2. John P. Rompon Managing Principal - BPO Hewlett-Packard Company Insourcing / Outsourcing: Changing What It Means To Be A Bank Panel Discussion BAFT 2005 Conference 83 rd Annual Meeting April 18, 2005 Miami, Florida
13. Framework: Three Strategic Sourcing Questions The answer to each of these questions should be YES if your company is going to own an operation or asset Strategy Does the operation or asset directly contribute to the organization’s competitive advantage, core competency or capability? 1 Finance Does the investment in the operation or asset yield a return that is greater than the cost of invested capital? 2 Performance Is the operating performance of the operation or asset (quality of output, cost and cycle time) measurably superior to relevant industry standards? 3
14. Extending the Enterprise How much should we do ourselves and how much should we buy from others? Ronald Coase 1991 Nobel Laureate, Economics Where should we focus our resources? David Ricardo 19 th Century Economist
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25. Build v. Buy Decision ? Insource Outsource Non core– low value add – not key to long-term success Poor track record of internal funding/support No need/desire to control Market capability and maturity Low risk/uncertainty Core – high value add - key to long-term Success High risk/uncertainty High levels of control required Strong track record of internal funding/support Strong capability Pressures to Insource/Outsource
