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Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
Understanding The Difference Between Ito And Bpo
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Understanding The Difference Between Ito And Bpo

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Mastering the Differences between BPO & ITO Workshop This workshop will review the challenges when the exact same methodology is used in structuring BPO Outsourcing Agreements as is used in IT …

Mastering the Differences between BPO & ITO Workshop This workshop will review the challenges when the exact same methodology is used in structuring BPO Outsourcing Agreements as is used in IT Outsourcing Agreements, and will provide practical recommendations for overcoming these challenges. SIG, Leadership, BPO, ITO, differences, Ben Trowbridge, CEO, Alsbridge and Alan Barnes SVP and Deputy Group Counsel, ACS, Outsourcing, IT, offshore, category sourcing, strategic sourcing, supplier

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  • 1. Understanding the Differences between ITO and BPO October 9, 2007 Alsbridge Americas 3535 Travis St., Suite 105 Ben Trowbridge – Alsbridge CEO ACS 9040 Roswell Rd., Suite 700 Dallas, TX 75204 Atlanta, GA 30075 Tel: +1 214-696-6410 Fax: +1 214-239-0698 Allan Barnes - ACS Tel: 770-829-1342 Email: alan.barnes@acs-inc.com Email: EnquiryUSA@Alsbridge.com www.acs-inc.com www.alsbridge.com
  • 2. Agenda Speaker Backgrounds Points to Consider Comparison of BPO and ITO Issues by Process Phase • Feasibility Assessment • Strategy & Business Case • Solution Design • Provider Selection (OCM starts here) • Contract Negotiation • Transition Management © Alsbridge 2007 Confidential and Proprietary 2
  • 3. Alsbridge Difference Quick Facts Quick Facts • Award winning global advisory firm providing advice on outsourcing, shared services and offshoring • Since 2003, Alsbridge has grown to over 100 consultants headquartered in Dallas, TX and London, UK • Management team from senior positions at Accenture, Capgemini, EDS, E&Y, KPMG, Hackett and IBM • Changing the way traditional sourcing relationships are built through collaboration and innovation • More than $80 billion in contracts created, negotiated and implemented for clients © Alsbridge 2007 Confidential and Proprietary 3
  • 4. Speaker- Ben Trowbridge, CEO Alsbridge Background Recent Projects Best known as a thought leader in the evolution of Best known as a thought leader in the evolution of Engagement Leader for a Global High-Tech Engagement Leader for a Global High-Tech Outsourcing, Ben Trowbridge is a proven leader with Outsourcing, Ben Trowbridge is a proven leader with Company with $9B in annual revenue. Alsbridge Company with $9B in annual revenue. Alsbridge more than 20 years of diversified global experience as more than 20 years of diversified global experience as was brought on to conduct a global back-office was brought on to conduct a global back-office Managing Partner, CEO and Senior Executive with Managing Partner, CEO and Senior Executive with Outsourcing, Shared Services, and Best Shore Outsourcing, Shared Services, and Best Shore proven experience in hundreds of outsourcing, shared proven experience in hundreds of outsourcing, shared assessment for most non-production related assessment for most non-production related services and offshore transactions as a consultant and services and offshore transactions as a consultant and functions to include: Finance, HR, Call Center, functions to include: Finance, HR, Call Center, buyer executive. Prior to forming Alsbridge, Ben served buyer executive. Prior to forming Alsbridge, Ben served middle-office processing, billing, customer service middle-office processing, billing, customer service as Managing Partner for Ernst & Young’s Outsourcing as Managing Partner for Ernst & Young’s Outsourcing and Tele-sales. and Tele-sales. Services Business and COO for their Global Services Business and COO for their Global Outsourcing Business. Outsourcing Business. Led the strategy and business case development Led the strategy and business case development process for a one of the largest energy companies process for a one of the largest energy companies Key areas of expertise in the world to relocate over 10,000 Finance & in the world to relocate over 10,000 Finance & Accounting, Human Resources and Technology Accounting, Human Resources and Technology Provider Relationship Management Provider Relationship Management activities. Blue print developed a 4 year plan that activities. Blue print developed a 4 year plan that used a combination of outsourcing and captive used a combination of outsourcing and captive Offshoring Offshoring offshore strategies offshore strategies Global Sourcing Strategy Global Sourcing Strategy Led the business case development to restructure Led the business case development to restructure the SG&A costs for 7 major private equity the SG&A costs for 7 major private equity Captive Shared Services Captive Shared Services transactions valued at over $13 billion. transactions valued at over $13 billion. Global F&A, HR and IT sourcing transactions Global F&A, HR and IT sourcing transactions Assisted a $500M publicly traded regional wireless Assisted a $500M publicly traded regional wireless Contract negotiaton Contract negotiaton carrier (Sprint PCS affiliate) to renegotiate a carrier (Sprint PCS affiliate) to renegotiate a contract with their current outsourced billing and contract with their current outsourced billing and Global transactions from $150M -- $2.2B Global transactions from $150M $2.2B call center provider. call center provider. © Alsbridge 2007 Confidential and Proprietary 4
  • 5. Agenda Speaker Backgrounds Points to Consider Comparison of BPO and ITO Issues by Process Phase • Feasibility Assessment • Strategy & Business Case • Solution Design • Provider Selection (OCM starts here) • Contract Negotiation • Transition Management © Alsbridge 2007 Confidential and Proprietary 5
  • 6. Points to Consider - Structuring For Success Where do you see your company? Less Very Control Control Controlled Controlled Not Very Speed Speed In Rush Rushed Lowest Value Price Price Price Based Risk Risk Averse Risk Risk Tolerant Very Very Few People People Involved Standard Value Add Solution Innovation Innovation Solution Very Team Little Collaboration Collaboration Driven Sole Competitive Sourcing Sourcing Source Process Alsbridge Solution Slider Box © Alsbridge 2007 Confidential and Proprietary 6
  • 7. Points to Consider – Do you have a plan for BPO or ITO? Developing a Plan Sourcing Drivers Sourcing Drivers Vision & Plan Vision & Plan • Cost, cost and cost • Cost, cost and cost • Reason for outsourcing • Reason for outsourcing • Revenue • Revenue • Executive Sponsor • Executive Sponsor • Employee upheaval Scope • Deal construct • Employee upheaval • Deal construct • • Customer perception Customer perception Location & • • Business Case Business Case • • Control and flexibility Control and flexibility Configuration • • Risk mitigation Plan Risk mitigation Plan • Product // Service growth plans • Product Service growth plans • Internal & external • Internal & external • Service expectations • Service expectations communications communications Converting Drivers to a Vision & Plan requires: Defining the scope of the services being sourced Evaluating potential locations Configuring the work to drive the best value © Alsbridge 2007 Confidential and Proprietary 7
  • 8. Points to Consider – Thoughts from an Advisor How does a world class Client establish a Value add relationship with a provider? • Stop doing stupid things • Get some meat with that sizzle • Make sure the ring matches the engagement length • Make sure the honeymoon matches both of your expectations • Make the site visit memorable (very hard to do) Dilbert cubes in Bangalore when your jet lagged are hard to get excited about • Save your powder till you see the whites of their eyes • Follow the drill sergeant if you want to be in the parade © Alsbridge 2007 Confidential and Proprietary 8
  • 9. Agenda Speaker Backgrounds Points to Consider Comparison of BPO and ITO Issues by Process Phase • Feasibility Assessment • Strategy & Business Case • Solution Design • Provider Selection (OCM starts here) • Contract Negotiation • Transition Management © Alsbridge 2007 Confidential and Proprietary 9
  • 10. Comparison of BPO and ITO ITO is typically serviced based focused on reducing the costs of operating expenditures of the IT budget. ITO involves more mature, easily defined services that can be offshored. BPO is focused on improving performance, efficiency and productivity of the entire business. BPO has many more variances but involves less spending of capital expenditures. Operating environment is virtually the same. © Alsbridge 2007 Confidential and Proprietary 10
  • 11. Comparison of BPO and ITO Transition in BPO deals are typically more difficult. The customer environment in BPO involves entirely different processes and transformation while ITO is more lift and shift. BPO transactions often take more time and involve much more complex pricing mechanisms. Providers in BPO transactions are much more reliant on the customers for assistance and approvals. In BPO transactions in-scope personnel (frequently partial FTE’s) come into play in the implied services portion of many form agreements. © Alsbridge 2007 Confidential and Proprietary 11
  • 12. Comparison of BPO and ITO Price and growth more easily determined in ITO transactions. ITO transactions frequently have a metric that determines when to add MIPS or DASD, but it is harder to determine when an FTE is needed for a BPO transaction. Help desk call volumes on BPO transactions will typically soar during transition and therefore should be priced appropriately. Service levels in BPO transactions often require a burn in period because either because they have never been measured before or there is a completely different process. © Alsbridge 2007 Confidential and Proprietary 12
  • 13. Agenda Speaker Backgrounds Points to Consider Comparison of BPO and ITO Issues by Process Phase • Feasibility Assessment • Strategy & Business Case • Solution Design • Provider Selection (OCM starts here) • Contract Negotiation • Transition Management © Alsbridge 2007 Confidential and Proprietary 13
  • 14. Issues by Phase Months Phase 1 Phase 2… 2-3 months 1 1 1 2-4 Define strategy: Prepare RFP: Response to RFP: Evaluate bids: Negotiate contract: •Mobilise team •Define scope-in/ •Conduct site visits •Analyse bids •Finalise SLAs & KPIs •Baseline out analysis •Conduct supplier •Develop lists of questions •Finalise targets/ •Identify options •Define contract & workshops - SAS •Conduct further workshops •improvements expected •Assess business commercial terms •Respond to •Prepare business cases •Carry out transition case •Specify pricing questions •Identify gaps v criteria planning •Develop strategy requirements •Refine comms •Ask for BAFO •Negotiate commercial •Test internally •Specify service/ strategy •Select supplier and and contractual terms •Confirm plan - SAS process imps req’d •Develop detailed approve internally - SAS •Carry out supplier due •Define selection business model diligence criteria •Prepare SLAs & •Confirm business case •Brief suppliers KPIs •Sign deal •Draft document Alsbridge Outsourcing RFP issued Bids received Go/no go Deal starts strategy defined decision and signed exclusive supplier selected © Alsbridge 2007 Confidential and Proprietary 14
  • 15. Feasibility Assessment ITO ITO BPO BPO Documented processes Documented processes Unique customer operating Unique customer operating procedures and multiple processes procedures and multiple processes Analyzing reports Analyzing reports that are never fully documented that are never fully documented Lau gauge of Microsoft, Oracle Lau gauge of Microsoft, Oracle Significant in- depth interviews Significant in- depth interviews or SAP or SAP at a junior level at a junior level Development of controls Development of controls VS VS Multi- lingual skills Multi- lingual skills © Alsbridge 2007 Confidential and Proprietary 15
  • 16. Strategy & Business Case ITO ITO BPO BPO Low margins and high capital Low margins and high capital High margins and low capital High margins and low capital requirements requirements requirements requirements Cost Savings Cost Savings Business transformation Business transformation Easily measured outcomes Easily measured outcomes Variable tasks Variable tasks Demand for resource units has a Demand for resource units has a Difficult to define demand Difficult to define demand well defined language VS VS well defined language © Alsbridge 2007 Confidential and Proprietary 16
  • 17. Solution Design ITO ITO BPO BPO Established standards such Established standards such Home- grown customer work Home- grown customer work as ITIL as ITIL flows flows Typical people transfer Typical people transfer Potential people transfer Potential people transfer Potential for innovation on Potential for innovation on Potential for innovation on Potential for innovation on application of technology application of technology process process VS VS Less reengineering Less reengineering Customer infrastructure Customer infrastructure Suppliers infrastructure Suppliers infrastructure © Alsbridge 2007 Confidential and Proprietary 17
  • 18. Provider Selection ITO ITO BPO BPO Established standards Established standards Yet to be developed standards Yet to be developed standards Global providers Global providers Fewer global solutions Fewer global solutions Full enterprise easier to address Full enterprise easier to address Niche providers Niche providers for most components for most components Multi- disciplinary driven by a Multi- disciplinary driven by a host of issues from data privacy to host of issues from data privacy to VS VS core capacities to handle language core capacities to handle language and issues such as HR law and and issues such as HR law and Accounting standards Accounting standards © Alsbridge 2007 Confidential and Proprietary 18
  • 19. Contract Negotiation ITO ITO BPO BPO Existing benchmarks and Existing benchmarks and In- house knowledge of current In- house knowledge of current standards standards state is usually not as well known state is usually not as well known Commoditized Commoditized Established language for Established language for Immature pricing logic that can Immature pricing logic that can additional needs additional needs drive to FTE pricing drive to FTE pricing VS VS Need to document outcomes vs. Need to document outcomes vs. capabilities capabilities © Alsbridge 2007 Confidential and Proprietary 19
  • 20. Transition Management ITO ITO BPO BPO Platform driven Platform driven Functional Functional Well established Well established Vertical process support Vertical process support documentation processes documentation processes designed to take over your designed to take over your Can be lengthy due to a host Can be lengthy due to a host mess for less ififneeded mess for less needed of issues of issues Language of Microsoft Language of Microsoft VS VS Usually not well prepared for Usually not well prepared for makes movement of work makes movement of work easier easier OCM is key OCM is key © Alsbridge 2007 Confidential and Proprietary 20
  • 21. Americas Europe Ben Trowbridge Tim Lloyd Chief Executive Officer Managing Director Europe Email: Ben.Trowbridge@Alsbridge.com Email: Tim.Lloyd@Alsbridge.eu Tel: +1 214-696-6410 Tel: +44 (0)207-242-0666 Alsbridge Americas Alsbridge Europe 3535 Travis St., Suite 105 22-24 Ely Place Dallas, TX 75204 London, EC1N 6TE United States of America United Kingdom Tel: +1 214-696-6410 Tel: +44 (0)207-242-0666 Fax: +1 214-239-0698 Fax: +44 (0)207-242-0667 Email: EnquiryUSA@Alsbridge.com www.Alsbridge.com Email: EnquiryUK@Alsbridge.com © Alsbridge 2007 Confidential and Proprietary 21

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