blocks

• Appetite for more

transitions

• Account management set-

up and capability

• Creating goodwill

Stakeholder

Management

• Service depth

• Delivery methodologies

• Project & Performance

Management

• QA

Service

Capability

• Market orientation

• Clarity of vision

• Capability to handle

growth

• Decision making process

• Empowerment

• Cost effectiveness

Operating

Model

• Recruitment & Staffing

• Enhancing brand

presence

• Training

• Performance Evaluation

• Focus on HCM

• HR team capability

HRM

Processes

• Focus on new and

emerging technologies

• Technical thought

leadership

• Knowledge sharing

Technology

Edge

• Alignment of management

• Management depth

Leadership

Capability

© Neo Group


SOURCE: PARTNER EXPERIENCE &

CAPABILITIES19

Vendors/ Suppliers are requested to provide data and support their responses in regards to their ‘Experience & Capabilities’ for the following.

This needs to be their representative experience toward:

• Domain and Verticals

o Percentage of Total Revenues

o Number of Domain/ Vertical Clients and top 3 among them

o Top 3 Locations by FTEs that serve similar clients

o No. of FTEs by Total Experience Level that include experts

o Center of Excellence (COE) data

o Accreditations and/ or Certifications

o Supplier Proficiency Level

• Functional Capabilities

o Functional Area

o Top 3 Clients by Revenue

o Top 3 Clients by FTEs

o Number of FTEs by total experience level

o Center of Excellence (COE) data



• Technical Skills

o Technology/ Tool Name

o Number of unique clients with similar technology/ tools

o Top 3 Locations by FTEs

o No. of FTEs by Total Experience Level



The above areas will be scored and the results will be heat-mapped to provide overall coverage and unique capabilities of the Vendors/

Suppliers


A GOOD TRANSITION FRAMEWORKDRIVES STABLE OPERATIONS

20

Setup Transition Governance

Plan Transition

Review Scope TransitionBaseline

Knowledge Transfer

Shadow Support

Reverse Shadow Support

Steady State (Stabilization)

Transition Governance

Time

EXECUTEMOBILIZEPLAN

Tech

nolo

gy

Pro

ce

ss

Peo

ple

Change management



A COLLABORATIVE TRANSITION SCORECARD

DRIVES RIGHT INCENTIVES

21

TRANSITION PLAN

DOCUMENTATION

RISK ASSESSMENT - FEMA

READINESS CHECKLIST

ISSUES AND ESCALATIONS*

SKILL MATRIX AND RESOURCING

PERFORMANCE INDICATORS

KNOWLEDGE TRANSFER

CHANGE MANAGEMENT

REPORTING

TRANSITION

SCORECARDA TYPICAL SCORECARD WILL

ENCOMPASS EACH OF THE

FOLLOWING AREAS



Governance

Organizational Governance

Functional Governance

Operational Governance

Coordination, communication & control between

process owners

Provide for knowledge transfer and knowledge

management

Opportunity Identification & enable demand aggregation

Cross-functional, cross-geography, cross-vendor alignment

Manage global sourcing contracts and service

levels

Manage vendor relationships, performance and

resources

Manage scope and integration

Reporting

Align business strategy & global services initiatives

Guide execution of enterprise wide globalization initiatives

Ensure adequate risk mitigation and controls

Program sponsorship


GOVERNANCE

MODEL

A robust governance model is

layered and addresses day to day

operations while considering

strategic and enterprise wide

objectives. Organizational and

Functional Governance is managed

by a Global Sourcing Center of

Excellence (GSCoE) while

Operational Governance is

managed by a PMO or VMO

GOVERNANCE HELPS REALIZE DESIRED OUTCOMES

22


Market Data (country, city,

supplier)

Price pressure and trends

Wage inflation

Operating cost escalation

Infrastructure risks

SLA Performance, CSAT, etc. …..

Balanced Scorecard Metrics...

Transaction Level Performance….

Vendor Management Audits…...

Mark

et

Supplie

rIn

tern

al

BALANCED

SCORECARD

A balanced scorecard

methodology and library to

create performance

transparency and benchmarking

capability

A BALANCED SCORECARD SUPPORTSBETTER PARTNER MONITORING

23



RISK

RATINGNEGLIGIBLE LOW MODERATE HIGH EXTREME

SUPPLIERRISKS

FINANCIAL CLIENTS PEOPLE ALLIANCES

SERVICECAPABILITY

GOVERNANCE INFRASTRUCTURE THOUGHTLEADERSHIP

CITYRISKS

MACRO-ECONOMIC FINANCIAL BUSINESS INFRASTRUCTURE

GEO-POLITICAL LEGAL SCALABILITY QUALITY OF LIFE

COUNTRYRISKS

MACRO-ECONOMIC FINANCIAL BUSINESS INFRASTRUCTURE

GEO-POLITICAL LEGAL SCALABILITY QUALITY OF LIFE

2 4 6 8 10RISK

MONITORING

MODEL• Proactively monitors in real-time

Countries, Cities and Suppliers

globally

• Shares valuable insights built from

sophisticated analytical models

• Delivers actionable guidance from

a team of expert industry analysts

PROACTICE RISK MONITORINGAVOIDS DISRUPTIONS

24



ENSURE CONSISTENT & EXTENSIVE SERVICE LEVELS25

It is important to follow a consistent service level framework

Used In-house

New Created

In-house

Supplier Provided

Advisor Provided

Co-Developed

(Advisor/Supplier)

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


DEVELOPING PEOPLE SKILLSENABLES ONGOING SUCCESS

26

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

Change

Mgmt.

& SkillsTOOLS

TRAINING

PROCESS



Executive Sponsorship

Goals & Expectations

Portfolio Strategy

Delivery Model

Steady State

Governance

Transition

Performance –

Productivity / Quality

HR Lifecycle

Roles /

Responsibilities

Change

Management

Communications

Strategy

Landscape

Roadmap

Security

Physical Security

Technical Security

Contractual Delivery

Compliance

Certifications

TECHNOLOGY COMPLIANCE

PROCESSPEOPLE

STRATEGY

HEALTH CHECK

HEALTH CHECKS CAN ENSURE BEST PRACTICES

27


USA 129 Newbury St., Suite 400

Boston, MA 02116, USA

www.neogroup.com

617.830.1664

AMSTERDAM,

NETHERLANDS

BANGALORE, INDIA

BOGOTA, COLOMBIA

GUADALAJARA, MEXICO

NEW YORK, USA

SAO PAULO, BRAZIL

SAN FRANCISCO, USA

SYDNEY, AUSTRALIA

John BreeSVP & Partner

[email protected]

+1.732.306.8022

www.NeoGroup.com

www.SupplyWisdom.com

[email protected]


THANK

YOU!

QUESTIONS?28

http://www.neogroup.com/

mailto:[email protected]

http://www.neogroup.com/

http://www.supplywisdom.com/

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