outsourcing risk mitigation and critical success factors

Outsourcing Risk in the New Paradigm and Success Factors

June 4, 2013 12:00 PM- 1:00 PM EDT

Sponsored by: SPAN Systems Corporation Produced and Presented by: The Outsourcing Institute

The Outsourcing Institute • Located at outsourcing.com – Over 70,000 Executive Members Globally • Trends, Best Practices, Case Studies • Training Through OI University

• Specialize in Low Cost Alternatives for Outsourcing Buyers Needing Assistance with RFP

Development and/or Vendor Selection: – Outsourcing RFP Builder Software – Matchmaker Service

• Qualified Demand Generation Programs

• Outsourcing Jobs Opportunities and Recruiting Services Through CMS Inc.

• Local, Intimate and Interactive Outsourcing Road Show • Sponsorship and New Business Development Opportunities & Programs

For more information contact us at: [email protected] or 516-279-6850 ext. 712

mailto:[email protected]

Today’s Speakers

www.spansystems.com 3 Copyright: SPAN Systems Corporation

Tony Mataya Managing Partner ThinkSolutions

Ben Blakewood Senior Vice President and Chief Information Officer AgFirst Farm Credit Bank

Prakash Grama Co-founder and CEO SPAN Systems Corporation

Naganand Doraswamy Co-founder and EVP Engineering SPAN Infotech (India) Pvt. Ltd.

Agenda

Outsourcing Risks and Mitigation Steps

Customer/Buyer Perspectives with Case Study

Relationship Management


Q&A

Outsourcing Risks and Mitigation…

Associated Risk in Outsourcing Mitigation Steps


Relationship Management Most critical success factor. Avoid Order Takers. Vendor should need your business.

Outsourcing objective not aligned with Business Strategy

Do it for the right reasons. Get Buy-ins from all stakeholders.

ROI

Set right expectations with costs and returns. Establish all costs related to vendor management and governance. What is the cost of failure? What is the

cost of innovation? What is the skin in the game for the vendor? Is the onsite/offsite ratio

right in blended rates.

Outsourcing Risks and Mitigation…

Associated Risk in Outsourcing

Scalability

Vendors Legal Terms

Right size Vendor, Flexible Ramp - Up/Down keeping core team in place. Grow at the speed of your market.

U.S. Incorporated Vendor, IPR, Confidentiality, Limitation of Liability.

Mitigation Steps

Ability to work as Strategic Partners Multi source capability, Proof of capability, Attrition rate, Cultural alignment, Value creation.


Outsourcing Risks and Mitigation

Associated Risk in Outsourcing

IP Protection Is Vendor in IP Business along with services; How do they work with your Competitors.

Mitigation Steps


Governance Models/ Contracts - SLA/OLA, Vendor dependence Security, Privacy,

Exit Mechanism Review and Set Governance Models and OLA in

contract in addition to SLA.

Quality Certifications, Process Maturity, Practice.

Value Creation Understand your business, your customer, and your

market and be proactive in giving suggestions for improvements.

Outsourcing Risks and Mitigation

Associated Risk in Outsourcing Mitigation Steps

Service Transition, Delivery & Post Transition Management

Establish the right KT. Invest heavily in communication initially. Use Shadowing

and Benchmarking.


Visibility of status Reporting Mechanisms. Tools, Transparency.

Knowledge retention and Management Employee retention and Tools for knowledge management. Cross Pollination.

Competency Pyramid

• The Playing Field of Offshore Companies narrows as you go up the Pyramid.

• Domain specialization ensures value addition and productivity.

• Internal Process should be matured and consistent

• Technology Expertise is a minimum Qualification.


AgFirst Farm Credit

AgFirst Farm Credit Bank

• $28 Billion • 19 Cooperatives

AgFirst Farm Credit - June 2013 11

Offshore Proof of Concept

• June 2006 with SPAN • Business Case:

– Mission critical, mature in-house written loan origination with large VB6 code footprint.

– Due to other strategic priorities, difficulty keeping up with small changes, maintenance requests from business users.

– Needed a cost effective way to maintain systems and be agile in meeting customer needs.


Due Diligence for POC • Reviewed POC proposal with all key internal

stakeholders: Business Users, Internal Audit, and Executive Committee.

• Utilized Gartner Group Research. • Vendor reference calls.


Results of POC • SPAN was able to quickly get up to speed learning

the legacy system. • Eliminated the technical resource bottleneck to

getting work done. • Had strong business user support for offshoring

after POC.


How we use offshoring today • Balance of offsite and onsite resources

- 20% onsite, - 80% offsite

• Assigned to: – SQL report development. – Application maintenance. – Patch/verification testing. – Security consulting. – Mobile development.


Benefits • Deep bench for technical resources. The ability to

quickly scale up and scale down adds tremendously to enterprise agility and flexibility.

• Follow-the-sun development. Passing work offshore at the end of day and having it ready the next morning speeds development cycles.

• Value added services. Testing, security, and mobile development.

• Managing key developer risk. Offshore companies are very adept at documenting systems so they can be handed off/supported by others.


Keys to Success • Select a vendor that:

– Matches your size. You don’t want to be a very small fish in a large pond.

– Has ISO security certifications. • Build business user support. Business users should

experience direct benefits and be your strongest advocates.

• Manage staff fears. • Incent technical managers to use offshoring services. • Ensure comprehensive governance is in place with

internal security teams and the project management office.


Keys to Success (Continued) • Knowledge transfer. Require resources to

come onsite for knowledge transfer. • Established, long-term engagement. Have

permanent onsite resources from the vendor to help with the coordination of offsite resources.


Relationship Management


SPAN Systems Corporation

www.spansystems.com 20

U.S. ‘C’ Corporation 1993 incorporated

Wholly owned by EVRY (www.evry.com), a $2.3 Billion Nordic company

Ranked #7 Best IT Places to Work For in India; Historically low attrition

CMMI5, ISO 9001 and ISO 27001 certifications

Strong Relationship Management

Customers range from Fortune 5 to SMEs

Copyright: SPAN Systems Corporation

www.spansystems.com

SPAN Overview

Processes

Client Engagement

Stability

Domain

Technology

SPAN

An EVRY Company

• Almost Two decades in IT solution providing

• Part of US $2.3 Billion Norwegian company & 10,000+ employees

• #7 in Best Employer in India

• Insurance & Healthcare

• Banking & Finance • Retail • Independent

Software Vendors

• Microsoft – Silver web development partner

• Oracle – Platinum Partner • DW/BI • Java & other open source • ERP • Enterprise Mobility

• Relationship Model

– Management focus

– Governance team

• Innovative Pricing

• Tailored Business Models

• Offshore Centers Certified

– CMMI 5

– ISO 9001:2008

– ISO 27001: 2005

21 Copyright: SPAN Systems Corporation


Tony Mataya Managing Partner ThinkSolutions [email protected]

Ben Blakewood Senior Vice President and Chief Information Officer AgFirst Farm Credit Bank [email protected]

Prakash Grama Co-founder and CEO SPAN Systems Corporation [email protected]

Naganand Doraswamy Co-founder and EVP Engineering SPAN Infotech (India) Pvt. Ltd. [email protected]

Questions





Thank you for joining Outsourcing Risk in the New Paradigm and

Success Factors

This webinar was sponsored by SPAN Systems Corporation in conjunction with The Outsourcing Institute.

Tony Mataya Managing Partner

ThinkSolutions

Ben Blakewood Senior Vice President and Chief

Information Officer AgFirst Farm Credit Bank

Prakash Grama Co-founder and CEO

SPAN Systems Corporation

Naganand Doraswamy Co-founder and EVP Engineering

SPAN Infotech (India) Pvt. Ltd.