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Challenges of Outsourcing the Mainframe (v1.2)


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In this presentation we discuss the challenges a company faces when the mainframe is outsourced. We will be looking at what should be considered when contemplating an outsource. Rui talks about his experience in working with companies that have been outsourced, drawing on his experience of over 10 years working for outsourcing companies.

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Challenges of Outsourcing the Mainframe (v1.2)

  1. 1. Challenges  of  Outsourcing  the   Mainframe   Rui  Miguel  Feio   RSM  Partners     Date  of  presenta:on  (04/11/2015)   Session  <FG>  
  2. 2. Delivering  the  best  in  z  services,  soJware,  hardware  and  training.  Delivering  the  best  in  z  services,  soJware,  hardware  and  training.   World  Class,  Full  Spectrum,  z  Services   Challenges  of  Outsourcing     the  Mainframe   Rui  Miguel  Feio   Security  Lead  
  3. 3. Agenda     •  Introduc:on   •  Outsourcing  the  Mainframe   •  Outsourced  in  1,  2,  3…   •  An  Outsourcing  Study  Report   •  Is  Outsourcing  a  Bad  Thing?   •  References  and  Resources   •  Ques:ons?  
  4. 4. Introduc:on   Rui  Miguel  Feio  is…   –  Security  lead  at  RSM  Partners   –  Mainframe  technician  specialising  in  mainframe  security   –  Has  been  working  with  mainframes  for  the  past  16  years   –  Started  as  an  MVS  Systems  Programmer   –  Experience  in  other  pla^orms  as  well   –  Has  worked  in  both  sides  of  the  fence:   •  For  outsource  service  provider  companies   •  For  companies  that  have  been  outsourced  
  5. 5. Outsourcing  the   Mainframe  
  6. 6. Why  Consider  Outsourcing?   Companies  see  Outsourcing  as  a  way  to:   •  Reduce  opera:onal  costs:   –  Opera:ons,  maintenance,  labour   •  Improve  services,  technology   •  Address  problems:   –  Security   –  Legacy  applica:ons     –  Infrastructure   –  Re:ring  IT  experts   •  Ul:mately  improve  business  landscape,  increase  share  values,   distribute  beber  dividends,  and  pay  higher  bonuses  
  7. 7. Choosing  an  Outsourcer   •  Typically  companies  select  an  Outsourcer  based  on:   –  The  Outsourcer’s  name  and  size   –  Cost   •  Companies  don’t  focus  on:   –  Other  companies’  sa:sfac:on  with  the  Outsourcer   –  Technical  requirements   –  Risks,  challenges,…   –  What  the  outsource  encompasses  
  8. 8. The  Decision  Makers   •  The  outsourcing  decision  makers  typically:   –  Have  a  short  term  management  aetude   –  Don’t  have  a  “feel  the  Company”  Culture   –  Are  not  interested  on  aJer  the  facts   –  Are  not  liable  for  making  the  wrong  decisions   –  In  some  cases  are  egocentric   –  May  or  may  not  have  an  understanding  of  what  a  mainframe  is   and  the  importance  of  it  for  the  company  
  9. 9. The  Focus   •  The  focus  of  the  decision  maker  is:   –  Pass  the  responsibility  to  a  3rd  party   –  Bonus  =  costs  reduc:on  +  increase  share  values   –  Pass  responsibility  +  Bonus   •  Important  aspects  are  overlooked  or  seen  as  :cks  in  a  box  only   without  actually  considering  if  they  are  real  or  if  they  apply:   –  Technical  benefits   –  Business  benefits  (performance,  availability,  support)  
  10. 10. The  Outsourcing  Conundrum   •  Companies  see  outsourcing  as  a  way  to  save  money   •  On  the  other  hand  outsourcers  want  to  make  money   •  Can  you  see  a  problem  here?  
  11. 11. Let’s  Meet  to  Discuss   •  All  par:es  get  involved  but  not  all  of  them  have  a  saying:   –  Outsourcer  people   –  Decision  makers   –  Managers   –  Project  managers   –  Project  managers   –  Project  managers   –  And  some  more  project  managers   –  Some  technical  people…  
  12. 12. The  Company’s  Aetude   •  ‘Blinded’  with  the  idea  of  saving  money  most  of  the  :me  a   company:   –  Assumes  everything  will  be  covered  by  the  outsource   –  Doesn’t  read  the  the  documenta:on  provided   –  Does  not  review  their  own  documents  (processes,  procedures,   etc.)   –  Does  not  consider  proper  knowledge  transfer   –  Does  not  ask  pertaining  ques:ons     –  Fails  to  listen   –  Fails  to  assume  responsibility  (IT  infrastructure  has  a  direct   impact  in  the  business)  
  13. 13. Technical  Team’s  Input   •  The  technical  people  try  to  highlight  poten:al  problems,  risks,   challenges…   •  But  they  tend  to  be  ignored:   –  Blah,  blah,  blah,  problem,  blah,  blah,  blah,  risk   –  Are  you  being  difficult  because  you’re  afraid  you  might  lose   your  job?   –  They  can’t  communicate  outside  the  technical  terms   –  No  one  understands  them  
  14. 14. What  the  Technician  Thinks  
  15. 15. The  “Elephant”  in  the  Room  
  16. 16. What  the  Decision  Makers  Think  
  17. 17. Outsourced  in  1,  2,  3…  
  18. 18. Typical  Issues  AFTER  Outsourcing   •  Things  don’t  work  as  expected…   •  Deficient  technical  exper:se     •  Lack  of  proper  support   •  What  happened  to  the  technical  knowledge  transfer?   •  “But  I  thought  that  was  included  in  the  Outsourcing”   •  Outsourcer  points  out  to  what  was  agreed  between  both  par:es   •  Expecta:ons  are  not  met  and  frustra:on  sebles  in  
  19. 19. What  Tends  to  Happen…     •  Most  of  the  :mes  the  Outsourcer  will:   –  Provide  technical  and  non-­‐technical  documenta:on  constructed   with  a  greater  emphasis  in  legal  terms   –  Technical  documenta:on  does  not  describe  how  things  are   done  (processes  and  procedures)     –  Allocate  the  same  technical  resource  to  more  than  one  client   –  Charge  for  every  piece  of  work  not  covered  by  the  agreement   (remember  the  lack  of  processes?)  
  20. 20. Why?  Because  the  Outsourcer…   •  In  order  to  make  money  the  outsourcer  will:   -­‐  Save  money  on  training   -­‐  Save  money  on  the  technical  team:   -­‐  Technical  resources  shared  amongst  different  clients   -­‐  Reduce  the  number  of  technical  individuals   -­‐  Replace  experienced  members  by  cheaper  inexperienced   personnel   -­‐  Only  cover  the  minimum  contracted  services   -­‐  Charge  for  any  extra  service  including  security  
  21. 21. The  Company  Faces  Reality   •  Ok,  there’s  a  problem  with  the  Outsourcing  but  we  need  to  reduce   costs…   •  Remember  how  costs  affect  the  bonuses?   •  So  in  order  to  keep  the  costs  low,  the  company:   –  Will  only  address  and  pay  for  what  is  really  required  –  typically   audit  findings   –  Will  not  review  processes  (internal  and  from  the  outsourcer)   –  Will  not  review  reports  with  the  aben:on  they  deserve  (e.g.   monitoring,  aler:ng,  access)   –  Risk  wise  –  “We  have  a  mainframe.  No  one  hacks  the   mainframe.”  
  22. 22. Where  Have  I  Seen  this  Before?  
  23. 23. An  Outsourcing  Study   Report  
  24. 24. Mainframe  Outsourcing  Report   •  Study  commissioned  by  Compuware  to  the  independent  research   company  Vanson  Bourne  in  September  2012:   –  “Mainframe  Outsourcing:  Removing  the  Hidden  Costs”   •  Study  methodology:   –  520  Chief  Opera:on  Officers  (CIOs)  interviewed   –  Large  enterprises  across  a  range  of  industries  from:   •  U.S.A   •  Europe:  UK,  France,  Germany,  Italy,  Benelux   •  Japan   •  Australia  
  25. 25. Why  Outsourcing?   •  65%  of  companies  outsource  mainframe  infrastructure  and/or   management  to  reduce  costs.   •  68%  of  companies  outsource  because  their  in-­‐house  team  no   longer  has  legacy  mainframe  knowledge.  
  26. 26. Sa:sfac:on  With  the  Outsource   •  67%  of  companies  are  dissa:sfied  with  the  quality  of  new   applica:ons  or  services  provided  by  outsourcers   •  71%  are  frustrated  by  the  hidden  costs   •  65%  believe  staff  churn  within  outsourcers  nega:vely  impacts  the   quality  and  turnaround  :me  of  work  
  27. 27. Interes:ng  Facts   •  37%  of  respondents  do  not  have  comprehensive  documenta:on  for   exis:ng  legacy  applica:ons.   •  80%  of  respondents  believe  knowledge  transfer  issues  impact   outsourcer  quality   •  54%  have  had  to  increase  investment  in  tes:ng  and   troubleshoo:ng  due  to  the  poor  performance  of  work  being   delivered  by  outsourcers  
  28. 28. Now  What?  
  29. 29. Is  Outsourcing  a  Bad   Thing?  
  30. 30. The  BIG  Ques:on!!   •  Is  outsourcing  the  mainframe  a  bad  thing  then?   –  In  most  cases  Yes!   •  Focused  on  the  wrong  things   •  Failed  to  look  into  things  properly   •  Failed  to  assume  responsibility   •  Failed  to  listen   •  Failed  to  plan   •  Failed  in  almost  everything!  
  31. 31. But  Does  it  Have  to  Be  Bad?   •  Is  there  any  hope  for  the  outsource?   –  Yes!     –  You  just  need  to  learn  from  other  companies’  experience   –  Select  the  right  Outsourcer  with  a  proven  experience  in   mainframe  outsources   –  Organise  yourself,  get  the  documenta:on  in  place   –  Have  the  appropriate  teams  engaged  in  the  outsourcing  plan   –  Listen,  ask  ques:ons,  have  your  saying  and  put  them  in  wriben   and  get  the  outsourcer  to  agree  on  them   –  Make  sure  you  understand  what  you’re  paying  for  and  what   you’re  geeng  in  return   –  Make  sure  all  processes  are  well  defined  and  described  
  32. 32. References  &  Resources  
  33. 33. References  &  Resources   •  “Mainframe  Outsourcing:  Removing  the  Hidden  Costs”,  Compuware   •  “IT  Key  Metrics  Data  2015:  Key  Outsourcing  Measures:  Outsourcing   Profiles:  by  Industry”,  Gartner   •  “Smarter  Outsourcing  for  SI  and  Client”,  Micro  Focus   •  Windsor  Group:­‐outsourcing   •  Compuware:   •  Gartner:   •  Vanson  Bourne:   •  Micro  Focus:   •  B.  A.  Baracus:  
  34. 34. Ques:ons?     Want  to  kill  yourself  aJer  this?   Not  just  yet…  Don’t  do  it!!   There’s  more!...  
  35. 35. Rui  Miguel  Feio,  RSM  Partners   mobile:  +44  (0)  7570  911459   linkedin:   Contact  
  36. 36. Session feedback – Do it online at Session feedback •  Please submit your feedback at •  Session is <FG> This is the last slide in the deck 36