Outsourcing for Managers Chris Miller Dir. of Messaging/Collab [email_address]

Quick Agenda Doesn’t everyone do it? ASP, MSP, ISP, xSP: Can I get a vowel? Is a bid or RFP necessary? Grey areas Why are my employees nervous? Signing YOUR contract Launch date! Where did they go?

Doesn’t everyone do it?

ASP, MSP, ISP, xSP: Can I get a vowel?

Is a bid or RFP necessary?

Grey areas

Why are my employees nervous?

Signing YOUR contract

Launch date!

Where did they go?

Doesn’t Everyone Do It? Networks Firewalls Applications Human Resources Developers Call Center Data Center Travel Services VPN voice over IP co-location

The Figures Outsourcing budgets have remained stable. Averaged 24% of IT budgets in 2002 to 23% projected for 2003. An estimated 38% will be renewed without renegotiations. The use of SLAs went up to 81% in 2002. It was only 66% in 2001. xSP’s are merging and being bought.

Outsourcing budgets have remained stable. Averaged 24% of IT budgets in 2002 to 23% projected for 2003.

An estimated 38% will be renewed without renegotiations.

The use of SLAs went up to 81% in 2002. It was only 66% in 2001.

xSP’s are merging and being bought.

Is a Bid or RFP Required? Are the ‘big’ outsourcing companies better? What steps do I (and can I) control in the process? Do I retrench employees once I outsource? Well this guy knows a vendor… We have plenty of budget for this project, just pick someone.

Are the ‘big’ outsourcing companies better?

What steps do I (and can I) control in the process?

Do I retrench employees once I outsource?

Well this guy knows a vendor…

We have plenty of budget for this project, just pick someone.

What You Get Without A Well-written RFP You get to do the project or outsourcing their way. You don’t retain the necessary control and management. You could be left with too few employees to mange the project. Does this vendor really know your needs?

You get to do the project or outsourcing their way.

You don’t retain the necessary control and management.

You could be left with too few employees to mange the project.

Does this vendor really know your needs?

Grey Areas User id creation Password management Server restarts Off-hours notification Patches, updates Backup/restore/ retention policy User deletion turnaround Server access (physical and remote) Trouble ticketing Response time Priority levels

User id creation

Password management

Server restarts

Off-hours notification

Patches, updates

Backup/restore/ retention policy

User deletion turnaround

Server access (physical and remote)

Trouble ticketing

Response time

Priority levels

Where Can I Lose Money? Lack of project management skills in outsourcing Thinking outsourcing means just cutting costs Skipping the doctor visit What ASP/ISP does my ASP/ISP use?

Lack of project management skills in outsourcing

Thinking outsourcing means just cutting costs

Skipping the doctor visit

What ASP/ISP does my ASP/ISP use?

Obligatory Slide With Tons of Numbers The revolving door was invented in 1888 1/3 of Americans flush while still sitting 78% of cats never travel with their owners Yogurt intake for Americans has quadrupled in the last year alone.. A piece of paper can be folded no more than 9 times A standard golfball has 360 dimples There are 293 ways to make change for a dollar 75% of people wash from top to bottom in the shower When the U of N Cornhuskers play, the stadium becomes the 3rd largest city in the state

Possible Long Term Money Loss Areas to Plan Out in Advance Loss of in-house skillset employees vacate the enterprise when the outsourcing is announced Loss of critical knowledge who internally could run it in case the provider vanishes Owning the developed product Overbillings by the provider Switching out qualified people in mid-project

Loss of in-house skillset

employees vacate the enterprise when the outsourcing is announced

Loss of critical knowledge

who internally could run it in case the provider vanishes

Owning the developed product

Overbillings by the provider

Switching out qualified people in mid-project

Writing YOUR Contract Baby steps Set fixed milestones with guarantees and doublechecks. Controlling the pieces (multiple RFPs) An entire project is not required to be one RFP. Each vendor has specific skills. Recovering from their errors Enable a backup and backout plan.

Baby steps

Set fixed milestones with guarantees and doublechecks.

Controlling the pieces (multiple RFPs)

An entire project is not required to be one RFP. Each vendor has specific skills.

Recovering from their errors

Enable a backup and backout plan.

Writing YOUR Contract (continued…) Exiting without penalty (out clause) This is a flexible cause that can cover not only their failure, but changes in your company direction. Merger-acquisition-divestiture clause What if you get sold/bought/merged? What if they do the same? Can you have an out clause? Using the economic climate to force a better deal

Exiting without penalty (out clause)

This is a flexible cause that can cover not only their failure, but changes in your company direction.

Merger-acquisition-divestiture clause

What if you get sold/bought/merged? What if they do the same? Can you have an out clause?

Using the economic climate to force a better deal

Faults in Picking the Vendor Not allocating enough time to evaluate the RFPs and investigate Underestimating the full requirements Believing everything you read Lack of understanding your own company’s direction and value Well of course new technology is easier and better

Not allocating enough time to evaluate the RFPs and investigate

Underestimating the full requirements

Believing everything you read

Lack of understanding your own company’s direction and value

Well of course new technology is easier and better

Where Did They Go? (my favorite) No one answers the phone anymore Management is unavailable Patches are behind My restore is not completed There are news stories The technician could not assist us Trouble tickets are gathering dust They refuse to update their financials for you to review

No one answers the phone anymore

Management is unavailable

Patches are behind

My restore is not completed

There are news stories

The technician could not assist us

Trouble tickets are gathering dust

They refuse to update their financials for you to review

ASP/ISP/MSP Failure Case Studies and Examples Providian Financial-2001 McDermott International-2001 Digex starts cutting jobs-Aug 2002 Exodus loses power at collocation facility, dropping Yahoo for hours-May 2001 Loudcloud sold to EDS-Jun 2002 IOS (Intel) drops out-May 2002

Providian Financial-2001

McDermott International-2001

Digex starts cutting jobs-Aug 2002

Exodus loses power at collocation facility, dropping Yahoo for hours-May 2001

Loudcloud sold to EDS-Jun 2002

IOS (Intel) drops out-May 2002

Quote... “ Being ‘out of the box’ means being edgy, and edgy is out. People are more skeptical of hotshot know-it-alls. They want track records, proof of what you can really do, what you can deliver.” Cheryl Berman, chairwoman and chief creative officer of Leo Burnett, USA

“ Being ‘out of the box’ means being edgy, and edgy is out. People are more skeptical of hotshot know-it-alls. They want track records, proof of what you can really do, what you can deliver.” Cheryl Berman, chairwoman and chief creative officer of Leo Burnett, USA

Summary Outsourcing is still a viable and productive option. Take the time to prepare the RFP, review and interview the candidates. Control and manage the process of contract writing and negotiation. Constantly review and be aware of the stability and management of your provider.

Outsourcing is still a viable and productive option.

Take the time to prepare the RFP, review and interview the candidates.

Control and manage the process of contract writing and negotiation.

Constantly review and be aware of the stability and management of your provider.

Thanks For Coming! Questions? If you need more information… Chris Miller Director of Messaging and Collaboration Connectria [email_address]

Questions?

If you need more information…