IT Outsourcing Transformation             Demand of the time
2IT Outsourcing Transformation - Demand of the timeOverviewIT Services have been an in-house function for most of organiza...
3IT Outsourcing Transformation - Demand of the timeprovider, as a strategic method for improving effectiveness andefficien...
4IT Outsourcing Transformation - Demand of the timeThe NeedsThere are several drivers for a managed services set up depend...
5IT Outsourcing Transformation - Demand of the timeby somebody and execution by somebody else. In case of In-house ITteam ...
6IT Outsourcing Transformation - Demand of the timemanaged services engagement. Prioritization is done based on theweight ...
7IT Outsourcing Transformation - Demand of the timeBased on the analysis, a roadmap is prepared to transition servicesfrom...
8IT Outsourcing Transformation - Demand of the time5. Strategic Uptake Planning – Is aligned to the Customer strategyas a ...
9IT Outsourcing Transformation - Demand of the time                                                                       ...
10IT Outsourcing Transformation - Demand of the time        Frameworks and documents to support the design of quality IT  ...
11IT Outsourcing Transformation - Demand of the time          Governance Model (Engagement Model, Project Organization   ...
12IT Outsourcing Transformation - Demand of the time        Governance Model ensures that engagement related decisions    ...
13IT Outsourcing Transformation - Demand of the timeThe Program Management methodology provides for processesrequired to p...
14IT Outsourcing Transformation - Demand of the timeshould have been defined to direct the execution and delivery ofsoluti...
15IT Outsourcing Transformation - Demand of the timeProgram Managers leverages on the above features in the portal, indefi...
16IT Outsourcing Transformation - Demand of the time                                         Measurement                SL...
17IT Outsourcing Transformation - Demand of the time   S.No            Challenge                        Resolution / Mitig...
18IT Outsourcing Transformation - Demand of the timeReferenceshttp://en.wikipedia.org/wiki/Managed_serviceshttp://www.cio-...
19IT Outsourcing Transformation - Demand of the timeABOUT HCLHCL TechnologiesHCL Technologies is a leading global IT servi...
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HCLT Whitepaper: IT Outsourcing Transformation

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IT Services have been an in-house function for most of organizations across the globe a decade ago. With rapid growth in new technologies and expansion of customer base, organizations were unable to adapt to changes relying solely on their in-house IT teams. This gave rise to external IT service providers and proliferation of multiple engagement models.

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HCLT Whitepaper: IT Outsourcing Transformation

  1. 1. IT Outsourcing Transformation Demand of the time
  2. 2. 2IT Outsourcing Transformation - Demand of the timeOverviewIT Services have been an in-house function for most of organizationsacross the globe a decade ago. With rapid growth in new technologiesand expansion of customer base, organizations were unable to adapt tochanges relying solely on their in-house IT teams. This gave rise toexternal IT service providers and proliferation of multiple engagementmodels. In-House IT Team – Organizations were using in-house IT teams to manage the IT work. Co-Sourcing Model - Organizations started using consultants from the service providers to manage the work along with the In- house IT team. Service provider‘s consultants were managed by the IT manager. Staff Augmentation (T&M) Model – Organizations use IT service providers to complement the in-house IT teams in execution of projects and pricing model was based on the effort put by the consultant. Fixed Price Model – Fixed price model is similar to Staff Augmentation model in terms of tasks being outsourced to the service provider. Pricing model is different from Staff Augmentation. In Fixed price model, cost of service is measured in terms of quantity of deliverables and overall program is managed by the organization. Managed Services Model – In Managed services engagement model, the service provider is responsible for end-to-end responsibility to deliver a service which was being delivered or managed by the organization‘s in-house IT department. Pricing model is outcome based as compared to activity based in the earlier models. Figure 1: In-House IT Vs Co-Sourcing Vs ManagedDefinitionA managed service is the practice of transferring day-to-daymanagement and operations responsibility to a third party service© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  3. 3. 3IT Outsourcing Transformation - Demand of the timeprovider, as a strategic method for improving effectiveness andefficiency.While the organization that owns or has direct oversight ofthe entity or system being managed is referred to as the client orcustomer, the person or organization that accepts and provides themanaged service is regarded as the service provider.ConceptThe service managed and delivered by a service provider under acontracted service level agreement is generally termed as a ―ManagedService‖. This term is used by various providers differently based onthe context of their business and the services that they provide. Theservice provider takes complete management responsibility to deliver aservice that was traditionally performed by the internal staff or by theservice providers in either T&M or Fixed price model. Managedservices are definitely not a one-size-fits-all concept. They have to becustomized based on the unique needs of the organization and theservice provider‘s portfolio of services.In a managed services scenario the customer organization compensatesthe service provider for the services that it provides and not for thecomponents that constitute the service. The customer organization isnot required to plan, design, manage, and deliver the services in amanaged services scenario, as all these activities that are related toservice delivery and operations management are the responsibility ofthe service provider. While working with an organization that has ahighly matured managed services setup the customer is required toonly manage, monitor and evaluate the overall service providerperformance.ScopeThe diagram shown below depicts the scope of the Managed servicesPortfolio starting from mere Team augmentation to the level ofcomplete outsourcing of all Assets (Hosting & IT), planning, designingthrough an SLA based end-to-end service management. The scope inModel-4 gets extended up to managing other service providers for adefined scope of work. It also includes driving RFP and selecting thefinal service provider to provide the service. Figure 2: Levels of Outsourcing© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  4. 4. 4IT Outsourcing Transformation - Demand of the timeThe NeedsThere are several drivers for a managed services set up depending onthe organization, the industry it is operating in, theapplications/systems that it uses, service provider penetration, and theIT industry outlook. They range from reducing delivery risk toleveraging the service provider‘s capabilities for service delivery.CIOs are facing the challenges of – IT Managers spending time in micro management of individual projects Managing financial pressure of high cost of operation and inadequate year-on-year improvement Fierce competition Handling all business and technology risk CTO, SMEs and IT Managers spending the precious time in finding the ways of application modernization and lack of support from the service provider Having roadblocks in adopting mission critical technology and going for business transformation Inadequate Value addition by the service providers. Lack of transparency from the service provider.Service Providers also face the problem of – Lack of Visibility Lack of Ownership Non involvement in planning activity and execution as per the plan No focus on the productivity improvement and competency enhancement. Inadequate opportunity of moving up in value chain during the engagement.These challenges are mainly because of the reasons illustrated below.Multi Vendor Scenario – Customers are working with multipleservice providers and tracking each and every service provider is acumbersome task.While working in Co-souring model, service provider lacks indemonstrating the -Accountability – Customer is accountable for any issue even ifservices are offered by the service providers.Capability enhancement – Service Provider‘s consultant sticks to atechnology and the application without any capability enhancement intechnology or business applications.Productivity Improvement – Supplier‘s consultant does not work inthe line of productivity improvement to deliver more for less.Innovation – There is a lack of innovation by the service provider‘sconsultants when they don‘t get opportunity to define, execute, deliverand measure their performance.Scalability – Scalability becomes an issues when planning is done© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  5. 5. 5IT Outsourcing Transformation - Demand of the timeby somebody and execution by somebody else. In case of In-house ITteam also, scalability is an issue to address.Visibility – Service provider does not have the visibility of thecomplete landscape and it impacts the performance of serviceprovider.Partnership – Service provider does not work in partnership mode tobring maturity into the business.Outsourcing in Managed Services - BenefitsIT Industry has seen tremendous benefits by transforming theengagements into Managed Services. In a matured managed servicesengagement model, customer gets benefits not only in making a betterstrategy for the coming years but also gets cost effective and qualityservices from the service provider in partnership mode. Few keybenefits are - Risk, Responsibility and Rewards sharing by the trusted partners Predictable costing Innovative solution framework SLA Based Delivery - Driving Efficiency through Service Level Management Customer FTEs are ―freed up‖ to take-up other important activities Clearly stated, measurable outcomes – Accountability is built into the model so that roles and responsibilities are strictly defined and ambiguity eliminated wherever possible with Quantitative metrics and milestones. Consistent High Quality Delivery Continuous improvement - Simple staff augmentation does not provide the incentive for process improvement. The managed outcome model, by comparison, encourages the provider to exploit savings opportunities through shared knowledge of best process practices, standardization, and application life-cycle improvements Development of Reusable components Access to Experts, Enterprise Tools and World-Class Methodologies Improved efficiency and productivity Knowledge Retention Reduced Total Cost of Operations Improved Customer SatisfactionTransformation to Managed ServicesPurposeThis document provides a methodology for transforming staffaugmentation model to managed services model. It contains detailedprocess for identifying and prioritizing the applications / projects /services for managed services model and then how to start the© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  6. 6. 6IT Outsourcing Transformation - Demand of the timemanaged services engagement. Prioritization is done based on theweight assigned against numerous parameters. The methodologyexplains the following– Facilitates the service provider to develop and submit the business case. Helps the customer in defining the road map for transitioning to Managed Services Model. How to define and establish Service Level Agreements for different types of services.Embracing Managed Services Model will benefit the customer in termsof cost optimization, process maturity and improved quality.Customers get all the advantages of a matured outsourcing model inmanaged services mode.Approach towards Managed Services ModelManaged Services Framework is typically designed with the followingkey objectives- Enable transition to Managed Services in a phased manner Provide a standardized service model Reduce client effort‘s on operational management Extend benefits from economies of scale Will provide IT Managers necessary job aids, guidelines, templates and checklists to enable transition into the frameworkThe process any established service provider would like to follow theapproach is represented below (while working with Customercounterparts)- Prepare Application Services Catalog  Prepare exhaustive list of services provided for each application  Categorize these services for each application in to various application management services (AMS) category  Prepare a volume baseline per application per service Categorize Applications  Applications are categorized (Platinum, Gold, Silver etc) based on the business criticality Document As-Is Processes for each of the AMS Categories in the following lines  Incident Management , Problem Management,  Change Management  Service Request Management  Configuration, Release and Availability Management Collect Service Level Requirements based on business criticality Define SLAs based on Service Level Requirements© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  7. 7. 7IT Outsourcing Transformation - Demand of the timeBased on the analysis, a roadmap is prepared to transition servicesfrom the existing setup to service provider‘s Managed Services model. Figure 3: Managed IT Operations ServicesThe ElementsThere is a need for establishing strong practices both on the customerand service provider front to move into a managed services setup.Moving into this setup calls for putting in place a framework thatgoverns the organization and its service providers and certainoperational practices that need to be followed by them.Both these would include financial aspects, service level agreementsand a cataloguing model, among others. Generally the following arekey components of a managed services framework -1. Service Cataloguing toolkit – Contains the types of servicesoffered, detailed description of the services offered, customizations,scope, service windows, support specifications, DR specifications,requisition procedures and related dynamics.2. Service Level Agreement Framework – A framework that isaimed at managing the services being offered to the customer withtargets defined for performance, quality, rewards and penaltymechanisms, review and monitoring guidelines.3. Pricing and costing model – The financial framework used for theprovision of the services that includes the budgeting model, costingand pricing mechanisms, chargeback mechanism and other accountingprocedures.4. Governance Framework – The Managed services governanceframework talks of the structure, policies, practices that are necessaryfor the governance of the managed services setup. It also includesestablishment of forums/focus groups around specific areas withrepresentation from key stakeholders from Business & IT.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  8. 8. 8IT Outsourcing Transformation - Demand of the time5. Strategic Uptake Planning – Is aligned to the Customer strategyas a whole and creates higher value for business.6. Optimized Demand Management – Helps in minimizing theexecution cycle time, standardizes the processes to ensure consistentcustomer experience.7. Quality Delivery through standardized deliverables, engagementsuccess and best practices cascaded across the Managed Service.8. Optimized Service support with better resource mobilization,higher offshore % and improved governance, scoping & reviews.Additional elements could form a part of the managed servicesframework based on the Project requirements. However, there areother IT operations and management practices like support processes,and documentation that any organization must establish in order tomove into a managed services framework.StrategyThe approach starts with the agreement on scope of services targetedin managed services model and Identification of opportunities formanaged services within the customer‘s organization.Prioritization of candidates for Managed Services:Application prioritization is one of the important steps in moving theprojects from staff augmentation to Managed Services Model.Prioritization of projects, tasks and activities must be carried out usinga set of parameters.Parameters to prioritize the candidates Desired outcome of the Parameter Description Parameter for Faster transformation Where ever there is scope for huge financial, Business Criticality regulatory impacts, it is better to transition those Low services at a later stage after detailed due diligence. Having senior management‘s commitment with Management Support High some business representation is critical. A clear understanding of the risks and mitigation plans to reduce exposure to them is necessary. Risk areas to be considered are Regulatory & legal risks Risks Services that could impact the business in Medium terms of revenue Risks that can cause instability in the IT organization Critical proprietary information and rights Number of changes to the application functionality Application Stability High / architecture Identification of the applications / services that can ROI Medium provide high yield / ROI. Increase in the productivity and the need for Productivity Low reduction in the cycle time Services where there is a scope for performance Performance and quality improvement are best candidates for Medium improvement potential transitioning into managed services.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  9. 9. 9IT Outsourcing Transformation - Demand of the time Desired outcome of the Parameter Description Parameter for Faster transformation Services where there is skills shortage or lack of Technical Expertise Low technological expertise in customer organization Many applications and Infrastructure related work requires documentation. This technical or non- Documentation Medium technical documentation is necessary when a third party is managing the delivery. Services where there is a level of process maturity Process maturity with clear roles and responsibilities, standardized High processes and procedures Having the capabilities within the client Organizational organization for managing service delivery in the High Readiness new setup. For transitioning into a managed services model, one of the most critical element is having authority Level of Authorization High for the SPOC from customer side for the services, associated applications and infrastructure The candidate services / applications are Application Stability High reasonably stable. Complexity of the applications being transitioned Complexity into managed services mode plays a major role on Low the tenure of the transformation.The below table has parameters related to service provider‘scapabilities and these can be used by CIOs to evaluate a serviceprovider for any particular piece of work to be outsourced in managedservices model. Service providers with proven capabilities that can be leveraged High Methodologies, further is extremely important, by not only taking over support but practices, processes also create value by leveraging their proprietary methodologies, practices and processes. Ability to manage The service provider should have a set up to meet the demand for Medium demand Managed Service Model. Domain & High Strong expertise in domain and technology areas and the expertise in Technical using multiple technologies for a business objective. Competency Service Providers with proven expertise in delivering the projects High MSM Expertise with MSMThe above parameters will help in deriving the Managed Service Indexwhich will indicate how soon the service / application / project can betransformed to Managed Serviced Mode. Implementing this modelacross all services / applications / projects shall derive the ManagedServices Transition Roadmap.DesignThe main goals and objectives of Design are to: Design services to meet agreed business outcomes Design processes to support the service lifecycle Identify and manage risks Design secure and resilient IT infrastructures, environments, applications and data/information resources and capability Design measurement methods and metrics Produce and maintain plans, processes, policies, standards and architecture.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  10. 10. 10IT Outsourcing Transformation - Demand of the time Frameworks and documents to support the design of quality IT solutions Develop skills and capability within IT Contribute to the overall improvement in IT service quality.This phase involves creating IT operations service catalogue, mappingbusiness and IT processes through a contract managed servicebusiness and operational solution. Outcome of this phase is a clearlydefined business case for moving towards managed services. Thisphase comprising of two sub phases viz. Due Diligence, SLAFramework and Business Case preparation.Plan / SolutionInputs gathered during the due diligence phase are considered fordefining plan for delivering the agreed services to customer. This plancan include the technology solutions, process solutions, a high levelschedule and effort to deliver predefined scope of services. This scopeof work along with SLAs defined below will be the key inputs forpreparing the business case.Service Level Agreements (SLAs) – Life cycleThis section explains the process steps involved in managing theService Level Agreements. Define SLAs — this process covers the work of drafting and refining SLAs, ensuring they meet the customer requirements and gaining agreement from all the parties involved. Implement the SLA — once all parties have agreed, the SLA is published, a start date determined and the affected operational teams notified. Measure SLA performance and report results. Refine — assess the effectiveness of the service, locate where the gaps or changes are occurred and execute the SLA definition process to adjust the SLA.Managed Services Business Case Detailed Managed Services business case will be prepared and submitted to the customer. The proposal will focus on the below items to deliver the services.  Scope of Work  Assumptions and Dependencies  Methodology and Approach  Proposed Technical Solution for new projects  Service Level Agreements  ROI  Time lines & Commercials© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  11. 11. 11IT Outsourcing Transformation - Demand of the time  Governance Model (Engagement Model, Project Organization Structure, Project Management Processes, Project Progress Tracking & Communication, Risk Management, Change Management, Escalation Management)  Responsibility Matrix  Case Studies Finally, Signed Managed Services contract is an outcome of Service design phaseTransition and Service DeliveryThe transition phase involves taking over the management andoperational responsibility of the given scope of work. This is executedby leveraging a program management framework andworking closely with the customer to assess, document and validate thesteps that are applicable to the defined scope.Transition has below steps and that should be executed with a detailedchecklist and toll gate review at regular intervals. Due Diligence – To understand the scope of work Transition Planning – To make the plan and schedule for the actual transition. It also defines the team structure and the mode of training. Transition – Actual knowledge acquisition happens as per the agreed transition plan between different stakeholders. Shadow Support – The new service provider provides the secondary support where as the incumbent service provider or internal staff contributes for the primary support. Reverse Shadow Support – The new service provider provides the primary support and the incumbent service provider or internal staff provides help to the new service provider in execution. Steady State – The new service provider takes the complete charge of service delivery. Optimization stage – This is the continuous improvement activity and the service provider shows the continuous productivity improvement throughout the engagement.Managed Services FrameworkThe key elements that frame the managed services model includeDelivery Framework, Governance Model, SLA framework andProcesses & Tools Delivery Framework that aligns with the service scope and leverages on application development / support needs and skill requirements. The delivery model aims to provide the client benefits from improved quality of service, economies of scale and visibility© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  12. 12. 12IT Outsourcing Transformation - Demand of the time Governance Model ensures that engagement related decisions varying in criticality, urgency and financial impacts are appropriately addressed through a multi layered governance mechanism operating at strategic, tactical and operational levels Service Level Agreements are defined for each of the services identified and measured during the execution of the project. SLAs are reviewed on a periodic basis and necessary changes are incorporated in consultation with customer. Process and Tools ensures that the delivery teams have appropriate capabilities to provide the services defined. An engagement specific policy and procedures manuals supported by service delivery plans is provided to internal stake holders to clearly define the approach for service delivery. A typical established service provider uses a combination of client provided request handling tools and 3rd party tools to deliver services.Program ManagementThe best of class Framework is implemented with the Program andProject Management methodologies at the organization level, andpractice specific engineering life cycle methodologies at the customerengagement level. Figure 4: Program and Project ManagementEvery program sets out their vision and goals based on the stakeholderexpectations, Business Unit level KRAs and customer-specific businesscommitments. This Program Vision and Targets govern ProjectInitiation and Planning activities, which include Project-level Measuresand Goals setting. Similarly, the Project-level performance acts as afeedback loop in monitoring and stabilizing program executionA Program is defined as a ―group of projects managed using theestablished Delivery Framework to deliver Software Products andServices, based on customer requirements, to leverage Benefits andControls, not available from managing them individually‖.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  13. 13. 13IT Outsourcing Transformation - Demand of the timeThe Program Management methodology provides for processesrequired to plan, track and manage programs / customer engagementsfrom a strategic perspective Figure 5: Program and Project Management FrameworkProject Management Figure 6: Project Management - Delivering Right First TimeA Project is a value creating business executed in a defined time periodwhich enables delivery of services to the end consumers.Projects provide for further breaking of the scope of engagement /program (strategic business needs of the customer) in to manageablework packets (Development, Maintenance, support, etc.) for effectiveexecution and delivery.The phases of project management include – Initiation, Planning,Execution (Tracking & Monitoring, Delivery & Deployment) andClosure. The approach following for delivering project level outputright first time is depicted below:Practice / engineering methodologies forSolution / DeliverySoftware Engineering Life Cycle / practice specific methodologies© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  14. 14. 14IT Outsourcing Transformation - Demand of the timeshould have been defined to direct the execution and delivery ofsolutions and services across disparate technologies. Detailedmethodologies and procedures must be available with any serviceprovider‘s quality process. The relevant portion of the same will beshared with the customer during the engagement kick off.Delivery Structure Delivery team(s) collaborate with the representatives in the customer organization in the context of project delivery Customer Management Team collaborates with the customer at an engagement level, in providing a comprehensive picture of all delivery. Delivery Support by Quality, Competency Solutions, HR, KM and others Figure 7: Delivery StructureGovernance ModelService provider should have a comprehensive governance structureand process in place. The key activities in planning for the governancestructure and process include- Establishing a review plan for critical milestones, deliverables and periodic progress Defining a detailed communication plan – identify reporting requirements and the various stakeholders who need to be communicated. Determine the frequency of communication and responsibility and, Defining the escalation matrix for issue resolutionAt program level, every program manager captures communicationand review plans pertaining to their programs in any ProgramManagement Portal. The escalation matrix applicable for issueresolution will also be updated in the portal. Program Managers have aprovision to upload plans pertaining to document management andknowledge management as a part of the overall program planningphase. Effective program governance is a cornerstone for successfulchange management and incident / exception management. Thechange register and an incident / exception register, is used to monitorchanges / incidents / exceptions impacting the program.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  15. 15. 15IT Outsourcing Transformation - Demand of the timeProgram Managers leverages on the above features in the portal, indefining a comprehensive governance plan for their programs. Thiswould facilitate the effective monitoring of the governance mechanismduring the program execution phase, and help program managers insteering their programs towards success. The typical Governancemodel for followed in HCL is depicted below- Governance Forum Participants Inputs Outputs  Customer’s Project Sponsor STEERING Steering Committee  Customer’s Senior  Project Highlights  Executive Commitments  COMMITTEE Review Key Performance Meeting Management Indicators  Issue Resolutions (Quarterly)  HCL’s Head of Delivery  Strategic Directions (Executive Management)  HCL’s Engagement  Escalated Issues Director ENGAGEMENT  Customer’s Program   Progress Reports  Engagement Review Manager Escalated Issues Issue Resolution GROUP  Customer’s Project  Directions from Steering  Project Plan realignment Meeting Manager Committee  Issue Escalation (Relationship (Monthly)  HCL’s Program Manager  Risk Analysis  Resource Requisition Management)  HCL’s Account Manager  Metrics  Customer’s Project  Project Status Manager  Issue Escalation DELIVERY GROUP Delivery Meeting  Customer’s SMEs  Metrics  Revised Plan  Directions From (Project Management) (Weekly)  HCL’s Project Manager  Metrics Engagement Group  HCL Technical/Module/  Risks  Current issues Test/Project Leads MEETING SCHEDULE REPORTS SCHEDULE Steering Committee Once every 3 Months REPORT PREPARED BY SENT TO Weekly Status Engagement Committee Once every Month Project Manager All Stakeholders Report Monthly Progress Project Manager & Delivery Meeting Once a week Steering Committee Report Account Manager Figure 8: Governance ModelIndicative SLAsIn any managed services engagement, SLAs are aligned with only twoobjectives – One is on time delivery and the other is bug fixing timefor resolution.In addition to the above SLA‘s, the following table contains the sampleSLAs that can be followed for the engagement in the Managed ServiceModel. The actual SLAs will be discussed and mutually agreed uponcommencement of the managed services model:Indicative SLAs for Production Support projects are given below. Measurement SLA Metric Formula Expected Matrix Time of Ticket Severity 1 Ticket Response Time Response minus Time 15 minutes Response of Ticket Assignment Time of Ticket Severity 2 Ticket Response Time Response minus Time 15 minutes Response of Ticket Assignment Time of Ticket Severity 3 Ticket Response Time Response minus Time 1 hour Response of Ticket Assignment Time of Ticket Severity 4 Ticket Response Time Response minus Time 2 hours Response of Ticket Assignment Time of Ticket Severity 1 Ticket Resolution Time Resolution minus Time 4 hours Resolution of Ticket Assignment© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  16. 16. 16IT Outsourcing Transformation - Demand of the time Measurement SLA Metric Formula Expected Matrix Time of Ticket Severity 2 Ticket Resolution Time Resolution minus Time 3 days Resolution of Ticket Assignment Time of Ticket Severity 3 Ticket Resolution Time Resolution minus Time 30 days Resolution of Ticket Assignment Time of Ticket Severity 4 Ticket Resolution Time Resolution minus Time 30 days Resolution of Ticket Assignment Time within which the Post Mortem report to Post Mortem Incident Time be sent to the customer 24 Hrs Report for Severity 1 & 2 ticketsChallenges in moving into Managed ServicesLike any other scenario where there is a substantial organizationalchange, transitioning into managed services also presents toughchallenges in the way of the transformation. Some of these challengesare process related, some technological and some related toorganizational & behavioral changes. One of the most importantcriteria and challenge for the customer organization is to have enoughtrust on the capabilities of the service provider. Since Managed servicesrequires less oversight and management burden for the customerorganization, in spite ofclearing all odds, not having trust on the service provider organizationand its capabilities can undermine all efforts. Below is a list of fewprominent challenges that most organizations face in thistransformation.Challenges & their mitigation while movinginto the Managed Services Mode:Based on our past experience in converting the engagements intomanaged services mode, we have listed the possible issues that mightdevelop. We have also given below the mitigation or resolution foreach of these issues in order to move the engagement to managedservices mode successfully. S.No Challenge Resolution / Mitigation from the Service Provider 1 Dependency on Service provider will go through the training / KT during the first 6 the customer months to become the subject matter experts for the identified SME skill/stream. This will help in minimizing the customer SME involvement on a staggered mode and eventually the service provider‘s team will become self dependent. 2 Gaining In order to get the confidence, the movement will be done in a staggered Customer mode - Partially managed and eventually into a fully managed services stakeholder mode. This will also help in minimizing the risk for the business. confidence for moving into Managed Services Model© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  17. 17. 17IT Outsourcing Transformation - Demand of the time S.No Challenge Resolution / Mitigation from the Service Provider 3 Lack of Upon conversion to partially managed / fully managed, service providers transparency follow the defined communication plan to share the project progress, from Service issues/concerns, performance SLAs and metrics with customer. This will provider be planned at multiple levels. Service provider‘s onsite co-coordinator will be interfacing between onsite, offshore and customer to minimize any gaps. 4 Lack of The SLA based engagement with performance incentives & credits to Accountability ensure required accountability from the service provider. from Service provider 5 Handling Service provider team will be supported by the internal Technical architectural Architecture Group and competency groups. These groups provide the changes technical guidance and also perform technical & architectural reviews to ensure that the deliverables meet the standards. 7 Knowledge Service provider should have a dedicated Knowledge Management portal Retention and framework for customer engagement. The framework enables the service provider to capture, retrieve and re-use the documented knowledge and tacit knowledge. 8 Lack of Customer will continue to manage the engagement by way of the engagement following: - (a) Prioritization of projects (b) Approving milestones (c) oversight by the Estimation revalidation and approvals (d) SLA based performance customer monitoring and provision of incentives & credits (e) Toll gate reviews and signoffs for the milestone based deliverables. 9 Complaint with (a) Before migrating to the Managed Services Model, Service provider the service would have worked with Customer for nearly 24 months time in project provider‘s mode. This is a good timeframe for any large application to get the SDLC required Knowledge on the service provider‘s SDLC process followed by processes Customer. (b) In addition to this, before moving to the Managed services model, a charter will be prepared which describes the process to be adopted. Service provider should be open to follow the process prescribed by the customer, or service provider can suggest its own or a combination of both. In any case, the process will be mutually agreed and implemented. 10 Organizational By moving into managed services model, Customer managers will be freed change from the routine operational, technical and resource related matters. This management and will enable them to have more bandwidth for more value added services as people well as taking up some of the high end work. This will allow required communication acceptance from the customer staff. It is also important to provide the direction of the managed services model from the senior leaders of the organization for better and faster implementation. 11 Business By outsourcing the work in managed services, customer has very little Continuity Plan control in day to day operations. In this case, service provider needs to have a disaster recovery plan to run the business as usual in case of any disruption. This should be tested and audited in regular interval.End Note Defining a long term vision and the roadmap for its execution are the utmost priorities for any CIO. This can be achieved only if CIOs and IT managers outsource the IT work to a service provider in managed services model. This gives more bandwidth to work on strategic things. All operational work to run the business is outsourced to a service provider with agreed service level agreement. It also reduces the total cost of ownership and annual budget can be used for transformation of application to meet the business and market demands. It also brings improved customer delight index.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  18. 18. 18IT Outsourcing Transformation - Demand of the timeReferenceshttp://en.wikipedia.org/wiki/Managed_serviceshttp://www.cio-weblog.comhttp://technologyoutsourcingblog.comhttp://managedservicesblueprint.comAbout the Author Praveen Sinha is part of Mainframe Solution CoE team as ADMS consultant and has 15 years of experience in various areas of Mainframe. In the past, he has worked in several large engagements and converted Staff augmentation or Semi-Managed Services engagement to Managed Service Model successfully. He has also contributed in starting an engagement in managed services model for various Transformation, Development, Maintenance and Support projects across various technologies.© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  19. 19. 19IT Outsourcing Transformation - Demand of the timeABOUT HCLHCL TechnologiesHCL Technologies is a leading global IT services company, workingwith clients in the areas that impact and redefine the core of theirbusinesses. Since its inception into the global landscape after its IPO in1999, HCL focuses on ‗transformational outsourcing‘, underlined byinnovation and value creation, and offers an integrated portfolio ofservices including software led IT solutions, remote infrastructuremanagement, engineering and R&D services and BPO. HCL leveragesits extensive global offshore infrastructure and network of offices in 31countries to provide holistic, multi-service delivery in key industryverticals including Financial Services, Manufacturing, ConsumerServices, Public Services and Healthcare. HCL takes pride in itsphilosophy of ‗Employees First‘ which empowers our 72,267transformers to create real value for customers. HCL Technologies,along with its subsidiaries, had consolidated revenues of US$ 3.1billion (Rs. 14,101 crores), as on 31st December 2010About HCL EnterpriseHCL is a $5.7 billion leading global technology and IT enterprisecomprising two companies listed in India - HCL Technologies andHCL Infosystems. Founded in 1976, HCL is one of Indias original ITgarage start-ups. A pioneer of modern computing, HCL is a globaltransformational enterprise today. Its range of offerings includesproduct engineering, custom & package applications, BPO, ITinfrastructure services, IT hardware, systems integration, anddistribution of information and communications technology (ICT)products across a wide range of focused industry verticals. The HCLteam consists of over 79,000 professionals of diverse nationalities, whooperate from 31 countries including over 500 points of presence inIndia. HCL has partnerships with several leading Global 1000 firms,including leading IT and Technology firms. For more information,please visit www.hcl.com© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

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