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Outsourcing risk mitigation and critical success factors

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Ways to Mitigate Risk in Your Outsourcing Strategy

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Outsourcing risk mitigation and critical success factors

  1. 1. Outsourcing Risk in the New Paradigm and Success Factors June 4, 2013 12:00 PM- 1:00 PM EDT Sponsored by: SPAN Systems Corporation Produced and Presented by: The Outsourcing Institute
  2. 2. The Outsourcing Institute • Located at outsourcing.com – Over 70,000 Executive Members Globally • Trends, Best Practices, Case Studies • Training Through OI University • Specialize in Low Cost Alternatives for Outsourcing Buyers Needing Assistance with RFP Development and/or Vendor Selection: – Outsourcing RFP Builder Software – Matchmaker Service • Qualified Demand Generation Programs • Outsourcing Jobs Opportunities and Recruiting Services Through CMS Inc. • Local, Intimate and Interactive Outsourcing Road Show • Sponsorship and New Business Development Opportunities & Programs For more information contact us at: info@outsourcing.com or 516-279-6850 ext. 712
  3. 3. Today’s Speakers www.spansystems.com 3Copyright: SPAN Systems Corporation Tony Mataya Managing Partner ThinkSolutions Ben Blakewood Senior Vice President and Chief Information Officer AgFirst Farm Credit Bank Prakash Grama Co-founder and CEO SPAN Systems Corporation Naganand Doraswamy Co-founder and EVP Engineering SPAN Infotech (India) Pvt. Ltd.
  4. 4. Agenda Outsourcing Risks and Mitigation Steps Customer/Buyer Perspectives with Case Study Relationship Management www.spansystems.com 4Copyright: SPAN Systems Corporation Q&A
  5. 5. Outsourcing Risks and Mitigation… Associated Risk in Outsourcing Mitigation Steps www.spansystems.com 5Copyright: SPAN Systems Corporation Relationship Management Most critical success factor. Avoid Order Takers. Vendor should need your business. Outsourcing objective not aligned with Business Strategy Do it for the right reasons. Get Buy-ins from all stakeholders. ROI Set right expectations with costs and returns. Establish all costs related to vendor management and governance. What is the cost of failure? What is the cost of innovation? What is the skin in the game for the vendor? Is the onsite/offsite ratio right in blended rates.
  6. 6. Outsourcing Risks and Mitigation… Associated Risk in Outsourcing Scalability Vendors Legal Terms Right size Vendor, Flexible Ramp - Up/Down keeping core team in place. Grow at the speed of your market. U.S. Incorporated Vendor, IPR, Confidentiality, Limitation of Liability. Mitigation Steps Ability to work as Strategic Partners Multi source capability, Proof of capability, Attrition rate, Cultural alignment, Value creation. www.spansystems.com 6Copyright: SPAN Systems Corporation
  7. 7. Outsourcing Risks and Mitigation Associated Risk in Outsourcing IP Protection Is Vendor in IP Business along with services; How do they work with your Competitors. Mitigation Steps www.spansystems.com 7Copyright: SPAN Systems Corporation Governance Models/ Contracts - SLA/OLA, Vendor dependence Security, Privacy, Exit Mechanism Review and Set Governance Models and OLA in contract in addition to SLA. Quality Certifications, Process Maturity, Practice. Value Creation Understand your business, your customer, and your market and be proactive in giving suggestions for improvements.
  8. 8. Outsourcing Risks and Mitigation Associated Risk in Outsourcing Mitigation Steps Service Transition, Delivery & Post Transition Management Establish the right KT. Invest heavily in communication initially. Use Shadowing and Benchmarking. www.spansystems.com 8Copyright: SPAN Systems Corporation Visibility of status Reporting Mechanisms. Tools, Transparency. Knowledge retention and Management Employee retention and Tools for knowledge management. Cross Pollination.
  9. 9. Competency Pyramid • The Playing Field of Offshore Companies narrows as you go up the Pyramid. • Domain specialization ensures value addition and productivity. • Internal Process should be matured and consistent • Technology Expertise is a minimum Qualification. www.spansystems.com 9Copyright: SPAN Systems Corporation
  10. 10. AgFirst Farm Credit
  11. 11. AgFirst Farm Credit Bank • $28 Billion • 19 Cooperatives AgFirst Farm Credit - June 2013 11
  12. 12. Offshore Proof of Concept • June 2006 with SPAN • Business Case: – Mission critical, mature in-house written loan origination with large VB6 code footprint. – Due to other strategic priorities, difficulty keeping up with small changes, maintenance requests from business users. – Needed a cost effective way to maintain systems and be agile in meeting customer needs. AgFirst Farm Credit - June 2013 12
  13. 13. Due Diligence for POC • Reviewed POC proposal with all key internal stakeholders: Business Users, Internal Audit, and Executive Committee. • Utilized Gartner Group Research. • Vendor reference calls. AgFirst Farm Credit - June 2013 13
  14. 14. Results of POC • SPAN was able to quickly get up to speed learning the legacy system. • Eliminated the technical resource bottleneck to getting work done. • Had strong business user support for offshoring after POC. AgFirst Farm Credit - June 2013 14
  15. 15. How we use offshoring today • Balance of offsite and onsite resources - 20% onsite, - 80% offsite • Assigned to: – SQL report development. – Application maintenance. – Patch/verification testing. – Security consulting. – Mobile development. AgFirst Farm Credit - June 2013 15
  16. 16. Benefits • Deep bench for technical resources. The ability to quickly scale up and scale down adds tremendously to enterprise agility and flexibility. • Follow-the-sun development. Passing work offshore at the end of day and having it ready the next morning speeds development cycles. • Value added services. Testing, security, and mobile development. • Managing key developer risk. Offshore companies are very adept at documenting systems so they can be handed off/supported by others. AgFirst Farm Credit - June 2013 16
  17. 17. Keys to Success • Select a vendor that: – Matches your size. You don’t want to be a very small fish in a large pond. – Has ISO security certifications. • Build business user support. Business users should experience direct benefits and be your strongest advocates. • Manage staff fears. • Incent technical managers to use offshoring services. • Ensure comprehensive governance is in place with internal security teams and the project management office. AgFirst Farm Credit - June 2013 17
  18. 18. Keys to Success (Continued) • Knowledge transfer. Require resources to come onsite for knowledge transfer. • Established, long-term engagement. Have permanent onsite resources from the vendor to help with the coordination of offsite resources. AgFirst Farm Credit - June 2013 18
  19. 19. Relationship Management www.spansystems.com 19Copyright: SPAN Systems Corporation
  20. 20. SPAN Systems Corporation www.spansystems.com 20 U.S. ‘C’ Corporation 1993 incorporated Wholly owned by EVRY (www.evry.com), a $2.3 Billion Nordic company Ranked #7 Best IT Places to Work For in India; Historically low attrition CMMI5, ISO 9001 and ISO 27001 certifications Strong Relationship Management Customers range from Fortune 5 to SMEs Copyright: SPAN Systems Corporation
  21. 21. www.spansystems.com SPAN Overview Processes Client Engagement Stability Domain Technology SPAN An EVRY Company • Almost Two decades in IT solution providing • Part of US $2.3 Billion Norwegian company & 10,000+ employees • #7 in Best Employer in India • Insurance & Healthcare • Banking & Finance • Retail • Independent Software Vendors • Microsoft – Silver web development partner • Oracle – Platinum Partner • DW/BI • Java & other open source • ERP • Enterprise Mobility • Relationship Model – Management focus – Governance team • Innovative Pricing • Tailored Business Models • Offshore Centers Certified – CMMI 5 – ISO 9001:2008 – ISO 27001: 2005 21Copyright: SPAN Systems Corporation
  22. 22. www.spansystems.com 22Copyright: SPAN Systems Corporation Tony Mataya Managing Partner ThinkSolutions tony.mataya@thinksolutions.net Ben Blakewood Senior Vice President and Chief Information Officer AgFirst Farm Credit Bank bblakewood@agfirst.com Prakash Grama Co-founder and CEO SPAN Systems Corporation prakash@spansystems.com Naganand Doraswamy Co-founder and EVP Engineering SPAN Infotech (India) Pvt. Ltd. naganand@spanservices.com Questions
  23. 23. Thank you for joining Outsourcing Risk in the New Paradigm and Success Factors This webinar was sponsored by SPAN Systems Corporation in conjunction with The Outsourcing Institute. Tony Mataya Managing Partner ThinkSolutions Ben Blakewood Senior Vice President and Chief Information Officer AgFirst Farm Credit Bank Prakash Grama Co-founder and CEO SPAN Systems Corporation Naganand Doraswamy Co-founder and EVP Engineering SPAN Infotech (India) Pvt. Ltd.

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