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Qantas ibm outsourcingv5

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  • Ref: Best practice for risk mitigation in outsourcing transitions
  • Technology Downtime not considered when building the system & not discovered until the system is launch Take longer than anticipated to upgrade & standardize the buyer’s software so it would run on the provider’s infrastructure. Result in leaving the applications in the legacy environment until provider could update them. Unanticipated delay impacted the provider's revenue and the buyer’s cost. Timeline Buyer insist on accelerating the transition when the scope includes multiple process, it will increase the chances of mistake and some functions will need to transit in an incomplete stage. Process Reengineering A question to transit the work after the buyer reengineers the process or transit it as-is and depend on the outsourcer to do the process improvement. The advantage of doing the reengineering in house is that it will catch the workarounds & knowledge embedded in employee’s minds. Process with a lot of touch points or dependencies on other systems are particularly vulnerable to unanticipated delays caused by process reengineering shortly before the transition to an outsourcer. Impact on work in progress Depending on the extent the outsourcing, transition can impact the progress of other projects taking place at the buyer organization. Change Management Robust change management in place can smoothen the transition process. Changing people’s behavior and mindset requires more effort than changing the technology systems. It requires a daily sustained effort to embed new disciplines and new ways of working into a business. Maintaining priorities and milestones in a transition phase is difficult in an environment with resistance from the buyer’s staff.
  • Transcript

    • 1. Team Assignment Qantas / IBM
      • Done by:
      • Hay Tze Sen G1001180H
      • See Chiang Jiunn G1001198D
      • Tan Li Liang G1001205L
      • Zhang Hong Sheng G1001218L
    • 2. Agenda
      • Types of Transition - Phased VS Big Bang
      • Transition Challenges
      • Best Practice for Transition
        • Mitigating Risk
        • Building Transition Team
        • Walking Through The Change
      • Contract with IBM
      • Negative effect resulted from this outsourcing deal with IBM
      • Impact On Qantas
      • Recommendation for Qantas
      • References
    • 3. Phased VS Big Bang Transition [7] No Metrics Phased Big Bang 1 Time Longer Shorter 2 Resources More costly Less costly 3 Time-to-Value Realization Slower Faster 4 Stress Level on people Lower level of stress on both companies. Higher level of stress both companies. 5 Risk Lower, incorporate lesson learned from the earlier phases. Higher 6 Stakeholder confidence Influence stakeholder buy-in in that the transition builds upon success. Unable to build stakeholder buy-in with successful phases. 7 Progress dependency Progress can bog down in 1 phase and impact the plans for subsequent phases No phases, all progresses execute simultaneously.
    • 4. Transition Challenges [7] Challenges Remarks 1 Technology Take longer than anticipated to upgrade the software, delay impact on provider’s revenue and buyer cost. 2 Time line Buyer insist on accelerating the transition, increasing the chances of mistake. 3 Process reengineering A question to transit the work after the buyer reengineers the process or transit it as-is and depend on the outsourcer to do the process improvement. 4 Impact on work in progress Transition can impact the progress of other projects taking place at the buyer organization. 5 Change management Changing people’s behavior and mindset requires more effort than changing the technology systems. Transition is difficult with resistance from the buyer’s staff.
    • 5. Best Practices for the Transition Phase [7]
      • Mitigating Risks
      • If buyer wants a short transition,
        • create risks for service provider
        • thus need to put in more work to mitigate the risks
      • Ensure an effective project management methodology in place with good monitoring and control throughout the process.
      • Establish milestone and move forward only if both companies agree. Each milestone include decision criteria for moving on to next phase.
      • Establish a back-up plan for each anticipated challenges and a fall-back approach if milestone is not met or there is a delay in resolving issue.
      • Establish a SWAT team to analyze
        • Strengths,
        • Weaknesses
        • Lessons learned
        • Best practices
      • The team should discuss all issues arose and feedback to the stakeholders.
    • 6. Best Practices for the Transition Phase [7]
      • Building transition teams
      • Both of the companies are
        • committed to the transition success.
        • have the capabilities to quickly identify a problem,
        • are authorized to resolve the issues in a short time.
        • should focus on helping the 2 companies integrate.
      • Walking through the change
      • Understand the impacts of blending 2 corporate cultures.
      • Critical where,
          • The buyer’s culture is faster pace than the service provider.
          • The transition approach is a big bang with a short time.
    • 7. Contract with IBM
      • Seven Year Contract starting from 2009. [1]
      • Valued at $200 Million. [4]
      • 178 Qantas employee to be transfer to IBM or make redundant. [3]
      • Employee who chose not to leave Qantas would be given 3 weeks’ pay for each year of service, up to and including 5 years’ service with a minimum of 4 weeks’ pay. More than 5 years of service, for each year they get 4 weeks pay. [4]
      • IBM would also provide project management delivery expertise, deep industry knowledge and proven process capabilities to Qantas. [2]
      • Qantas to have access to IBM's deep research, analytics and business optimization capabilities. [2]
    • 8. Negative effect resulted from this outsourcing deal with ibm
      • Qantas employee offered employment at IBM but did not accept it would be redeployed with Qantas or make redundant. [1]
      • Unofficial new report that non acceptance of offer resulted in employee been asked to leave Qantas. [4]
      • Only 50 employee took up IBM offered as at 4 November 2009, after offer acceptance closing date due on 30 September 2009. [5]
      • Affected Employee fear that their job would be sent overseas once they join IBM. [3]
      • IBM have not make known the classification to these Qantas employee, until they sign up the offered causing concern to these affected Qantas employee. [3]
    • 9. IMPACT ON QANTAS PREVIOUS OUTSOURCING DEAL
      • Qantas have since remove more than 1000 IT job in the past 12 year with outsourcing deal. [1]
      • Qantas have outsource the services to TATA and Satyam based in India. [6]
      • Worker Union mention that IBM have previously subcontract to TATA and Satyam would do the same with this outsourcing deal with Qantas costing job to be lose or not created in Australia. [6]
    • 10. Recommendation for Qantas (Phased Transition – 7 Years)
      • Require a robust change management in place to smoothen the transition.
      • With resistance from Qantas staff, its difficult for transition. Therefore is important to walk through the change with them.
      • Understand the impact of blending two corporate cultures is critical when,
          • Qantas culture is faster pace than IBM
          • The transition approach has a short time.
      • Establish a SWAT team to analyze the strengths, weaknesses, lessons learned and best practices after each phase is rolled out.
      • The team should discuss all issues arose and feedback to the stakeholders.
      • Make sure team have the capabilities to quickly identify and address a problem, they should be authorized to resolve the issues in a short time frame.
      • Apart from transferring work to the service provider, both teams also should focus on helping the 2 companies integrate.
    • 11. REFERENCE
      • [1] Tay, L. (2009, September 11) . IBM, Qantas ink seven year outsourcing deal. Retrieved from: http://www.itnews.com.au/News/155428,ibm-qantas-ink-seven-year-outsourcing-deal.aspx
      • [2] IBM Press Release. (2009, September 9). IBM and Qantas Sign Project Delivery Agreement. Retrieved from: http://www-03.ibm.com/press/us/en/pressrelease/28349.wss
      • [3] Foo, F. (2009, September 15). Qantas staff fear IBM transfer. The Australian. Retrieved from: http://www.theaustralian.com.au/australian-it-old/ibm-in-200m-qantas-outsource/story-e6frgamo-1225771339428
      • [4] Foo, F. (2009, September 10). IBM in $200 Qantas outsource. The Autralian. Retrieved from: http://www.theaustralian.com.au/australian-it-old/ibm-in-200m-qantas-outsource/story-e6frgamo-1225771339428
      • [5] Tindal, S. (2009, November 4). Qantas workers refuse IBM jobs . ZDNet. Retrieved from: http://www.zdnet.com.au/qantas-workers-refuse-ibm-jobs_print-339299354.htm
      • [6] (2009, September 11). Outsourcing: Qantas in seven year deal with IBM. Chiefofficers.NET. Retrieved from: http://chiefofficers.net/888333888/cms/index.php/news/management/business_strategies/outsourcing/outsourcing_qantas_in_seven_year_deal_with_ibm
      • [7] Goolsby, K. (2009). Best Practices for Risk Mitigation in Outsourcing Transitions. Outsourcing Excellence Awards Best Practice Series 4.