David GuestDo Offshore Managed ServicesReally Work?
Objectives and Agenda • Background Experience • Provide Some Real Examples and Data • Debate: – What can we use a Managed Service for? – What has worked well for other people? – What should people look for from their suppliers? – Is there still a place for T&M contracts?
Over the past 10 years I have used off-shore extensively:• 2000 - 2006 T&M – Offshore (O/S) development and support using very large GE programme – Largely staff augmentation/body shopping• 2006 - 20010 – Developed O/S programme (now 500+ FTE and growing) – Introduced Managed Services for Core Support• 2010 - 2012 – Developed O/S programme (now 250+ FTE and growing) – O/S Managed Services for Support and Testing Managed – Capacity Service for development Services
Managed Services‘Managed services is the practice of outsourcing management responsibilities asa strategic method for improving operations’ We have the following managed services: • 2/3 Line Application Support (Delhi and Bangalore) – Accenture – Retail and Supply Chain 100+ FTE – JKT Central and Group Systems • Independent Testing – SQS (Pune) – System Testing – test creation and execution 70 FTE – Regression test automation creation and execution • And .... We have Store Break Fix – Fujitsu – All UK based
Managed Services Implementation• Common Complaints – ‘Its harder in India than doing it on-shore’ – ‘We will have to transfer the knowledge’ – ‘Its not as productive as doing it in the UK’ – ‘Its expensive during transition’ – ‘We’ll lose the IP’• But if done properly – They can be transformational from a service and cost perspective
Managed Services Benefits• Unit Cost Reduction – Unit cost saving for support and testing of 40% – Effective rates have dropped by over 33% since we moved to managed services – Domestic contractor usage has dropped to zero in these areas – This is a multi-million pound saving and its increasing• Service Improvements – Testing coverage has increased by 30%, automation is up to 80% on our retail systems and productivity has increased by 20% – Incident volumes and active problems have reduced across all application portfolios by 20 - 40% – Regular release cycles have been introduced for problem fixes and small changes – System availability has improved dramatically and most systems are within SLAs• Intangible – IP is better protected – Improved documentation and rigour – Permanent staff have been freed up and have better career prospects – Best practices & disciplines from our suppliers
What Makes the Difference?• Incentivising our teams to accept Managed Services – financially, professionally and emotionally• Incentivising our partners to improve service and reduce costs – risk reward contracts• Accepting that we would manage the contract and they would manage the service – we have good contracts• Trusting our partners and stopping our teams from interfering – we choose our partners carefully• Building relationships at the highest levels and visiting the teams in India regularly – we have no travel restrictions and everyone flies business• Commercially we keep our options open – we are multi vendor and they all know it
• Discussion topics – Have other people had similar experiences? – What has worked well for other people? – What can we use managed services for? – What should one expect from suppliers? – Is there still a place for T&M?