This document discusses strategies for outsourcing and offshoring processes in the energy/utilities industry. It outlines steps for analysis and planning, execution, review and feedback, and continuous improvement when implementing an outsourcing model. Key aspects include portfolio analysis to identify outsourcing partners, establishing governance frameworks, testing with pilot programs, setting KPIs, gradually transitioning teams, and implementing reviews and a gain/share model for continuous improvement. It also notes the importance of change management and a mature governance framework when undertaking a large outsourcing initiative.

1. OUTSOURCING AND OFFSHORING PROCESSES
ENERY/UTILITIES (O&G)
STEVE SUGULAS
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Analysis & Planning
• By collating portfolio information, the business can assess and possibly optimize the
Enterprise portfolio prior to undertaking the outsourcing initiative. This portfolio analysis
will also aid in identifying suitable outsourcing partners and the services that may be
leveraged.
• Once the outsourcing partners have been selected, the necessary infrastructure must be
established to facilitate global delivery.
• Establishing a governance framework should include the formation of a partner's
management group to provide effective communication channels.
• After the transformation program is finalized and a clear understanding of the scope,
transition and post-transition phases has been established, a small pilot program will
serve to test and fine-tune the model.
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Execution
• To ensure successful execution, KPIs should be established for Group Managers.
Wherever possible, these should be aligned with existing KPIs, rather than creating
additional responsibilities.
• The actual transition to an offshore model results in a gradual ‘ramp-down' of the
incumbent team and a corresponding ‘ramp-up' of the new outsourcing vendor's team.
• Outsourcing provides the opportunity for the business to strengthen in areas of core
competency and employees should be redeployed to core business activities or
transformation initiatives.
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Review & Feedback

2. An ongoing regime of reviews, metrics and feedback establishes a ‘check-and-balance'
mechanism, providing alignment with the overall transformation goals and enabling
revaluation of the ‘go/no-go' decision process.
Reviews/satisfaction surveys across the organization provide valuable feedback regarding
the progress of the initiative on all relevant parameters.
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Continuous Improvement
Once ‘steady state' for the program has been achieved, the organization can begin to:
• Accelerate the transformation strategy to ensure business – technology alignment; and
• Leverage outsourcing partners for thought leadership and transformation initiatives.
• Adopting an offshore outsourcing model should be about more than seeking cost
reductions, it should establish a framework to drive continuous improvement.
• Actions to deliver continuous improvement include:
• Collaborating with outsourcing partners to deliver more value though innovation;
• Implementing a gain/share model in certain transformation initiatives;
• Ensuring an optimum mix of internal and outsourcing partner resources in the
transformation programs
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Change Management & Governance
Any outsourcing initiative requires a mature and robust change management and
governance framework to manage the complexities of a large business change program.
This framework should include:
• A change management strategy for internal and external stakeholders;
• Evaluation of the impact on internal and external staff, contractors and the incumbent
vendors in developing the transition plan (redeployment, redundancy, release);
• Development of new organization structure, based on the new sourcing model; and
• Provision of intended technology direction to outsourcing partners to ensure alignment
for future transformation activities.
Different parts of a project (or kinds of work) may be suited to onsite, near-shore or
offshore locations.
Services

3. Locations
Strategy and Roadmap definition
Development & Integration
Systems Integration & Package Implementation
ITO, BPO, & AMO
On Site
Client interaction, Interviews, Reviews, Program Leadership, & Goal-Setting
Architecture, Requirements, Change Mgmt, & Implementation
Client Interaction, Process Mapping, Solution Definition, Architecture, Change &
Program Mgmt
First-level support, Facilities support, & Program Mgmt
Near-site Locations
Analysis and synthesis
Requirements analysis, High level Design, & Prototype building, & Implementation
support
Prototype Building, High Level Design, & Implementation Support
Near-site support centers, Service Redundancy
Offshore Locations

4. Background research, thought leadership, & information support.
Detailed design,
Code Development, Testing & Integration
Custom Components, Integration Interfaces, & Reports Building
Large Offshore Centers, Core Service Delivery