Raúl Zamorano

May, 23rd 2012

Top things to consider in your Outsourcing Strategy

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About myself and the company I work for01

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Some numbers about the market

The telco challenge

What should we outsource?

What relationship do we need with our supplier?

Is it possible to innovate when outsourcing?

What are the risks?

Few take aways….

Telefonica DigitalGlobal Cloud Services

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Src. Savvy to IT deprmts (2010)

Why don´t you outsource all of your IT?

40%

Data about outsourcing shows a clear trend

ITM Survey (2011)

ITM Survey (2011)

1. Ok I believe you, this is growing…

3. New technologies… & innovation?

Telefonica DigitalGlobal Cloud Services

2. 40% external «not to» reasons

4ÁreaCompany NameTelefonica DigitalGlobal Cloud Services

The operators of today and challenges ahead

Huge customer base

Unending products

and services portfolio

All possible Channels

Customer services

The capabilities

Networks, Systems and Processes

Macroeconomic environment

Competitive landscape

Regulation

The opportunity

The environment

Technology landscape(Cloud, M2M, Apps…)

Huge Data consumptiongrowth

Differentiation New digital businesses

To keep the pace, outsourcing really becomes strategic

Efficiency

Deciding to Outsource has a lot to do with asking

ourselves the right questions…

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How much should I invest to improve?

Do I understand the causes?

How do I make sure I choose the right partner?

What is the right outsourcing strategy for your process? Dr. Ronan McIvor. Glasgow university

Re la tive c a p a bility

Co m p e titiv e a dva nta g e

or or

or

When should we think about outsorcing a part of our business?

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Could I keep my CA in the future?

How easy to trespass is this without risks?

Is it a trasnferrable activity?

Telefonica DigitalGlobal Cloud Services

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How should our relationship with our supplier be like?

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Sp e c ific to Ve ry s p e c ificSho rt – Me d ium te rm

Le s s Sp e c ificSho rt te rm

Ve ry Sp e c ificLo ng te rm

Broad offer

Mainly cost driven

Often more than one at a time

Several players available

Specific task & processes

Typically one to one relationship

Low dep. upon clear & documented processes

Few players

Strategic/Long term

High dependancy/risk

One partner

Hard to control processes

Telefonica DigitalGlobal Cloud Services

Dependancy very low

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Can I really expect innovation coming from outsourcing?

What does qualify?

Innovation is also a journey in the outsourcing space and results are not immediate…

Innovationjourney

Three phases/steps… simplifying a lot

t• Time• Trust

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Some potential factors for success…

supplier side relationship

Understand the business processes

to add value

Bring knowledge of their industry in

Trust, both personal and competency

based

Innovation governance

Telefonica DigitalGlobal Cloud Services

client side

Tech Knowledge

Open/Umbrella for cross - collaboration

Avoid provider IT management

centralisation

9ÁreaCompany NameTelefonica DigitalGlobal Cloud Services

What about the risks?There is always a risk involved… that can be tackled (almost always)

the risks

VendorSelection

Contracting &Transition

RelationshipManagement

FinanciallyStable?

Fit for Purpose?

Strategically aligned?

Culturally aligned?

SLA irregularities

?

Inadecuate measures to folow

SLA?

Unclarity on charges?

Termination and

continuity plans?

Opportunism?

Transfer of resources?

?

Skills missing?

Lack of inner communication?

Lack of stakeholder´s support?

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Few take aways…

Be sure you exactly know the why´s. Always look at the gap to perform internally first

If you decide to go, document thoroughly and be prepared for things go wrong

Outsourcing is a profession of people. Always keep channels open and build trust

Telefonica DigitalGlobal Cloud Services

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Thank you!

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