Telcom Offshoring

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Telcom Offshoring

  1. 1. Assessing the Viability of Offshore Outsourcing for Telcos Cablevision’s Investigation into Offshore/Near-shore IT Engagements Presented by: John Blanco Vice President, Strategic Communications
  2. 2. Our Discussion for Today⇒ An Introduction to Cablevision and its Corporate Information Systems group⇒ Our Offshore Investigation Roadmap⇒ Should You Go Offshore/Near-shore⇒ Assessing Risks and Benefits⇒ Final Thoughts⇒ Q&A
  3. 3. (JOHN’S VIDEO INSERTED HERE)
  4. 4. A total media and telecommunications company• More than 22,000 employees• Service Offerings Provided: • Cable Television • Digital Satellite (Q4, 2003) • Entertainment and Sports Programming • News and Information • Internet Service Provider • Telephone Service Provider • Live Venues • Advertising
  5. 5. A solid customer base• 3 million cable television customers in the New York Metropolitan Area• More than 400,000 Digital Video subscribers• More than 850,000 High-speed Data (Internet) customers• More than 16,000 residential and commercial telephone customers• $4 billion in total annual revenue, YE 2002
  6. 6. Corporate Information Systems (Responsible for all Cablevision IT Needs)• Preeminent provider of state of the art, reliable, efficient Information Systems and Production Support Services for all Cablevision Businesses• “Federated yet Centralized” Organizational Structure • Several business-focused groups led by Business Information Officers (BIOs) report to Company CIO • Each BIO commands dedicated technology staff aligned to each of Company’s several business units
  7. 7. Corporate IS supports…• 150 business applications • Business-critical apps include: • DST Innovis (CableData) • Kenan Billing Systems • MetaSolv • Remedy• 680 UNIX and Intel servers• 120 Terabytes of Raw Data Storage• More than 10,000 e-mail users• 1,500 Network Components
  8. 8. A quick look back at 2002…• Two major re-organizations/downsizings: • March, 2002 • August, 2002 Combined for 3,000 layoffs across company• Total Cablevision Corporate IS Staff now: • 421 employees
  9. 9. Current IS Staff As Compared to Years Past 3 0 ,0 0 0 702 913 2 5,0 0 0 421 421 2 0 ,0 0 0 24,000 22,300 21,080 21,080FTE 15,0 0 0 10 ,0 0 0 5,0 0 0 - 2000 2001 2002 2003 Year Cablevision Staff* IS Staff** * Cablevision Staff represents all non-Corporate IS employees. ** IS Staff represents budgeted FTE’s for years indicated. Associated consultant
  10. 10. Reduction-in-Force Did Not Mean Reduction-in Work!• Current economic and business trends require Cablevision to expand technology needs for customers • Customer Self-Provisioning • Digital Cable Offering (iO) • Optimum Online
  11. 11. Reduction-in-Force Did Not Mean Reduction-in Work!• Corporate IS must keep pace internally with business unit’s strategic need for innovative Information Technology • Upgrade existing applications • New Application Rollouts
  12. 12. Let’s Not Forget Ongoing IT Support 250,000 231,569 221,664 221,664 225,000 203,115 200,000 17 5 , 0 0 0 15 0 , 0 0 0 Qty 12 5 , 0 0 0 10 0 , 0 0 0 75,000 50,000 25,000 - 2000 2001 2002 2003 Year Help Desk Tickets
  13. 13. Let’s Not Forget Ongoing IT Support 15 , 0 0 0 14,435 14,264 14,264 12 , 5 0 0 11,000 10 , 0 0 0 Qty 7,500 5,000 2,500 - 2000 2001 2002 2003 Year Desktops
  14. 14. Past Options Used to Handle the WorkloadOption One: Handled by Cablevision’s Internal IS Staff• Add project/activity to current workload• Low cost to internal user• Questionable timeline for completion• Changing requirements during engagement• Quality could be questionableOption Two: Handled by traditional outsourcing company• High cost to internal user• Solid timeline established to guarantee completion• Changing requirements during engagement possible, raising cost to completeOption Three: Just Say No…• Delay project until next fiscal year or do in place of one already scheduled• Could impact the development of business-critical app
  15. 15. Consider a New Option2003 Reduce IT Spending in face of current economic climate Cost Savings/ Containment Focus “Monetize” the Company’s IT Assets Gain IT Agility and Scalability Outsourcing Skills Shortage Drivers Quality Speed of Delivery Accelerate the software acquisition integration process Specialist Requirements Time to Market Hand off the “busy” (low value-add) work
  16. 16. Consider a New Option2003 Cost Savings/ Containment Focus Offshore/Near-shore Engagement Skills Shortage Quality Specialist Requirements Time to Market
  17. 17. Our Offshore Investigation Roadmap
  18. 18. Cablevision Offshore/Near-shore Investigation Roadmap Go/No Go? Go/No Go?Activities • Fact-finding • BIO Meeting(s)* • Exec Meetings (CEO, etc.) • Review potential • Set basic parameters • EA Meeting • Develop RFI/RFP vendor capabilities • Create GDO-centric • Attend seminars • CIO Briefing and determine • Create vendor teams • Vendor talks* • Business Planning evaluation criteria long/short lists • Establish Metrics • Expert talks* Meeting • Tweak RFI with Experts • Assess internal • Choose vendor/sign • Reference talks • Discuss contract process readiness contracts • Collect and assess parameter w) Legal, HR) , • Assess staff sample templates • Begin development of readiness the GDO** concept • Develop training •Share results of Pilot curriculum Engagement process • Site visits1 2 Socialization Operationalize Initial Analysis And Strategy Educate and Engage Idea Sponsorship Prepare• Offshore/Near-shore • IT Pilot Project Feasibility • Executive mandate • All IS staff trained on White Paper White Paper developed from CEO to proceed improved Internal • Approved contracts with• Identified group of IS after interviews with BIOs • RFI/RFP Processes to handle vendor and Cablevision “friendlies” championing • IT pilot project chosen for • Approved Strategy engagement • Established GDO initiative to business unit engagement Roadmap • Rollout of IS • Formalized documentation and IS staff • Published Offshore/Near-shore (SOWs, etc.) mission/goals of Awareness Campaign • Release Pilot project proposed GDOResults Communication Education Relationship Mgt.* Begin discussing potential savings areas** Global Delivery Office concept
  19. 19. Cablevision Offshore/Near-shore Investigation Roadmap Go/No Go? Go/No Go?Activities • Fact-finding • BIO Meeting(s)* • Exec Meetings (CEO, etc.) • Review potential • Set basic parameters • EA Meeting • Develop RFI/RFP vendor capabilities • Create GDO-centric • Attend seminars • CIO Briefing and determine • Create vendor teams • Vendor talks* • Business Planning evaluation criteria long/short lists • Establish Metrics • Expert talks* Meeting • Tweak RFI with Experts • Assess internal • Choose vendor/sign • Reference talks • Discuss contract process readiness contracts • Collect and assess parameter w) Legal, HR) , • Assess staff sample templates • Begin development of readiness the GDO** concept • Develop training •Share results of Pilot curriculum Engagement process • Site visits1 2 Socialization Operationalize Initial Analysis And Strategy Educate and Engage Idea Sponsorship Prepare• Offshore/Near-shore • IT Pilot Project Feasibility • Executive mandate • All IS staff trained on White Paper White Paper developed from CEO to proceed improved Internal • Approved contracts with• Identified group of IS after interviews with BIOs • RFI/RFP Processes to handle vendor and Cablevision “friendlies” championing • IT pilot project chosen for • Approved Strategy engagement • Established GDO initiative to business unit engagement Roadmap • Rollout of IS • Formalized documentation and IS staff • Published Offshore/Near-shore (SOWs, etc.) mission/goals of Awareness Campaign • Release Pilot project proposed GDOResults Communication Education Relationship Mgt.* Begin discussing potential savings areas** Global Delivery Office concept
  20. 20. Initial Analysis (Fact Finding)• 4-month process • September to December 2002• More than 30 Offshore/Near-shore IT Vendors interviewed• “Boot Camp” Meetings with Experts • Gartner, META, Giga• Participation in IT Offshore User Group to share experiences • Merck • Avis
  21. 21. We interviewed the Leaders Vendor Revenue (Millions) Tata Consultancy Services (TCS) $698 Wipro $687 Infosys $464 Covansys $421 HTMT, Inc. $269 Satyam $261 HCL Technologies $205 IBS Group (Luxoft) – Russia $200 Syntel $165 Silverline $155 Cognizant $137 * Information provided by META Group, Inc., 2002
  22. 22. Principal Locations of Offshore/Near-shore Vendors Interviewed Offshore: India, Russia, Argentina, Brazil Near Shore: Canada, Mexico
  23. 23. Initial Analysis (Fact Finding)• Offshore vendors asked to answer 41 Questions about its engagement process• Questions categorized by: • Business Strategy • Resource Pool • Benefits • Security • Process Management • Location • Scope • Start-up/Transition • Development Cycle • End Case • Trends • Support• Offshore vendor “One-on-One” meetings provided additional insight• Data published in Offshore/Near-shore IT Strategy White Paper
  24. 24. What We Learned…
  25. 25. No Surprise: Every Global ITProvider Says They’re a “Perfect Fit”• Offshore/Near-shore IT Providers cite growing Telecom client base: • Satyam (SONY, Cable and Wireless) • Cognizant (Nielson Media Research, CBS) • HTMT, Inc. (Time Warner, parent MSO) • TCS (Major MSO) • InfoSys (Verizon, Telenet)• Others have vertical market familiarity with popular applications • PeopleSoft • SAP • Oracle
  26. 26. Most Offshore/Near-shore IT Providershave strong development background Legacy Integration (Older, more static systems) Core Business Apps (Oracle Financials, HRMS) Maint./Modernization (Enhancements, Upgrades) New Development (Project or new Project Development) e-Business/Web (Java, Site Hosting) App Integration (APIs, middleware, customizations) 0 5 10 15 20 25 30 35 40 45 50 Percentage of IT Applications Cited for Offshore Development Outsourcing * Information provided by The Offshore Development Group Benchmark Report, 2002
  27. 27. Cost savings are evident… $100/hr.* (minimum rate) $68.50/hr. (current rate) $45/hr.* (minimum rate ) U.S. Senior Corporate IS Offshore Senior Programmer Senior Programmer Programmer * Information provided by A. T. Kearney, Inc., 2002
  28. 28. How Do You Determine WhetherOffshore/Near-shore Works for You?• Gauge Your Organization’s Maturity to handle Offshore • Does your company make ongoing changes to project specifications and deliverables after kick-off? • Does your company follow process? • Does management need to be “hands-on” throughout project’s lifecycle? • Are supportive project managers in place to oversee offshore engagement?
  29. 29. How Do You Determine WhetherOffshore/Near-shore Works for You?• Ready to perform the Due Diligence? • Offshore IT Providers will talk to you because they want your business • Put them on the spot • Ask for credentials and references • Probe their operations • What is the employee turnaround? • What is the average years of experience? • Do professionals work exclusively on your account? • Visit the Offshore Development Center when it’s time • See the working environment first hand
  30. 30. How Do You Determine WhetherOffshore/Near-shore Works for You• Do you have the right projects for consideration? • Don’t off-load business-critical IT projects • Eliminate ones where a unique understanding is needed for application development • Consider non-business-critical, legacy projects • Sharply defined and specified • Develop a feasibility approach to gauge project viability• Are you ready to handle the media? • Offshore/Near-shore IT engagements receiving more press • NY Daily News, Time, New York Times, CBS • Offshore/Near-shore proponents acknowledge situation but don’t promote a successful response • May be a tough sell both outside and internally • Why can’t IT staff be re-hired?
  31. 31. Challenges that can arise…• Offshore/Near-shore is a Philosophical Change •Transition to an offshore model will cause some initial disruption to business • Business executives and sponsors must “buy-in” to concept • Internal IT customers must “adjust” to model• The Communications Gap • Poor communication is fatal flaw in global IT engagements • Communication also crucial within IT organization itself • IT staff will see engagements as threat to their position • IT management must provide as much info as possible • Legal/Human Resources must beon board from the “get-go”
  32. 32. Challenges that can arise…• Regional/Cultural Differences • Language issues must be recognized • Turn into a positive: forces more diligence to ensure requirements are correctly understood – on both sides • Cultural differences may be a larger issue • What is understood as a business action here may not be understood the same by your offshore counterpart• Operational issues • Gaps in quality middle management offshore • Address issue immediately with your vendor • Rising salaries of Offshore IT resources • Use as a “bargaining chip” with the vendors to ensure rising costs still provide competitive advantage • Establishing a detailed Master Agreement • Negotiate everything – even possible changes to your business model
  33. 33. Weighing the Benefits…• Ease for your IT organization to concentrate Business Critical Projects• Long Term Cost Savings• Added Emphasis on Quality• Improved Time to Market• Scalability• Clear Communications Strategy and Reporting• Well Defined Requirements and Deliverables
  34. 34. Keep in Mind…• Successful engagements happen when an offshore IT provider is considered a seamless, transparent extension of your own IT organization • Looking at Offshore as another “body-shop” opportunity dooms it to failure • Active mutual management of the relationship is crucial• Offshore/near-shore IT engagements are a long-term investment in money, time and resources • Initial “ramp-up” costs are involved with initial preparation by offshore IT vendor • It takes approximately 6 months to 2 years for Global IT engagements to get traction
  35. 35. Keep in Mind…• Communicate, Communicate, Communicate! • Ensure all internal staff, senior executives, and business customers understand the strategy and benefits • Prepare Human Resources, Legal and PR teams for possible challenges • Establish strong metrics and communication tools with your Global IT vendors
  36. 36. Q &A

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