Structured Approach to
Implementing and Operating
Outsourcing and Managed
Services for Suppliers and
Outsourcing Organisat...
April 3, 2011 2
Objectives
• Describe at a high-level a structured approach to
implementing outsourcing/managed services f...
April 3, 2011 3
Scope
• Provide a high-level view of a common set of processes to
be used by service providers and end-use...
April 3, 2011 4
Topics
• Introduction
− Overview
− Risks and Lessons Learned
− Principles of Outsourcing and Core Competen...
April 3, 2011 5
What is Outsourcing?
• Outsourcing is delegating the responsibility for performing
an information technolo...
April 3, 2011 6
Potential Advantages of Managed Services
• Better Use of Staff: allows agencies to focus human
resources o...
April 3, 2011 7
Types of Outsourcing Arrangement
• Efficiency/Utility (Make it Cheaper) arrangement outsourcing
focuses pr...
April 3, 2011 8
Benefits of Managed Services
• Managed Services offers an alternative approach for a client to acquire IT ...
April 3, 2011 9
Outsourcing Organisations - Developing a Vision for
IT Services is Required
• What do we do today?
• What ...
April 3, 2011 10
Reasons Organisations Outsource
17%
16%
12%
12%
8%
6%
6%
4%
3%
3%
Reduce And Control Operating
Costs
Impr...
April 3, 2011 11
Outsourcing Experiences
• 13% to 25% of outsourcing contracts are brought in-house
within the first two y...
April 3, 2011 12
Key Issues For Successful Outsourcing
• Many outsourcing relationships fail, are terminated early,
are un...
April 3, 2011 13
Hidden Costs of Outsourcing
• Transfer of knowledge
− Processes and procedures
− Documentation
− Personal...
April 3, 2011 14
Cease's Law on the Nature of the Firm
• A firm will tend to expand until the cost of organizing an extra ...
April 3, 2011 15
Transaction Costs
• Along with production costs, there are costs for preparing, entering into and monitor...
April 3, 2011 16
Outsourcing Planning
• Structured approach can form the basis for an outsourcing
implementation plan for ...
April 3, 2011 17
Sample Service Transfer Plan – Outsourcing Service
Provider
• Plan subset
• Based on activities
− 1 Servi...
April 3, 2011 18
Sample Service Transfer Plan – Outsourcing
Organisation
• Plan subset
• Based on activities
− 1 Outsourci...
April 3, 2011 19
Where Outsourcing Problems Happen
• Inadequate Preparation = Problems Start Here
• Flawed Service Provide...
April 3, 2011 20
Risks in Outsourcing – Lots of Them
Outsourcing Risks
Strategic Reputation
Compliance Operational
Termina...
April 3, 2011 21
Strategic Risks
• Outsourcing provider may conduct activities that are
inconsistent with the overall stra...
April 3, 2011 22
Reputational Risks
• Outsourcing provider delivers a poor service
• Outsourcer’s customer service does no...
April 3, 2011 23
Compliance Risks
• Outsourcing provider does not comply with relevant laws
and regulations
• Outsourcing ...
April 3, 2011 24
Operational Risks
• Outsourcing provider experiences technology failures that
impact outsourcer
• Outsour...
April 3, 2011 25
Termination Risks
• Outsourcer has no exit strategy are not in place because of
from over-reliance on one...
April 3, 2011 26
Financial Risks
• Inadequate cost controls and charging mechanism leads to
unexpectedly higher costs for ...
April 3, 2011 27
Country Risks
• Outsourcer cannot enforce contract
• Incorrect selection of applicable legal jurisdiction
April 3, 2011 28
Access Risks
• Outsourcing arrangement negatively impacts ability to
provide accurate and timely informat...
April 3, 2011 29
Concentration/Systemic Risks
• Concentration of services from multiple outsourcers in
small number of out...
April 3, 2011 30
Lessons Learned from Outsourcing Problems
• Smoothly Transferring Services And Resources
− Common cause o...
April 3, 2011 31
Lessons Learned from Outsourcing Problems
• Reviewing Service Design And Deployment To Ensure An Adequate...
April 3, 2011 32
Lessons Learned from Outsourcing Problems
• Monitoring And Managing Client’s And End User’s Satisfaction
...
April 3, 2011 33
Principles of Outsourcing
• Need a comprehensive policy to guide the assessment of whether and how activi...
April 3, 2011 34
Core Competencies for Exploiting Outsourcing and
Managed Services for Organisations Selecting
Outsourcing...
April 3, 2011 35
Sourcing and Supplier Management
• Supplier Management competence and associated
processes operationalise...
April 3, 2011 36
Sourcing
Competence
Supplier Management CompetenceSourcing Competence
Sourcing and Supplier Management
St...
April 3, 2011 37
Sourcing Competence
Strategy
Alignment
Objectives
and Scoping
Sourcing
Model
Business Case
Calculation
Or...
April 3, 2011 38
Sourcing Competence
• Define sourcing strategy and sourcing model
• Evaluate outsourcing potential of IT ...
April 3, 2011 39
Sourcing Competence Scope
• Strategic sourcing decisions on what processes are in- or outsourced
to what ...
April 3, 2011 40
Dimensions of Sourcing Competence Measurement
Framework
• Measure state of
Sourcing competence
along thre...
April 3, 2011 41
Supplier Management Competence
• Supplier management is concerned with the execution of
the IT supplier s...
April 3, 2011 42
Supplier Management Competence Scope
• All activities related to managing ongoing (operational) relations...
April 3, 2011 43
Dimensions of Supplier Management Competence
Measurement Framework
• Measure state of Supplier
Management...
April 3, 2011 44
Phases of Outsourcing Relationship
Ongoing
Initiation Delivery CompletionAnalysis
For outsourcing organis...
April 3, 2011 45
Phases of Outsourcing Relationship
Management of outsourcing lifecycleManagement of outsourcing lifecycle...
April 3, 2011 46
Roles of Service Provider and Outsourcing Organisation
During Phases of Outsourcing Relationship
Initiati...
April 3, 2011 47
Roles of Service Provider and Outsourcing Organisation
During Phases of Outsourcing Relationship
Initiati...
April 3, 2011 48
Key Capabilities and Constituent Practices
• Idealised set of steps for a service provider and end-user
o...
April 3, 2011 49
Key Capabilities Within Outsourcing Lifecycle for
Service Providers
Ongoing
Initiation Delivery Completio...
April 3, 2011 50
Key Capabilities Within Outsourcing Lifecycle for
End-User Organisations
Outsourcing
Strategy
Management
...
April 3, 2011 51
Key Capabilities Within Outsourcing Lifecycle for
Service Providers and End-User Organisations
Outsourcin...
April 3, 2011 52
Key Capabilities and Constituent Practices for
Service Providers
Outsourcing
Capabilities
and Skills
Init...
April 3, 2011 53
Key Capabilities and Constituent Practices for End-
User Organisations - 1 Outsourcing
Capabilities and
S...
April 3, 2011 54
Key Capabilities and Constituent Practices for End-
User Organisations - 2 Outsourcing
Capabilities and
S...
April 3, 2011 55
Analysis Phase
• End-User Organisation
• Concerned with analysing operations and
functions to identify th...
April 3, 2011 56
Initiation Phase
• Service Provider
• Concerned with preparation for and initiation of
service delivery
−...
April 3, 2011 57
Delivery Phase
• Service Provider
• Concerned with service delivery including
management of service deliv...
April 3, 2011 58
Ongoing Phase
• Service Provider
• Management functions that need to
be performed during the entire
outso...
April 3, 2011 59
Completion Phase
• Service Provider
• Concerned with closing down the
engagement at the end of the outsou...
April 3, 2011 60
Benefits of Structured Approach
• Service Provider
• Minimises problems
• Provides common language
• Prov...
April 3, 2011 61
Outsourcing for Service Providers
April 3, 2011 62
Phases of Outsourcing Relationship
Ongoing
Initiation Delivery Completion
April 3, 2011 63
Phases of Outsourcing Relationship
• Every outsourcing relationship has four phases
− Initiation – prepar...
April 3, 2011 64
Initiation Phase
• Concerned with preparation for and initiation of service delivery
− Gather requirement...
April 3, 2011 65
Delivery Phase
• Concerned with service delivery including management of
service delivery, verification t...
April 3, 2011 66
Completion Phase
• Concerned with closing down the engagement at the end
of the outsourcing lifecycle
− M...
April 3, 2011 67
Ongoing Phase
• Management functions that need to be performed during
the entire outsourcing lifecycle
− ...
April 3, 2011 68
Key Capabilities Within Outsourcing Lifecycle
Ongoing
Initiation Delivery Completion
People
Management
Pe...
April 3, 2011 69
Key Capabilities and Constituent Practices
Outsourcing
Capabilities and
Skills
Initiation/
Completion
Del...
April 3, 2011 70
Key Capabilities and Constituent Practices
• Idealised set of steps for a service provider to perform
whe...
April 3, 2011 71
Key Issues For Successful Outsourcing
• Many outsourcing relationships fail, are terminated early,
are un...
April 3, 2011 72
Key Issues For Successful Outsourcing
1. Establishing and maintaining trust with stakeholders
2. Managing...
April 3, 2011 73
Key Issues For Successful Outsourcing
12. Monitoring and managing clients’ and end-users’ satisfaction
13...
April 3, 2011 74
Issue 1 - Establishing And Maintaining Trust With
Stakeholders
• Building a trusting relationship with st...
April 3, 2011 75
Issue 2 - Managing Stakeholder Expectations
• Differences in expectations between the client, the service...
April 3, 2011 76
Issue 3 - Translating Implicit And Explicit Needs Into Defined
Requirements With Agreed-Upon Levels Of Qu...
April 3, 2011 77
Issue 4 - Establishing Well-Defined Contracts With
Stakeholders, Including Clients, Suppliers And Partner...
April 3, 2011 78
Issue 5 - Reviewing Service Design And Deployment
To Ensure Adequate Coverage Of The Requirements
• Failu...
April 3, 2011 79
Issue 6 - Ensuring The Effectiveness Of Interactions
With Stakeholders
• Large-scale outsourcing often in...
April 3, 2011 80
Issue 7 - Managing Supplier And Partner
Relationships To Ensure That Commitments Are Met
• Outsourcing en...
April 3, 2011 81
Issue 8 - Ensuring Compliance With Statutory And
Regulatory Requirements
• Service providers are often fa...
April 3, 2011 82
Issue 9 - Managing Clients’ Security
• Managing security and controlling critical data and assets
are cri...
April 3, 2011 83
Issue 10 - Managing Cultural Differences Between
Stakeholders
• In large-scale outsourcing there are many...
April 3, 2011 84
Issue 11 - Monitoring And Controlling Activities To
Consistently Meet The Service Delivery Commitments
• ...
April 3, 2011 85
Issue 12 - Monitoring And Managing Clients’ And
End-Users’ Satisfaction
• Success is not always defined i...
April 3, 2011 86
Issue 13 - Building And Maintaining The Competencies That
Enable Personnel To Effectively Perform Their R...
April 3, 2011 87
Issue 14 - Managing Employee Satisfaction,
Motivation And Retention
• IT-enabled outsourcing often involv...
April 3, 2011 88
Issue 15 - Establishing And Maintaining An Effective
Work Environment
• A work environment that is well s...
April 3, 2011 89
Issue 16 - Maintaining A Competitive Advantage
• Service providers need to effectively demonstrate their
...
April 3, 2011 90
Issue 17 - Innovating, Building Flexibility and Increasing
Responsiveness To Meet Unique And Evolving Cli...
April 3, 2011 91
Issue 18 - Managing Rapid Technological Shifts And
Maintaining The Availability, Reliability, Accessibili...
April 3, 2011 92
Issue 19 - Capturing And Using Knowledge
• Managing knowledge is critical to a service provider’s
ability...
April 3, 2011 93
Issue 20 - Smoothly Transferring Services And
Resources
• A common cause of failure in outsourcing is the...
April 3, 2011 94
Issue 21 - Maintaining Continuity Of The Service
Delivery
• Effectiveness of outsourcing is related to th...
April 3, 2011 95
Issue 22 - Capturing And Transferring Knowledge
Gained To The Client During Contract Completion
• Frequen...
April 3, 2011 96
Issue 23 - Measuring And Analysing The Reasons for
Termination to prevent Reoccurrence
• Termination may ...
April 3, 2011 97
Key Capabilities and Constituent Practices
Outsourcing
Capabilities and
Skills
Initiation/
Completion
Del...
April 3, 2011 98
1 Service Transfer - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Completion
Delivery Ongoi...
April 3, 2011 99
1 Service Transfer - 1.1 Resources Transferred In
• Scope
− Establish and implement procedures to verify ...
April 3, 2011 100
1 Service Transfer - 1.2 Personnel Transferred In
• Scope
− Establish and implement procedures to manage...
April 3, 2011 101
1 Service Transfer - 1.3 Service Continuity
• Scope
− Establish and implement procedures to ensure the c...
April 3, 2011 102
1 Service Transfer - 1.4 Resources Transferred Out
• Scope
− Establish and implement procedures to trans...
April 3, 2011 103
1 Service Transfer - 1.5 Personnel Transferred Out
• Scope
− Establish and implement procedures to manag...
April 3, 2011 104
1 Service Transfer - 1.6 Knowledge Transferred Out
• Scope
− Establish and implement procedures to trans...
April 3, 2011 105
2 Contracting - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Completion
Delivery Ongoing
1...
April 3, 2011 106
2 Contracting - 2.1 Negotiations
• Scope
− Establish and implement guidelines for negotiations with curr...
April 3, 2011 107
2 Contracting - 2.2 Pricing
• Scope
− Establish and implement guidelines for pricing services
• Activiti...
April 3, 2011 108
2 Contracting - 2.3 Confirm Existing Conditions
• Scope
− Establish and implement guidelines for confirm...
April 3, 2011 109
2 Contracting - 2.4 Market Information
• Scope
− Analyse and use market information about prospective cl...
April 3, 2011 110
2 Contracting - 2.5 Plan Negotiations
• Scope
− Plan and track negotiations with current or prospective ...
April 3, 2011 111
2 Contracting - 2.6 Gather Requirements
• Scope
− Establish and implement procedures to gather a client’...
April 3, 2011 112
2 Contracting - 2.7 Review Requirements
• Scope
− Prior to committing to the prospective client, review
...
April 3, 2011 113
2 Contracting - 2.8 Respond to Requirements
• Scope
− Establish and implement procedures to respond to t...
April 3, 2011 114
2 Contracting - 2.9 Contract Roles
• Scope
− Establish and implement procedures to respond to the
requir...
April 3, 2011 115
2 Contracting - 2.10 Create Contracts
• Scope
− Define the roles and responsibilities of the organisatio...
April 3, 2011 116
2 Contracting - 2.11 Amend Contracts
• Scope
− Establish and implement procedures to amend contracts
• A...
April 3, 2011 117
3 Service Design and Deployment - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Completion
...
April 3, 2011 118
3 Service Design and Deployment - 3.1
Communicate Requirements
• Scope
− Establish and implement procedu...
April 3, 2011 119
3 Service Design and Deployment - 3.2 Design and
Deploy Service
• Scope
− Establish and implement proced...
April 3, 2011 120
3 Service Design and Deployment - 3.3 Plan Design
and Deployment
• Scope
− Plan and track the design and...
April 3, 2011 121
3 Service Design and Deployment - 3.4 Service
Specification
• Scope
− Create the service specification
•...
April 3, 2011 122
3 Service Design and Deployment - 3.5 Service
Design
• Scope
− Create the service design based on the se...
April 3, 2011 123
3 Service Design and Deployment - 3.6 Design
Feedback
• Scope
− Establish and implement procedures to ob...
April 3, 2011 124
3 Service Design and Deployment - 3.7 Verify Design
• Scope
− Establish and implement procedures to revi...
April 3, 2011 125
3 Service Design and Deployment - 3.8 Deploy
Service
• Scope
− Deploy the service based on the service d...
April 3, 2011 126
4 Service Delivery - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Completion
Delivery Ongo...
April 3, 2011 127
4 Service Delivery - 4.1 Plan Service Delivery
• Scope
− Plan and track the service delivery according t...
April 3, 2011 128
4 Service Delivery - 4.2 Train Clients
• Scope
− Establish and implement procedures to train clients and...
April 3, 2011 129
4 Service Delivery - 4.3 Deliver Service
• Scope
− Deliver service according to the service delivery pla...
April 3, 2011 130
4 Service Delivery - 4.4 Verify Service Commitments
• Scope
− Establish and implement procedures to meas...
April 3, 2011 131
4 Service Delivery - 4.5 Correct Problems
• Scope
− Establish and implement procedures to correct proble...
April 3, 2011 132
4 Service Delivery - 4.6 Prevent Known Problems
• Scope
− Establish and implement procedures to take pre...
April 3, 2011 133
4 Service Delivery - 4.7 Service Modifications
• Scope
− Establish and implement procedures to make modi...
April 3, 2011 134
4 Service Delivery - 4.8 Financial Management
• Scope
− Establish and implement procedures for financial...
April 3, 2011 135
5 Knowledge Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Completion
Delivery ...
April 3, 2011 136
5 Knowledge Management - 5.1 Share Knowledge
• Scope
− Establish and implement a policy to share knowled...
April 3, 2011 137
5 Knowledge Management - 5.2 Provide Required
Information
• Scope
− Identify, control and provide the in...
April 3, 2011 138
5 Knowledge Management - 5.3 Knowledge System
• Scope
− Establish and maintain a knowledge system to ide...
April 3, 2011 139
5 Knowledge Management - 5.4 Process Assets
• Scope
− Establish and maintain a set of process assets for...
April 3, 2011 140
5 Knowledge Management - 5.5 Engagement
Knowledge
• Scope
− Analyse and use knowledge gained from client...
April 3, 2011 141
5 Knowledge Management - 5.6 Reuse
• Scope
− Identify and reuse work products
• Activities
− Provide sup...
April 3, 2011 142
5 Knowledge Management - 5.7 Version and Change
Control
• Scope
− Establish and implement procedures to ...
April 3, 2011 143
5 Knowledge Management - 5.8 Resource
Consumption
• Scope
− Establish and implement procedures to analys...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisat...
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Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisations

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Describe at a high-level a structured approach to implementing outsourcing/managed services from both service provider and end-user organisation

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Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisations

  1. 1. Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisations Alan McSweeney
  2. 2. April 3, 2011 2 Objectives • Describe at a high-level a structured approach to implementing outsourcing/managed services from both service provider and end-user organisation
  3. 3. April 3, 2011 3 Scope • Provide a high-level view of a common set of processes to be used by service providers and end-user organisations to implement and operate an outsourcing/managed services arrangement
  4. 4. April 3, 2011 4 Topics • Introduction − Overview − Risks and Lessons Learned − Principles of Outsourcing and Core Competencies − Phases of Outsourcing Relationship • Outsourcing for Service Providers − Phases of Outsourcing Relationship − Key Issues For Successful Outsourcing − Key Capabilities and Constituent Practices • Outsourcing for End-User Organisations − Outsourcing Challenges − Key Issues For Successful Outsourcing − Key Capabilities and Constituent Practices
  5. 5. April 3, 2011 5 What is Outsourcing? • Outsourcing is delegating the responsibility for performing an information technology or business function to a third party • You outsource because the outsourcing supplier will do: − What the organisation currently does − At the same or better level of performance − For the same or lower price
  6. 6. April 3, 2011 6 Potential Advantages of Managed Services • Better Use of Staff: allows agencies to focus human resources on strategic planning and core mission support • Cost Savings: choose not to build and support IT and network infrastructure available in the commercial sector; use limited capital to purchase needed service levels and reduce total cost of ownership • Ability to Use Optimal Technologies: adjust types and mix of hardware, software, skilled labour, capital investment and technology to support changes in mission needs • Rapid Response to Organisation and Business Changes: supplier is measured by ability to produce solutions
  7. 7. April 3, 2011 7 Types of Outsourcing Arrangement • Efficiency/Utility (Make it Cheaper) arrangement outsourcing focuses primarily on cost control and, over time, cost reduction, with the goal of maintaining consistency in the delivery of services • Business Enhancement (Make it Better) arrangement is about business productivity. The organisation’s performance, as compared with their competitors, will improve, resulting in movement toward defined business goals • Transformational (Make me Money) arrangement is characterised by a partnership between the service provider and service recipient that is focused on innovation and new business, changing the very basis on which an organisation competes
  8. 8. April 3, 2011 8 Benefits of Managed Services • Managed Services offers an alternative approach for a client to acquire IT or telecom support services − Managed services solutions are designed and delivered by service providers according to a predefined statement of deliverables and generally includes end-to-end service, service level agreements, and assets (if desired) • A managed service typically includes monthly recurring service-based pricing offering a more predictable cost approach for the client • Ongoing visibility of operational performance is provided and managed through pre-agreed performance parameters (known as service-level agreements) − The client may include their unique performance requirements such as degree of control and visibility, security, availability, capacity, service continuity and other requirements as it relates to the specific service • Because this is a core competency, the service provider is able to optimise the best balance of facilities, processes, resources, tools, and metrics, resulting in the best overall value for the client − Cost effectiveness is typically achieved through instituting process standards and establishing and supporting a standard operating environment (SOE) consisting of COTS (Commercial Off the Shelf) services and solutions • Managed services can be delivered either in a BOCO (Business-owned, contractor- operated) or COCO (contractor-owned, contractor-operated) model and is largely based on client preference
  9. 9. April 3, 2011 9 Outsourcing Organisations - Developing a Vision for IT Services is Required • What do we do today? • What do our customers want us to do? • What changes do we need to make to align with our customers needs? • How will they pay for those services? • How will we deliver those services consistently and measure their delivery? • What kind of organisation (Governance/Contract Management/Structures/Staff/Skills/Service Providers) will we need to achieve it? • What service management processes we should use?
  10. 10. April 3, 2011 10 Reasons Organisations Outsource 17% 16% 12% 12% 8% 6% 6% 4% 3% 3% Reduce And Control Operating Costs Improve Company Focus Gain Access To World-Class Capabilities Free Resources For Other Purposes Resources Not Available Internally Reduce Time To Market Take Advantage Of Capabilities Accelerate Reengineering Benefits Share Risks Function Difficult To Manage Or Out Of Control
  11. 11. April 3, 2011 11 Outsourcing Experiences • 13% to 25% of outsourcing contracts are brought in-house within the first two years • Buyers replace 80% of their service contractors in the first three years • Contractors turn over 40% of their contracts each year, on average • Nearly 70% outsourcing organisations feel their service provider does adequately understand what they are supposed to do • Not good
  12. 12. April 3, 2011 12 Key Issues For Successful Outsourcing • Many outsourcing relationships fail, are terminated early, are unsatisfactory to either or both of the service provider and the client • Outsourcing is a business issues and should be treated as such • Many common issues, problems and concerns arise across outsourcing contracts • Learn from the issues to avoid them
  13. 13. April 3, 2011 13 Hidden Costs of Outsourcing • Transfer of knowledge − Processes and procedures − Documentation − Personal knowledge • Quality issues and their resolution − Inspection programmes − Sustaining quality programmes − Cost of rework • Communication − Poor customer service − Daily operational issues
  14. 14. April 3, 2011 14 Cease's Law on the Nature of the Firm • A firm will tend to expand until the cost of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction on the open market • This means when it is cheaper to buy the service externally it will generally be bought externally • However there is an assumption of perfect knowledge and perfectly rational use of this knowledge to achieve the most logical solution • In reality this perfection is rarely if ever achieved − Other less rational factors affect the decision • Everybody Else Is Doing It • I Want To Do It So It Appears On My Resume • I Like New Technology • Vendors Keep Talking About It • I Need One Good Idea To Stamp My Mark On The Organization • It Will Solve All My Problems • I Hate Dealing With IT • I Do Not Want to Setup a Large IT Function • Cost estimates are rarely accurate − What we know about most projects is that they either or both overrun on costs and deliver less than expected − Cost overruns are generally caused by a mix of errors in the initial cost estimates and deliberate distortions in order to cause the decision to be made
  15. 15. April 3, 2011 15 Transaction Costs • Along with production costs, there are costs for preparing, entering into and monitoring the execution of all kinds of contracts as well as costs for implementing allocation and tracking measures for the contracted services • When internal transaction costs become greater than the costs of externally sourcing the service, the service will be obtained externally • There are hidden costs associated with sourcing a service externally − Selecting the wrong supplier − Costs of writing contract − Costs of enforcing contract − Having a poor service contract that results in hidden cost and/or reduced service − Overlooking personnel issues − Loosing control over the outsourced activity − Management, quality assurance and supervision overhead − Implementation and termination costs − Loss of flexibility − Loss of integration between applications and data − Data extraction costs − Security framework implementation • Transition to utility computing model requires full knowledge of costs – current and future • Note that anything can be outsourced except the management of what is outsourced
  16. 16. April 3, 2011 16 Outsourcing Planning • Structured approach can form the basis for an outsourcing implementation plan for both service providers and for companies performing outsourcing
  17. 17. April 3, 2011 17 Sample Service Transfer Plan – Outsourcing Service Provider • Plan subset • Based on activities − 1 Service Transfer • 1.1 Resources Transferred In • 1.2 Personnel Transferred In • 1.3 Service Continuity
  18. 18. April 3, 2011 18 Sample Service Transfer Plan – Outsourcing Organisation • Plan subset • Based on activities − 1 Outsourcing Opportunity Analysis • 1.1 Define Current State • 1.2 Outsourcing Criteria • 1.3 Demand Identification • 1.4 Outsourcing Options
  19. 19. April 3, 2011 19 Where Outsourcing Problems Happen • Inadequate Preparation = Problems Start Here • Flawed Service Provider Selection = Project Failure Starts Here • Unclear Contract = Conflict Begins Here • Wrong Performance Measurement = Management Failure Starts Here • Ineffective Ongoing Management = Service Delivery Problems Start Here
  20. 20. April 3, 2011 20 Risks in Outsourcing – Lots of Them Outsourcing Risks Strategic Reputation Compliance Operational Termination Financial Country Contract Access Concentration/Systemic
  21. 21. April 3, 2011 21 Strategic Risks • Outsourcing provider may conduct activities that are inconsistent with the overall strategic goals of the outsourcer • Outsourcer fails to implement appropriate and effective oversight of the outsourcing provider • Outsourcer has inadequate expertise to oversee the outsourcing provider
  22. 22. April 3, 2011 22 Reputational Risks • Outsourcing provider delivers a poor service • Outsourcer’s customer service does not meet expectations in areas serviced by outsourcing provider • Outsourcing provider practices do not comply with stated practices of outsourcer
  23. 23. April 3, 2011 23 Compliance Risks • Outsourcing provider does not comply with relevant laws and regulations • Outsourcing provider does not comply with consumer laws • Outsourcing provider has inadequate compliance systems and control
  24. 24. April 3, 2011 24 Operational Risks • Outsourcing provider experiences technology failures that impact outsourcer • Outsourcing provider has inadequate financial capacity to fulfil obligations and/or provide remedies in the event of failure or breach • Outsourcing provider experiences fraud or error • Outsourcer experiences difficulties or high costs in undertaking inspections
  25. 25. April 3, 2011 25 Termination Risks • Outsourcer has no exit strategy are not in place because of from over-reliance on one provider or the loss of relevant in-house skills • Ability to return services from outsourcing provider is difficult, time-consuming or costly because of a lack of staff or loss of intellectual capacity
  26. 26. April 3, 2011 26 Financial Risks • Inadequate cost controls and charging mechanism leads to unexpectedly higher costs for outsourcer • Changes to services requested from outsourcing provider are very expensive
  27. 27. April 3, 2011 27 Country Risks • Outsourcer cannot enforce contract • Incorrect selection of applicable legal jurisdiction
  28. 28. April 3, 2011 28 Access Risks • Outsourcing arrangement negatively impacts ability to provide accurate and timely information • There is an additional layer of complexity in understanding activities of the outsourcing provider
  29. 29. April 3, 2011 29 Concentration/Systemic Risks • Concentration of services from multiple outsourcers in small number of outsourcing providers can mean lack of control by individual outsourcer and overall systemic risk
  30. 30. April 3, 2011 30 Lessons Learned from Outsourcing Problems • Smoothly Transferring Services And Resources − Common cause of failure is the ineffective management of the transfer of services and resources to the service provider, leading to service delivery problems − Successful service providers rigorously control the transfer of services and resources to ensure that the new service is able to adequately deliver the service and the service continuity is maintained. • Maintaining Stakeholder Expectations − Common source of failure in outsourcing engagements is a difference in expectations between the client, the service provider and the suppliers and partners − Identifying and managing those expectations helps to ensure a common understanding of what is necessary for success • Translating Implicit And Explicit Needs Into Defined Requirements With Agreed Upon Levels Of Quality − Frequent cause of failure in outsourcing is that the service provider does not fully understand the needs of the client − Successful service providers rigorously gather and analyse the stated and unstated needs, then translate those needs into a set of documented requirements − Successful service providers also recognise that needs change over time and establish provisions for gathering and analysing modifications to their services
  31. 31. April 3, 2011 31 Lessons Learned from Outsourcing Problems • Reviewing Service Design And Deployment To Ensure An Adequate Coverage Of The Client’s Requirements − Failure in outsourcing is caused by the service provider not fully addressing the needs of the client − To ensure that the service delivery will meet the client’s needs successful engagements include rigorous reviews of the service design and deployment activities by the clients and the service provider prior to service delivery • Managing Client’s Security − Managing security and controlling critical data and assets are critical to establishing trust − Security management includes protection of intellectual property, confidentiality and privacy concerns • Monitoring And Controlling Activities To Consistently Meet The Service Delivery Commitments − Successful service providers rigorously monitor their service delivery activities to ensure that the client’s commitments are being met − Actions are taken to resolve and prevent problems, thereby escalating issues as appropriate to ensure that they are addressed in a timely basis
  32. 32. April 3, 2011 32 Lessons Learned from Outsourcing Problems • Monitoring And Managing Client’s And End User’s Satisfaction − Success is not always defined in terms of meeting the agreed upon commitments, because clients and end users may be unsatisfied even when commitments are being met − Successful outsourcing engagements monitor the satisfaction levels of the stakeholders to identify problems and take action • Managing Employee Satisfaction, Motivation, And Retention − IT-enabled outsourcing often involves challenges during transition, deployment and service delivery − High employee turnover jeopardises the service provider’s ability to meet its client’s requirements and undermines their expected gains and performance levels − Proactively monitoring and managing employee satisfaction and motivation can improve personnel retention and effectiveness • Managing Technological Shifts And Maintaining The Availability, Reliability, Accessibility, And Security Of Technology − Technology is a key component of outsourcing − Major challenges for the service provider include keeping pace with rapid changes in technology and effectively managing the technology infrastructure while changes are incorporated
  33. 33. April 3, 2011 33 Principles of Outsourcing • Need a comprehensive policy to guide the assessment of whether and how activities can be appropriately outsourced • Senior management needs to be responsible for outsourcing policy and related overall responsibility for activities undertaken under the policy • Need to establish a comprehensive outsourcing risk management programme to address the outsourced activities and the relationship with the service provider • Need to ensure that outsourcing arrangements does diminish its ability to fulfil obligations to customers and stakeholders • Need to conduct appropriate due diligence in selecting outsourcing service providers • Outsourcing relationship needs to be governed by contract that clearly describes all material aspects of the outsourcing arrangement, including the rights, responsibilities and expectations of all parties • Need to establish and maintain contingency plans, including a plan for availability and disaster recovery and regular testing of backup arrangements • Need to take appropriate steps to ensure that outsourcing providers protect confidential information from intentional or inadvertent disclosure • Need to be aware of the potential risks posed where the activities of multiple outsourcers entities are concentrated within a small number of outsourcing providers
  34. 34. April 3, 2011 34 Core Competencies for Exploiting Outsourcing and Managed Services for Organisations Selecting Outsourcing • Sourcing – having an effective approach to outsourcing − Concerned with managing the IT function like a business • Supplier Management – plan, analyse and manage the ongoing relationships with suppliers − Concerned with managing the IT function
  35. 35. April 3, 2011 35 Sourcing and Supplier Management • Supplier Management competence and associated processes operationalises the strategic decisions taken within the Sourcing competence Supplier ManagementSourcing
  36. 36. April 3, 2011 36 Sourcing Competence Supplier Management CompetenceSourcing Competence Sourcing and Supplier Management Strategic Sourcing Decision Supplier Selection Contracting Governance and Partner Integration Transition Supplier Engagement Order Management (Ordering/ Delivery/ Distribution) Supplier Communications Supplier Risk Monitoring Contract Management (Payment, Penalties) Performance Measurement And Monitoring Supplier Development Evaluation Procurement of IT Services and IT Hardware/Software
  37. 37. April 3, 2011 37 Sourcing Competence Strategy Alignment Objectives and Scoping Sourcing Model Business Case Calculation Organisational Readiness Partner Selection Contracting Transition Partner integration and Governance Reevaluation Planning Cycle Sourcing Cycle
  38. 38. April 3, 2011 38 Sourcing Competence • Define sourcing strategy and sourcing model • Evaluate outsourcing potential of IT processes • Select optimal partner(s) • Manage the transition to selected partner(s) • Setting the basis for a successful relationship with selected partner(s) to maximise business value contribution
  39. 39. April 3, 2011 39 Sourcing Competence Scope • Strategic sourcing decisions on what processes are in- or outsourced to what extent • The decision on what sourcing model is applied − Internal/external − Onshore/nearshore/offshore − Single vs. multiple vendor relationship • Calculation of business cases for outsourcing projects • The process of selecting the optimal partner(s) • Preparation, negotiation, closing and re-evaluation of contracts with selected partner(s) • Managing the transition process and setting up requirements for an enduring and successful relationship with partner(s)
  40. 40. April 3, 2011 40 Dimensions of Sourcing Competence Measurement Framework • Measure state of Sourcing competence along three dimensions − Sourcing Strategy − Contracting − Sourcing Execution • Define facets of each dimension • Measure each facet in terms of: − Associated processes and their state of development − Scope or extent within the organisation Sourcing Strategy Contracting Sourcing Execution
  41. 41. April 3, 2011 41 Supplier Management Competence • Supplier management is concerned with the execution of the IT supplier strategy and manages the suppliers on an operational basis • Supplier management operationalises the strategic decisions of IT suppliers and contracts agreed in the Sourcing competence • Effective supplier management provides opportunities for cost reduction from better control of assets and people, as well as value-creation opportunities by supporting IT supplier collaboration and innovation
  42. 42. April 3, 2011 42 Supplier Management Competence Scope • All activities related to managing ongoing (operational) relationship with suppliers and associated systems/ tools • Analysis of existing suppliers to identify suitable ongoing engagement strategies at an individual and portfolio level • Manage supplier relationship in line with evolving IT strategy • Measure and monitor supplier performance from both the organisation’s own perspective and the supplier’s perspective • Manage the ongoing external risks (e.g. supplier insolvency) and ongoing internal risks (e.g. unchecked SLAs) derived from the organisation’s relationships with its suppliers • Long-term development of suppliers, their products and services to help them improve internally to achieve improved levels of innovation, quality and performance, and to be aligned optimally with the enterprise
  43. 43. April 3, 2011 43 Dimensions of Supplier Management Competence Measurement Framework • Measure state of Supplier Management competence along three dimensions − Supplier Alignment − Relationship Management − Performance And Risk Management • Define facets of each dimension • Measure each facet in terms of: − Associated processes and their state of development − Scope or extent within the organisation Supplier Alignment Relationship Management Performance And Risk Management
  44. 44. April 3, 2011 44 Phases of Outsourcing Relationship Ongoing Initiation Delivery CompletionAnalysis For outsourcing organisation For both outsourcing organisation and service provider
  45. 45. April 3, 2011 45 Phases of Outsourcing Relationship Management of outsourcing lifecycleManagement of outsourcing lifecycleOngoing Close-out the service after the contract ends or the service has been terminated Close-out the service after the contract ends or the service has been terminated Completion Provide service and manage and measure its provision Provide service and manage and measure its provision Delivery Prepare for and transition to provision of service Prepare for and transition to provision of service Initiation Analyse operations and functions to identify those services, processes or functions that could potentially be outsourced and develops the approach to be taken to source the identified opportunities Analysis Service ProviderOutsourcing OrganisationPhase
  46. 46. April 3, 2011 46 Roles of Service Provider and Outsourcing Organisation During Phases of Outsourcing Relationship Initiation Delivery Completion Analysis Ongoing Service Provider Outsourcing Organisation Determine if outsourcing represents a business opportunity Prepare for service transition, transfer resources and personnel from outsourcing organisation and ensure service continuity Plan for outsourcing of selected services, evaluate and select a service provider, create an outsourcing agreement and transfer resources and personnel to service provider Define and agree requirements, negotiate contract, plan, design and deploy service, implement service delivery Implement the capability to manage the service provider, administer the agreement and the issues, challenges and changes that arise after the agreement has been reached, reviewing the service provider’s performance Implement knowledge management processes, perform people management, implement performance management, manage relationship, manage technology and manage risks and threats Develop outsourcing strategy management, manage relationship with service provider, ensure value, implement knowledge management processes, manage technology and manage risks and threats Prepare for service transition, transfer resources and personnel from outsourcing organisation and ensure service continuity Plan for completion, ensure service continuity, transfer resources and personnel from outsourcing organisation and transfer knowledge
  47. 47. April 3, 2011 47 Roles of Service Provider and Outsourcing Organisation During Phases of Outsourcing Relationship Initiation Delivery CompletionAnalysis Ongoing Service Provider Outsourcing Organisation Common Language and Expectations Agreed Roles and Responsibilities
  48. 48. April 3, 2011 48 Key Capabilities and Constituent Practices • Idealised set of steps for a service provider and end-user organisations and outsourcing organisation to perform when taking on a new outsourcing service • Provides a detailed checklist of work to be done • Each practices contains a set of activities and tasks • Can be modified to suit the circumstances: scope of outsourcing, size of service, duration of contract • Can forms the basis of a project plan for elements of outsourcing work such as initiation • Reduces risk of failure
  49. 49. April 3, 2011 49 Key Capabilities Within Outsourcing Lifecycle for Service Providers Ongoing Initiation Delivery Completion People Management Performance Management Relationship Management Technology Management Knowledge Management Threat Management Contracting Service Design and Deployment Service Delivery Service Transfer Service Transfer
  50. 50. April 3, 2011 50 Key Capabilities Within Outsourcing Lifecycle for End-User Organisations Outsourcing Strategy Management Governance Management Relationship Management Value Management Technology Management People Management Outsourcing Planning Outsourcing Agreements Sourced Services Management Outsourcing Completion Outsourcing Opportunity Analysis Ongoing Initiation Delivery CompletionAnalysis Knowledge Management Organisational Change Management Threat Management Outsourcing Approach Service Transfer Service Provider Evaluation
  51. 51. April 3, 2011 51 Key Capabilities Within Outsourcing Lifecycle for Service Providers and End-User Organisations Outsourcing Capabilities and Skills Analysis Initiation Delivery Ongoing Completion Outsourcing Organisation Outsourcing Organisation Service Provider Outsourcing Organisation Service Provider Outsourcing Organisation Service Provider Outsourcing Organisation Service Provider Outsourcing Opportunity Analysis Outsourcing Approach Service Transfer Service Transfer Contracting Service Design and Deployment Service Delivery Outsourcing Completion Sourced Services Management Outsourcing Planning Service Provider Evaluation Outsourcing Agreements Service Transfer Knowledge Management People Management Performance Management Relationship Management Technology Management Threat Management Outsourcing Strategy Management Governance Management Relationship Management Value Management Organisational Change Management People Management Knowledge Management Technology Management Threat Management
  52. 52. April 3, 2011 52 Key Capabilities and Constituent Practices for Service Providers Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilitie s 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  53. 53. April 3, 2011 53 Key Capabilities and Constituent Practices for End- User Organisations - 1 Outsourcing Capabilities and Skills Analysis Phase Initiation Phase Delivery Phase 1 Outsourcing Opportunity Analysis 2 Outsourcing Approach 3 Outsourcing Planning 4 Service Provider Evaluation 5 Outsourcing Agreements 6 Service Transfer Completion Phase 8 Outsourcing Completion 7 Sourced Services Management 1.1 Define Current State 1.2 Outsourcing Criteria 1.3 Demand Identification 1.4 Outsourcing Options 2.1 Outsourcing Approach 2.2 Business Case 2.3 Governance Model 2.4 Impact and Risk Analysis 2.5 Outsourcing Initiation Decision 3.1 Establish Outsourcing Project 3.2 Service Definition 3.3 Service Provider Selection Procedures 3.4 Evaluation Criteria 3.5 Prepare Service Requirements 4.1 Communicate Requirements 4.2 Evaluate Potential Service Providers 4.3 Select Candidate Service Providers 5.1 Negotiations Guidelines 5.2 Confirm Existing Conditions 5.3 Negotiations 5.4 Agreement Roles 5.5 Define SLAs and Measures 5.6 Create Agreements 5.7 Amend Agreements 6.1 Service Transition 6.2 Verify Design 6.3 Resources Transferred Out 6.4 Personnel Transferred Out 6.5 Knowledge Transferred Out 7.1 Perform Outsourcing Management 7.2 Performance Monitoring 7.3 Financial Management 7.4 Agreement Management 7.5 Problem and Incident Monitoring 7.6 Service Delivery Change Management 7.7 Service Change Management 7.8 Review Service Performance 7.9 Stakeholder Feedback 7.10 Service Value Analysis 7.11 Continuation Decision 8.1 Completion Planning 8.2 Service Continuity 8.3 Resources Transfer from Service Provider 8.4 Personnel Transfer from Service Provider 8.5 Knowledge Transfer from Service Provider
  54. 54. April 3, 2011 54 Key Capabilities and Constituent Practices for End- User Organisations - 2 Outsourcing Capabilities and Skills Ongoing Phase Governance Focused Competency and Change Focused Environment Focused 9 Outsourcing Strategy Management 10 Governance Management 11 Relationship Management 12 Value Management 13 Organisational Change Management 14 People Management 15 Knowledge Management 16 Technology Management 17 Threat Management 9.1 Outsourcing Sponsorship 9.2 Outsourcing Constraints 9.3 Potential Outsourcing Areas 9.4 Outsourcing Objectives 9.5 Organisational Outsourcing Strategy 10.1 Outsourcing Policy 10.2 Service Provider Management 10.3 Internal Stakeholder Management 10.4 Defined Outsourcing Processes 10.5 Align Strategy and Architectures 10.6 Business Process Integration 10.7 Adapt to Business Change 11.1 Service Provider Interactions 11.2 Service Provider Relationships 11.3 Internal Relationships 11.4 Issue Management 11.5 Cultural Fit 11.6 Collaborative Relationships 11.7 Innovative Relationships 12.1 Organisational Outsourcing Performance 12.2 Capability Baselines 12.3 Benchmark Outsourcing Processes 12.4 Improve Outsourcing Processes 12.5 Innovation 12.6 Business Value and Impact 12.7 Outsourcing Alignment 13.1 Prepare for Organisational Change 13.2 Stakeholder Involvement 13.3 Define Future State 13.4 Human Resource Changes 13.5 Communicate Organisational Changes 13.6 Organisational Change 14.1 Assign Outsourcing Responsibilities 14.2 Personnel Competencies 14.3 Organisational Outsourcing Competency 14.4 Define Roles 15.1 Provide Required Information 15.2 Knowledge System 15.3 Market Information 15.4 Lessons Learned 15.5 Share Knowledge 16.1 Asset Management 16.2 License Management 16.3 Technology Integration 17.1 Outsourcing Risk Management 17.2 Organisational Risk Management 17.3 Intellectual Property 17.4 Security and Privacy 17.5 Compliance 17.6 Business Continuity
  55. 55. April 3, 2011 55 Analysis Phase • End-User Organisation • Concerned with analysing operations and functions to identify those services, processes, or functions that could potentially be outsourced − Understanding the current, or as-is, state of the client organisation’s structure and processes − Identifying the relevant criteria for selecting outsourcing opportunities − Identifying outsourcing opportunities to meet outsourcing objectives and criteria − Organising options for outsourcing − Developing and validating the Business Case for each outsourcing option − Identifying the outsourcing approach and governance model for the proposed outsourcing action − Performing impact and risk analyses of the proposed outsourcing action − Making the decision whether or not to source the proposed outsourcing action
  56. 56. April 3, 2011 56 Initiation Phase • Service Provider • Concerned with preparation for and initiation of service delivery − Gather requirements − Perform due diligence to validate customer information − Assess if and how the requirements can be met − Prepare for negotiation − Negotiate and sign contract − Confirm assumptions − Confirm responsibilities and commitments − Design the service − Review the service design − Create service specification − Deploy the service − Transfer resources - personnel, technology, infrastructure, applications − Transition of service • End-User Organisation • Concerned with preparation for and initiation of managing outsourced services − Preparing for service selection by developing the solicitation and criteria for selection − Soliciting and evaluating potential service providers − Preparing for negotiation by having an organisational position on cost, quality and other topics that need to be negotiated − Defining the formal service level agreements and service provider performance measures − Understanding service provider’s capabilities by gathering information about the service provider and confirming the assumptions that impact commitments − Establishing a formal agreement with service providers that clearly articulates the clients’ and service provider’s responsibilities and commitments − Providing feedback on the service design in order to ensure that the services are meeting the client’s requirements and the agreed-upon commitments − Managing the effective transfer of resources needed for service delivery, including personnel, technology infrastructure and work environment
  57. 57. April 3, 2011 57 Delivery Phase • Service Provider • Concerned with service delivery including management of service delivery, verification that commitments are being met and management of costs associated with the service provision − Planning and tracking the service delivery activities − Delivering services according to the agreed commitments − Managing the finances associated with the service delivery − Identifying and controlling modifications to the services being provided − Identifying and controlling modifications to associated service commitments − Identifying problems that impact the service delivery and taking both preventive and corrective actions • End-User Organisation • Concerned with monitoring the service provider’s service delivery capabilities, including the ongoing monitoring of service provider performance to verify that commitments are being met, monitoring changes, management of the finances and agreements associated with the service provision, fostering realistic expectations and performing value analysis − Planning and tracking the outsourcing management activities − Ensuring that services are delivered according to the agreed-upon commitments − Managing the finances associated with the service delivery − Identifying and controlling modifications to the services being provided or to the associated service commitments − Facilitating problem resolution for problems that impact the service delivery − Reconciling performance against expectations and ensuring that the service provision returns value to the client organisation
  58. 58. April 3, 2011 58 Ongoing Phase • Service Provider • Management functions that need to be performed during the entire outsourcing lifecycle − Manage and motivate personnel to effectively deliver services − Manage relationships with clients, suppliers and business partners − Measure and review the organisation’s performance and taking action to improve it − Manage information and knowledge systems so that personnel have access to the knowledge needed to effectively perform their work − Identify and control threats to the organisation’s ability to meet its objectives and client requirements − Manage the technology, systems and applications infrastructure used to support delivery of service • End-User Organisation • Management functions that need to be performed during the entire outsourcing lifecycle − Manage and motivate personnel to effectively deliver services − Manage relationships with clients, suppliers and business partners − Measure and review the organisation’s performance and taking action to improve it − Manage information and knowledge systems so that personnel have access to the knowledge needed to effectively perform their work − Identify and control threats to the organisation’s ability to meet its objectives and client requirements − Manage the technology, systems and applications infrastructure used to support delivery of service
  59. 59. April 3, 2011 59 Completion Phase • Service Provider • Concerned with closing down the engagement at the end of the outsourcing lifecycle − Manage the transfer of resources to the new service provider, whether it is to the client or to another service provider − Ensure service continuity during transfer − Identify and transferring the knowledge critical for the delivery of service • End-User Organisation • Concerned with closing down the engagement at the end of the outsourcing lifecycle − Planning for closing down a outsourced service and managing the agreement during the close-down period including managing the agreement during termination proceedings, during renewal, or during normal completion − Managing the transfer of resources to the new service provider, whether it is to back to the organisation or to another service provider including the potential transfer of people, technology infrastructure and intellectual property − Ensuring service continuity during the transfer of responsibilities for service provision − Identifying and transferring the knowledge capital critical for the delivery of service
  60. 60. April 3, 2011 60 Benefits of Structured Approach • Service Provider • Minimises problems • Provides common language • Provides common understanding of roles and responsibilities • Provides mechanism for resolving issues • Know what is expected and what should be done • End-User Organisation • Provides structured approach to evaluating and adopting outsourcing • Demonstrates due diligence in selecting outsourcing partner • Provides common understanding of roles and responsibilities • Provides mechanism for resolving issues • Knows service to be provided and measures delivery
  61. 61. April 3, 2011 61 Outsourcing for Service Providers
  62. 62. April 3, 2011 62 Phases of Outsourcing Relationship Ongoing Initiation Delivery Completion
  63. 63. April 3, 2011 63 Phases of Outsourcing Relationship • Every outsourcing relationship has four phases − Initiation – prepare for and transition to provision of service − Delivery – provide service and manage and measure its provision − Completion – close-out the service after the contract ends or the service has been terminated − Ongoing – management of outsourcing lifecycle
  64. 64. April 3, 2011 64 Initiation Phase • Concerned with preparation for and initiation of service delivery − Gather requirements − Perform due diligence to validate customer information − Assess if and how the requirements can be met − Prepare for negotiation − Negotiate and sign contract − Confirm assumptions − Confirm responsibilities and commitments − Design the service − Review the service design − Create service specification − Deploy the service − Transfer resources - personnel, technology, infrastructure, applications − Transition of service
  65. 65. April 3, 2011 65 Delivery Phase • Concerned with service delivery including management of service delivery, verification that commitments are being met and management of costs associated with the service provision − Planning and tracking the service delivery activities − Delivering services according to the agreed commitments − Managing the finances associated with the service delivery − Identifying and controlling modifications to the services being provided − Identifying and controlling modifications to associated service commitments − Identifying problems that impact the service delivery and taking both preventive and corrective actions
  66. 66. April 3, 2011 66 Completion Phase • Concerned with closing down the engagement at the end of the outsourcing lifecycle − Manage the transfer of resources to the new service provider, whether it is to the client or to another service provider − Ensure service continuity during transfer − Identify and transferring the knowledge critical for the delivery of service
  67. 67. April 3, 2011 67 Ongoing Phase • Management functions that need to be performed during the entire outsourcing lifecycle − Manage and motivate personnel to effectively deliver services − Manage relationships with clients, suppliers and business partners − Measure and review the organisation’s performance and taking action to improve it − Manage information and knowledge systems so that personnel have access to the knowledge needed to effectively perform their work − Identify and control threats to the organisation’s ability to meet its objectives and client requirements − Manage the technology, systems and applications infrastructure used to support delivery of service
  68. 68. April 3, 2011 68 Key Capabilities Within Outsourcing Lifecycle Ongoing Initiation Delivery Completion People Management Performance Management Relationship Management Technology Management Knowledge Management Threat Management Contracting Service Design and Deployment Service Delivery Service Transfer Service Transfer
  69. 69. April 3, 2011 69 Key Capabilities and Constituent Practices Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  70. 70. April 3, 2011 70 Key Capabilities and Constituent Practices • Idealised set of steps for a service provider to perform when taking on a new outsourcing client • Provides a detailed checklist of work to be done • Each practice contains a set of activities and tasks • Can be modified to suit the circumstances: scope of outsourcing, size of client, duration of contract • Can forms the basis of a project plan for elements of outsourcing work such as initiation • Reduces risk of failure • Demonstrates professionalism to potential clients
  71. 71. April 3, 2011 71 Key Issues For Successful Outsourcing • Many outsourcing relationships fail, are terminated early, are unsatisfactory to either or both of the service provider and the client • Outsourcing is a business issues and should be treated as such • Many common issues, problems and concerns arise across outsourcing contracts • Learn from the issues to avoid them
  72. 72. April 3, 2011 72 Key Issues For Successful Outsourcing 1. Establishing and maintaining trust with stakeholders 2. Managing stakeholder expectations 3. Translating implicit and explicit needs into defined requirements with agreed- upon levels of quality 4. Establishing well-defined contracts with stakeholders, including clients, suppliers and partners 5. Reviewing service design and deployment to ensure adequate coverage of the requirements 6. Ensuring the effectiveness of interactions with stakeholders 7. Managing supplier and partner relationships to ensure that commitments are met 8. Ensuring compliance with statutory and regulatory requirements 9. Managing clients’ security 10. Managing cultural differences between stakeholders 11. Monitoring and controlling activities to consistently meet the service delivery commitments
  73. 73. April 3, 2011 73 Key Issues For Successful Outsourcing 12. Monitoring and managing clients’ and end-users’ satisfaction 13. Building and maintaining the competencies that enable personnel to effectively perform their roles and responsibilities 14. Managing employee satisfaction, motivation and retention 15. Establishing and maintaining an effective work environment 16. Maintaining a competitive advantage 17. Innovating, building flexibility and increasing responsiveness to meet unique and evolving client requirements 18. Managing rapid technological shifts and maintaining the availability, reliability, accessibility and security of technology 19. Capturing and using knowledge 20. Smoothly transferring services and resources 21. Maintaining continuity of the service delivery 22. Capturing and transferring knowledge gained to the client during contract completion 23. Measuring and analysing the reasons for termination, to prevent reoccurrence
  74. 74. April 3, 2011 74 Issue 1 - Establishing And Maintaining Trust With Stakeholders • Building a trusting relationship with stakeholders is critical to success • Important for all suppliers and partners involved in the outsourcing relationship – hardware, software, communications, services • By effectively managing expectations and responding to personnel, clients and end-users, service provider establishes trust with its stake- holders to help establish long-term relationships
  75. 75. April 3, 2011 75 Issue 2 - Managing Stakeholder Expectations • Differences in expectations between the client, the service provider and the suppliers and partners is a common source of failure • Identifying and managing those expectations helps to ensure a common understanding of what is necessary for success
  76. 76. April 3, 2011 76 Issue 3 - Translating Implicit And Explicit Needs Into Defined Requirements With Agreed-Upon Levels Of Quality • Frequent cause of failure in outsourcing is that the service provider does not fully understand the needs of the client − Inability of clients to adequately express their needs − Lack of rigor by the service provider in gathering and analysing those needs • Successful service providers rigorously gather and analyse the stated and unstated needs − Translate those needs into a set of documented requirements • Successful providers also recognise that needs change over time and establish provisions for gathering and analysing modifications to their services
  77. 77. April 3, 2011 77 Issue 4 - Establishing Well-Defined Contracts With Stakeholders, Including Clients, Suppliers And Partners • Poorly written contracts are a common cause of failure and result in a large number of contracts being renegotiated • Outsourcing arrangements are typically long-term in nature and require contracts that are clear and detailed as well as being flexible enough to account for business changes • Formal mechanisms are required in order for the provider to identify changing needs, modify services based on those changes and amend contracts to reflect the current requirements and commitments
  78. 78. April 3, 2011 78 Issue 5 - Reviewing Service Design And Deployment To Ensure Adequate Coverage Of The Requirements • Failure in outsourcing can be caused by the service provider not fully addressing the needs of the client • To ensure that the service delivery will meet the client’s needs, successful engagements include rigorous reviews of the service design and deployment activities by the clients and the service provider prior to service delivery
  79. 79. April 3, 2011 79 Issue 6 - Ensuring The Effectiveness Of Interactions With Stakeholders • Large-scale outsourcing often involves a combination of face-to-face and remote interactions • Interactions with clients need to be managed in order to effectively understand their needs • Clear communications with all stakeholders can have a strong positive impact on the ability to effectively perform work
  80. 80. April 3, 2011 80 Issue 7 - Managing Supplier And Partner Relationships To Ensure That Commitments Are Met • Outsourcing engagements can include multiple service providers working together to meet the client’s needs • Regardless of the type of relationship suppliers and partners can have a significant impact on the effectiveness of the service delivery and they must be actively managed
  81. 81. April 3, 2011 81 Issue 8 - Ensuring Compliance With Statutory And Regulatory Requirements • Service providers are often faced with the need to comply with a large variety of laws and regulations • Effectively operating in this environment requires rigorous analysis and management of all applicable legal requirements to protect themselves and their clients
  82. 82. April 3, 2011 82 Issue 9 - Managing Clients’ Security • Managing security and controlling critical data and assets are critical to establishing trust • Security management includes protection of intellectual property, confidentiality and privacy concerns • Breakdowns, such as security breaches, can impact the service provider’s ability to provide adequate service and can irreparably damage the relationship with the client
  83. 83. April 3, 2011 83 Issue 10 - Managing Cultural Differences Between Stakeholders • In large-scale outsourcing there are many potential cultural differences between service providers, clients, end-users, suppliers and partners • These include differences between country, region and organisational culture • These differences need to be identified and addressed in order to guard against breakdowns in communication
  84. 84. April 3, 2011 84 Issue 11 - Monitoring And Controlling Activities To Consistently Meet The Service Delivery Commitments • Successful service providers monitor their service delivery activities to ensure that the client’s commitments are being met • Actions are taken to resolve and prevent problems, thereby escalating issues as appropriate to ensure that they are addressed in a timely basis
  85. 85. April 3, 2011 85 Issue 12 - Monitoring And Managing Clients’ And End-Users’ Satisfaction • Success is not always defined in terms of meeting the agreed-upon commitments because clients and end-users may be unsatisfied even when commitments are being met • Successful outsourcing engagements monitor the satisfaction levels of the stakeholders to identify problems and take action
  86. 86. April 3, 2011 86 Issue 13 - Building And Maintaining The Competencies That Enable Personnel To Effectively Perform Their Roles And Responsibilities • Outsourcing is often highly dependant on specialised competencies without which personnel cannot effectively perform the work assigned to them • Service providers need to manage the competencies of individuals as well as the workforce as a whole in order to ensure that work is effectively performed and that the client’s requirements are met.
  87. 87. April 3, 2011 87 Issue 14 - Managing Employee Satisfaction, Motivation And Retention • IT-enabled outsourcing often involves challenges during transition and deployment and service delivery • High employee turnover jeopardises the service provider’s ability to meet its clients’ requirements and undermines their expected gains and performance levels • Proactively monitoring and managing employee satisfaction and motivation can improve personnel retention and effectiveness
  88. 88. April 3, 2011 88 Issue 15 - Establishing And Maintaining An Effective Work Environment • A work environment that is well suited to the service being delivered enables personnel to effectively perform their work • Also contributes to employee satisfaction and retention
  89. 89. April 3, 2011 89 Issue 16 - Maintaining A Competitive Advantage • Service providers need to effectively demonstrate their capabilities relative to competitors • Initially done to differentiate the service provider from the competition in such a way that they will be chosen over other providers • Done to continually improve the organisation’s capabilities and demonstrate to clients that the current service provider is the organisation best equipped to meet clients’ changing needs • Important aspect of being competitive is demonstrating financial stability and longevity
  90. 90. April 3, 2011 90 Issue 17 - Innovating, Building Flexibility and Increasing Responsiveness To Meet Unique And Evolving Client Requirements • Successful outsourcing engagements are those where the service provider is able to be flexible and responsive to clients’ changing needs • Adopting innovations is one way to add value and meet new needs • Actively manage the performance of the organisation and continuously improve its capabilities
  91. 91. April 3, 2011 91 Issue 18 - Managing Rapid Technological Shifts And Maintaining The Availability, Reliability, Accessibility And Security Of Technology • Technology is a key component of IT outsourcing such as public cloud • Challenges for the service provider include keeping pace with rapid changes in technology and effectively managing the technology infrastructure while changes are incorporated
  92. 92. April 3, 2011 92 Issue 19 - Capturing And Using Knowledge • Managing knowledge is critical to a service provider’s ability to avoid rework and improve the consistency and quality of work performed by personnel • includes the effective storage, retrieval and use of knowledge gained on engagements
  93. 93. April 3, 2011 93 Issue 20 - Smoothly Transferring Services And Resources • A common cause of failure in outsourcing is the ineffective management of the transfer of services and resources to and from the service provider leading to service delivery problems • Successful service providers rigorously control the transfer of services and resources to ensure that the new service provider is able to adequately deliver the service and that service continuity is maintained
  94. 94. April 3, 2011 94 Issue 21 - Maintaining Continuity Of The Service Delivery • Effectiveness of outsourcing is related to the service provider’s ability to maintain service continuity despite any problems that arise • Successful providers manage service continuity by effectively controlling and preventing problems during service delivery, preparing and responding to threats and coordinating the transfer of service during periods of transition
  95. 95. April 3, 2011 95 Issue 22 - Capturing And Transferring Knowledge Gained To The Client During Contract Completion • Frequent concern of clients who consider outsourcing is that in-house knowledge will be eroded, making it impossible to bring outsourced services back in-house • Successful service providers address this concern by making provisions for capturing and transferring knowledge back to the client during contract completion
  96. 96. April 3, 2011 96 Issue 23 - Measuring And Analysing The Reasons for Termination to prevent Reoccurrence • Termination may happen for a number of reasons, including an inability of the service provider to meet changing client needs, resolve problems, meet commitments, or match the capabilities of competitors • Analysing the reasons for termination and taking action based on the findings helps to prevent issues from recurring with other clients and ensure the long-term success of the service provider
  97. 97. April 3, 2011 97 Key Capabilities and Constituent Practices Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  98. 98. April 3, 2011 98 1 Service Transfer - Activities Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  99. 99. April 3, 2011 99 1 Service Transfer - 1.1 Resources Transferred In • Scope − Establish and implement procedures to verify and account for resources transferred to the organisation • Track and manage resource transfers in order to facilitate a smooth transfer of responsibilities prior to service delivery • Activities − Provide support for creating and maintaining the procedures for verifying and accounting for resources transferred to the organisation − Document and implement the procedures for verifying and accounting for resources transferred to the organisation − Support the implementation of the procedures for verifying and accounting for resources transferred to the organisation
  100. 100. April 3, 2011 100 1 Service Transfer - 1.2 Personnel Transferred In • Scope − Establish and implement procedures to manage the transfer of personnel to the organisation • Transfer the necessary personnel and ensure that the necessary personnel competencies are in place in order to enable the organisation to effectively deliver service • Activities − Provide support for creating and maintaining the procedures for managing the transfer of personnel to the organisation − Document and implement the procedures for managing the transfer of personnel to the organisation − Support the implementation of the procedures for managing the transfer of personnel to the organisation
  101. 101. April 3, 2011 101 1 Service Transfer - 1.3 Service Continuity • Scope − Establish and implement procedures to ensure the continuity of service • Maintain service continuity as service is transferred to the client, or to another service provide, in order to improve client satisfaction • Activities − Provide support for creating and maintaining the procedures for ensuring continuity of service across the organisation − Document and implement the procedures for ensuring continuity of service − Support the implementation of the procedures for ensuring continuity of service across the organisation
  102. 102. April 3, 2011 102 1 Service Transfer - 1.4 Resources Transferred Out • Scope − Establish and implement procedures to transfer resources from the organisation • Manage the transfer of resources in order to help ensure a smooth hand- over and improve the client’s satisfaction, thereby establishing a basis for future relationships with the client • Activities − Provide support for creating and maintaining the procedures for transferring resources from the organisation − Document and implement the procedures for transferring resources from the organisation − Support the implementation of the procedures for transferring resources from the organisation
  103. 103. April 3, 2011 103 1 Service Transfer - 1.5 Personnel Transferred Out • Scope − Establish and implement procedures to manage the transfer of personnel from the organisation • Activities − Provide support for creating and maintaining the procedures for managing the transfer of personnel from the organisation − Document and implement the procedures for managing the transfer of personnel from the organisation − Support the implementation of the procedures for managing the transfer of personnel from the organisation
  104. 104. April 3, 2011 104 1 Service Transfer - 1.6 Knowledge Transferred Out • Scope − Establish and implement procedures to transfer to the client the knowledge gained from the specific client engagement • Activities − Provide support for creating and maintaining the procedures for transferring knowledge to the client − Document and implement the procedures for transferring knowledge to the client − Support the implementation of the procedures for transferring knowledge to the client
  105. 105. April 3, 2011 105 2 Contracting - Activities Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  106. 106. April 3, 2011 106 2 Contracting - 2.1 Negotiations • Scope − Establish and implement guidelines for negotiations with current or prospective clients • Activities − Provide support for creating and maintaining the guidelines for negotiations with current or prospective clients across the organisation − Document and implement the guidelines for negotiations with current or prospective clients − Support the implementation of guidelines for negotiations with current or prospective clients across the organisation
  107. 107. April 3, 2011 107 2 Contracting - 2.2 Pricing • Scope − Establish and implement guidelines for pricing services • Activities − Provide support for creating and maintaining the guidelines for pricing services − Document and implement the guidelines for pricing services − Support the implementation of guidelines for pricing services
  108. 108. April 3, 2011 108 2 Contracting - 2.3 Confirm Existing Conditions • Scope − Establish and implement guidelines for confirming existing conditions about potential engagements • Activities − Provide support for creating and maintaining the guidelines for confirming existing conditions − Document and implement the guidelines for confirming existing conditions − Support the implementation of guidelines for confirming existing conditions
  109. 109. April 3, 2011 109 2 Contracting - 2.4 Market Information • Scope − Analyse and use market information about prospective clients • Activities − Provide support for creating and maintaining the work products and tasks for analysing and using market information about prospective clients − Document and implement the work products and tasks required for analysing and using market information about prospective clients − Support the implementation of analysing and using market information about prospective clients
  110. 110. April 3, 2011 110 2 Contracting - 2.5 Plan Negotiations • Scope − Plan and track negotiations with current or prospective clients • Activities − Provide support for creating and maintaining the work products and tasks for planning and tracking client negotiations − Document and implement the work products and tasks required for planning and tracking client negotiations − Support the implementation of planning and tracking client negotiations
  111. 111. April 3, 2011 111 2 Contracting - 2.6 Gather Requirements • Scope − Establish and implement procedures to gather a client’s requirements • Activities − Provide support for creating and maintaining the procedures for gathering requirements − Document and implement the procedures for gathering requirements − Support the implementation of the procedures for gathering requirements
  112. 112. April 3, 2011 112 2 Contracting - 2.7 Review Requirements • Scope − Prior to committing to the prospective client, review requirements and verify that the organisation can meet them • Activities − Provide support for creating and maintaining the work products and tasks for reviewing requirements and verifying that the organisation can meet them − Document and implement the work products and tasks required for reviewing requirements and verifying that the organisation can meet them − Support the implementation of reviewing requirements and verifying that the organisation can meet them
  113. 113. April 3, 2011 113 2 Contracting - 2.8 Respond to Requirements • Scope − Establish and implement procedures to respond to the requirements of a prospective client • Activities − Provide support for creating and maintaining the procedures for responding to requirements − Document and implement the procedures for responding to requirements − Support the implementation of the procedures for responding to requirements
  114. 114. April 3, 2011 114 2 Contracting - 2.9 Contract Roles • Scope − Establish and implement procedures to respond to the requirements of a prospective client • Activities − Provide support for creating and maintaining the procedures for responding to requirements − Document and implement the procedures for responding to requirements − Support the implementation of the procedures for responding to requirements
  115. 115. April 3, 2011 115 2 Contracting - 2.10 Create Contracts • Scope − Define the roles and responsibilities of the organisation and the client with respect to the proposed contract • Consistent and effective legal agreements in order to enable all the parties to have a clear understanding of what services will be delivered and at what level of quality • Given the long-term nature of most outsourcing engagements, implementing procedures for contracts and flexibility in the relationship between the client and the organisation are critical to success • Activities − Provide support for creating and maintaining the work products and tasks for defining the roles and responsibilities of the organisation and client − Document and implement the work products and tasks required for defining the roles and responsibilities of the organisation and client − Support the implementation of defining the roles and responsibilities of the organisation and client
  116. 116. April 3, 2011 116 2 Contracting - 2.11 Amend Contracts • Scope − Establish and implement procedures to amend contracts • Activities − Provide support for creating and maintaining the procedures for amending contracts − Document and implement the procedures for amending contracts − Support the implementation of the procedures for amending contracts
  117. 117. April 3, 2011 117 3 Service Design and Deployment - Activities Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  118. 118. April 3, 2011 118 3 Service Design and Deployment - 3.1 Communicate Requirements • Scope − Establish and implement procedures to communicate the client’s requirements to the service design and deployment team • Activities − Provide support for creating and maintaining the procedures for communicating requirements − Document and implement the procedures for communicating requirements − Support the implementation of the procedures for communicating requirements
  119. 119. April 3, 2011 119 3 Service Design and Deployment - 3.2 Design and Deploy Service • Scope − Establish and implement procedures to design and deploy the service to meet client requirements • Activities − Provide support for creating and maintaining the procedures for designing and deploying the service across the organisation − Document and implement the procedures for designing and deploying the service − Support the implementation of the procedures for designing and deploying the service across the organisation
  120. 120. April 3, 2011 120 3 Service Design and Deployment - 3.3 Plan Design and Deployment • Scope − Plan and track the design and deployment of the service • Activities − Provide support for creating and maintaining the work products and tasks for planning and tracking the design and deployment of the service − Document and implement the work products and tasks required for planning and tracking design and deployment − Support the implementation of planning and tracking the design and deployment of the service
  121. 121. April 3, 2011 121 3 Service Design and Deployment - 3.4 Service Specification • Scope − Create the service specification • Create a service specification that clearly, accurately and comprehensively describes the services to be provided in order to effectively meet the client’s requirements • Service specification is the basis for designing, deploying and delivering service. It is a comprehensive document that describes the services that the organisation provides to the client and describes how end-users request services • Describes the available services, the agreed-upon service levels, if any and the interfaces between the organisation, the clients and the end-users • As the service evolves over time, the service specification is modified to document the changing expectations of the client and the organisation • Activities − Provide support for creating and maintaining the work products and tasks for creating the service specification − Document and implement the work products and tasks required for creating the service specification − Support the implementation of creating the service specification
  122. 122. April 3, 2011 122 3 Service Design and Deployment - 3.5 Service Design • Scope − Create the service design based on the service specification • Ensure that the service design is based on the client’s requirements and the set of services specified in the agreed-upon service specification in order to effectively meet the client’s requirements • Activities − Provide support for creating and maintaining the work products and tasks for creating the service design − Document and implement the work products and tasks required for creating the service design − Support the implementation of creating the service design
  123. 123. April 3, 2011 123 3 Service Design and Deployment - 3.6 Design Feedback • Scope − Establish and implement procedures to obtain feedback from the client on the designed service and to incorporate necessary changes • Activities − Provide support for creating and maintaining the procedures for obtaining service design feedback − Document and implement the procedures for obtaining service design feedback − Support the implementation of the procedures for obtaining service design feedback
  124. 124. April 3, 2011 124 3 Service Design and Deployment - 3.7 Verify Design • Scope − Establish and implement procedures to review and verify the service design • Activities − Provide support for creating and maintaining the procedures for service design review and verification across the organisation − Document and implement the procedures for service design review and verification − Support the implementation of the procedures for service design review and verification
  125. 125. April 3, 2011 125 3 Service Design and Deployment - 3.8 Deploy Service • Scope − Deploy the service based on the service design • Activities − Provide support for creating and maintaining the work products and tasks for deploying the service − Document and implement the work products and tasks required for deploying the service − Support the implementation of deploying the service
  126. 126. April 3, 2011 126 4 Service Delivery - Activities Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  127. 127. April 3, 2011 127 4 Service Delivery - 4.1 Plan Service Delivery • Scope − Plan and track the service delivery according to the service design • Activities − Provide support for creating and maintaining the work products and tasks for planning and tracking the service delivery − Document and implement the work products and tasks required for planning and tracking service delivery − Support the implementation of planning and tracking the service delivery
  128. 128. April 3, 2011 128 4 Service Delivery - 4.2 Train Clients • Scope − Establish and implement procedures to train clients and end-users • Activities − Provide support for creating and maintaining the procedures for training clients and end-users − Document and implement the procedures for training clients and end-users − Support the implementation of the procedures for training clients and end-users
  129. 129. April 3, 2011 129 4 Service Delivery - 4.3 Deliver Service • Scope − Deliver service according to the service delivery plans • Activities − Provide support for creating and maintaining the work products and tasks for delivering service − Document and implement the work products and tasks required for delivering service − Support the implementation of delivering service
  130. 130. April 3, 2011 130 4 Service Delivery - 4.4 Verify Service Commitments • Scope − Establish and implement procedures to measure and verify that service commitments are being met • Activities − Provide support for creating and maintaining the procedures for verifying service commitments − Document and implement the procedures for verifying service commitments − Support the implementation of the procedures for verifying service commitments
  131. 131. April 3, 2011 131 4 Service Delivery - 4.5 Correct Problems • Scope − Establish and implement procedures to correct problems • Activities − Provide support for creating and maintaining the procedures for correcting problems − Document and implement the procedures for correcting problems − Support the implementation of the procedures for correcting problems
  132. 132. April 3, 2011 132 4 Service Delivery - 4.6 Prevent Known Problems • Scope − Establish and implement procedures to take preventive action for known problems • Activities − Provide support for creating and maintaining the procedures for taking preventive actions for known problems across the organisation − Document and implement the procedures for taking preventive actions for known problems − Support the implementation of the procedures for taking preventive actions for known problems across the organisation
  133. 133. April 3, 2011 133 4 Service Delivery - 4.7 Service Modifications • Scope − Establish and implement procedures to make modifications to services • Activities − Provide support for creating and maintaining the procedures for modifying services − Document and implement the procedures for modifying services − Support the implementation of the procedures for modifying services
  134. 134. April 3, 2011 134 4 Service Delivery - 4.8 Financial Management • Scope − Establish and implement procedures for financial management of the engagement • Activities − Provide support for creating and maintaining the procedures for financial management of the engagement − Document and implement the procedures for the financial management of the engagement − Support the implementation of the procedures for financial management of the engagement
  135. 135. April 3, 2011 135 5 Knowledge Management - Activities Outsourcing Capabilities and Skills Initiation/ Completion Delivery Ongoing 1 Service Transfer 2 Contracting 3 Service Design and Deployment 4 Service Delivery 5 Knowledge Management 6 People Management 7 Performance Management 8 Relationship Management 9 Technology Management 10 Threat Management 1.1 Resources Transferred In 1.2 Personnel Transferred In 1.3 Service Continuity 1.4 Resources Transferred Out 1.5 Personnel Transferred Out 2.1 Negotiations 2.2 Pricing 2.3 Confirm Existing Conditions 2.4 Market Information 2.5 Plan Negotiations 2.6 Gather Requirements 2.7 Review Requirements 2.8 Respond to Requirements 2.9 Contract Roles 2.10 Create Contracts 2.11 Amend Contracts 3.1 Communicate Requirements 3.2 Design and Deploy Service 3.3 Plan Design and Deployment 3.4 Service Specification 3.5 Service Design 3.6 Design Feedback 3.7 Verify Design 3.8 Deploy Service 4.1 Plan Service Delivery 4.2 Train Clients 4.3 Deliver Service 4.4 Verify Service Commitments 4.5 Correct Problems 4.6 Prevent Known Problems 4.7 Service Modifications 4.8 Financial Management 5.1 Share Knowledge 5.2 Provide Required Information# 5.3 Knowledge System 5.4 Process Assets 5.5 Engagement Knowledge 5.6 Reuse 5.7 Version and Change Control 5.8 Resource Consumption 6.1 Encourage Innovation 6.2 Participation in Decisions 6.3 Work Environment 6.4 Assign Responsibilities 6.5 Define Roles 6.6 Workforce Competencies 6.7 Plan and Deliver Training 6.8 Plan and Deliver Training 6.9 Performance Feedback 6.10 Performance Feedback 6.11 Rewards 7.1 Engagement Objectives 7.2 Verify Processes 7.3 Adequate Resources 7.4 Organisational Objectives 7.5 Review Organisational Performance 7.6 Make Improvements 7.7 Achieve Organisational Objectives 7.8 Capability Baselines 7.9 Benchmark 7.10 Prevent Potential Problems 7.11 Deploy Innovations 1.6 Knowledge Transferred Out 8.1 Client Interactions 8.2 Select Suppliers and Partners 8.3 Manage Suppliers and Partners 8.4 Cultural Fit 8.5 Stakeholder Information 8.6 Client Relationships 8.7 Supplier and Partner Relationships 8.8 Value Creation 9.1 Acquire Technology 9.2 Technology Licenses 9.3 Control Technology 9.4 Technology Integration 9.5 Optimise Technology 9.6 Proactively Introduce Technology 10.1 Risk Management 10.2 Engagement Risk 10.3 Risk Across Engagements 10.4 Security 10.5 Intellectual Property 10.6 Statutory and Regulatory Compliance 10.7 Disaster Recovery
  136. 136. April 3, 2011 136 5 Knowledge Management - 5.1 Share Knowledge • Scope − Establish and implement a policy to share knowledge among stakeholders • Activities − Provide support for creating and maintaining a policy for sharing knowledge among stakeholders across the organisation − Document and implement a policy for sharing knowledge among stakeholders − Support the implementation of a policy for sharing knowledge among stakeholders across the organisation
  137. 137. April 3, 2011 137 5 Knowledge Management - 5.2 Provide Required Information • Scope − Identify, control and provide the information that personnel need to perform their work • Activities − Provide support for creating and maintaining the work products and tasks for identifying, controlling and providing the information personnel need to perform their work − Document and implement work products and tasks required for identifying, controlling and providing the information personnel need to perform their work − Support the implementation of identifying, controlling and making available the information personnel need to perform their work
  138. 138. April 3, 2011 138 5 Knowledge Management - 5.3 Knowledge System • Scope − Establish and maintain a knowledge system to identify, control and provide information • Activities − Provide support for creating and maintaining the work products and tasks for establishing and maintaining a knowledge system for use across the organisation − Document and implement work products and tasks required for establishing and maintaining a knowledge system − Support the implementation of establishing and maintaining a knowledge system for use across the organisation
  139. 139. April 3, 2011 139 5 Knowledge Management - 5.4 Process Assets • Scope − Establish and maintain a set of process assets for use across the organisation • Activities − Provide support for creating and maintaining the work products and tasks for establishing and maintaining a set of process assets for use across the organisation − Document and implement work products and tasks required for establishing and maintaining a set of process assets − Support the implementation of establishing and maintaining a set of process assets for use across the organisation
  140. 140. April 3, 2011 140 5 Knowledge Management - 5.5 Engagement Knowledge • Scope − Analyse and use knowledge gained from client engagements • Activities − Provide support for creating and maintaining the work products and tasks for analysing and using knowledge gained from client engagements across the organisation − Document and implement work products and tasks required for analysing knowledge gained from client engagements − Support the implementation of analysing and using knowledge gained from client engagements across the organisation
  141. 141. April 3, 2011 141 5 Knowledge Management - 5.6 Reuse • Scope − Identify and reuse work products • Activities − Provide support for creating and maintaining the work products and tasks for identifying and reusing work products across the organisation − Document and implement work products and tasks required for identifying and reusing work products − Support the implementation of identifying and reusing work products across the organisation
  142. 142. April 3, 2011 142 5 Knowledge Management - 5.7 Version and Change Control • Scope − Establish and implement procedures to apply version control and change control to work products • Activities − Provide support for creating and maintaining the procedures for version control and change control − Document and implement the procedures for version control and change control − Support the implementation of the procedures for version control and change control
  143. 143. April 3, 2011 143 5 Knowledge Management - 5.8 Resource Consumption • Scope − Establish and implement procedures to analyse and use information on resources consumed • Activities − Provide support for creating and maintaining the procedures for analysing and using information on resource consumption − Document and implement the procedures for analysing and using information on resource consumption − Support the implementation of the procedures for analysing and using information on resource consumption

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