Trends & Market Evolutions influencing Riskmanagement in cloud (out)sourcing contractsPrepared for Cevora26th October 2011...
Agenda» About EquaTerra» Cloud Demystified» Market Research: 8 Key Trends & Associated Risks  influencing the operational ...
About EquaTerra      Research » Strategy » Transformation » Governance
EquaTerra – the Sourcing Advisory Organisation                                                                            ...
EquaTerra – What truly sets us apart...» Impartial objective practical advice» Sourcing Lifecycle specialists» Tested Appr...
EquaTerra Methodology & Approach» ITO & BPO sourcing approach based on  comprehensive Sourcing Delivery Lifecycle  Methodo...
EquaTerra Methodology             Strategy                                                              Solution          ...
Sourcing Lifecycle   Advising our clients through the complete sourcing lifecycle                       I.T.              ...
Cloud Demystified      Research » Strategy » Transformation » Governance
Definition of Cloud: from horizontal to vertical sourcing                 Horizontal Outsourcing                       Ver...
Why organizations chose cloud solution» Minimized capital expenditure» Access to systems regardless of location or device»...
Can Cloud Pricing Really Bring a Shower ofSavings?» Paying by the drink is appealing to many buyers.  But:        – Hidden...
Typical Risks in Cloud» Security & Privacy    Outsourcing data storage to a cloud, for example, could mean housing it beyo...
Cloud Service Providers» Next to typical & traditional global  players (often offering cloud back-end  solutions), the mar...
Good Cloud – Bad Cloud      Cloud computing is a good                                                                     ...
Market Research:8 Key Trends & Associated Risks influencingthe operational cloud environment        Research » Strategy » ...
8 Key Trends & Associated RisksDifferent EquaTerra Research Sources to present market information & trends» Pulse Surveys:...
Trend 1: Increasingly, cost savings and War for Talent drive outsourcingRisk 1: Both drivers often are contradictory (good...
Trend 2: Inadequate Governance due to cost savings outsourcing driver Risk 2: Too optimistic Clients & opportunistic Servi...
Trend 2: Inadequate Governance due to cost savings outsourcing driverRisk 2: Too optimistic Clients & opportunistic Servic...
Trend 3: “The usual suspects” in contract legal terms & conditionsnegotiationsRisk 3: too much focus on these GTCs as proc...
Trend 4: High focus on Termination in commercial negotiationsRisk 4: Too much focus on building a super flexible (and supe...
Trend 5: Today, most companies are in search for rapid ROI as many projects& investments have been frozen in 2008 - 2009Ri...
Trend 6: Advisors Key Challenge = Retained Org & Management SupportTrend 6: Service Providers Key Challenge = Change, Poli...
Trend 7: Indian Service Providers lead 2010 European Customer SatisfactionRisk 7: It looks “tempting” to work with Pure Pl...
Trend 8: Ever increasing contract & market complexityRisk 8: Contract not in the satisfaction zone© 2011 EquaTerra Europe ...
Governance fit-for-purpose      Research » Strategy » Transformation » Governance
Trend 2: Inadequate Governance due to cost savings outsourcing driverRisk 2: Too optimistic Clients & opportunistic Servic...
Demand – Supply Management Best Practice© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary o...
Demand – Supply Management Best Practice                                                                                  ...
Demand – Supply Management Ratio’s© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG...
Demand – Supply Management Ratio’s                                                                                        ...
Conclusions & Key Success Factors      Research » Strategy » Transformation » Governance
Key Success Factors© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and...
Conclusions» Know and understand the market (local, European and global)» RfI, RfP & Contract should be market competency ...
Contact Details      Research » Strategy » Transformation » Governance
Dominique Kindt                                                         » Dominique Kindt has a strong expertise in ITO an...
Trends+market evolutions influencing risk mngt in cloud sourcing contracts D.Kindt EquaTerra KPMG
Trends+market evolutions influencing risk mngt in cloud sourcing contracts D.Kindt EquaTerra KPMG
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Trends+market evolutions influencing risk mngt in cloud sourcing contracts D.Kindt EquaTerra KPMG

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Dominique Kindt, country mngr EquaTerra KPMG Belux, over de trends en evoluties die risico's voor cloudsourcing contracten kunnen betekenen.

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Trends+market evolutions influencing risk mngt in cloud sourcing contracts D.Kindt EquaTerra KPMG

  1. 1. Trends & Market Evolutions influencing Riskmanagement in cloud (out)sourcing contractsPrepared for Cevora26th October 2011Dominique Kindt, Country Manager EquaTerra KPMG BeLux Research » Strategy » Transformation » Governance
  2. 2. Agenda» About EquaTerra» Cloud Demystified» Market Research: 8 Key Trends & Associated Risks influencing the operational cloud environment» Governance fit-for-purpose» Conclusions and Key Success Factors© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 2EquaTerra name and logo are trademarks of KPMG International.
  3. 3. About EquaTerra Research » Strategy » Transformation » Governance
  4. 4. EquaTerra – the Sourcing Advisory Organisation Key Facts Advisors 350+» One of the global leading Outsource and Shared Services Engagements 2000+ Advisory firms TCV under control $300bn Countries served 60+» A recognised leader in IT, HR, BPO, F&A competencies Advisor Specialisation» Full Sourcing Lifecycle advisory capability HR 16%» We‟re Practitioners and trusted Advisors, not Consultants IT 38% Business & Financial 20%» Global provider with 16 offices across 3 continents Other Specialist 26%» Incorporated Morgan Chambers in 2007 Advisor Presence Americas 64 %» Acquired by KMPG in 2011 EMEA 34 % Asia Pacific 2% Our Mission: “Helping clients achieve sustainable value in their IT and Business processes by providing expert advice on how to get the most out of their sourcing relationships” © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 4 EquaTerra name and logo are trademarks of KPMG International.
  5. 5. EquaTerra – What truly sets us apart...» Impartial objective practical advice» Sourcing Lifecycle specialists» Tested Approach  Collaborative – Work together with Clients & providers (non-confrontational)  Flexible – Tailor services to meet your exact requirements (not one size fits all)  Sustainable – Look at the „big‟ picture, and what it will mean for the long term  Knowledge Transfer – We encourage 100% knowledge transfer in all our engagements  Speed to Market – Focused on achieving the objectives (not just about rigour and method)» Track record with proven complex deal capability» Our People» Industry leading Methodology © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 5 EquaTerra name and logo are trademarks of KPMG International.
  6. 6. EquaTerra Methodology & Approach» ITO & BPO sourcing approach based on comprehensive Sourcing Delivery Lifecycle Methodology focusing on all sourcing » Internal » Service Delivery or Improvements domains: Sourcing Strategy » Shared Services – Captive Center – Strategy » Service Delivery or Sourcing Assessment » Outsourcing - Offshore – Solution » Opportunity Analysis » InSource (back in house) – Implementation & Business Case » Negotiation & Contracting Governance – Optimization » Service Delivery – Governance Management » Business Alignment» Significant added value to our » Governance WorkPlace » Diagnostic and Methodology through continuous Benchmark » Transition » Transformation investments in: » Renegotiation Support » Contract Review » Change Management » Project Management – Managed Peer Networks » Performance & » Interim Satisfaction – Proven Market research Measurement Management – Practitioner‟s Knowledge sharing – Continuous Training and Education © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 6 EquaTerra name and logo are trademarks of KPMG International.
  7. 7. EquaTerra Methodology Strategy Solution Implementation Optimisation 1 Prepare and Define Internal Solution 1 Prepare & launch 1 Prepare & define 2 Assess current delivery • Shared Services 2 Realign & execute 2 Measure 3 Define future delivery • Captive Center 3 Govern & review 3 Analyse options • Internal Process 4 Improve 4 Develop strategy Improvement 5 Monitor 5 Plan & align External Solution • Outsourcing • Offshore© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 7EquaTerra name and logo are trademarks of KPMG International.
  8. 8. Sourcing Lifecycle Advising our clients through the complete sourcing lifecycle I.T. Finance & Acc.• Infrastructure Strategy & • Accounting• Operations Assessments • Banking Processes• Apps. Development • Insurance Processes Re-negotiations In-sourcing• Apps. Maintenance • Re-engineering & Re-bidding & Transforming • Transformation• Network (ICT) Mark to Outsourcing Market Transactions Governance Health Checks Design & Remediation (Process & Structure) Human Resources Value Assurance Supply Chain Operate &• Admin. (inc. Payroll) Innovate / Benchmarking • Source-to-pay• Resourcing Transition & • Click-to-procure• Talent Management Change Mgmt • Category Mgmt• Org. Effectiveness • Procurement process Assistance• Learning & Dev. • Frameworks© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). TheEquaTerra name and logo are trademarks of KPMG International.
  9. 9. Cloud Demystified Research » Strategy » Transformation » Governance
  10. 10. Definition of Cloud: from horizontal to vertical sourcing Horizontal Outsourcing Vertical Outsourcing aka Cloud© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 10EquaTerra name and logo are trademarks of KPMG International.
  11. 11. Why organizations chose cloud solution» Minimized capital expenditure» Access to systems regardless of location or device» Multi-tenancy (enabling a pool of users to share resources and cost)» Reliability/redundancy for business continuity» Scalability & access to new applications» Energy efficiency through shared infrastructure» Convenient on demand access But … often main reason for choosing cloud solutions is CapEx & OpEx costs savings driven by the business © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 11 EquaTerra name and logo are trademarks of KPMG International.
  12. 12. Can Cloud Pricing Really Bring a Shower ofSavings?» Paying by the drink is appealing to many buyers. But: – Hidden clauses, such as minimum volume levels, can automatically Cloud Service lock you into a minimum level of commitment for fees. Provider is controlling – Unit of measure pricing is inclusive of all services, including & standardizing the software and hardware upgrades. environment and – The conditions on software functionality, and how your price changes with requests for new functionality. “dictates” SLAs and – The sustainability of your pricing over time. Will it remain valid for QoS changes in volume or technology? – The upfront and ongoing costs associated with configuration and In other words: you integration needs, if any, back into legacy internal applications. chose to step into – The upfront and ongoing costs associated with training, user their standard way of support, etc. working … better be – The termination charges for exiting these types of agreements. prepared and – The potential costs associated with changing business operations understand where the and processes to support the new cloud environment. real cost saving is … – The standard SLAs that are offered © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 12 EquaTerra name and logo are trademarks of KPMG International.
  13. 13. Typical Risks in Cloud» Security & Privacy Outsourcing data storage to a cloud, for example, could mean housing it beyond agency firewalls, which could potentially raise the risk of compromise. Another concern is service providers‟ security measures, which could affect an agency‟s compliance with regulatory guidelines» Transitional & ancillary costs Despite the cost advantages of cloud computing, organizations will still need to invest in the transition. Preparing custom applications to run on the cloud, for example, will be a time- and labor-intensive activity, and you may need to continue supporting the legacy applications that don‟t run on the cloud» Availability & Performance Cloud providers promise great processing power and scalable services, but the reality is that leasing space on a cloud means you‟re dependent on someone else‟s capacity. Downtime, even if it‟s scheduled, will directly affect your access to cloud resources.» Change Management Cloud computing, still an emerging technology, may not be widely understood in all organizations. For example, your constituents and internal customers will have rapid access to servers, storage and computing platforms that were once the exclusive turf of IT. © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 13 EquaTerra name and logo are trademarks of KPMG International.
  14. 14. Cloud Service Providers» Next to typical & traditional global players (often offering cloud back-end solutions), the market will more and more be dominated by niche players offering a very specific business solution (often offering cloud front- end solutions) (www.cloudbook.net select Directories -> Applications)» Also, service providers that were in a totally different business enter the cloud arena (e.g. Amazon)» Access to cloud services is made very easy: Visa should do the job. © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 14 EquaTerra name and logo are trademarks of KPMG International.
  15. 15. Good Cloud – Bad Cloud Cloud computing is a good Cloud computing is not a option when … good option when ...» You‟re running modern Internet » You‟re running applications that enabled applications weren‟t written for the Internet» You want variable costs due to » You want permanent or varying levels of consumption inflexible parameters on IT» You‟re trying to reduce capital spend expenditure for data processing » You have significant sunk cost» You know exactly what you that will affect your business want in the cloud and with what case service provider(s) » You approach it opportunistically © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 15 EquaTerra name and logo are trademarks of KPMG International.
  16. 16. Market Research:8 Key Trends & Associated Risks influencingthe operational cloud environment Research » Strategy » Transformation » Governance
  17. 17. 8 Key Trends & Associated RisksDifferent EquaTerra Research Sources to present market information & trends» Pulse Surveys: Quarterly and periodic market studies of EquaTerra advisors business and IT service providers, and buyers of third party services. Global, regional (UK, Netherlands), industry (US public sector, life sciences) and functional (legal, HR) focus.» EquaTerra Echo: A quarterly wrap-up analysing all business & IT services market events and reporting.» Service Provider Performance and Satisfaction (SPPS) Studies: Yearly market study by geography and function on outsourcing trends and buying patterns and buyer assessment of service provider performance and satisfaction.» Topical and customised commissioned and EquaTerra internal market research studies» Research embedded in EquaTerra client engagements, events, and service provider offerings» Events: EquaTerra hosted buyer events, primarily in the European market; potential select service provider sponsorship.» Customised consulting: Flexible and customisable services to support vendor and service providers‟ strategic and operational needs. Sample topical areas covered include the following. – Strategy projects (e.g., market and service offering positioning, M&A support) – Sales and marketing effectiveness (e.g., brand management, training: pursuit, commercial, legal, working with sourcing advisors) – Operational efficiency (e.g., service delivery, transition management, outsourcing governance and relationship management) © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 17 EquaTerra name and logo are trademarks of KPMG International.
  18. 18. Trend 1: Increasingly, cost savings and War for Talent drive outsourcingRisk 1: Both drivers often are contradictory (good skills don’t come cheap)Comparison 2009/2010/2011: 70% 55% Cost savings 56% 44% 60% 43% Access to skills 50% 54% 30% 34% 2011 Quality improvement 22% 31% 2010 29% 2009 36% Financial flexibility 28% 2008 15% 22% 16% Time to market 16% 14% 8% 8% Change agent 16% 8%© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 18EquaTerra name and logo are trademarks of KPMG International.
  19. 19. Trend 2: Inadequate Governance due to cost savings outsourcing driver Risk 2: Too optimistic Clients & opportunistic Service Providers that underestimate impact of governance endangering the deal and relationship» Often buyers are not employing the most 100% applicable outsourcing governance model to 12% 7% 5 - Very good 90% fit/supports outsourcing meet the needs of their outsourcing efforts efforts well 80% 26%» Mismatched needs and models can limit 4 32% outsourcing governance effectiveness and 70% work against overall outsourcing 60% governance success 3 - Neutral 50% 37%» Even when the most applicable model is 40% identified some buyers may not have the 2 30% 51% skills, resources and support to deploy it successfully 20% 26% 1 - Poor fit/does not» Implementing the outsourcing governance 10% support outsourcing 5% 4% efforts well model starts during transition, another area 0% where many buyers struggle Advisors Service ProvidersTo learn more:• Sourcing Governance and Change Management: Elusive Enablers of Outsourcing Success• Governance 2.0: New Management Tool Supports Achievement of IT Sourcing Objectives• Best Practice in Governing Outsourcing Contracts: Establishing and Managing a Center of Excellence © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 19 EquaTerra name and logo are trademarks of KPMG International.
  20. 20. Trend 2: Inadequate Governance due to cost savings outsourcing driverRisk 2: Too optimistic Clients & opportunistic Service Providers thatunderestimate impact of governance endangering the deal and relationship Loss of Value from Ineffective Service Provider Governance Efforts Duplicated Resources Wasted Problems Performance Not Not at Managed Vendors Expected Deployed Levels Against Conflicting 10%–20% Or Wrong Value Loss Opportunities Goal Operational Untapped Challenges 20%–30% Value Loss Performance 5%–10% Challenges Value Loss Portfolio Management ChallengesTotal Potential Value “Net” Value Gained Gained From the From the Relationship Relationship © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 20 EquaTerra name and logo are trademarks of KPMG International.
  21. 21. Trend 3: “The usual suspects” in contract legal terms & conditionsnegotiationsRisk 3: too much focus on these GTCs as procurement is driving manyoutsourcing deals currently Limitation of liability Indemnities Regulatory compliance Step-in rights Supplier financial risk Data protection/privacy Pre-defined direct damages IT systems/network/data security Global Financial covenants Proprietary intellectual property rights Europe License/usage of third party intellectual property North America Representations and warranties Audit rights Physical security Force majeure 1,0 2,0 3,0 4,0 5,0 1=Not Challenging, 5=Very Challenging© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). TheEquaTerra name and logo are trademarks of KPMG International.
  22. 22. Trend 4: High focus on Termination in commercial negotiationsRisk 4: Too much focus on building a super flexible (and super complex)contract able to exit at all times Termination fees Termination rights Service levels Fee structure Transition fee/credit structure Scope of services Global Transformation Europe Inflation North America Foreign exchange rates Consent fees for third party contracts/licenses Service provider labor Service provider delivery locations 1,0 2,0 3,0 4,0 5,0 1=Not Challenging, 5=Very Challenging© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). TheEquaTerra name and logo are trademarks of KPMG International.
  23. 23. Trend 5: Today, most companies are in search for rapid ROI as many projects& investments have been frozen in 2008 - 2009Risk 5: Outsourcing does not bring rapid ROI© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 23EquaTerra name and logo are trademarks of KPMG International.
  24. 24. Trend 6: Advisors Key Challenge = Retained Org & Management SupportTrend 6: Service Providers Key Challenge = Change, Politics & MarketRisk 6: Misaligned RfPs and Negotiations leading to inadequate contract© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 24EquaTerra name and logo are trademarks of KPMG International.
  25. 25. Trend 7: Indian Service Providers lead 2010 European Customer SatisfactionRisk 7: It looks “tempting” to work with Pure Plays, but it requires differentgovernance skills to manage them© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 25EquaTerra name and logo are trademarks of KPMG International.
  26. 26. Trend 8: Ever increasing contract & market complexityRisk 8: Contract not in the satisfaction zone© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 26EquaTerra name and logo are trademarks of KPMG International.
  27. 27. Governance fit-for-purpose Research » Strategy » Transformation » Governance
  28. 28. Trend 2: Inadequate Governance due to cost savings outsourcing driverRisk 2: Too optimistic Clients & opportunistic Service Providers thatunderestimate impact of governance endangering the deal and relationship Loss of Value from Ineffective Service Provider Governance Efforts Duplicated Resources Wasted Problems Performance Not Not at Managed Vendors Expected Deployed Levels Against Conflicting 10%–20% Or Wrong Value Loss Opportunities Goal Operational Untapped Challenges 20%–30% Value Loss Performance 5%–10% Challenges Value Loss Portfolio Management ChallengesTotal Potential Value “Net” Value Gained Gained From the From the Relationship Relationship © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 28 EquaTerra name and logo are trademarks of KPMG International.
  29. 29. Demand – Supply Management Best Practice© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). TheEquaTerra name and logo are trademarks of KPMG International.
  30. 30. Demand – Supply Management Best Practice Demand Supply Business IT Delivery management management CEO CIO IT director Business director Process owner Information strategy Application portfolio Service portfolio Vendor (portfolio) Strategic analyst manager manager manager planning Enterprise architect Business process Information architect IT landscape architect Solution architect architect Auditor Business Information security Risk & compliance Security & compliance officer officer officer governance Quality officer Manager Management Business process Demand manager Supply manager Delivery manager Manager Information owner Project portfolio Program manager manager Business project Project sourcing Application owner Business consultant manager IT project manager manager Change Business process Information analyst Application/ infra Solution designer Solution engineer & designer consultant innovation Meta data manager Test manager Test coordinator Solution test manager Solution tester Change manager Release manager Deployment manager Business service Contract manager IT purchaser Contract delivery manager manager Service manager Service level Manager Service delivery Management manager control IT controller Asset manager Administrative support End user Key user Functional support Data quality analyst Service coordinator IT process manager Application engineer Operational Data administrator Service desk agent Systems engineer control Database administrator© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). TheEquaTerra name and logo are trademarks of KPMG International.
  31. 31. Demand – Supply Management Ratio’s© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 31EquaTerra name and logo are trademarks of KPMG International.
  32. 32. Demand – Supply Management Ratio’s The impact of scale on demand supply spend: 1 1. In small organizations the tactical 1 3 coordination of IT is relatively expensiveSpend on 4Demand mgt 24% 2 2. The optimum lies around 25 MiO; with spend+ Supply mgt above 25 MiO complexities increase, as doas a % of totalIT spend 2 the demand supply mgt costs 12% 3. 3 Above 75 MiO scale advantages lead to decrease in spend towards the optimum The impact of the investment strategy on demand supply spend: € 25 MiO € 75 MiO 1. 4 Apart from scale, the second factor with a Millions Outsourced large impact on demand supply management spend is the investment strategy. Organizations that invest aggressively in improvement projects tend to score on the high end of the spectrum. The graph represents an average investment strategy © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 32 EquaTerra name and logo are trademarks of KPMG International.
  33. 33. Conclusions & Key Success Factors Research » Strategy » Transformation » Governance
  34. 34. Key Success Factors© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 34EquaTerra name and logo are trademarks of KPMG International.
  35. 35. Conclusions» Know and understand the market (local, European and global)» RfI, RfP & Contract should be market competency driven combined with translation of internal (business) need» Understand the service provider community to know on what they react well and what “scares them off”» Understand what is driving the current market (and how service providers react, position and protect themselves against current market trends)» Know your own (internal) strengths & weaknesses before addressing the market © 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 35 EquaTerra name and logo are trademarks of KPMG International.
  36. 36. Contact Details Research » Strategy » Transformation » Governance
  37. 37. Dominique Kindt » Dominique Kindt has a strong expertise in ITO and BPO advisory in different industries. He developed a particularly expertise with respect to Financial Services Industry and Supranational (Government) Institutions. Dominique is able to provide assistance in all phases of the IT and Business Process Outsourcing Lifecycle. This equally includes providing guidance in governance, project risk management, organizational (re)design and process and financial methodologies. » Before joining EquaTerra, Dominique headed the Outsourcing Risk Advisory business unit at Deloitte. He was responsible for the delivery of several ITO and BPO projects. Prior to joining Deloitte, Dominique obtained hands-on people management and outsourcing experience in working at a Belgian fund institution acting as an ICT and general manager responsible for the internal services. He reorganized the internal service lines in selecting multiple vendors and service providers for ITO and BPO solutions to outsource eg. competence management, facilities, infrastructure and software development activities. » Dominique has served, amongst others, companies like Argenta, LBK, ING, ING IM, Dexia, Fortis IM, Aon, Swift, Euroclear, Base, City of Antwerp, Tech Data, Kyphon, BARC, Avnet, Unilin, Deloitte, Fabricom, VIL, Infrabel, ICANN, Puratos, Eurocontrol and NATO across multiple geographies. » Dominique initiated his career at the University of Antwerp (Ufsia) where he was engaged as research and education coordinator. » Dominique holds two Master degrees. He holds a Master in Applied Economics at the University of Antwerp and achieved an additional Master in Applied Computer Science at the University of Brussels. He successfully graduated both degrees with distinction. » Dominique is the founder and chairman of the Belgian Chapter of the European Outsourcing Association (www.eoa-belgium.be). » Dominique is based in Brussels, Belgium© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and itscirculation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The 37EquaTerra name and logo are trademarks of KPMG International.
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