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Sourcing lecture 1 ITSM class

These are the sheets of lecture 1 in a series of 6 of a graduate bachelor programma for a IT Service management class at Hanze University of Applies Sciences Groningen

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ITSM Specialization Sourcing
    2012-2013




Lecture 1: The principles of Sourcing
Who is Frank Willems?


Managing Partner Twynstra Gudde and Professor Hanze

University of Applied Sciences Groningen, Innovator in directing

ICT and (crowd)sourcing, TEDx speaker, Founding father of Village

Council rural village of Werkhoven,


Developing Leadership Master #Hanze, Regattasailor,
Jazz lover former 80’s disco DJ




                  713

             2
At the end you will know
a lot about sourcing
• How Change Management will be used for sourcing
• How to give value to sourcing opportunities:
     – With the Kraljic purchasing model
     – With the IT Management framework
     – And with the CMMi framework (Services and Acquisition)
• What the sourcing possibilities are
     –   Outsourcing
     –   Shared Services
     –   Collaboration
     –   Crowdsourcing including the usage of Social Media
• Directing old and new ways of sourcing

 3
Schedule Sourcing lectures

 1. Basic principles of sourcing en defining sourcing
    strategy
 2. Change management also with personal test
 3. Outsourcing as a solution
 4. Cloudsourcing
 5. The ICT Directing Organization for sourcing and
    Shared services as a solution
 6. New ways of sourcing (collaboration, crowdsourcing
    and usage of social media) and explanaition of the
    case for the learning task
 7. Presentation learning task

  4
Goal and agenda lecture 1

Goal: Introduction in basic principles of sourcing,
sourcing strategy and building a business case

Agenda:
1. What is sourcing?
2. Sourcing trends
3. Sourcing strategy
4. Building a sourcing business case




 5
What is sourcing?




6

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Sourcing lecture 1 ITSM class

  • 1. ITSM Specialization Sourcing 2012-2013 Lecture 1: The principles of Sourcing
  • 2. Who is Frank Willems? Managing Partner Twynstra Gudde and Professor Hanze University of Applied Sciences Groningen, Innovator in directing ICT and (crowd)sourcing, TEDx speaker, Founding father of Village Council rural village of Werkhoven, Developing Leadership Master #Hanze, Regattasailor, Jazz lover former 80’s disco DJ 713 2
  • 3. At the end you will know a lot about sourcing • How Change Management will be used for sourcing • How to give value to sourcing opportunities: – With the Kraljic purchasing model – With the IT Management framework – And with the CMMi framework (Services and Acquisition) • What the sourcing possibilities are – Outsourcing – Shared Services – Collaboration – Crowdsourcing including the usage of Social Media • Directing old and new ways of sourcing 3
  • 4. Schedule Sourcing lectures 1. Basic principles of sourcing en defining sourcing strategy 2. Change management also with personal test 3. Outsourcing as a solution 4. Cloudsourcing 5. The ICT Directing Organization for sourcing and Shared services as a solution 6. New ways of sourcing (collaboration, crowdsourcing and usage of social media) and explanaition of the case for the learning task 7. Presentation learning task 4
  • 5. Goal and agenda lecture 1 Goal: Introduction in basic principles of sourcing, sourcing strategy and building a business case Agenda: 1. What is sourcing? 2. Sourcing trends 3. Sourcing strategy 4. Building a sourcing business case 5
  • 7. Sourcing definition The dynamic planning and organizing of the supporting processes, people, resources and capabilities, needed to obtain the business goals 7
  • 8. To expoit capacity in a smarter way (smartsourcing) Directing Outsourcing Collaboration 8
  • 9. Responding to dynamics Riskmanagement Flexible response to changing demand and supply Innovation 9
  • 10. Diversity in sourcing appearances Collaboration Outsourcing Off shore sourcing Business process outsourcing Crowdsourcing Shared Services 10
  • 11. The traditional IT department will disappear Directing, demand and supply Change Different competences 11
  • 12. And sourcing demands for collaboration Other selection methods Openness and sharing Other commitments 12
  • 14. Measures in perspective Saving potential Measures at a functional level: Concentration, integration, mergers, Take-over or outsourcing Full outsourcing Shared Services Centre Integration, mergers and concentration Measures at a process level: Outsourcing of parts of the organization Collaboration and joint investments Optimization and standardization of processes System optimazation Measures at task level: Collaboration regarding purchasing, support, etc. Stopping investments Orcutting down on current Stopping projects initiatives Cutting down on training and learning Cutting down on engaging external consultants Capitalizing effects Short term Medium term Long term (0,5-1 year (1-2 years (2-5 years) 14
  • 15. Trend # 1 now and the coming years Organizing a professional and flexible capacity between demand and supply (smart sourcing and directing): • Shortage of excellent IT specialists requires different ways of organizing capacity • Suppliers are not yet sufficiently to realize cost reduction and innovation and ICT must still be delivered at cheaper cost level • Demand side and principals do not fill in their role well • ICT has matured and the issue is about functionality instead of the software and hardware • There is great need for business frameworks such as architecture, information architecture and governance capacity which can be focused 15
  • 16. The IT organization is under pressure Great need to change themselves, their business and control of suppliers: • There are (too) many models and best practices, where do I begin? • Do I have the right people in the house and do I keep them? • My business does not understand me and shows very little involvement? • I keep getting more work from my supplier charged when we had made good arrangements SLA • And then how to deal with the outstanding incidents, the increasing storage problems and the large implementation project that is failing 16
  • 17. Customer satisfaction on service providers Source Outsourcing Performance 2012, Giarte 17 http://data.outsourcingperformance.nl/#
  • 18. Benchmark is important to collect market information Source Outsourcing Performance 2012, Giarte 15-11-12 http://data.outsourcingperformance.nl/#
  • 19. Customer satisfaction on medium-sized infrastructure management higher Schuberg Philis 83 Simac 80 BT 73 Inter Access 60 Other offshore 56 SBS 55 average = 68% 0 20 40 60 80 100 (%) Source Outsourcing Performance 2009, Giarte 19
  • 20. Customer satisfaction on end-user management providers is low Atos Origin 52 HP 50 Getronics PinkRoccade 50 EDS 45 CSC 44 IBM 38 average = 47% 0 20 40 60 80 100 (%) 20 Source Outsourcing Performance 2009, Giarte
  • 21. Conclusion on trends • Sourcing is booming and will a stable trend fot the next decade • Outsourcing is considered a major disappointment politely but organizations want still to deal with it as a solution • Other sourcing solutions will play more important role because of disappointment in outsourcing 21
  • 23. Three models should be known by heart • The Kraljic purchasing model • The IT Management framework • The CMMi framework (Services and Acquisition) 23
  • 24. The Kraljic Purchasing model Large added value What is the extent to which the product / service adds Leverage Strategic value for the business Less added value Routine Bottleneck Purchasing Risk Standard Is it a standard or a specialized product? Specialized 24
  • 25. The sourcing solutions plotted on this model Large added value What is the extent to which the product / service adds e e 2 generation sourcing 4 generation sourcing Crowd sourcing Leverage Business Proces Strategic Outsourcing Business development Backoffice outsourcing e 3 generation sourcing Shared Service value for the business Centers DataCenter Facilities outsourcing Less added value outsourcing Routine Outsourcing Bottleneck workplace mgt Workinnovation e Operations e 1 generation sourcing 2 generation sourcing outsourcing Purchasing Risk Standard Is it a standard or a specialized product? Specialized 25
  • 26. The services plotted on this model Large added value What is the extent to which the product / service adds Leverage Strategic value for the business Less added value Routine Bottleneck Purchasing Risk Standard Is it a standard or a specialized product? Specialized 26
  • 27. The IT management framework Management Directing Service Aligning Specify strategy Specify strategy SpecifyIT and FM facilities and services information supply and control Organizing Design and Design and Design, build and implementation implementation implement IT and facilities and FM services information supply and control Implementing Use and exploitation Management and Management and use facilities exploitation IT and 27 FM services
  • 28. The three columns of the enneahedron Management Directing Service Business Directing Supplier organization Aligning Bepalen strategie Bepalen strategie Bepalen strategie bedrijfsvoering informatie ICT service voorziening en Organizing Ontwerpen en Ontwerpen en regie Ontwerpen en plannen plannen plannen ICT bedrijfsvoering informatie service voorziening en Implementing Ontwerpen en Beheren en Beheren en regie exploiteren gebruiken exploiteren ICT informatievoozien services 28 bedrijfsvoering
  • 29. The three rows of the enneahedron Management Directing Service Aligning Bepalen strategie Bepalen strategie Bepalen strategie View and governance bedrijfsvoering informatie ICT service voorziening en Oganizing Ontwerpen en Ontwerpen en regie Ontwerpen en Planning, organization and plannen plannen plannen ICT projects bedrijfsvoering informatie service voorziening en Implementing Ontwerpen en Beheren en Implementation and Beheren en regie exploiteren service delivery operational gebruiken exploiteren ICT informatievoozien services bedrijfsvoering
  • 30. How to specify what is outsourceable? Management Directing Service Aligning specify strategy and specify strategy Bepalen strategie management facilities and ICT service information supply and control Organizing Design and Design and Ontwerpen en This part is usually implementation implementation qualified for plannen ICT (out)sourcing management facilities and service information supply and control Implementing Use and exploitation Management and Beheren en management use facilities exploiteren ICT 30 services
  • 31. Cmmi acquisition process areas in the 9 grid Management Directing Service Governance Aligning specify strategy and specify strategy specify IT and FM Strategy & Collaboration management facilitiesPortfolio Service and services management Account Mgt. information supply Architecture Management and control Project Monit. & Control Organizing Design and Design and Design, build and Management Prestatiemeting en analyse implemantation implementation implement IT and Account & Monitoring quality Demand mgt. management facilities andSupplier mgt. FM services Contract & information Purchase & tenders supply Supplier mgt. Demand Management and control Implementing Use and exploitation Change management Management and Management and management use facilities exploitation IT and Demand & failure settlement 31 FM services
  • 32. Practical tip 1: Create a Crisis Plan This will deliver a lot of information for decision- making and the business case: • Clarity about the essential functions of the organization • Understanding the dependencies of the organization • Understanding risks, opportunity and the countermeasures • Translation of vital ICT components in the essential functions properly (and equal documented) • Clarity about responsibilities and behavior in emergencies (and who really has to say) • And what matters and visibility of the professionalism at this moment 32
  • 33. Practical tip 2: Develop a Pro forma SLA and Terms of Reference • On the basis of the crisis plan it is clear what ICT services are important and which less • With users it will be clear what requirements they set for services • Services are classified in importance for business and market transparency for completion of appropriate cooperation • The quality of the services need to be checked, for example with CMMi • The Program of Requirements and the SMART requirements will be visible and gives guidance in the selection process 33
  • 34. Building a sourcing business case 34
  • 35. Building a sourcing business case • What are the posibilities based on the sourcing descision tree • What is the current level of quality of the IT organisation • What are the possible scenario’s 35
  • 36. Sourcing decision tree ICT products and services Business High Strategisch? Low Impact Riscs Yes Manageble? No Service professional? No Stabiel? Costreduction No possible? Yes Yes Yes Improvement possible by collaboration? No NO Under control? Yes Start Hire cacacity external First improve then Uitbesteden Outsourcing Zelf collaboration then outsource outsource Strategic or Leverage Strategic or Bottleneck Bottleneck or Commodity Commodity 36
  • 37. Develop four businesscases Make a quantitative and qualitative design for a number of sourcing opportunities: • Scenario 0: the current situation qualitatively and quantitatively • Scenario 1: what it means to professionalize yourselve • Scenario 2: workplace management, system management and network management outsourcing • Scenario 3: workplace management, system management, network management and application outsourcing • Scenario 4: professional cooperation with other companies 37
  • 38. Experience with the four business cases Quantitative average from dozens of business cases *: • Scenario 0: yearcosts ICT = current level • Scenario 1: self professionalize ≅ 10% more expensive • Scenario 2: workplace management, system management and network management outsourcing ≅ 3-15% more expensive excluding transfer of staff • Scenario 3: workplace management, system management, network management and application outsourcing ≅ 5-20% more expensive exclusive transfer of staff • Scenario 4: professional cooperate ≅ 5-10% cheaper * Individual situations can be differtent 38
  • 39. 15-11-12 Titel presentatie aanpassen 39

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