The document discusses achieving breakthrough savings without offshoring through transforming an organization's application delivery model. It describes a 4 step process: 1) Establishing a governance model focused on business objectives and processes. 2) Mapping processes to identify improvements. 3) Implementing business service level agreements. 4) Revisiting the governance model. The approach focuses on innovation, productivity and business-driven services over short-term offshoring savings. A case study shows transforming an organization to reduce IT spending by 79% while improving performance.
3. [ My roots - 1
Real Experience. Real Advantage. 3
4. [ My Roots - 2
Real Experience. Real Advantage. 4
5. [ Rate of change has increased dramatically
Transformation Ready
50 years in 5 years
People Companies Countries
Real Experience. Real Advantage. 5
6. [ As change speeds up and complexity grows,
so does the cost of keeping the lights on
66%
Percentage of the annual IT
budget spent on application
maintenance and support
* 66% - Forrester – Forrsights Budgets & Priorities Tracker Survey, Q2 2010
Real Experience. Real Advantage. 6
7. [ Typical approach to savings may be a dead end
Original team New team
$$$$$$ $$$$$$
Onsite Offshore
Real Experience. Real Advantage. 7
8. [ Offshoring could be a dead end when …
• Short-term savings provide a false sense of progress
• Cultural barrier perpetuate or reinforce barriers to change
• Governance models remain at ad hoc maturity levels
• Important knowledge, talent and process is lost
• Rate cards discussions take center stage instead of productivity,
automation and efficiency
• Savings and impact remains inside IT, don’t necessarily
impact the business
Real Experience. Real Advantage. 8
9. [ Speed of industry change means the CIO
and his organization is under pressure
• Drop in credibility due to dismal
IT industry performance
• Burdens of legacy technology
hampers business’ agility
• Technology advancements outpace
ability to adopt at enterprise IT level
• Requirements grow exponentially
and budgets linearly (if at all)
Real Experience. Real Advantage. 9
10. [ Rate cards and cheap labor are a thing of the past
100%
5% 5%
90% 10% 20%
80% 30%
50%
70%
60%
50%
50%
Value 85%
40% Value-added IP
65%
30% 35% Process
20%
Cheap Labor
30%
10% 15%
0%
2000 2005 2010 2015
Offshore CMM Lean Business
Arbitrage Six Sigma Outcome Value of Services
based
Real Experience. Real Advantage. 10
11. [ A high performing application organization model
Real Experience. Real Advantage. 11
12. [ But few organizations have ventured
Distribution of Maturity Among Application Organizations
Ad Hoc
Repeatable
Defined
Quantitatively Oct-10
Managed Mar-09
Optimizing
0 20 40 60 80
Source: Gartner (February 2011)
Real Experience. Real Advantage. 12
13. [ No need to offshore to achieve break-though savings –
Case Study
• Top 5 CPG and leading global brewer with • Also tracking process accuracy, availability,
operations in 23 countries performance and responsiveness
• From ad-hoc process to IBS plus managed services • From and dozen of contractors to Business SLAs.
• From IT-centric organization to business process • Critical apps. performance: 100%, Non-critical 99.7%.
focused organization IT spending after transformation: 21% of baseline.
• Performance review linked to business outcomes 100% onshore.
IT spending evolution
100%
• Base year
IT spending evolution
• Rationalization • Continuous Improvement
for calculations • Infrastructure Integration • Payment linked to
• Internally • Efficiency on Break/Fix business process
managed • Variable cost managed performance
• Dozens of different 53% • Support new initiatives • 10% additional savings
Contractors • Start managed year over year
• Service models: outsourcing
• Vendor
Staff aug, T&M
consolidation
• Control Demands
• Adjust Service 21% 19%
Levels
• ERP Stabilization
2008 2009 2010 2011 (est.)
Real Experience. Real Advantage. 13
14. [ Why break-though savings
Before After
Innovation Innovation
33%
Operations 66%
66%
Operations
34%
Real Experience. Real Advantage. 14
15. [ Simple steps
Step I: Governance Model
Step II: Process Mapping
Step III: Services & SLAs Implementation
Step IV: Governance Model again
Real Experience. Real Advantage. 15
16. [ Step I – Governance Model
Business Requirements Process
• Governance model • Financial Concepts
• Managed Services (SLA) • Money Outbound
• People > Service • Money Inbound
• Ticket reduction • Value Chain (Logistics)
• End User Satisfaction • Value Chain (Production)
• Application > Business • Business Intelligence
• Dashboard – Monitoring
People Technology
• Change Management • Project Office
• Service Workshop • AMS
• Governance Workshop • Governance Tools
• Training
• Culture
Real Experience. Real Advantage. 16
17. [ Step I: Governance Model
Process Tree (BPPs)
1. Configuration “As a Service”
2.Validation (Testing)
Service Governance
Improvement Objectives
Service
3. Data Management Delivery
4. Development SLA
Implement Service
Monitoring
5. GRC & Evaluating
Business
My Objectives
6. Change Management
Business
Drivers
7. Business Intelligence
Business
8. Web Services/Mobile Strategy
Real Experience. Real Advantage. 17
18. [ Simple steps
Step I: Governance Model
Step II: Process Mapping
Step III: Services & SLAs Implementation
Step IV: Governance Model again
Real Experience. Real Advantage. 18
19. [ Step II – Process Mapping
Real Experience. Real Advantage. 19
20. [ Step II – It’s all about Transformation
Red Print®:
• Before Blue Print: change organization before change before
blue print, solve business differences before designing SAP
design
• Vision 5 years forward (Strategic Map) Business
and “Pain Points Inventory” Business
Strategy
Process
• Business Requirements Information
Management
• Processes change
• Organizational Structure review
• Technology Architecture
• Change company policies, master data
and process
20
Real Experience. Real Advantage.
21. [ Simple steps
Step I: Governance Model
Step II: Process Mapping
Step III: Services & SLAs Implementation
Step IV: Governance Model again
Real Experience. Real Advantage. 21
22. [ Step III - Tracking Management
Real Experience. Real Advantage. 22
23. [ Step – III Business Service Level Agreements (SLAs)
Real Experience. Real Advantage. 23
24. [ Simple steps
Step I: Governance Model
Step II: Process Mapping
Step III: Services & SLAs Implementation
Step IV: Governance Model again
Real Experience. Real Advantage. 24
25. [ Step IV - Governance Again
Real Experience. Real Advantage. 25
26. [ State of the art / transformation
State No Boundaries All together
of the art Transparency War Room (KPIs)
Facilities Easy Communication
State Application Catalog Managed Services
of the art Service Catalog Application Monitoring
Service Critical Applications Knowledge Management
design Preventive Maintenance
State SLAs Goals Cont. improvement
of the art Issue/Risks Meetings Vendor
Governance Performance Accountability Management
Real Experience. Real Advantage. 26
27. [ Overview: break-though savings model
• Model Assumptions
• Productivity + Managed + Business Driven
• Service Drivers
• Lower Cost + Better Service
• Service Model
• State of the art Infrastructure
• State of the art Services
• State of the art Governance
• Service Location
• Agnostic (but requires changing the model)
Real Experience. Real Advantage. 27
28. [ Cloud Services
Transformation Ready
50 years in 5 years
People Companies Countries
Real Experience. Real Advantage.
30. [
Thank you for participating.
Mauro Okamoto
mauro.okamoto@softtek.com
Please remember to complete and return your
evaluation form following this session.
For ongoing education in this area of focus, visit www.asug.com. ]
Real Experience. Real Advantage.