request for solution: a new way to contract for a service provider's best ideas
DESCRIPTION
Bill Stout, Director, ISG, and Scott Bonneau, VPI IT, Finance & Hosting Services, Dr Pepper Snapple Group prepared this information for presentation at the May 2013 SIG Global Sourcing Summit. The 50 minute session covered the genesis of the RFS, details on the approach and tips for practitioners on how to leverage the RFS in specific situations to bring more innovation in Provider proposals.TRANSCRIPT
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Prepared for the SIG 2013 Global Sourcing Summit
Bill Stout, Director, ISGScott Bonneau, VP IT, Finance & Hosting Services, Dr Pepper Snapple Group
May 2013
One Client's Experience
Request for Solution: a New Way to Contract for a Service Provider’s Best Ideas
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About Dr Pepper Snapple Group
► Manufacture, bottle and distribute more than 50 brands of carbonated soft drinks, juices, teas, mixers, waters and other premium beverages
► $5.995 billion in revenue for 2012
Dr Pepper Snapple Group (NYSE: DPS) is one of North America’s leading refreshment beverage companies.
Flavored CarbonatedSoft Drinks Premium TeaJuice & Juice Drinks
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Objective and Agenda
► Objective: Inform the attendees about the emerging Request for Solution (RFS)
process and provide a case study as an example of practical application with
lessons learned and suggestions for potential practitioners.
► Agenda
ISG and DPS background
Overview of the RFS Process
DPS Case Study Case Context
Case Study "Take-Aways" and Lessons Learned
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Polling Questions
How many of you may have already heard about the RFS?
For your most recent major sourcing transitional, please raise your had if you started the process with an RFP
Please raise your had if you started the process with an RFQ?
Please raise your hand if you started with an RFS approach?
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The Request for Solution: Best of the bunch
We've picked some of the best elements of all approaches to develop an alternative that helps widen the solution horizon and gets to contract (benefits) sooner
Sourcing Transaction Engagement Continuum
1RFP
8-12+ Week Process:Supports
"Lift and Shift" approaches – can be time consuming and
stifle innovation
2RFS
8 Week Process:"Solution" focus
looking for innovation and exploring alternatives
3RFQ
X Weeks:Known Standard
Solution; procurement
focus
Project Time More Less
Scop
e an
d Co
mpl
exity
More
Less
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The RFS forgoes the rigor required to develop, socialize and agree on an RFP upfront, in favor of an early focus on solution and transformation opportunities
RFS ►The Engagement Package focuses on goals and objectives – not terms and conditions
►Commonly 6 Providers are invited to participate allowing a broader view of potential solutions
►The bulk of the effort is in the collaboration with the Providers, providing feedback and evaluating the options - leading to a down-select
RFS at a Glance
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Dr Pepper Snapple Group Case Study
Scope & Context
► 7 year managed services outsourcing agreement was due to expire in May 2014
► Scope centered on data center & hosting services Servers Storage Email hosting
► Incumbent provider had performance issues over life of contract, although had improved significantly in 2012
► Desire to leverage a competitive sourcing process
Business Objectives
► Capture financial savings associated with service offering maturity
► Improve speed to market, (e.g., startup of new server and storage services)
► Improve reliability, availability, and performance of compute and storage platforms
► Leverage recent changes in technology and data center/hosting service offerings
► Mitigate business risk during transition & transformation
Results
► Leveraged the RFS to review solutions from 6 providers (10 weeks)
► Conducted due diligence with 2 providers to secure detailed transformation plans and firm pricing (8 weeks)
► Down-selected to a single provider (incumbent) and closed the contract negotiations (6 weeks)
► New agreement includes significant cost savings and complete technology refresh
► Transformation already underway
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Lessons LearnedBenefits
DPS Case Study – Buy-Side Takeaways
► The RFS process, by its nature, delivers high level solutions and indicative pricing, making down-select decisions difficult
► Cannot necessarily go straight into contract – indicative pricing and high level solutions require multiple clarification iterations
► Even though there is no RFP, the team must know and agree in advance which types of solutions will work for their environment and business
► Critical to staff the right cross-functional team during the RFS phase (e.g., IT Security, Architecture, Applications, Hosting, Procurement)
► Faster process than the traditional approach that was used internally at DPS
► Provided a high degree of competition and solution diversity
► Increased focus on solution development and reduced emphasis on documenting responses
► Yielded greater insight into the provider's capabilities and solutions prior to the down-select, due to the collaborative process that was employed
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When and why you should consider an RFS
► Generally, the RFS best suited for situations where the client has previous sourcing experience, a clear sourcing strategy and existing service integration and governance processes
► From a solution perspective, the RFS is well suited for situations where the in-scope areas are subject to major innovation or transformation; or
► Where a high degree of competition and solution diversity is needed from 6+ bidders
► Can be used where speed to an agreement is paramount and the transaction is solution focused
► Greenfield solutions – the RFS has also been used for completely new businesses where the client has almost complete flexibility in technology solution choices
The Request for Solution approach is generally more geared towards certain scenarios than others.
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Thank you for your time today
► Bill StoutDirectorISG+1 720 373 3187 [email protected]
► Scott Bonneau VP IT, Finance & Hosting Services
Dr Pepper Snapple Group+1 972 673 [email protected]
To learn more about RFS:Visit www.isg-one.comFor related article on the RFS from CIO Magazine and a previous ISG and SIG RFS presentation
www.isg-one.com