Vox Artis, Voice of Experts - Next & Best Practices in Global Sourcing

march 2012

Next & Bestpractices in

Global sourcing

Voice of the expert

The Natural Endowment of the City Determines High-end Development of Hangzhou Service Outsourcing Industry.

It is beneficial to the optimization of industr y structure. The service outsourcing industry is an important component of modern high-end service industry. It is typical “human brain+computer ” economy, which is a kind of knowledge economy with reduction of consumed resources, high added value and high information capacity. It is an industry that Hangzhou should develop mostly, and also an industr y that possesses the most advanced conditions. It is determined by the natural endowment of Hangzhou. Hangzhou is lack of mineral resources with limited land and environment capacity. However, it is the fert i le soil for the development of knowledge economy. The service outsourcing industry is an important breakthrough, which can drive the industry to develop in a high-end way. The service outsourcing covers foreign trade and foreign fund, and is the key process for the connection of “foreign trade, foreign capital, foreign economy and outsourcing”. The undertaking of

service outsourcing industry can realize the gradually transfer of internationally advanced service industry, the optimization of utilization of foreign capital and promotion of the upgrading and transition of open economy of Hangzhou.

It is beneficial to the transformation of the foreign trade developing mode. Hangzhou is a big trading city. In 2009, the total volume of the foreign trade of Hangzhou amounted to USD 40.4 billion. However, the proportion of service trade was very small. According to the estimate, it was less than USD 2billion. Compared with the good trade, the development of the service trade of Hangzhou seriously lagged behind. Service outsourcing is the development focus in the contemporar y international service trade, featuring relatively low dependence on the resource cost, week foreign limitation, quick growth rate, etc.. It is hoped to become the breakthrough and effective approach

of the acceleration of service trade in Hangzhou. The execution amount of offshore service outsourcing of Hangzhou in 2009 was USD 919 million, up by 3.5 times compared with the last year (the export of the cargo trade in the same period last year reduced by 19.1%), thus becoming the new growing drive for the foreign trade export in Hangzhou. The fully utilization of the developing potential of Hangzhou in area l ike software design, information and communication \, engineering contracting and the vigorous development of service outsourcing is beneficial to the promotion of the optimization and transformation upgrading of the foreign trade structure adjustment to boost the coordinative development of the service trade and the cargo trade. It is also beneficial to the reduction of the consumption of resources and energy and the relief of the environmental bearing capacity and transformation of the developing mode of foreign trade of Hangzhou so as to realize the leap from a big trading city to a strong trade city.

It is beneficial to the enhancement of international competition .through the undertaking of high –end service industry, enterprises in Hangzhou continuous participate in international high-end technical research and development activit ies which is beneficial to attract more high-end international

p roduct ion fac to r s by means o f tak ing i n international research and development experience so as to further enhance hangzhou’s position in global labor division and the role played in the global resource allocation. The internationalization of a city should not only satisfy the global connection and global manufacturing but also the global service. The service outsourcing industry is a highly internationalized industr y. The development of service outsourcing approach for the enhancement of hangzhou’s international competitiveness and the advancement of urban internationalization.

It is beneficial to encourage social employment. Since 1980s, the proportion of labor attracted by the service industries in the social labor has been improving year by year. as the booster of the modern service industry, the service outsourcing industry will create abundant job positions to remit employment pressures of intellectuals, especially the undergraduates. According to the statistics, the number of people engaged in the service outsourcing industry in china has exceeded 1, 500,000, in which people with university degree of above taking up over 70%. The service outsourcing enterprises in Hangzhou has attracted nearly 100,000 people to work in.

IOBD-International Outsourcing Business Development Summithttp://www.great-idea.com.cn/hangzhou/Email: [email protected]

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What Are Business Platforms? 8Phil Fersht, Robert McNeill, Tony Filippone

HfS Research

Achieving Innovation in IMS 16Robert Mcneill

HFS

VMO Evolution in an Era of ‘Activist’

Sourcing 26Vikram Ramnath

Applied Materials

Multi Vendor Governanace 30Michael Serghiou

Ann Inc.

Consumerization: CIOs, Are You Ready? 34Gerry Clark, Ben Trowbridge

ISG, Alsbridge

Cloud’s Impact on Outsourcing 38Paul Coby, Carla Zuniga, Stanton Jones

John Lewis, Allstate Insurance Co., ISG

Global Sourcing of Services 42Cliff Justice, Stan Lepeak

KPMG

Getting Multisourcing Right 50Ralph Schonenbach

Trestle Group

TABLE OF CONTENTS

Countdown to GSC 2012 Begins

We are just a few days away from our annual conference, the Global Services Conference 2012, on March 15, 2012 in New York city.

Global Services Conference 2012 will focus on how to build and sustain excellence in services. This strategy is the key to enterprise services, enterprise transformation, and aligning that transformation to drive competitive advantage to companies. Companies are looking to access data and knowledge in a better way and to leverage the maturity of the services organization that has been in place to drive better business value.

Beginning with in-sourcing and often shared services, organizations went on to outsourcing, co-sourcing, and finally co-creating competencies with service providers. The new rules for the services organization are to consolidate and standardize delivery; to balance internal, external, and virtual capabilities; and to manage services like a portfolio. These are the essential steps to building and sustaining excellence in services.

The articles in this issue embellish these themes in various ways. Together with the conference sessions, we believe that senior sourcing executives would gain insights into the next and best practices and can come up with actionable steps to achieve excellence in their global sourcing efforts.

Please check out the conference program and speaker list at www.globalservicesmedia.com. There are a few seats left, so I would enjoin services buyers to register. The conference’s unique format based on practitioner-level discussions is much appreciated by delegates and it has become a differentiator for this conference compared to many others in global sourcing.

A big thank you to our partner, NeoGroup, the speakers, the registered delegates, and sponsors. Look forward to seeing you soon in New York city.

Ed Nair EditorGlobal ServicesE

dit

or’s

Not

e

Excellence in global

sourcing is the key to enterprise

services, enterprise

transformation, and aligning

that transformation

to drive competitive advantage to companies.

8 www.globalservicesmedia.com March2012

Phil FershtFounder and CEO

HfS Research

Robert McNeillResearch Vice President

HfS Research

Tony FilipponeEVP ResearchHfS Research

Phil Fersht is Founder and Chief Executive Officer of HfS Research. He was named “IIAR Analyst of the Year 2010” by the Institute of Industry Analyst Relations (IIAR) and retained this award in 2011. Phil has worked at AMR Research (Gartner Inc), Deloitte Consulting’s BPO Advisory Services and Everest Group. Phil began his career at IT analyst IDC. Phil is a frequent author and speaker. He was named both an “FAO” and “HRO Superstar” by FAOToday and HROToday Magazines for 2005, 2006, 2007, 2008, 2009 and 2010 He was also nominated for “Advisor of the Year” at the FAOSummit 2008.

Robert McNeill is research vice president focused on cloud business services, IT management andeffective sourcing strategies forend-user organizations and service providers. Prior to HfS, he was VP Research/Consulting for Saugatuck Technology, VP Strategy/ Marketing for SaaS vendor Service-now.com and a Principal Analyst with Forrester Research. He is a contributing author of a book produced by the Institute of Directors in the UK on software asset management. Robert holds a master’s degree in European business and a bachelor’s degree in business studies from Cass Business School, City University, UK.

Tony Filippone is executive vice president of research at HfS Research.Prior to joining HfS, Tony spent nine years at WellPoint. Before WellPoint, Tony spent seven years consulting with Accenture and MarchFirst.

Tony holds an MA in Communication Management from the University of Southern California’s Annenberg School for Communication and a BA in Organizational Communication (Magna Cum Laude) from Pepperdine University. He is a Certified Professional in Supply Management (CPSM) from the Institute of Supply Management (ISM).

WHAT ARE BUSINESS PLATFORMS AND WHY

DO THEY REPRESENT THE FUTURE OF OUTSOURCING?

Business Platforms are the future of business process outsourcing and represent the true fusion of the benefits provided by standardized business processes, cloud computing, and SaaS in a singular managed service delivery model.

Today, most enterprises are experienced outsourcers. They’ve earned their stripes by slashing their conspicuous operational costs with predominantly labor-based outsourcing engagements, particularly in labor-intensive areas such as software maintenance and development, customer management services, transactional accounting, and administrative HR. These organizations have learned that labor arbitrage alone cannot deliver breakthrough outcomes. To achieve substantially better results, these organizations are shifting their focus to areas where more complex processes and technology changes are required. Yet, these changes are nothing new. Over the last two decades, companies have invested trillions of dollars upgrading systems, integrating data, and reengineering processes.

Two things are new. First, these organizations are now working with highly competent BPO services providers who service many large enterprises’ needs. Second, technology solutions are quickly evolving into cloud-based solutions. The convergence of these two evolutions has left executives asking, “Can I avoid historically large investments and achieve major advances by combining BPO and technology?”

Next & Best Practices in Global Sourcing


Adopting solutions that couple BPO and cloud-based solutions can potentially provide that trigger. Our research indicates the market is ripe for widespread adoption in various process areas. HfS research believes that “Business Platforms” (which is the name we’ve given the combined solution) will refashion the way buyers access best-in-class process outcomes. This Rapid Insight defines Business Platforms and provides evidence from HfS’ latest industry study that buyers are evaluating standardized business process opportunities extensively as part of their overall global sourcing strategy.

What are Business Platforms?

Business Platforms will enable buyers to rapidly transition to a desired future state for a specific business process, or set of processes. Business Platforms have four key characteristics:

1. Business Platforms deliver standardized business processes; 2. Business Platform owners (services providers, not buyers) manage the

business processes associated with the Business Platform and furnish the complete solution, including the people that operate them, the underlying software platform, and the infrastructure;

3. Business Platforms focus on business outputs or outcomes such as improved working capital and higher customer loyalty, not inputs such as labor and physical assets;

4. Business Platforms service more than one client.

Well-executed Business Platforms provide customers with compelling technology-enabled business process services that help drive innovation via process re-engineering, greater business agility, and productivity improvements. They are flexible and scalable in the face of global demand fluctuations and provide high-quality process workflows.

DemanD for cost reDuction, Process stanDarDization, gloBal flexiBility, anD Better technology sets the stage for Business Platforms

The days of organizations being willing to make multimillion-dollar capital investments to transform processes as part of a complex outsourcing transformation are fast diminishing. Subscribing to Business Platforms, which consolidate infrastructure, middleware software, labor, and process/domain expertise (including future investments) and invoice them as an operating expense, is attractive to clients. Cheaper to get started, and with output or outcome-based fees, Business Platforms align with the current budgeting trends evident in the market.

Our new study, which covered the intentions and observations of 534 buyers, advisors, and providers with their sourcing strategies, in the event of a “double-dip” recession, reveals what is motivating buyers to outsource in this current climate: while eliminating costs is still a major interest, buyers are increasingly focused (Exhibit 1) on achieving greater flexibility to scale their global operations.


Buyers Being highly motivateD to move to common stanDarDs Drive the DeveloPment of Business Platforms

Executives will be shocked by our finding that eighty percent of buyers are willing to move onto standard processes. Buyers are unconcerned if their closest competitors use the same expense management or claims adjudication processes, the same cash applications or collections tools. They simply want to adopt quality process flows they can deploy effectively and efficiently when there is no competitive advantage to be gained by conducting these processes in a unique manner. This is massive news for providers seeking to push more productized and one-to-many (or at least one-to-few) Business Platform offerings into the market. With increased buyer interest, the ability to develop best-in-class processes within Business Platforms, whether they focus on horizontal or vertical process clusters, is becoming a real differentiator in the market. Buyers’ increasing interest in Business Platforms is driven in part by the need to reduce IT complexity and cost. Business Platforms help buyers avoid cumbersome management of on-premise software, expensive licenses, and supporting infrastructure. Moreover, Business Platforms help business owners contend with resistance from internal IT staff and complex prioritization processes. In short, buyers are motivated to accelerate change by moving from “A to C” and skipping much of that painful “B” phase (which is often where many get stuck into perpetuity).

Buyers Want to gloBalize their Business service management more effectively – anD Business Platforms fit the Bill

The greatest motivator of outsourcing in today’s environment is the need to have more flexible global operations (forty-three percent). Governance leaders are under increasing pressure to move onto single instances of ERP, and to develop

Source: HfS Research September 2011, Sample: 177 Buy-side Organizations

What are Business Platforms andwhy do they represent the future of outsourcing?

November, 2011

Exhibit 1: Outsourcing motivations move beyond solely cost: standardization, global fexibility, and better technology

40% 29%

43%

24% 19%

47%

51% 33%

52% 47%

13% 20% 23% 23%

34%

Drive out immediate

operating cost

quickly

Better access to standardized

business

processes

Greater flexibility to

scale our global

operations

Better access to technology

support

services

Availability of proven

offerings from

providers

Bu

y-s

ide O

rga

niz

ati

on

s

Not a motivating

factor

Somewhat motivating

factor

Strong motivating

factor

Q. To what extent are the following factors MOTIVATING your organization to outsource

in this current unstable economy?


Buyers being highly motivated to move to common standards drives the

development of Business Platforms

Executives will be shocked by our fnding that eighty percent of buyers are willing to move onto standard processes. Buyers are unconcerned if their closest competitors use the same expense management or claims adjudication processes, the same cash applications or collections tools. They simply want to adopt quality process fows they can deploy effectively and effciently when there is no competitive advantage to be gained by conducting these processes in a unique manner.

This is massive news for providers seeking to push more productized and one-to-many (or at least one-to-few) Business Platform offerings into the market. With increased buyer interest, the ability to develop best-in-class processes within Business Platforms, whether they focus on horizontal or vertical process clusters, is becoming a real differentiator in the market.

Buyers’ increasing interest in Business Platforms is driven in part by the need to reduce IT complexity and cost. Business Platforms help buyers avoid cumbersome management of on-premise software, expensive licenses, and supporting infrastructure. Moreover, Business Platforms help business owners contend with resistance from internal IT staff and complex prioritization processes. In short, buyers are motivated to accelerate change by moving from “A to C” and skipping much of that painful “B” phase (which is often where many get stuck into perpetuity).

© 2011, HfS Research Ltd. | www.hfsresearch.com 3

Exhibit 1: Outsourcing motivations move beyond solely cost: standardization, global flexibility, and better technologyQ. To what extent are the following factors MOTIVATING your organization to outsource in this currrent unstable economy?

March2012 www.globalservicesmedia.com 13

real end-to-end visibility across their global processes. In the old days of outsourcing, far too many organizations would operate their shared services under one management team. This organizational change often assembled siloed management functions into an even more disconnected and unwieldy broad shared services function – a silo of silos. To reduce costs, they’d simply outsource a silo.

Today’s shared services leaders know they need to integrate silos much more effectively in order to achieve anything close to global process effectiveness. Introducing Business Platforms into the equation helps operations managers bridge the process and IT silos and mitigates the risk of poorly integrated shared services and outsourcing delivery. They are also highly cognizant of the fact that they can leverage outsourcing as a vehicle to achieving process enhancements that have been back-burnered for years, and Business Platforms can provide a tailor-made solution – albeit initially on a process-by-process basis. In the future we may see services providers being able to manage and integrate a community of Business Platforms and services on behalf of customers.

Mid-market firms are already seeing value in working with SaaS solutions like Netsuite OneWorld that can consolidate multinational subsidiaries data into one system, improve analytics and reporting, and reduce risk, by locating sensitive data in the SaaS solution and not on-premise in high risk locations. BPO providers like Genpact now have the opportunity to wrap people and process around SaaS to create Business Platforms.

Buyers Want Better technology suPPort, Which Puts it services ProviDers in a strong Position to take aDvantage of Business Platforms

In previous outsourcing deals, BPO services providers were expected to have a bench of technology experts to support the heterogeneity of a client’s dysfunctional IT processes and technologies. Services providers had to contend with tools that may not have been well integrated, multiple databases that store information, and weak reporting/analytics that require extensive custom analysis just to figure what is going on. Meanwhile, ITO services providers were tasked with improving application feature sets and uptime at a much lower cost. Outsourcing only compounded the problems of poorly aligned and soloed processes.

You only have to look at the pain in the eyes of the long-suffering process-owners to understand. After several years and many mergers, they are still trying to develop a standard global template for their P2P processes, while their IT counterparts work agonizingly slowly toward delivering one instance of SAP. They still spend a fortune each year on multiple services firms to help with Nota Fiscal, China’s Golden Tax, or the Russian Tax Code. Some simply wind up dropping enormous hourly rates on SAP’s consultants to do it for them. Process owners’ patience has worn thin – they are fed up with the complexity. These firms want more bang for their buck when they look at their global outsourcing engagements.

Business Platforms consolidate responsibility for IT and the business process through a single expert service provider tasked with accountability for outcomes.


This reduces finger pointing between multiple parties and allows the Business Platform provider to make investments in people and technologies that enhance business outputs or outcomes.

the Buyer’s voice is Being hearD

For IT executives and CIOs, the Cloud is a technology and business enabler; for the business, it is a source of innovation. Buyers are realizing that Business Platforms ensure that they can reduce their reliance on on-premises software, hardware, internal administration, and operational processes. The buyer’s demand for Business Platforms is being heard (certainly by us, but also by services providers and other outsourcing advisors). Our September 2011 research shows that seventy-five percent of organizations want to reengineer their existing business processes in an effort to develop more flexible global operations. Thirty-five percent of organizations will increase their impetus in evaluating Business Platforms and forty-five percent of organizations will increase the impetus to move infrastructure to the Cloud (Exhibit 2), all brought about by the prospects of a “double-dip” recession.

What are Business Platforms andwhy do they represent the future of outsourcing?

November, 2011

Business Platforms is being heard (certainly by us, but also by services providers and other outsourcing advisors). Our September 2011 research shows that seventy-fve percent of organizations want to reengineer their existing business processes in an effort to develop more fexible global operations. Thirty-fve percent of organizations will increase their impetus in evaluating Business Platforms and forty-fve percent of organizations will increase the impetus to move infrastructure to the Cloud (Exhibit 2), all brought about by the prospects of a “double-dip” recession.

Exhibit 2: Business function leaders seek to reengineer business processes and explore the potential of Cloud delivery

24% 11% 13%

22% 12% 11%

51%

37% 32% 20% 29% 24%

14%

33% 38% 46%

32% 46%

1% 7% 1%

1%

9% 1%

9% 11% 16% 10%

17% 17%

Re-engineer existing business

processes

Move business support

functions into shared services

(Finance,

Procurement, HR and other ops)

Move IT infrastructure

into the Cloud

Move IT support functions into

shared services

Invest in Analytics

capabilities

Subscribe to Cloud Business

Services platforms (i.e.

PaaS, SaaS)

Bu

y-s

ide O

rgan

izati

on

s

Don't know

Major decrease

Minor decrease

No change

Minor increase

Major increase

Q. In your opinion, how will a "Double Dip" Recession impact your organization's impetus to pursue

the following PRODUCTIVITY measures over the next six months??


In turn, services providers are investing in Business Platforms

Services providers are responding to this demand by investing heavily to build the operational and technology service delivery foundation upon which they can win in the Business Platform market. For instance, European services powerhouse Capgemini has developed Business Platforms such as Smart Energy Services, and acquired assets like IBX to go after procurement. Infosys has carved out more than ten offerings through its Infosys Edge Business Platform unit. Cognizant has built out its Business Platforms credentials with clients, including a leading US telecommunications provider, to offer Order Management as a Service and with Eli Lilly to offer Commercial Analytics as a Service, the latter based on IP from its acquisition of analytics vendor MarketRx. Accenture’s acquisition of Zenta is designed to offer a robust Business Platform in the mortgage processing industry, as the frm already has strong BPO capabilities. Xerox’s acquisition of ACS was designed to help create an integrated print and document management solution.

© 2011, HfS Research Ltd. | www.hfsresearch.com 5

Exhibit 2: Business function leaders seek to reengineer business processes and explore the potential of Cloud deliveryQ. In your opinion, how will a “Double Dip” Recession impact your organization’s impetus to pursue the following pRODucTIVITy measures over the next six months?


in turn, services ProviDers are investing in Business Platforms

Services providers are responding to this demand by investing heavily to build the operational and technology service delivery foundation upon which they can win in the Business Platform market. For instance, European services powerhouse Capgemini has developed Business Platforms such as Smart Energy Services, and acquired assets like IBX to go after procurement. Infosys has carved out more than ten offerings through its Infosys Edge Business Platform unit. Cognizant has built out its Business Platforms credentials with clients, including a leading US telecommunications provider, to offer Order


Management as a Service and with Eli Lilly to offer Commercial Analytics as a Service, the latter based on IP from its acquisition of analytics vendor MarketRx. Accenture’s acquisition of Zenta is designed to offer a robust Business Platform in the mortgage processing industry, as the firm already has strong BPO capabilities. Xerox’s acquisition of ACS was designed to help create an integrated print and document management solution.

As seen in the examples above, services providers will have to invest heavily up front to build capable Business Platforms. Nibbling on the edges of capability won’t help them succeed. Services providers will need to seriously invest in a manner that is quite different from historical practices of asking buyers to foot the reengineering bill with start-up fees or technology licensing fees through a separate, on-going charge. As such, providers will have to take a long, hard look at the way they do business today to distinguish tomorrow’s platform assets from the outsourcing baggage of yesteryear. Some providers may face daunting technology upgrades and operational changes. In the long term, we believe that to create a more flexible, standardized and cheaper Business Platform, significant new investments will have to be made.

the Bottom line: ask services ProviDers aBout their Business Platform exPerience anD strategy

The Business Platform market is at a very nascent stage of development, especially for IT-oriented services providers that see their expertise in technology as a way of entering the BPO market. While early in development, we expect this marketplace to flourish and to become the place where innovation in the outsourcing industry will happen.

Services providers will have to provide new governance and management services to help organizations assess, implement, and manage a portfolio of business platforms. Providers will be expected to offer more “off the shelf” process support and “innovation” as part of the deal. HfS increasingly views the capability of providers to offer more innovative approaches to clients as a crucial differentiator – for example, if three providers are offering the same processing support as part of a Business Platform solution based on SmartStream (a popular banking application), what makes them distinctive? Quite simply, the provider that can offer up real domain knowledge, innovative ideas, and a collaborative attitude as part of the deal, all of which will mean more to clients than simply undercutting rivals by a few cents in the transaction.

Organizations should refrain from rushing into such major decisions without giving considerable thought to the financial implications, risk factors, and organizational change necessary to win from these sourcing tools. But unnecessary caution should not slow innovation. When reviewing your requirements for traditional BPO, a market that is growing and by no means going away, ask your services provider about Business Platforms. They may very well be new to the services provider and your organization, but the cost savings and risk profile may be sufficient to engender serious assessment.

This article originally appeared in Vox Artis-II issue `Building & Sustaining Excellence in Global Service’

As VP Research for HFS, Robert provides research and consulting services to both end user organizations and services providers focused around sourcing strategies and best practices. Prior to HFS, Robert was VP Research/ Consulting for Saugatuck Technology, VP Strategy/ Marketing for SaaS vendor Service-now.com, a management consultant with Deloitte Consulting advising organizations across North America on IT and business process sourcing strategies and a Principal Analyst with Forrester Research. He is a contributing author of a book produced by the Institute of Directors in the UK on software asset management.

Robert McNeill VP, Research

Horses for Sources (HFS)

Contributing Authors:

Esteban Herrera, COO, SVP Research, HfS Research

Tony Filippone, VP Research, HfS Research

Phil Fersht, CEO, HfS Research


Achieving Innovation in IMS: Eight Strategies to

Consider

In a period of uncertain business cycles influenced by a potential “Double Dip” global recession, corporate priorities have rapidly changed just within the past few months as they explore smarter ways of working, new growth

opportunities in new markets, and better ways to manage sprawling, capital-intensive heterogeneous infrastructures. Providers of infrastructure management services need to innovate their offerings to keep up with these new demands of their clients - and a number of technological and sourcing innovations can provide the IT organization with new options that can be implemented today. This report focuses on the top ways to innovate infrastructure management services.



eight strategies to innovate your infrastructure management strategy

Some CIOs shy away from introducing innovation due to a laser-focus on achieving operational stability within their IT environment. This strategy will increasingly fail to satisfy the business as organizations want infrastructure that provides them increased agility at a lower operating cost that is increasingly available from external services providers. Innovation is about realizing new methods for achieving business benefits, and IT organizations need to invest in new sourcing options that will provide this impact to their users. Based on exhaustive research with many organizations and service providers, HfS Research has identified the eight ways to innovate infrastructure management services:

1. Design outsourcing contracts that promote change and innovation. Lets face it, if you need to change and need to do to it quickly, external providers can cut through organizational obstacles (e.g., politics, lack of skills and company culture). However, if you outsource what you have and ask the provider to do it exactly as you do it today, then you are not going to innovate. On the other hand, if you give the outsourcer license to introduce innovations (best practices, continuous services improvements and radical innovations),

What is innovation?

Innovation within the context of delivering outsourcing services takes a variety of forms including transformation, best practices, continuous process improvement, new technologies, business benefits, effective policies and achievement of the buyer’s desired future state. But...what is it really? HfS buckets innovation in three areas:

1. Best Practice Implementation. Refers to providers (either internal or external) bringing what they have learned from doing similar business “outside”, judging whether it is the best way to do it, and implementing it on behalf of their clients. Risk is moderate, but failure can be expensive. The return can range from moderate to significant, depending on the starting point.

2. Continuous Improvement. Refers to providers implementing minor modifications to existing processes to make them perform better, without regard for what is done “outside” Risk is minimal and failure is cheap. Returns are generally small, but can add up over time.

3. Real Innovation. Refers to trying things that have never been done before inside or outside. Involves highest level of risk-taking and the potential for failure is significant. Returns can be very substantial if the innovation succeeds.


service providers can be a source of rapid innovation. Organizations impacted by radical, fundamental shifts to their industry economics, are more prepared than ever to admit they need to look outside of their current organization boundaries to keep their business operations cost-competitive. In addition, buyers need to be careful when setting up the relationship at the onset—it is counterproductive to talk about constant change and frequent innovation and then design a contract that effectively locks both sides into an intransigent environment. With new growth coming from outside of traditional markets organizations need to reinvent their infrastructure strategies or face an inability to execute against business needs.

2. Head to the Cloud for cost, speed and scale. Cloud Computing is refashioning the cost, quality, speed and flexibility by which businesses can access—and suppliers can deliver—services to support business needs. Companies continue to suffer from significant internal resource and budget constraints with, on average, 70 to 80 percent of the IT budget still spent on IT operations and maintenance, leaving insufficient resources for new projects. Organizations are beginning to leverage public cloud datacenters and private cloud alternatives to provide rapid scaling in response to business needs where dedicated infrastructure proves too costly and provisioning flatly takes too long. Cloud-based infrastructure--available from Amazon’s AWS, Rackspace, Savvis (CenturyLink), and Navisite, for instance--allows for

Exhibit 1. Threat of “Double Dip” moves more IT infrastructure to the Cloud

Q. In your opinion, how will a "Double Dip" Recession impact your organization's impetus to pursue the following pRODucTIVITy measure over the next six months?

Source: HfS Research September 2011; Sample: 157 Buy-side Organizations

Re-engineer existing

businessprocesses

Re-engineer existing

businessprocesses

9% 11% 16% 10%17% 17% Don’t know

Major decrease

Major increase

Minor increase

Minor decrease

No change

1%1%

1%1%9%

7%14%

33%

37%

11%

38%

32% 20%

22%

29% 24%

11%12%13%

46%32% 46%

51%

24%Bu

y-si

de

Org

an

iza

tion

s

Move business support funtions

into sharedservices(Finance,

Procurement, HR and other ops)

Move ITinfrastructureinto the Cloud

Move ITsupport

functionsinto shared

services

Invest inAnalytics

capabilities

Subscribe toCloud Business

Servicesplatforms (i.e.PaaS, SaaS)


the rapid provisioning of infrastructure and provides hardware elasticity in an on-demand manner. As Cloud-based services mature, IT organizations can reduce their reliance on on-premises software, hardware and internal administration. Our September 2011 research shows that while 38 percent of organizations will not change their strategy related to use of Cloud-based infrastructure brought about by the prospects of “Double Dip” recession, 45 percent of organizations will move infrastructure to the Cloud (see Exhibit 1). To IT executives and CIOs, the Cloud is a technology and business enabler. If they can master these new innovations effectively, then they can reduce the costs of provisioning technology and the time to deliver projects to business units while planning for newer and more innovative solutions for business units to deploy.

3. Seek better IT automation – Time to “Tool Up”. In large infrastructures, CIOs have to contend with tools that may not be well integrated, multiple databases that store information and weak reporting/analytics that require heavy custom analysis just to figure what is going on. Many IT processes are fragile as they depend too heavily on people. With the relatively high adoption of service delivery/management processes such as ITIL CIOs have the opportunity to automate services management processes thereby reduce dependency on manual based processes. IT organizations must “tool up” to improve productivity and transparency. Savvy CIOs are developing themselves into Cloud-enablers by honing their sourcing and service integration skills – and better automation is required. A whole new cadre of software vendors that enable deployment of Cloud infrastructure is gaining certainly VC traction in the market. Companies such as Eucalyptus, Abiquo, CloudKick (Rackspace), Sensible Cloud, Enomaly, Enstratus, Rightscale, Cloud.com (Citrix), Platform Computing, ServiceNow, HP Software, BMC, Dell, IBM, and Microsoft are all getting into the act trying to accelerate the implementation of an infrastructure-as-a-service (IaaS) cloud in a customer’s data center and where possible integration with Public Cloud such as Amazon’s EC2. Process management and orchestration become more important as the business requires faster provisioning of IT requests. Automated discovery, mapping of application and service dependencies and orchestration of infrastructure components and tasks has become a “must have” for IT/business and cloud service management organizations as the business demands increased automation of commonly requested services.

4. Scrap installed legacy software in favor of SaaS based IT management. SaaS-based IT management is one of fastest growth segments in enterprise IT as advancements in technology. SaaS promises customers reduced costs to upgrade, configure, manage over time – and in many cases ease of use. As organizations subscribe to the software – they can use what they need rather than buying it all up front. With no software to implement or upgrade rapid value can be delivered without an army of developers and consultants. Companies such aas Facebook, Deutsche Bank, Intel and UBS, have deployed SaaS based IT management suites to manage the IT workflow and automation


policies within their organization, in many cases ripping out on-premise alternatives available from the traditional BIG 4 management vendors (BMC, CA, IBM and HP). Pressure from cloud computing, economic recession and budget constraints is threatening their positions. Driven by the success of software companies such as Beetil and ServiceNow, on-premises vendors have piled in to the market with offerings such as CA Service Manager on Demand, HPSoftware-as-a-Service, RemedyForce, Remedy OnDemand, and TivoliLive,

5. Increase your home-based workforce to significantly reduce infrastructure requirements. Higher levels of unemployment, improved collaboration technology, some of which is free (skype, OovoO, Gmail), and the ability to have homeworkers use their own infrastructure is allowing organizations to tap into a broader pool of talent and to do so cheaply. The removal of the bricks and mortar and use of Cloud-based applications for collaboration is enabling the homeworking environment on a serious scale. Employing a content flexible workforce drives employee retention rates up, lowers the costs of managing talent and for some types of work (particularly non scripted voice BPO), and improves customer satisfaction when compared to offshore alternatives Other areas, such as medical coding, already rely heavily on home-based staff to work on administrative tasks with contextual needs. Indeed, well over 100,000 home-based call center jobs have been created in the US in the last three years by companies leveraging services available from Alpine Access, Working Solutions, LiveOps, Arise and Westathome.

6. Embrace Social Media for infrastructure support and services. Social media is now being used by IT services management teams to help improve communication between IT and users. Social media allows end users improved transparency to what is happening in IT through consuming information from simple technologies that they use in everyday life (e.g., twitter, chat, forums, wikis). It is about getting the right information personalized to a user and faster than through alternative channels. Knowledge, service catalog, and request management are prime candidates for social media infusion. Knowledge management, traditionally a static discipline that over time became less useful as information was not updated or was only available from cumbersome user manuals or isolated databases has been invigorated with the implementation of crowdsourced wikis and chat forums. Items within a services catalog can be advertised through tweets to users allowing organizations to encourage more self-service. IT and application owners can now subscribe to lists e.g., for Instantaneous alerts and updates can be distributed in a familiar notification format to mobile devices ensuring that interested parties have the most up-to-date information on the state of IT. Indeed, some IT services desks now have integration social media incidents “twickets”, a play on a more traditional helpdesk “ticket”.

7. Consider outsourcing the supporting infrastructure with the application. Rather than optimising infrastructure as a hermetic silo, outsourcing the supporting IT infrastructure with an application drives accountability to one


provider and therefore reduces finger pointing between multiple parties. A provider that bundles both IT and application management support may be more capable of aligning services to the business, improving service quality and incident closure time as it understand and is responsible for managing all the dependencies from infrastructure to applications. Further, providers that manage all aspects of the IT stack may be more motivated to make proactive investments in IT infrastructure to ensure that the application is performing according to service level commitments.

8. Review your procurement strategies and rationalize requirements. While for some executives this may seem like mother and apple pie advice, HfS still sees many IT organizations as bloated as they over-spec their environment and over-provision their employees. If people got innovative and thoughtful with their purchases, they could really save a slew of wasted money. For example, many employees walk around with expensive laptops with enormous functionality that is overkill for their job, fashionable Tumi laptop backpacks, installed SAS @ $5k/license, and have a COLOR fax machine, two color printers, a black and white printer, and a MFD/copier to share with their admin (who wont share with their own team). If organizations were to procure infrastructure services in a far more logical manner through rationalizing requirements significant savings would be created. Take advantage of any “Double Dip” recession for new impetus in cost cutting and productivity efforts.

the final WorD: Be aggressive aBout getting your innovation Plans in motion

While some organizations are dissatisfied with the amount of innovation they receive from service providers, the truth is most organizations fail to provide resources to cater for developing an innovation strategy. Investment in developing ideas and implementing solutions is not free, whether sourced internally or through a services provider. Organizations need to create the conditions for innovation to take place. Do you have a culture and reward scheme for individuals/ services providers to take risks and fail, and do people have a sense of purpose at work that promotes new thinking? IT needs to invest in researching new opportunities in order to develop an understanding of how new innovations can be implemented for business benefit. IT has to sell the advantages to groups who don’t necessarily understand how investments in infrastructure can make an impact on their business. Organizations that want to move quickly to deploy new infrastructure sourcing alternatives in any strategic manner may need support and advice to help them with both internal IT and process transformation. Organizations need not reinvent the wheel and may find value in working with partners through this next journey of IT delivery. Here are some simple steps for buyers to follow to get an innovation plan in motion:

◆Create an aggressive innovation agenda and a plan to keep that agenda fresh over time. Buyers need to stipulate the need to explore new and creative ways to improve productivity and top-line growth as a core element of their


IMS endeavor, and communicate this aggressively, on a repeated basis, to their IT organization.

◆Communicate this innovation agenda to both governance and provider teams. Virtually all buyers beginning to achieve some innovation success with their engagement will say the same thing: “We recognized what we needed to do internally, and communicated aggressively with our provider to start delivering it with us”. Until buyers directly deal with the problem internally and communicate to their partners the new direction they are taking, they will struggle to achieve any real positive results.

◆Create an innovative contract with their provider. Buyers need to provide financial incentives to their providers in order to gain their assistance in achieving gains in both productivity and growth. Providers will step up to the plate with the right approach, if they have the financial incentive to do so.

◆ Stop playing providers off in a low-cost bake-off. If a buyer simply squeezes the life out of its provider with a cost bake-off, it is unlikely to get much in return beyond operational delivery to meet the contracted service levels. Some of today’s external services providers are inserting gain-sharing elements into their deals in order to beat off price-dropping competitors, because they are desperate to win the deal. The better providers now have the advantage of knowing where they can offer innovation incentives to gain ground in tough pursuits. In any case, as most providers are now operating within a similar price band, the focus needs to move away from simply price and on to which providers are better prepared to drive innovative results, of course with the right financial incentives.

◆ If your service provider fails to step up to the plate, seek alternative expertise. Smart buyers quickly realize that the initial onus to drive an innovation agenda lies on their own doorstep. It is up to them to drive expectations and requirements onto their service provider to foster a collaborative partnership where both parties can work towards common business outcomes for the buyer. However, it many cases, the buyer is discovering over the course of its first contract, that their provider is either unable, or unwilling, to commit the resources or talent needed to support its client’s innovation roadmap. If this is the case then it is time to bring additional expertise into the delivery mix. This can be done to force more commitments during a contract re-negotiation, or, alternatively, can simply forge part of a strategy where the disappointing provider performs more of an operational role, and another provider or consulting firm can perform more of the innovation services.

This article originally appeared in Vox Artis-I issue `Infrastructure Management Services’

Vikram Ramnath leads the Infrastructure Program and Solutions Management function within Applied Materials Global Information Services organization. He came onboard in August 2006, to manage an IT Transformation Initiative to migrate all enterprise IT applications support to a Managed Services-based outsourced delivery model.

Vikram has an undergraduate degree in Computer Engineering from the University of Pune, India and an MBA in International Management from Thunderbird. He lives in San Carlos CA and outside of work, enjoys spending as much time as he can with his two children, aged 6 and 3, in addition to traveling and playing golf.

Vikram Ramnath Infrastructure Program and

Solutions Management


VMO EVOLUTION IN AN ERA OF ‘ACTIVIST’ SOURCING

Vendor Management Offices (VMO), have matured rapidly over the last decade, as the scope and breadth of strategic sourcing has increased. End user organizations leverage their experience and expertise in getting the

most favorable deal terms with external vendors and re-use that learning across all their sourcing initiatives. Mid-size IT organizations ($250M annual budget or higher) with a 60/40 or higher mix of insourcing/outsourcing have accepted that a VMO is more than just management overhead when it comes to effectively managing vendor relationships, and delivers more than just contractor resource management.

VMOs operate at three levels of the organization:

Strategic Tactical Operational

Strategically, the VMO’s objectives must align with the organization’s overall objectives and more specifically, to those of the technology organization that they are a part of, namely:

- Operational excellence - Product differentiation - Innovation-driven.

Thus, the VMO would benchmark itself against similar organizations, either based on the total IT spend, revenue size or mix of core versus contextual activities and objectively measure its value-add to the bottom line.



Tactically, the VMO is responsible for:

- Managing contract compliance and SLA adherence - Driving change in the dynamics of vendor relationships based on

agreed governance criteria

Finally, at an operational level, the VMO’s responsibilities include, but are not limited to:

Defining new contracts/restructuring existing contracts Chairing periodic governance meetings with current vendors Managing RFI/RFP activities

VMOs come in many flavors and their structure depends on a number of factors. Organizations which are neophytes at strategic sourcing have more transactional relationships with their vendors and thus a limited VMO function that focuses mainly on contractor resource management, typically subsumed within a broader procurement organization. Organizations that have a bigger outsourcing footprint and are more mature in their vendor governance naturally see more value in having a specialized VMO function, with expertise in the traditional hardware, software and service verticals. The typical rule of thumb seems to be 1-2% of an organization’s total strategic sourcing expenditure is earmarked for staffing a VMO function. IT VMOs are often aligned with the Office of the CIO or dotted-line into the procurement organization within end user computing organizations, whose core expertise is not in the business of IT. VMOs partner closely with the PMO and technology delivery functions, especially with the increasing and pervasive influence of SaaS. While marketers and vendors would have us believe IT is increasingly commoditized and transaction-based, this is a somewhat simplistic view of the world, at least as viewed through the eyes of the IT staff. The reason is these providers often over-simplify the cost and complexity of data, process and application integration with the existing systems used by an organization. This is where VMOs can often add value by leveraging the lessons learned from managing outsourced service providers and bringing those lessons to bear on SaaS engagements.

A good example of this is the Virtual desktop space, where there are two competing models in play currently –the traditional deployment model of building a VDI infrastructure and then ‘finding’ suitable user groups within the organization who could adopt it, or the ‘build it and they will come’ school. The other, which advocates ‘paying by the drink’ where the provider assumes the risk of setting up, deploying and managing the VDI infrastructure whilst offering the customer the option of scaling up as their business grows –a de facto ‘try then buy’ option. Pure play SaaS providers in most instances are not interested in customizing their offerings, because their entire business model is predicated on ‘vanilla’ deployment options, which leverage their larger economies of scale and deliver higher margins. However, VMOs bring their contract negotiation skills to good effect in such engagements by applying the lessons learned with more traditional outsource deals, wherein providers get paid based on ‘gain share’ type revenue arrangements.


vmos segment their ProviDers into a matrix BaseD on the time anD effort they neeD to invest in managing them, as Well as the PerceiveD roi, namely (see illustration BeloW):

Up and comers – these providers are the ‘new kids on the block’and hungry to break into a new account. They often assume the ‘loss leader’ role; offering subsidized pricing to gain new business on the premise of recovering this over time. VMOs should be proactively monitoring the horizon to identify these new players and ‘test drive’ their offerings through proofs of concept and pilots to evaluate if there is potential in their offerings, worthy of further consideration.

Stars – these vendors are on the cusp of getting established within a customer account and are delivering good value at an affordable price point. They are often strong in one or two key functional areas and looking to expand their portfolio of offerings by building on their credibility and existing relationships.

Status Quo – these providers are entrenched in the customer site for a number of years, typically have a large installed base of functional areas that they support and their relationship with the customer is characterized by high volume, low to moderate margin business, such as Help Desk, infrastructure, applications support etc. The VMO views this group as’ high maintenance’ from a resource perspective, except when it comes to contract renegotiation or renewal periods, when there is a flurry of activity around restructuring current terms and renegotiations.

Dogs – these vendors typically have a declining share of the customer’s sourcing spend and the VMO perceives little value in investing time and effort into maintaining this relationship.

As fast as strategic sourcing is evolving, the skills required to successfully staff a VMO are also becoming multi-dimensional. In addition to contract and vendor management skills, VMO staff is also expected to be conversant with the latest service offerings in a seemingly ever-growing IT marketplace. Project and program management skills are also essential in helping to drive complex outsourcing deals, which also typically have long lead times to closure and multiple operational and process dependencies. In the past, category managers were expected to be specialists in their respective centers of competences, such as hardware and/or software, but the field has now morphed to include new SaaS, PaaS, IaaS and even BPaaS providers. In conclusion, the VMO is proving to be an even more important cog in the wheel, as companies continue the elusive search for a fleeting, ephemeral competitive advantage.


Michael is a veteran ITO and BPO professional and brings over 30 years of IT and business consulting experience t. His extensive skills include global outsourcing (ITO/BPO), shared services transformation, project management, systems/applications implementation, strategic planning, and IT/IS management . His consulting and business experience include planning, implementation, and development and design of business systems and processes as well as IT/IS systems and processes, and covers numerous global delivery, shared services locations including US, India, Brazil, Argentina, Uruguay, China and Romania.

Michael SerghiouVP, Head of Vendor Management,

Ann Inc.


MULTI-VENDOR GOVERNANCE

Establishing the metrics and sharing the results helps both the internal IT organization and the service providers remain focused on delivering results and value to the business.

There are three layers of ITO governance that are typically crafted before the transition takes place: Strategic Governance, Cross-Functional or Integration Governance and Operational Governance. The framework and the related processes need to be in place prior to transition.

ITO governance becomes even more important when a client needs to manage a multi-vendor environment. It provides a standard platform in which both the client and the service providers agree to communicate, monitor progress and make strategic decisions collectively. The output from these meetings provides a roadmap to enhance the relationships and focus on improving overall performance and unlock the value of the ITO deal.

As mentioned earlier, ITO governance needs to be established before transition takes place. Typically, a TMO (Transition Management Office) is established to help manage the transition. It is recommended that transition is run by the client with input from the various service providers. Specific transition metrics and milestones need to be established and agreed upon prior to the commencement of transition. It is vital for the client to dedicate full time internal ITO transition managers to help smooth out any issues that typically are encountered during this major change in the IT environment. Working closely with the internal HR team ensures that a proper change management program is established and the right expectations and incentives are discussed and communicated. An often overlooked task that many IT organizations forget to look at is deciding what the new IT organization will look like and behave in the new environment. Titles, roles, structure, span of control, incentives and rewards need to



be clearly articulated of what the new IT organization will look like. A strategy session should take place between the IT senior management team and invite the service providers to participate as well. Although it is hard to establish specific demarcations of responsibility between the client and the service providers, these sessions provide good guidance on how the client and the service providers should interact.

As the transition is taking place through the TMO office, it will become apparent that some of the client team members will become part of the steady state vendor management office. It is recommended that if a PMO office exists in the organization that both the VMO and PMO offices should be integrated to allow for a seamless operation relating to the demand management process. Since the service providers will become a large source of human capital supply for projects, enhancements and steady state operations it is recommended that a common resource monitoring/performance dashboard is created to provide visibility into the demand and performance of the resources.

Starting from the top of the pyramid, a strategic committee should be established with an agenda to discuss changes in the IT strategy (based on business requirements) and how these changes are affecting the ITO strategy. Critical issues, financials, relationship management and high level performance metrics should be shared as part of the monthly or quarterly Strategic Governance meetings.

As part of the VMO/PMO team, an Integration or Cross-Functional ITO governance structure should be established to communicate the changes across geographies, service providers, IT teams, business units and how activities in one group or service provider impact other IT teams. A common knowledge management platform should be established to collect the learnings and procedures/documentation from various service providers so that it can be leveraged over many IT teams. The purpose of the VMO/PMO team is to provide standards and guidelines to the project teams and ITO operational teams on how to collect the various metrics associated with SLAs (CPIs, KPIs, GPIs) and elevate them to the VMO/PMO office to create the overall dashboard. Financial and contract management is also a part of the Integration or Cross-Functional governance team. The contract should be reviewed once a year and depending on circumstances changes should be mutually agreed upon to make the relationship work. Always look for a win-win scenario when dealing with strategic partners. A comprehensive vendor management score card should be built that monitors the main Service Providers and includes a financial risk assessment, geo-political risks, operational risks, managerial and regulatory/legal risks. The score cards should then be analyzed and provide the VMO/PMO office with the necessary information to create short to medium/long range action plans. Depending on the financial size of the contract deal and scope, a dual vendor strategy may be a good idea to mitigate any risk associated with “putting all your eggs in one basket”.

The day to day operational governance is typically handled by the various IT teams in conjunction with their Service Provider counterparts. Weekly operational meetings should take place to capture issues, performance SLAs, financials, resource management, RCAs, incident management, problem management etc. A good start is


to use the ITIL v3 framework as a guideline to build or enhance the current IT service capabilities. The right tools need to be implemented to capture the data and make the SLA adherence process as easy as possible. If SLAs have not been established, then SLOs (Service Level Objectives) should be mutually established with the Service Providers to establish an accurate baseline that perhaps in 2 to 3 months time could become a contractual SLA. This information needs to be shared on a monthly basis with the VMO/PMO team that will then create an enterprise view of the ITO operations and publish a strategic ITO dashboard.

The two key take-away concepts I would like to leave everyone with are relationship management and metrics. If the relationship fails then all the other governance concepts will not be effective. Regular CSAT surveys should be conducted to received feedback and share it with your service providers. The second concept is “If I can’t measure it, I can’t fix it”. Establishing the metrics and sharing the results helps both the internal IT organization and the service providers remain focused on delivering results and value to the business. Metrics take out the ambiguity and make it clear as far as what the goals should be. Goals are then entered into action plans that keep teams and personnel accountable.


Gerry ClarkPartner ISG (South and East Asia)

Ben TrowbridgeFounder & CEO

Alsbridge

Ben Trowbridge is founder and CEO of Alsbridge, an award-

winning sourcing advisory and benchmarking firm changing

the way companies buy and manage hardware, software,

IT infrastructure services, application services, business

processes and cloud computing. As CEO of Alsbridge, one of

the Inc 500’s fastest growing companies in America in 2010, Ben has revolutionized the way companies source technology

and business processes.

Gerry Clark is the Partner for ISG for South and East Asia. He is responsible for the company‚s Business Development across the South and East Asia Region. This entails providing consultancy advisory services covering Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) to customers on their future Sourcing strategies. He is a highly skilled General Manager with experience covering Sales, Delivery and P+L management. Gerry‚s experience covers 35 years and he has worked in Asia Pacific for over 16 years with a good understanding of business practices and challenges across the diverse IT markets across the region.


CONSUMERIZATION: CIOs, ARE YOU READY ?

Consumerization is a hot word in the technology world today. With consumers driving new technologies into organizations, CIOs have new challenges to face. This piece is based on the session ‘Top Technology Trends:

Consumerization & Beyond’ at the Nasscom India Leadership Forum 2012. Gerry Clark, Partner, ISG and Ben Trowbridge, CEO, Alsbridge share their views on the emerging trend that is here to stay.

its a neW era

It is an era of evolution. The advent of cloud, social media and mobility is challenging organizational IT strategies. Consumers today are far more familiar with new technologies, they live with it and are also bringing it to the workplace. Personal devices like Smartphones, ipads, tablets are finding their way into organizations. Lots of factors are driving the change. The young generation is thirsty for new technologies, it wants more accessibility, it wants to connect and communicate in multiple ways. This is changing the way organizations work. Also bringing more troubles for the CIOs. Clark said ”CIOs are being bombarded with new technologies. The challenge is in how you embrace the new era.”

to emBrace the change or resist it?

The previous internet evolution was driven by the corporate organizations and consumers were pulled into it. This time the technology evolution is being driven from a different paradigm. It is the consumers that are driving the change and organizations are being dragged into it. Consumerization is undoubtedly a big emerging trend today. So organizations do not have much of a choice other than to embrace it. The faster they do the better they can use the opportunity. “Some



organizations are embracing the change and some are resisting it. It will be interesting to see how the relationships between the enterprise, employees and customers evolve” he said.

Social media and the advent of cloud is influencing the way people interact. There is also a change in how enterprises reach out to their customers. Figures for the last quarter of 2011 reveal that smartphones and tablets were more in shipment as compared to PCs. Trowbridge reveals “Around 30 percent of the IT budgets is not under the control of the CIO, its growing because of consumerization in business units.”

Although consumerization and the concept of BYOD have its advantages, there will be issues to deal with.

What are the concerns?

In most cases the organizational IT environment will have to be realigned to support new technology devices. There will also be security issues.

CIOs need to be careful about few things. Commenting on this Trowbridge said, “Employees are very different today. They are more aware of technnology and also more dissatisfied with the internal IT organization.” This is a problem that enterprises have to deal with. The advent of new technologies calls for a change in the internal IT environment so that there is place for both-personal devices and enterprise devices. Clark adds “ The challenge is people bring their devices to work but they still have their work devices.” So the IT infrastructure has to be realigned in a way that it supports both. Employee owned and enterprise owned technologies have to coexist. That is the biggest challenge at the moment.

Trowbridge pointed out three issues that organizations are facing:

Most Fortune 500 companies are paying wrong rates and don’t know what they are paying for the mobility cost.

Organizations don’t have a good grip for security.

They don’t have a standardized plan.

hoW much security is gooD enough?

As a behavioral change we are seeing that people interacting on Facebook and social media platforms hardly care much about security issues. They prefer more transparency. So it is natural that employees too come with such a mindset. The perception about confidentiality and security is likely to change. But there is another set of people, such as the corporate lawyers that are even more concerned today about security than earlier. They prefer more control when it comes to

security. There are possibilities of a clash in mindsets. “Security is an illusion. The tighter you grip it the more you may not have control” said Trowbridge.

CIOs will have to decide where to draw the line. Though embracing the change is important but it has to be in a sensible way. There has to be a strategy plan that supports new technologies and also takes care of security issues. Barry said “It needs to be appropriate for the type of organization.”

The force called consumerization cannot be curbed, as its being driven by changing human preferences and mindsets. The love for new technologies and social media is breaking all boundaries. Efforts to control can thus have a negative impact on employee productivity and overall work environment. Organizations that can adapt to the changes now, can reap benefits in the years to come.


Paul CobyIT DirectorJohn Lewis

Carla ZunigaVP, Operations

Allstate Insurance Co.

Stanton JonesAnalyst

Emerging Technology, ISG

Paul Coby serves as IT Director at John Lewis. He is responsible for John Lewis Division’s IT including applications development and support including johnlewis.com, which with its wide range and clear navigation now accounts for about one fifth of John Lewis revenue. John Lewis has led the development of multi-channel retail in the UK, with innovations like Click and Collect. Paul joined John Lewis in March 2011. Previously, he had been Chief Information Officer (CIO) of British Airways for 10 years.

Carla Zuniga is a Senior Executive member of Allstateís Technology and Operations organization. She is responsible for a $400 million portfolio inclusive of IT Support functions and Operations Delivery processes, all of which have Enterprise accountability. Carla joined Allstate in 1985. Her current responsibilities include Workflow Automation, Customer Technical Support, Policy Processing, Operational Accounting, Global Sourcing Governance and IT Training / Employee Development.

Stanton uses his unique background in IT to help

ISG clients navigate the emerging cloud services

landscape through the development of customized

cloud strategies and research. Stanton also

assists customers in contracting for both on-

premise and virtual private cloud platforms. Prior to his analyst role,

Stanton led corporate technology strategy

and global IT operations as TPIís

Chief Information Officer.


THE CLOUD’S IMPACT ON

OUTSOURCING

In an era when IT business entwines cloud debate, scour over the mindset of IT executives and you will find cogent, colorable statements for cloud embracement. The question of cloud has moved from ”What?” to “How” and “When.”

The time of cloud has arrived. There is no vertical in the IT-industry that today can afford to ignore cloud computing. But one of the key questions many traditional IT service providers are asking themselves is: How will cloud computing affect my outsourcing business, existing service providers and the services that I offer?

These were the questions that keystoned the session at the 20th NASSCOM India Leadership Forum at Mumbai. Moderated by Stanton Jones from ISG, and with participation from Paul Coby, IT Director,John Lewis, Peter Coffee, VP, Salesforce, and Carla Zuniga, VP, Allstate Insurance Company, the discussants analyzed the cloud-questions and its impact on IT services.

Opening the discussion, Stanton Jones said, “the prime question remains, what kind of an impact will this disruptive technology have on existing outsourcing marketplace? “



Responding to the opening note, Paul Cobby, said, “Business as in today’s economic turmoil needs to address various considerations and to address these, IT itself must change the way it delivers the services.” Business agility is the key, an important ingredient to script market growth and cloud has the potential to help business and transform the outsourcing landscape by offering increased agility and lower cost-driven services. This potential will only be realized when enterprises start taking the steps needed to seize the cloud opportunity.

Carla Zuniga expressed her views on cloud impact on the insurance sector. She said as insurance sector is data-driven, hence data-agility is vital for our day to day business. Cloud enable data-agility to drive greater value from data and knowledge, using advanced, real time analytics. we identify buying pattern and quickly return very targeted offers or purchasing suggestions to consumer at their point of need, said, Carla Zuniga.

The sector is likely to adopt cloud computing in the future as it offers them a way to overcome many challenges facing them and hone their competitive edge. By moving towards cloud based architecture, insurance firms will be able to deliver secure, agile, sophisticated solutions that can be rapidly tweaked to meet changing business imperatives. Zuniga believes that cloud will enable insurers to break new grounds, many of which are yet to be identified.

This is just one aspect of cloud, the real challenge is in deciding how to use it in right context. Each organization will need to tailor its approach to the cloud to get the most out of it.

On the question of “Cloud Impact on Outsourcing”, Stanton Jones opines, “The cloud-outsourcing transition is having a measurable impact on outsourcing industry, the shift to cloud is altering supplier behaviors and is posing new challenges for both customers and suppliers alike in the transition from more traditional sourcing models.”

The above statement is evident, for example, the nature of outsourcing agreements themselves, which were essentially unchanged as recently as two years ago, have begun to evolve. Outsourcers will broaden and deepen their cloud-related portfolios offering services that will mark an important psychological shift in the ongoing outsourcing market.

Most of the services offered by software vendors today will soon be offered as “as-a-Service” because it gives cost efficiency which is acceptable to most of the customers. As such, enterprises will eventually be forced to standardize their processes in order to ensure that underlying cost structures meet industry averages. In response, buyers will move away from long-term contracts where the return on investment depended on continuous improvement, and move to shorter-term contracts with more. The cloud-utility model will extend the benefits of outsourcing.


Cloud-based services will radically change the outsourcing business from the service providers’ perspective, says Stanton Jones. Cloud computing will create a very different IT outsourcing marketplace and also create a lot of friction over the next five years.

Intricacies provided by the service providers will very change the way outsourcing service providers cost their services. Cloud computing gives tremendous benefits to organizations but in spite of these benefits impediments like security matters, customization and integration are hindering the rise of cloud – based outsourcing services.

Paul Cobby advices, buyers really should also take into consideration when choosing from the diverse offers of cloud service providers if they have the capabilities in managing long – term IT advanced innovations towards the diverse cloud environment. In order to steer clear of the hazards in selecting IT outsourcing service providers, buyers need to first turn out to be at ease with the basics of cloud computing just before taking advantage.

What is clear is that this is a new game that cannot be played successfully under old rules. Companies that intend to be effective in the new game need to start changing the way they manage their IT and business operations now. They need to plan for the environment of the future; they need to carefully assess the risks involved with deploying new technologies; and they need to understand at an even more detailed level the capabilities of their suppliers and providers.


Cliff Justice US Shared Services and Outsourcing Advisory GroupKPMG

Stan LepeakDirector, Research,

Shared Services & Advisory

KPMG

Stan Lepeak is Director of Research for Advisory

Services at KPMG. He specialises in business

process and information technology (IT) services and

outsourcing market trends; outsourcing and shared services execution and

management best practices; and the globalization of

the business services and outsourcing markets. He

was formerly MD and the Leader of EquaTerraís

global research practices (KPMG acquired EquaTerra

in February, 2011) focused on trends, issues and futures

in the global information technology and business

process outsourcing markets.

Leads one of the world's largest and most comprehensive shared services and outsourcing advisory businesses for KPMG LLP. Has 20 years of relevant experience across a wide range of disciplines, including operations, global shared services and global outsourcing. Industry expertise includes: Energy (Oil & Gas), Financial Services, Healthcare & Pharmaceuticals, Manufacturing, Human Resources, Consumer Food and Packaged Goods, Technology, and Utilities. Prior to joining KPMG, was Managing Director of EquaTerra, and led its services globalization advisory practice. Prior to EquaTerra, Cliff was Managing Director of neoIT and specialized in offshoring strategies.


Global Sourcing of Services: Easier Said

Than Done (Well)

KPMG recently released the results of its 2Q11 Sourcing Advisory Pulse surveys, which provide insights into trends and projections in end-user organizations’ usage of shared services, outsourcing, and global

third-party business and IT services. While the survey findings reveal many interesting trends, one key finding was that although many organizations are looking to move to a more mature model for services delivery, few have realized this goal.

gloBal sourcing: there’s a Will But not alWays a skilleD Way

While the use of near and offshore captive and third party services is nothing new, the KPMG survey found that the scope of this usage continues to expand, both from the perspectives of what services organizations are willing to take offshore and also in terms of the number and diversity of delivery models and service providers utilized.



For most larger firms, global sourcing today is a multi-point process across multiple geographies, utilizing multiple service providers and employing multiple service delivery models (e.g., internally run operations, local shared services centers and offshore captive centers, onshore, nearshore and offshore outsourcing). While this “extended global enterprise” model can better support organizations’ global services needs and help to improve operational competitiveness, it is also proving increasingly complex to successfully design, deploy, operate and optimize.

Buyers undertaking global sourcing efforts naturally exert much focus on selecting which service provider to employ and from what locations to source services. This assessment process should include a clear and realistic assessment of a buyer’s own maturity and sophistication relative to sourcing and managing global sourcing efforts.

A common root cause of problematic or underachieving offshore outsourcing efforts is a disconnect between what a buyer is trying to accomplish and the skills, experience, and resources it possesses to support these efforts. These skills involve selecting providers and locations, accounting for and managing risk, and governing a growing number of sourcing efforts spread across multiple providers and locations. Yet often it seems that many buyer organizations’ global sourcing ambitions outpace their capabilities to successfully undertake and manage these efforts. Or more simply the global sourcing “eyes” are bigger than the capabilities’ “stomach.”

In the 2Q11 Pulse survey, KPMG polled leading third party business and IT service providers and its own sourcing advisors to assess buyer maturity and sophistication relative to various global sourcing skills. Respondents were asked to rank their perception of buyer skills on a one-to-five scale, where one represents very immature or unsophisticated and five represents very mature or sophisticated (see Figure 1). Results show that overall there is room for improvement across all of these global sourcing capability sets.

KPMG advisors did not score buyers above the midpoint on any of the five skill sets assessed. The highest score given was 2.65 for service provider selection and assessing service providers’ global delivery capabilities. Service providers were more generous in their perception of buyers’ skills, scoring this attribute at 3.32.

The skill ranked next highest by service providers was service delivery geographic location assessment (e.g., where to source from, onshore/offshore, which countries), scored at 3.21, while for advisors the second ranked skill was assessing and accounting for data, data privacy and intellectual property risk, scored at 2.61.

There was consensus on typical buyer challenges in managing and governing multiple engagements and service providers across multiple functions, geographies, etc., scored the lowest by both service providers and advisors.

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KPMG advisors in the field offered additional details on why some buyers struggle with their global sourcing efforts. One US-based partner who works with firms sourcing back-office business functions globally made the following observation, “Clients don’t consider the greater complexity of environments in which an offshore captive or third-party providers operate, and therefore don’t account for geopolitical risk, economic conditions, etc.”

Addressing and managing risk in global sourcing was a commonly cited weakness indentified in many buyers’ accounts. As one senior advisor noted, “Clients are gaining greater familiarity with utilizing offshore providers’ capabilities, but remain risk averse. Despite this, little (or at least not enough) attention is given to managing risk. Governance and relationship management capabilities are often weak compared to the scope of the global sourcing efforts.”

A senior manager in the US was more blunt, or realistic. “Look these folks are not idiots, but rarely are they excellent at each and all of these global sourcing activities.”

Figure1–BuyerGlobalSourcingMaturity/Sophistication

1.00 2.00 3.00 4.00 5.00

Serviceproviderselection/assessingSP'sglobaldeliverycapabilities

Managingandgoverningmultipleengagementsandserviceprovidersacrossmultiplefunctions,geographies,etc.

Assessing/accountingfordata,dataprivacyandintellectualpropertyrisk

Assessing/accountingforgeopoliticalandserviceproviderrisk

Servicedeliverygeographiclocationassessment(e.g.,wheretosourcefrom,onshore/offshore,whichcountries,etc.)

1=Veryunskilled/unsophisticated,5=Veryskilled/sophisticated

Advisors ServiceProviders


evolving toWarDs a gloBal services Portfolio aPProach anD moDel

As buyers’ appetites to source more services globally continues to grow, so too should their capabilities to source and manage these efforts. This is at the heart of the extended global enterprise model and maturity framework.

The first step to address the shortcomings outlined above is to recognize and define each challenge and apply adequate and skilled resources to overcome them. This is a multidisciplinary effort that extends leading practices related to sourcing, selection, transition, outsourcing governance, and multi-provider management to account for additional challenges and nuances introduced from increased globalization of service efforts. As the scope and complexity of buyer global sourcing efforts continue to grow, this will remain an ongoing challenge, with the bar for leading practice continually being raised.

One means to improve global sourcing capabilities is to take more of a portfolio approach to managing global efforts. This need will continue to grow as global sourcing becomes more pervasive and accounts for more of an organization’s global services footprint. However, tightly coordinating and managing sourcing efforts globally is still a goal to which most organizations aspire.

Figure2-Management&GovernanceModelsforExistingGlobalSourcingEfforts

35%

53%

7%5% 15%

58%

9%

18%

Independentlyofothereffortsalreadyinthefield

Bygeography,businessunit,functionalarea,etc.

Byanenterprisesourcingcouncil

ByanenterprisesourcingCenterofExcellence



In the 2Q11 Pulse, 58 percent of service providers polled and 53 percent KPMG firms’ sourcing advisors indicated that when typical buyers are managing existing global sourcing efforts, they are grouped and managed and governed by geography, business unit, functional area, etc. (see Figure 2). This is the most common, historical approach, and is adequate for deals and efforts that do not overlap key functional areas.

However today, this approach to managing multiple shared services and outsourcing efforts can often create fragmented, difficult to manage, and under optimized functional and process silos. A more holistic, functional, and thorough process is often required in these more complex sourcing environments.

Fewer than 10 percent of service providers and advisors indicated that existing efforts are managed and governed by an enterprise sourcing council, which can provide a more holistic, coordinated, and detailed view of global sourcing efforts and their performance and cost levels.

The story is better for new sourcing efforts, with 15 percent of advisors and 27 percent of service providers indicating that buyers are attempting to source and manage these efforts globally (see Figure 3).

Figure3–Management&GovernanceModelsforNewGlobalSourcingEfforts

18%

55%

27%37%

48%

15%

Independentlyfromothereffortsbeingsourcedoralreadyinthefield

Bygeography,businessunit,functionalarea,etc.

Sourcedandcoordinatedglobally



One common challenge to managing sourcing efforts globally is the fact that they are often sourced locally from functional, budgetary, approval and execution standpoints. As a KPMG UK manager noted, “Given the sensitivity of sourcing (and excluding the executive sponsorship, often new efforts are run from project teams who have been split off and act independently, then once sourced and as required there is a global and/or regional engagement from operational teams and subject matter experts.”

As procurement groups get more active in sourcing global services, however, they can act as a unifying force. As one KPMG manager in the IT sourcing practice called out, “Sourcing is still typically by function - usually pursued by different organizations for IT, F&A, and HR, etc. The common thread, however, is increasingly the centralized procurement organization.”

conclusion

Many buyers today still view global sourcing as a series of discrete options and capabilities (e.g., internal services, shared services, offshore captives, ITO, BPO) rather than a continuum of integrated service models. This is similar to the legacy perspective of viewing offshore outsourcing as a point-to-point initiative (for example, from the United States to India) instead of an integrated suite of global service delivery capabilities.

The reality today is that organizations should develop a holistic strategy and operational model to support the totality of their businesses and IT services operations. This includes how to source and manage these capabilities as well as how to continually improve their overall efficiency and effectiveness.

While leading organizations have made progress, for example, in governing their outsourcing efforts as a portfolio via a portfolio model as cited in the above Pulse survey responses, often these efforts are disconnected from the management of internal retained operational systems and functions, as well as the strategy and execution of sourcing of new investments. In short, buyers’ capabilities to source and manage a diverse services delivery portfolio have often not kept up with their sourcing ambition’s scale and scope.

This article originally appeared in Vox Artis-I issue `Infrastructure Management Services’

Schonenbach is the CEO of Trestle Group and on the Board of Trestle Group Foundation. He has held senior positions with the firms Andersen and Ernst & Young. Through Trestle Group Foundation, he is passionately involved with providing support to both women and emerging entrepreneurs in developing countries. Schonenbach frequently speaks at conferences and has authored a variety of publications. Schonenbach earned a degree in Business Management from Goucher College.

Ralph Schonenbach CEO

Trestle Group


Getting Multisourcing Right!

Multisourcing, defined as optimising business, information technology and infrastructure services across external suppliers and internal partments / companies, can provide significant advantages for corporations. To

reap these rewards, organisations require a cohesive strategy that is managed consistently throughout the business.

Benefits of a successfully implemented multisourcing strategy should include:

◆A consolidated vendor landscape◆Optimised processes and reduced transaction costs◆Consolidation of activities in low cost destinations◆Ongoing savings ranging from 20 to 30%

A robust multisourcing strategy will incorporate the following components:

◆ Strategy, governance & stakeholder commitment◆ Relevant geographic footprint◆Coordinated allocation of activities (internal and external)

strategy, governance & stakeholDer commitment

The strategy should determine the impact multisourcing would have on the organisation i.e. financial, operational, market share and competitive advantage. Additionally, the strategy should allow for enough flexibility for individual divisions to fulfill their local market requirements and should be solid enough to



ensure that allocation of activities are applied consistently both internally and externally.

Top down governance is an imperative. If organisations are able to ensure that the multisourcing strategy requirements are implemented consistently, sufficient volumes of activities will be consolidated internally and externally allowing for cost and operational benefits to be achieved. The governance structure should contain a number of key performance measures that are committed to the business units’ senior management teams. Appropriate governance with external vendors and captive centers will ensure that the business units are receiving the services they require according to defined conditions.

Implementing a multisourcing strategy requires significant commitment from senior management. In every organisation, there will be resistance to change. Depending on how this resistance is managed determines if a company is able to truly multisource or maintain the status quo with a multitude of services providers and duplicate internal activities.

relevant geograPhic footPrint

A dynamic multisourcing strategy will incorporate a combination of onshore, nearshore and offshore activities to take advantage of labor cost and access to skills. These activities will be performed by either vendors or captive centers. When evaluating locations for processing activities, a variety of criteria should be considered such as language, culture, time zone, political stability and the ability to deliver based on expected service level agreements.

To put this into perspective, an example scenario would have a company with operations in Europe establishing a captive center in Eastern Europe for business process activities based on local language requirements. Furthermore, the company may then choose two to three vendors in India to cover and consolidate English-speaking activities from their operations in North America. Lastly, they may also consolidate infrastructure in Spain to take advantage of a captive center for European operations.

Importantly, a comprehensive risk analysis should be conducted to ensure the selected location would not have an impact on daily operations.

coorDinateD allocation of activities it DeveloPment anD maintenance

There is much debate regarding how to allocate IT development and maintenance activities. From our experience in working with corporations, activities that require significant increases and decreases in resources such as IT development can be effectively sourced with several strategic vendors. These vendors have a deep bench of resources that can absorb fluctuations.


Activities that are steady and span over a long period of time such as application maintenance tend to work well when managed by captive centers. This allows organisations to save the premium they would pay to a third party provider.

infrastructure

With advances in technology, there are many benefits to consolidating infrastructure internally or with a third party provider. We have observed both models working well with the caveat that the business case must be managed aggressively. If cost savings are not being achieved, action is required immediately.

Business Process outsourcing (BPo)

A similar approach as defined with IT development and maintenance can be applied to business process outsourcing. Most organisations find economic or operational benefits by consolidating business process activities into captive centers or with vendors. As activities are consolidated, processes are optimised and transaction costs are reduced. Current trends indicate that BPO is expected to grow considerably in the future, with continental Europe positioned as a growth leader.

lessons learneD getting the iDeas into PoWerPoint is much easier than imPlementing the concePt

Designing a realistic multisourcing strategy requires input from sourcing practitioners and commitment from senior management. Once the strategy is agreed upon, the real challenge organisations face is implementing according to timeframe and ensuring that the benefits are achieved. Organisations should not underestimate the value of involving sourcing practitioners who have lived through complex implementations.

Sourcing Strategy

CEO TODAY 79

outsourcing. Most organisations findeconomic or operational benefits byconsolidating business process activitiesinto captive centers or with vendors. Asactivities are consolidated, processes areoptimised and transaction costs arereduced. Current trends indicate thatBPO is expected to grow considerablyin the future, with continental Europepositioned as a growth leader.

Lessons learnedGetting the ideas intoPowerPoint is much easierthan implementing theconcept

Designing a realistic multisourcingstrategy requires input from sourcingpractitioners and commitment fromsenior management. Once the strategyis agreed upon, the real challengeorganisations face is implementingaccording to timeframe and ensuringthat the benefits are achieved.Organisations should notunderestimate the value of involvingsourcing practitioners who have livedthrough complex implementations.

Manage your vendors andcaptive centers

Vendors have considerableexperience managing their clients. It’stheir livelihood. If proper controls arenot in place, this can lead to adisadvantage for the companyengaging the vendor. Buyers mustensure that KPI’s are robust andmonitored regularly. Any irregularitiesshould be addressed according toescalation agreements and dealt withrapidly.

Likewise, internal captive centers aremost likely not in a position to managetheir customers. It is important toensure that these centers are utilisedappropriately. Centers that are notintegrated will quickly become costlyand inefficient.

Communicate, communicateand communicate

Once the multisourcing strategy isdefined, it is important to develop acommunication plan. Providingmanagers and team leaders with anoverview of frequently asked questions

/ answers will help ensure thatcommunication is consistent and willhelp reduce individual’s concerns thathe or she is communicating somethingthat is inappropriate. Utilising changemanagement practices throughout thecommunication process is essential.

ConclusionMultisourcing is ultimately the

optimisation of activity management.There are significant advantages thatcan be achieved by developing amultisourcing strategy that is consistentwith the goals of the organisation and isimplemented with the requiredgovernance. Organisations will find thata successful transition will ultimatelyprovide more flexibility as processes areoptimised and consolidated.

Steady work that can be planned overlonger periods of time is most favorablefor captive centers. On the other hand,vendors with a deep bench can bestabsorb variable activities withsignificant peaks and valleys.

PowerPoint presentations and businesscases are only the beginning. Get the


manage your venDors anD caPtive centers

Vendors have considerable experience managing their clients. It’s their livelihood. If proper controls are not in place, this can lead to a disadvantage for the company engaging the vendor. Buyers must ensure that KPI’s are robust and monitored regularly. Any irregularities should be addressed according to escalation agreements and dealt with rapidly.

Likewise, internal captive centers are most likely not in a position to manage their customers. It is important to ensure that these centers are utilised appropriately. Centers that are not integrated will quickly become costly and inefficient.

communicate, communicate anD communicate

Once the multisourcing strategy is defined, it is important to develop a communication plan. Providing managers and team leaders with an overview of frequently asked questions / answers will help ensure that communication is consistent and will help reduce individual’s concerns that he or she is communicating something that is inappropriate. Utilising change management practices throughout the communication process is essential.

conclusion

Multisourcing is ultimately the optimisation of activity management. There are significant advantages that can be achieved by developing a multisourcing strategy that is consistent with the goals of the organisation and is implemented with the required governance. Organisations will find that a successful transition will ultimately provide more flexibility as processes are optimised and consolidated.

Steady work that can be planned over longer periods of time is most favorable for captive centers. On the other hand, vendors with a deep bench can best absorb variable activities with significant peaks and valleys.

PowerPoint presentations and business cases are only the beginning. Get the governance right, gain the support of the critical influencers in the organisations and develop a robust implementation plan. Measure your progress throughout the transition and do not tolerate unmet service level agreements / key performance indicators.

When sourcing practitioners are not available in-house, invest in external advice. Additionally, implementing a multisourcing strategy requires an investment in change management. If there are any doubts, speak with organisations that have recently gone through such complex transitions.

This article originally appeared in Vox Artis-II issue `Building & Sustaining Excellence in Global Service’

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