Request for Solution: a New Way to Contract for a Service Provider's Best Ideas


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Bill Stout, Director, ISG, and Scott Bonneau, VPI IT, Finance & Hosting Services, Dr Pepper Snapple Group prepared this information for presentation at the May 2013 SIG Global Sourcing Summit.
The 50 minute session covered the genesis of the RFS, details on the approach and tips for practitioners on how to leverage the RFS in specific situations to bring more innovation in Provider proposals.

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Request for Solution: a New Way to Contract for a Service Provider's Best Ideas

  1. 1. © 2013 Information Services Group, Inc. All Rights Reserved.Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means,including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.Prepared for the SIG 2013 Global Sourcing SummitBill Stout, Director, ISGScott Bonneau, VP IT, Finance & Hosting Services, Dr Pepper Snapple GroupMay 2013One Clients ExperienceRequest for Solution: a New Way to Contractfor a Service Provider’s Best Ideas
  2. 2. © 2013 Information Services Group, Inc. All Rights Reserved 2ISG is a leading technology insights, market intelligence and advisory services company,offering clients one source for support in driving operational effectiveness.A premierindependenttechnologyadvisory serving theU.S. public sector.The premier independentprovider of business and ITbenchmarking,performance improvement,data and analytics services.the powerof OneThe world’s leadingsourcing data andadvisory firm.TMThe Power of One: ISG-One
  3. 3. © 2013 Information Services Group, Inc. All Rights Reserved 3About Dr Pepper Snapple Group► Manufacture, bottle and distribute more than 50 brands of carbonated soft drinks,juices, teas, mixers, waters and other premium beverages► $5.995 billion in revenue for 2012Dr Pepper Snapple Group (NYSE: DPS) is one of North America’s leadingrefreshment beverage companies.Flavored CarbonatedSoft Drinks Premium TeaJuice & Juice Drinks
  4. 4. © 2013 Information Services Group, Inc. All Rights Reserved 4Objective and Agenda► Objective: Inform the attendees about the emerging Request for Solution (RFS)process and provide a case study as an example of practical application with lessonslearned and suggestions for potential practitioners.► Agenda ISG and DPS background Overview of the RFS Process DPS Case Study Case Context Case Study "Take-Aways" and Lessons Learned
  5. 5. © 2013 Information Services Group, Inc. All Rights Reserved 5Polling Questions How many of you may have already heard about the RFS? For your most recent major sourcing transitional, please raise your had if youstarted the process with an RFP Please raise your had if you started the process with an RFQ? Please raise your hand if you started with an RFS approach?
  6. 6. © 2013 Information Services Group, Inc. All Rights Reserved 6The Request for Solution: Best of the bunchWeve picked some of the best elements of all approaches to develop an alternativethat helps widen the solution horizon and gets to contract (benefits) soonerSourcing Transaction Engagement Continuum1RFP8-12+ Week Process:Supports"Lift and Shift"approaches – can betime consuming andstifle innovation2RFS8 Week Process:"Solution" focuslooking for innovationand exploringalternatives3RFQX Weeks:Known StandardSolution;procurementfocusProject TimeMore LessScopeandComplexityMoreLess
  7. 7. © 2013 Information Services Group, Inc. All Rights Reserved 7The RFS forgoes the rigor required to develop, socialize and agree on an RFPupfront, in favor of an early focus on solution and transformation opportunitiesRFS ►The Engagement Package focuses ongoals and objectives – not terms andconditions►Commonly 6 Providers are invited toparticipate allowing a broader viewof potential solutions►The bulk of the effort is in thecollaboration with the Providers,providing feedback and evaluatingthe options - leading to a down-selectRFS at a Glance
  8. 8. © 2013 Information Services Group, Inc. All Rights Reserved 8Dr Pepper Snapple Group Case StudyScope & Context► 7 year managed servicesoutsourcing agreementwas due to expire in May2014► Scope centered on datacenter & hosting services Servers Storage Email hosting► Incumbent provider hadperformance issues overlife of contract, althoughhad improvedsignificantly in 2012► Desire to leverage acompetitive sourcingprocessBusiness Objectives► Capture financial savingsassociated with serviceoffering maturity► Improve speed to market,(e.g., startup of new serverand storage services)► Improve reliability,availability, andperformance of computeand storage platforms► Leverage recent changes intechnology and datacenter/hosting serviceofferings► Mitigate business riskduring transition &transformationResults► Leveraged the RFS toreview solutions from 6providers (10 weeks)► Conducted due diligencewith 2 providers tosecure detailedtransformation plans andfirm pricing (8 weeks)► Down-selected to a singleprovider (incumbent) andclosed the contractnegotiations (6 weeks)► New agreement includessignificant cost savingsand complete technologyrefresh► Transformation alreadyunderway
  9. 9. © 2013 Information Services Group, Inc. All Rights Reserved 9Lessons LearnedBenefitsDPS Case Study – Buy-Side Takeaways► The RFS process, by its nature, delivershigh level solutions and indicativepricing, making down-select decisionsdifficult► Cannot necessarily go straight intocontract – indicative pricing and highlevel solutions require multipleclarification iterations► Even though there is no RFP, the teammust know and agree in advancewhich types of solutions will work fortheir environment and business► Critical to staff the right cross-functional team during the RFS phase(e.g., IT Security, Architecture,Applications, Hosting, Procurement)► Faster process than the traditionalapproach that was used internally atDPS► Provided a high degree of competitionand solution diversity► Increased focus on solutiondevelopment and reduced emphasison documenting responses► Yielded greater insight into theproviders capabilities and solutionsprior to the down-select, due to thecollaborative process that wasemployed
  10. 10. © 2013 Information Services Group, Inc. All Rights Reserved 10When and why you should consider an RFS► Generally, the RFS best suited for situations where the client has previous sourcingexperience, a clear sourcing strategy and existing service integration and governanceprocesses► From a solution perspective, the RFS is well suited for situations where the in-scopeareas are subject to major innovation or transformation; or► Where a high degree of competition and solution diversity is needed from 6+ bidders► Can be used where speed to an agreement is paramount and the transaction is solutionfocused► Greenfield solutions – the RFS has also been used for completely new businesses wherethe client has almost complete flexibility in technology solution choicesThe Request for Solution approach is generally more geared towards certainscenarios than others.
  11. 11. © 2013 Information Services Group, Inc. All Rights Reserved 11Thank you for your time today► Bill StoutDirectorISG+1 720 373► Scott BonneauVP IT, Finance & Hosting ServicesDr Pepper Snapple Group+1 972 673 6886scott.bonneau@dpsg.comTo learn more about RFS:Visit www.isg-one.comFor related article on the RFS from CIO Magazine and a previous ISG and SIG RFSpresentation
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