Can Your Offshore Provider Help In Business Transformation?

Sourcing & Vendor Management Sudin Apte Principal Analyst Forrester Research June 9, 2010 3 Entire contents © 2010 Forrester Research, Inc. All rights reserved. 4 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Source: Worth1000.com www.forrester.com © 2010, Forrester Research, Inc.

Theme Offshore providers fall short of delivering true end-to-end business transformation. However, they can successfully deliver isolated subprocesses or IT-focused projects. 5 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Agenda • Why are companies looking at offshore for their transformation projects? • Types of transformation projects and capability required • Review of top offshore providers for transformation projects • Q&A 6 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Cost cutting remains a top priority “How important are each of the following business goals to your internal IT organization when making software decisions?” Very important Important Reduce costs 60% 29% Regulatory requirements 48% 28% Improve collaboration 22% 37% Increase innovation 21% 37% Sustainability goals 13% 24% Base: 1,007 North American and European enterprise software decision-makers Source: Enterprise And SMB Software Survey, North America And Europe, Q4 2009 7 Entire contents © 2010 Forrester Research, Inc. All rights reserved. To survive budget cuts, companies cut waste and want to pay as they get value “How important are the following software initiatives in supporting your firm's current business goals?” Very important Important Consolidate enterprise applications 24% 43% Modernize key legacy applications 25% 41% Increase collaboration techs 16% 42% Upgrade enterprise applications 16% 38% Expand use of Agile 9% 23% Increase our use of SaaS or cloud 8% 23% Outsource app maintenance 9% 20% Outsource app development 8% 17% Base: 1,007 North American and European enterprise software decision-makers Source: Enterprise And SMB Software Survey, North America And Europe, Q4 2009 8 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Cost-saving projects and reducing the application portfolio are top of mind “How do you expect the following activities to change over the next 12 months as a result of the current economic conditions?” Decrease Increase Accelerate cost saving projects 2% 70% Reduce the application portfolio 2% 60% Increase ROI reviews 3% 55% Move to subscription models (like SaaS) 4% 20% Defer software spending 6% 39% App maintenance outsourcing 15% 24% App development outsourcing 18% 26% Speed of software upgrades 29% 19% Size of internal IT staff 34% 20% Base: 1,007 North American and European enterprise software decision-makers Source: Enterprise And SMB Software Survey, North America And Europe, Q4 2009 9 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Business roles are as important as IT roles in the buying process “Who is significantly involved in the decision-making process for selecting third-party IT service providers at the following stages?” Business roles IT roles Base: 942 North American and European enterprise IT services decision-makers Source: Enterprise IT Services Survey, North America And Europe, Q2 2009 10 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Theme Offshore providers fall short of delivering true end-to-end business transformation. However, they can successfully deliver isolated subprocesses or IT-focused projects. 11 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Business transformation programs • Focus on making firms stronger, leaner, and more adaptable by making their operating models, supporting business processes, and underlying processes technologies flexible, leaner, and more adaptable to change. 12 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Components of the true end-to-end business transformation definition • Executive commitment • Covers three key components — people process, people, process and technology • Ability to innovate • Typically long-term • Aligned with business strategy and g g gy goals 13 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Example of a vendor’s enterprise transformation capability: Accenture’s business transformation approach • “High-performance research initiative”: collecting and structuring information and insights on business g g performance across industry verticals and horizontal processes – Measuring inputs and outcomes, linking outcomes to metrics, building business blueprints 14 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Example of a vendor’s enterprise transformation capability: Accenture’s business transformation approach (cont.) • “Process excellence initiative”: building a central repository of information, data, and benchmarks p y , , – Build process best practices, use metrics to build process KPIs, already more than 10,000 processes covered •“Predictability and insights at scale” (Don Rippert, CTO, Accenture) – Build and maintain centers of excellence for defined key k processes (i (i.e., t l t management, retail talent t t il banking). 15 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Example of a vendor’s enterprise transformation capability: Accenture’s business transformation approach (cont.) • Common tool set and solution architecture for building software p g packages g – Central repository for knowledge capturing to drive reuse – Focus on key platforms (i.e., .NET, NetWeaver) – Standard tools for training and development • Standard methods for engagement planning and project management – Select projects based on how well they fit Accenture’s business and technology ambitions. – Leverage global delivery backbone rigorously. 16 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Theme Offshore providers fall short of delivering true end-to-end business transformation. However, they can successfully deliver isolated subprocesses or IT-focused projects. 17 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Why don’t clients think of offshore providers for transformation? • Historic value proposition around cost arbitrage • Primary capability around technology and delivery processes • Limited skills on the business domain side to develop an industry-leading business process • No business transformation experience in the past, limited business consulting capability • Typical offshore teams include mostly an army of juniors, and onshore teams are small. 18 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

All transformation deals are not the same • Mega-size corporate/financial transformation – Focus on business re-engineering • Business process transformation – Process optimization and leadership • IT apps and infrastructure transformation – Cut waste and make lean. • IT organization and process rationalization i ti d ti li ti – Focus on efficiency and alignment 19 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Offshore providers build new capability to deliver parts of transformation Source: Upcoming, “A Strategic Review Of The Top Five Offshore Vendors” Forrester report 20 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Indians have an appetite to grow Financials for the 12 months ended March 2010, compared with 2009 Source: Upcoming, “A Strategic Review Of The Top Five Offshore Vendors” Forrester report 21 Entire contents © 2010 Forrester Research, Inc. All rights reserved. The top offshore providers made more money during the recession Financials for the quarter ended March 2010, compared with the same quarter in 2009 Source: Upcoming, “A Strategic Review Of The Top Five Offshore Vendors” Forrester report 22 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

How do the top five Indians’ next-gen capabilities stack up? Source: Upcoming, “A Strategic Review Of The Top Five Offshore Vendors” Forrester report 23 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Examples of successful transformation projects done by top Indians • Business process transformation – Case study: Infosys transforms the order-to-cash order to cash (OTC) process of a top retailer globally • IT apps and infrastructure transformation – Case study: Wipro transforms legacy applications at a top five insurance provider to eBusiness • IT org and process transformation – Case study: HCL builds a next-gen partnership between IT and the business by building business- oriented service centricity 24 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Case 1: Infosys transforms the order-to- cash (OTC) process of a top retailer globally Client A Fortune 500 global retailer Issue/focus Meet new competitive pressures by collaborating better with customers. The client also wanted to transform its order-to-cash process. Challenge The client wanted to grow revenue realization and reduce operating costs. It also wanted to substantially increase operational benefits and margin to improve the company's valuation. Vendor Infosys deployed its IMPACT and VRM frameworks and methodologies. approach It leveraged its strong SAP capability and partnership, accelerators, and prebuilt solutions. It created a vertical-focused process repository with country-specific legal and statutory requirements (for 45 countries). Benefits The incremental approach resulted in higher predictability — Infosys deployed this SAP-based solution in one region before successfully rolling it out globally. The client realized $70 million in benefits to its operations after rollout. 25 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Case 2: Wipro transforms legacy apps at a top five insurance provider to eBusiness Client A top five insurance firm that wanted to move legacy apps to eBusiness Issue/focus The client wanted to provide applications access to trading partners so they could service customers better and improve satisfaction. It also wanted to reduce the cost of operations. Challenge Long cycle times; involvement of multiple teams in a single request/ticket; multiple and unintegrated apps result in data loss/redundancy, manual error, and lack of reconciliation. Vendor Wipro deployed Web service wrappers to stitch functionality across multiple approach applications that resulted in straight-through processing (STP). It leveraged its strong tech capability across platforms such as WebSphere, Jacada HostFuse, and Apache Tomcat. It used its systems integration and software engineering skills. Benefits Number of Web-based screens was reduced from 15 to two. End-to-end process time was cut by 33%; data input by users was reduced by 45%. The client achieved real-time data and applications with ease of use. 26 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

Case 3: HCL builds business-oriented service centricity and business partnership Client Dr. Pepper Snapple Group (DPS), a leading beverage company Issue/focus DPS wanted to enable a next-generation business-IT partnership by transforming its IT org and processes. Challenge Improve business-value-oriented IT with greater service centricity. Lower costs and build business alignment. Vendor DPS signed a multiyear contract with HCL for app development, app approach maintenance, and infrastructure support on high-end service parameters. HCL deployed on-site dedicated service delivery managers (SDMs) and domain experts for better coordination with DPS’s business units. HCL's used its Enterprise Discovery Framework, Process Watch dashboard, Prizm design tool and value Portal tool, Portal. Benefits Day-to-day problems decreased and on-time delivery improved. Business got a single point of contact for IT across tech silos. Centralization and offshoring drove cost savings. Innovations reduced cycle time and increased internal customer satisfaction. 27 Entire contents © 2010 Forrester Research, Inc. All rights reserved. Summary • Offshore providers fall short of delivering true, end- to-end business transformation. • But not all transformation falls in this category. • Top offshore providers can successfully deliver parts of business- or IT-focused work. • They can bring age-old offshore benefits blended with newly honed domain and consulting capability. 28 Entire contents © 2010 Forrester Research, Inc. All rights reserved. www.forrester.com © 2010, Forrester Research, Inc.

The next 90 days • Explore how can you leverage providers’ new capability like intellectual property solutions to get incremental value in your coming projects • Add quickly new criteria in your Q2 vendor score-card to capture new offshore value proposition • If negotiating for transformation work, rope in a offshore provider to get costs down. Mere presence of Indian supplier will get on-shore provider’s costs down quickly. quickly 29 Entire contents © 2010 Forrester Research, Inc. All rights reserved. 2009 Longer term • Set the right goals for your transformation projects delivered from offshore. Focus on a subset at a time and go up incrementally. • Invest in vendor education, especially on business processes • Invest in internal change management and new collaboration and workflow tools to manage complex and globally distributed projects 30 Entire contents © 2010 Forrester Research, Inc. All rights reserved. 2009 www.forrester.com © 2010, Forrester Research, Inc.

Can Your Offshore Provider Help In Business Transformation?

by A.T.Keanrey GmbH

Accessibility

Categories

Upload Details

Usage Rights

Statistics

Can Your Offshore Provider Help In Business Transformation? Document Transcript