risks associated with offshoring - garp€¦ · risks associated with offshoring malcom frank...
TRANSCRIPT
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Risks Associated with Offshoring
Malcom Frank
Executive Vice President, Strategy and
Marketing
Cognizant Technology Solutions
Michael Pahlke
Managing Director, Head of Private
Banking and Wealth Management Products
Technology
Credit Suisse
November 2014
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2
The views expressed in the following material are the
author’s and do not necessarily represent the views of
the Global Association of Risk Professionals (GARP),
its Membership or its Management.
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Managing risks related to offshoring
of services
Zurich, ACCA/GARP/CAIA Chapter Meeting
November 18, 2014
Michael Pahlke - Global Head PB&WM Products IT
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Global Footprint of CS Information TechnologyWhere do we stand today?
New York
Main Business:
Investment Banking
London
Main Business:
Investment Banking
Zurich
Main Business:
Private Banking,
Corporate & Institutional
Clients,
Investment Banking
Raleigh (2005)
Near-shore
development
center, primarily
supporting NY Wroclaw (2010)
Near-shore center,
primarily supporting
EMEA and Switzerland
India (2002)
Outsourced and
co-managed Off-shore
center in different locations
Singapore
Hub mainly serving fast
growing markets of APAC
region
2November 18, 2014Michael Pahlke - Global Head PB&WM Products IT
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The Credit-Suisse Offshoring ModelDefining and following a strategic operating model along design
principles…
November 18, 2014Michael Pahlke - Global Head PB&WM Products IT 3
Some intentions of the CS strategy:
Relying on the competences of our offshore partners
Working with a limited number of strategic vendors
Concentrating vendors around «Capabilities» and few selected locations
Moving towards «Managed Service engagements»
House Team Size
Vendor Size
CS Peer Group
Example: Captive vs. non-captive footprint in offshore locations
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Optimization and Risk MitigationWhat are the potential road blocks? Selected examples …
November 18, 2014Michael Pahlke - Global Head PB&WM Products IT 4
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Finding the Right BalanceHow do we define success or what does it take to stay on course?
November 18, 2014Michael Pahlke - Global Head PB&WM Products IT 5
Quantitative
Factors
Certified in Right
Technologies
Attrition Rate
Service Level Agreements
# of Tickets Closed
Outage Time
Qualitative (Soft)
Factors
Engagement of People
Shared Vision
Stakeholder’s Satisfaction
Mgmt Relationship with
Staff
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Questions?
November 18, 2014Michael Pahlke - Global Head PB&WM Products IT 6
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© 2014, Cognizant
Malcolm Frank
Chief Strategy Officer, Chief Marketing Officer, Head of Cognizant DigitalWorks
Sourcing in our Digital World The new opportunities…and the new risks
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©2013, Cognizant Confidential
Ben Pring Cognizant’s Center for the
Future of Work
Capitalizing on
Code Halos
in the IoT
Marketplace
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2 | ©2012, Cognizant Confidential. Not for distribution.
WE ARE INCREDIBLY LUCKY
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| © 2014, Cognizant
We have the opportunity to build (and manage) the
“vast, silent, unseen
Second Economy”
“By 2025 the Second Economy will be as large as the 1995 physical economy”
W. Brian Arthur, Santa Fe Institute – McKinsey Quarterly, Oct 2011; http://www.mckinsey.com/insights/strategy/the_second_economy
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| © 2014, Cognizant
Everything is up for grabs (again) …
“We are in era where we are re-imagining nearly everything … powered by new devices, plus connectivity, plus new user interfaces, plus beauty….”
—Mary Meeker - Kleiner Perkins Caufield & Byers
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Which is great … and terrifying
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“Get Dilbert on line 1”
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SO, HOW DO WE CAPITALIZE ON THE DIGITAL OPPORTUNITY?
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CODE HALOS
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… which are created by every
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10 | ©2012, Cognizant Confidential. Not for distribution.
… every digital interaction any body and/or any
thing has
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| © 2014, Cognizant 11
How to best build a relationship with him?
• Basic demographics?
• A few data points? • Salesmanship?
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| © 2014, Cognizant 12
Or knowing his exact needs and preference?
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| © 2014, Cognizant
It’s the algorithms that “see” and “understand” us …
13
•Personal ratings •Collaborative filtering
•Algorithms •Based on user
activity
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… every “thing” can – and should – have a Code Halo
around it
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15 | ©2012, Cognizant Confidential. Not for distribution.
“Now any Noun … any person, place or thing … has a virtual self as well a physical self.”
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The mobilization of everything
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Source: https://contractiq.com/Internet_Of_Things_Report_2014
17
The numbers are staggering …
World Population
Connected Devices
6.3 Billion
500 Million
6.8 Billion
12.5 Billion
7.2 Billion
25 Billion
7.6 Billion
50 Billion
Connected Devices
Per Person 0.08
2003
1.84
2010
3.47
2015
6.58
2020
More
connected
devices
than people
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18 | ©2012, Cognizant Confidential. Not for distribution.
WHEN CODE HALO MEETS CODE HALO
THE “SPARK” CREATES NEW BUSINESS MODELS
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| © 2014, Cognizant
Six Companies, 10 Years, $1 Trillion Created
19
They did it with Code Halos
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Value Migration
20
Code Halo
Company
2003 Value 2013
Value
Traditional
competitor
2003
Value
2013
Value
Amazon $15 $176 Borders $1.4 Bankrupt
Apple $64 $506 Nokia $77 $7
Facebook Not yet founded $131 MySpace Private $0.035
Google Private, 4 yrs old $355 Yahoo! $41 $34
Pandora Private, 3 yrs old $6 Tower $3 Bankrupt
Netflix $0.7 $21 Blockbuster $4.3 Bankrupt
Totals $22 Billion $1,195
Billion
$127
Billion
$41
Billion
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| © 2014, Cognizant
Source : The Motley Fool
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22 | ©2012, Cognizant Confidential. Not for distribution.
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Some client voices on Digital: CXOs The Client Challenge
“Advances in technology and shifts in customer
expectations show no signs of abating. They
bring in their wake both disruption and
opportunity. We need to recognize that banking
is a digital business.”
Every business is a digital business. Every
customer is a digital customer. AIG must
evolve to compete
Robert Benmosche, CEO, AIG
Simon McNamara, CAO, RBS
Martin Sorrell, CEO, WPP
"We increased our target for digital to 40%-45% of our
business. If you asked — what do I regret about the
past five or ten years? We didn't go fast enough."
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| ©2011, Cognizant
But this creates new
challenges in IT sourcing
and delivery
27
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Copyright 2014 Cognizant 28
Foundational Technology The infrastructure,
connectivity, devices and security that bring
solutions to life
Technology & Business Solutions
Applications, business analytics, and process
services to move business from physical to digital
Design Processes, interfaces, and
connections to create improved moments of
engagement
Digital Strategy Capturing the commercial
digital opportunity
Successful digital solutions connect…
DigitalWorks
The Digital Experience
Perceived by customers, employees,
partners, and even devices
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| © 2014, Cognizant
Four big issues when outsourcing digital
1. Turning Big Data into Meaning
2. Digitization of Processes
3. Brand Wars via Software
4. Staying Secure
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| © 2014, Cognizant
Four big issues when outsourcing digital
1. Turning Big Data into Meaning
2. Digitization of Processes
3. Brand Wars via Software
4. Staying Secure
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| © 2014, Cognizant
From transactions…
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| © 2014, Cognizant
…to Journeys How do you effect events as events are unfolding?
How do you manage overall customer journeys – based on the culmination of all transactions?
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| © 2014, Cognizant
Four big issues when outsourcing digital
1. Turning Big Data into Meaning
2. Digitization of Processes
3. Brand Wars via Software
4. Staying Secure
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| ©2010, Cognizant Technology Solutions 34
Digit realities • Communication costs near zero • Unbundling of humans and information • Coordination costs plummet – external • Cheaper Information is (nearly)
infinite and universal
Widget assumptions • Communication costs expensive • Co-location of humans, information • Coordination costs high (internal ownership) • Information is finite and proprietary
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| © 2014, Cognizant
Designed for Widgets….not for Digits
35
The Digitization of Processes
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| © 2014, Cognizant
Physical and Virtual Value Chains Harmonized
36
• What goes digital? • What stays physical? • How are the two
harmonized? • What goes
where…and when…and how…any by whom?
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| © 2014, Cognizant
Four big issues when outsourcing digital
1. Turning Big Data into Meaning
2. Digitization of Processes
3. Brand Wars via Software
4. Staying Secure
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© 2008, Cognizant Technology
Solutions.
Confidential
3
8
Most Companies’
Systems
Most Customers
Software as the new
Brand Battleground
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“Software is the brand”
01110011 01101111 01100110
01110100 01110111 01100001
01110010 01100101 00100000
01101001 01110011 00100000
01110100 01101000 01100101
00100000 01100010 01110010
01100001 01101110 01100100
And technology becomes marketing.
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| © 2014, Cognizant
Four big issues when outsourcing digital
1. Turning Big Data into Meaning
2. Digitization of Processes
3. Brand Wars via Software
4. Staying Secure
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295 million…
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| ©2011, Cognizant
Security is the potential Achilles Heel of Digital
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| ©2011, Cognizant
Software is eating the world…
…but don’t let software eat you.
Every company is becoming a software
company
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What can we learn from Digital Software Leaders? A culture of security
Top Down: Executive
Commitment
• Full recognition that enterprise
value and brand reputation are
directly tied to digital security
• Focus from the top, infused into
the DNA
• Every product
• Every services
• Every day
“If you spend more on coffee
than on IT security, you will
be hacked. What’s more, you
deserve to be hacked.”
Richard Clarke
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What can we learn from Digital Software Leaders? A culture of security
Bottom Up: Gray Hat Culture:
• Think like hackers – Understand the latest risk
– Thrive on the ongoing chess match between black hats and white hats
• Knowing the hacking “state of the art” • Constantly reverse engineering the
latest hacks, and what they might mean to your company
• Baking Security into the offer – From day one – Security for customers, not
captive users – Not the department of “no” – Make cultural room for the
security cynics • Note: If you feel slightly
uncomfortable in their presence, you’ve found the right people
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| ©2011, Cognizant
One final thought…
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Why does this all matter?
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© 2014, Cognizant
Thank you