achieving success in outsourcing and managed services deals
DESCRIPTION
An event presentation by Paul Allen, Partner at DLA Piper based in the Dubai office and Head of the Intellectual Property and Technology group in the Middle East.TRANSCRIPT
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Achieving Success in Outsourcing &
Managed Services Deals
Paul Allen, Head of IPT, Middle East
Bahrain
18 September 2012
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Agenda
Intellectual Property & Technology Group
The Essence of Outsourcing
Outsourcing Globally
Outsourcing Regionally
Secrets of Sourcing Success
Procurement Planning & Preparation
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INTELLECTUAL PROPERTY &
TECHNOLOGY GROUP
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Background
Head of Intellectual Property & Technology(Middle East)
Over 12 years international experience: privateand public sector delivery of IT & T projectsand outsourcing.
"impresses clients with his modern outlook andcommercial knowledge" (Chambers &Partners, 2012)
valued for his "responsiveness, commercialityand client-facing approach" (Legal 500, 2012)
Currently leading on one of the region's largestIT projects.
4
Paul AllenPartner
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Our Middle East IPT Team
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Ken Dearsley(Senior Counsel)
Paul Allen(Head of IPT)
Lamiaa Kheir Bek(Paralegal)
Jamie Ryder(Legal Consultant)
Bachir Abouchakra(Senior Legal Consultant)
Robert Flaws(Legal Consultant)
Katie Withers(Senior Legal Consultant)
Miranda Showler(Legal Consultant)
Peter Elliott(Trainee Legal Consultant)
Eamon Holley(Senior Legal Consultant)
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IPT's Four Pillars
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Intellectual Property & Commercial
Technology & Sourcing
Media & Sport
Telecommunications
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Technology, Media & Telecoms
7
Tier 1 ranking, Chambers Global (2011, 2012)
"particular expertise in outsourcing matters, and regularlyadvises high-profile entities on GCC-wide issues. It also advises
key industry names on transactions pertaining to a range ofplatforms, including television, internet and mobile
telecommunications." (Chambers & Partners, 2012)
Tier 1 ranking, Legal 500 (2008– 2012)
"DLA Piper Middle East LLP's TMT practice is 'excellent, withon-the-ground local law knowledge that many other international
law firms lack.'" (Legal 500, 2012)
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Global Sourcing Portal
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THE ESSENCE OF
OUTSOURCING
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OUTSOURCING GLOBALLY
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Overview of Outsourcing
Projected growth of outsourcing industry:
2013 = 10.3% increase
2014 = 8% increase
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REGIONAL TRENDS
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GCC Outsourcing Trends
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SECRETS OF SOURCING
SUCCESS
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What is Sourcing Success?
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What is Sourcing Success?
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What is Sourcing Success?
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What is Sourcing Success?
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What is Sourcing Success?
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What are some other Indicators of
Success?
Procurement budget
Procurement timeline
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Business disruption
Legal risks
Public/shareholder perception
Stakeholderengagement/satisfaction
Win/win relationship
Vendor model
Internal relationships
Service commitments
Quality commitments
Flexible arrangement
Customer/supplier relationship
Transitional arrangements
Exit options
Change management
Governance
Continuous improvement
Ongoing competitiveness
Data protection
Employment issues
etc
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Why do procurements fail?
Root Cause Analysis
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What is Failure?
What do we mean by “failure”?
Failure is:
termination, non-renewal, litigation
non materialisation of benefits
unfulfilled expectations
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Case Study 1
Customer
large national retailer
organisational growth through M&A
disparate IT systems and providers
Objectives
reduce opex and capex
improve application management
Solution
multi-vendor outsourcing, onshore/offshore resource
Problem encountered
one of the key applications could not be outsourced due to licencerestraints
Root Cause
poor due diligence
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Case Study 2
Customer
global insurance organisation
operating in a highly regulated environment
decentralised training and development function
Objective
reduce opex/capex
deliver consistent, holistic training program consistent with riskmanagement strategies
Solution
single vendor outsourcing of training and development function
Problem encountered
stakeholder disagreement meant that the project stalled
Root cause
poor stakeholder management
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Case Study 3
Customer
financial services entity
Objectives
seeking to implement a technology program
Solution
outsourced the build, implementation and operation of the technologysolution
Problem encountered
failed delivery
Root Cause
contract not fit-for-purpose
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Case Study 4
Customer
mobile operator
Objectives
reduce opex and capex
access skills
outsource risk
Solution
managed service for network operation and maintenance
Problem encountered
unexpected increase in procurement timeline and cost
Root Cause
non-competitive procurement process
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The Secrets!
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The Secrets!
1. Know your objectives – begin with the end in mind
2. Plan and prepare properly – including due diligence
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The Secrets!
1. Know your objectives – begin with the end in mind
2. PLAN AND PREPARE PROPERLY – INCLUDINGDUE DILIGENCE
3. Project manage from start to finish
4. Establish clear lines of communication
5. Employ the "KISS" principle
6. Appoint the right resources
leadership
experience
talent
knowledge
authority
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7. Set roles and responsibilities (RACI)
8. Get business case approval
9. Support through governance
“wash-up” meetings
escalation of issues
risk registers
stakeholder management
10. GET THE CONTRACT RIGHT
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MYTH BUSTING!
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Myth Busting
What we hear
“It’s all about the relationship”.
“We have to beat the other side”.
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Myth Busting
What we hear
“One size fits all.”
“Anyone can do procurement.”
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Myth Busting
What we hear
“If the commercial terms are right,
the rest will follow.”
“We can negotiate the contract later.”
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Myth Busting
What we hear
“The contract is something you put
in the drawer and forget about.”
“Lawyers are too expensive – only involve them at the end.”
“Lawyers only cause problems – don’t involve them at all!”
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Myth Busting
What we hear
“Even if something does go wrong,
I’ll be long gone by that time.”
“What does it matter if we get it wrong, no one is going tocheck anyway.”
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Always Remember…
Best practice is not anoption, it’s a must!
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Central Bank of Bahrain (CBB)
Rulebook
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• Material outsourcing arrangements must have prior approval by CBB
• Failure to comply = no approval
• Requirements include:
• performing risk assessment
• producing an outsourcing agreement
• having alternative outsourcing arrangementsin place
• ensuring the cbb has 'timely access' torelevant info
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PLANNING & PREPARATION
Costs of a well planned and implementedprocurement are generally negligible compared
to loss you may incur in the absence of the same
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Planning and Preparation
What is being procured?
Objectives of the procurement
Choose vendor approach
Choose procurement approach
Establish a sensible timeline
Choose contracting approach
Identify and allocate funds
Establish the procurement team
Prepare procurement documentation
Prepare for negotiations
Due diligence – throughout procurement
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Outsourcing Requirements Builder
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What Do We Need to Cover?
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What Positions Should We Take?
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Questions