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Building Partnerships  Gail F Farnsley Vice President and CIO Cummins Inc. NASSCOM Conference, Mumbai February 14, 2008
Agenda <ul><li>Outsourcing Model </li></ul><ul><li>Background </li></ul><ul><li>Management and Measurement </li></ul><ul><...
HIGH Competitive Advantage/ Strategic Importance LOW HIGH External Partner Capability Insource Invest in internal capabili...
Model Implications for IT Program/Project Management Infrastructure and Operations Business/Systems Analysis Programming, ...
Background <ul><li>IT Applications   </li></ul><ul><ul><li>Sent some Y2K work offshore with TCS in late 1990’s </li></ul><...
Background <ul><li>Infrastructure and Operations </li></ul><ul><ul><li>Initial contract signed in 2004 </li></ul></ul><ul>...
Supplier Management <ul><li>Follow standard Cummins Supplier Management practices </li></ul><ul><li>Supplier management te...
Sample Customer Satisfaction Survey Control Chart 8% 1% 68% 158/114 Q2-07 66% 57% 71% 65% 68% 65% 52% TTB  (>= 65%) 1% 1% ...
Low High Maturity Low High Offshore Leverage * Sample Capability Matrix Legend Evidence Capability Exists Capability needs...
Why a Joint Venture? <ul><li>Evolution of a captive to JV </li></ul><ul><ul><li>Captive IT services group in India had gro...
Evolution of a partnership <ul><li>JV formed in late 2001 </li></ul><ul><ul><li>Traditional IT outsourcing business agreem...
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Building, Managing and Measuring Strategic Partnerships,Gail F Farnsley, Vice President and Chief Information Officer,

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Building, Managing and Measuring Strategic Partnerships,Gail F Farnsley, Vice President and Chief Information Officer,
Cummins Inc.

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Transcript of "Building, Managing and Measuring Strategic Partnerships,Gail F Farnsley, Vice President and Chief Information Officer,"

  1. 1. Building Partnerships Gail F Farnsley Vice President and CIO Cummins Inc. NASSCOM Conference, Mumbai February 14, 2008
  2. 2. Agenda <ul><li>Outsourcing Model </li></ul><ul><li>Background </li></ul><ul><li>Management and Measurement </li></ul><ul><li>Why a joint venture? </li></ul><ul><li>Evolution of the partnership </li></ul>
  3. 3. HIGH Competitive Advantage/ Strategic Importance LOW HIGH External Partner Capability Insource Invest in internal capability Insource until external partners are capable Invest with partners to build their capability Collaborate Use partners for flexible capacity and while we develop internal capability Outsource Outsource to selected Global Preferred Vendors Outsourcing Model
  4. 4. Model Implications for IT Program/Project Management Infrastructure and Operations Business/Systems Analysis Programming, Testing and Support Strategy and Planning Primarily Insourced Primarily Outsourced
  5. 5. Background <ul><li>IT Applications </li></ul><ul><ul><li>Sent some Y2K work offshore with TCS in late 1990’s </li></ul></ul><ul><ul><li>Merged internal India-based IT services company (Cummins Infotech) with KPIT to create KPIT Cummins joint venture </li></ul></ul><ul><ul><li>Initial outsourcing contracts signed in 2001 </li></ul></ul><ul><ul><ul><li>KPIT Cummins, TCS, iGate </li></ul></ul></ul><ul><ul><li>Contracts re-bid in 2003 and extended in 2006 </li></ul></ul><ul><ul><ul><li>KPIT Cummins, TCS, iGate </li></ul></ul></ul><ul><ul><li>Contracts re-bid in 2007 </li></ul></ul><ul><ul><ul><li>KPIT Cummins, TCS, Infosys </li></ul></ul></ul><ul><ul><li>As of Year-end 2007 </li></ul></ul><ul><ul><ul><li>65% of IT applications work is outsourced </li></ul></ul></ul><ul><ul><ul><li>95% of outsourced work is done by 3 Global Preferred Vendors </li></ul></ul></ul><ul><ul><ul><li>68% of Global Preferred Vendor work is done offshore </li></ul></ul></ul>
  6. 6. Background <ul><li>Infrastructure and Operations </li></ul><ul><ul><li>Initial contract signed in 2004 </li></ul></ul><ul><ul><ul><li>HCL </li></ul></ul></ul><ul><ul><li>Contract renewed in 2007 </li></ul></ul><ul><ul><ul><li>HCL </li></ul></ul></ul><ul><ul><li>Services provided as of Year-end 2007 </li></ul></ul><ul><ul><ul><li>Multi-language IT Help Desk </li></ul></ul></ul><ul><ul><ul><li>Global Account Management </li></ul></ul></ul><ul><ul><ul><li>Server Management (Oracle, UNIX, Lotus Notes, Windows, Web) </li></ul></ul></ul><ul><ul><ul><li>Network Management (NOC, WAN Support) </li></ul></ul></ul><ul><ul><ul><li>Appworks Support </li></ul></ul></ul><ul><ul><ul><li>Storage and Backups </li></ul></ul></ul><ul><ul><ul><li>Remote Desktop Support </li></ul></ul></ul>
  7. 7. Supplier Management <ul><li>Follow standard Cummins Supplier Management practices </li></ul><ul><li>Supplier management team assigned for each partner </li></ul><ul><li>Measures defined in the contract </li></ul><ul><li>Regular Customer Satisfaction Surveys </li></ul><ul><li>Communication plans in place and escalation paths established </li></ul><ul><li>Quarterly and annual reviews of work and relationship </li></ul><ul><li>Joint Six Sigma projects to address areas for improvement </li></ul>
  8. 8. Sample Customer Satisfaction Survey Control Chart 8% 1% 68% 158/114 Q2-07 66% 57% 71% 65% 68% 65% 52% TTB (>= 65%) 1% 1% 0% 0% 0% 0% 2% BB (0 %) 10% 9% 3% 3% 4% 3% 10% BTB (=< 5%) 139/88 91 73 71 90 84 74 Responses/ Respondents Q3-07 Q1-07 Q4-06 Q3-06 Q2-06 Q1-06 Q4-05 3.81 3.86 3.75 3.97 3.96 3.88 3.83 3.60 Weighted Average Score Q3-07 Q2-07 Q1-07 Q4-06 Q3-06 Q2-06 Q1-06 Q4-05
  9. 9. Low High Maturity Low High Offshore Leverage * Sample Capability Matrix Legend Evidence Capability Exists Capability needs Strengthening Building Capability Not an area of Capability
  10. 10. Why a Joint Venture? <ul><li>Evolution of a captive to JV </li></ul><ul><ul><li>Captive IT services group in India had grown to over 100 people, but managing an IT services company was not a core competency of Cummins </li></ul></ul><ul><ul><li>But we wanted to maintain an investment in an IT services company as we saw it as a good investment </li></ul></ul><ul><li>Helped move work faster </li></ul><ul><ul><li>Concerns about confidentiality of applications lessoned by moving work to someone “inside the family” </li></ul></ul><ul><ul><li>Senior leadership visibility and attention due to concern about success of JV </li></ul></ul><ul><li>Gave us insight into cost structure and operation of an IT company </li></ul><ul><ul><li>Made us more educated when negotiating with other partners </li></ul></ul>
  11. 11. Evolution of a partnership <ul><li>JV formed in late 2001 </li></ul><ul><ul><li>Traditional IT outsourcing business agreement </li></ul></ul><ul><li>Launched joint community service projects in 2006 </li></ul><ul><ul><li>Partnered on a Six Sigma project to identify how to provide low cost IT services to non-profit community agencies in Columbus, Indiana, USA </li></ul></ul><ul><ul><li>KPIT Cummins employees and volunteers staff a new agency to deliver IT services </li></ul></ul><ul><li>Expanded nonprofit support to other communities in 2007 & 2008 </li></ul><ul><ul><li>Started program to provide support for agencies in Pune </li></ul></ul><ul><ul><li>Plans to expand program to Fridley, Minnesota and Nashville, Tennessee </li></ul></ul><ul><li>Expand partnership to Purdue University to research new ways to apply </li></ul><ul><li>technology to societal problems and community organizations </li></ul>
  12. 12. Thank You
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