coo best practices for outsourcing 2013

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Best Practices for Outsourcing -- How Leading COOs Are Gaining Workforce Productivity While Cutting Costs

Leonardo Mattiazzi / Bruno Guicardi

Best Practices for Outsourcing -- How Leading COOs Are Gaining Workforce Productivity While Cutting CostsLeonardo Mattiazzi & Bruno Guicardi

www.ExecSense.com © ExecSense, Inc.

About the Webinar Speakers

Leonardo MattiazziVP, International BusinessCi&T, www.ciandt.com

Led Ci&T's expansion into international markets

Responsible for differentiating the company in the fierce global competition

Bringing value to customers through innovation

Bruno GuicardiCOOCi&T, www.ciandt.com

Led the company to constantly innovate in technology and processes

Responsible for keeping competitive edge in all company’s lines of business

Almost 20 year of accumulated knowledge in the outsourcing industry

Slide 2



Overview

Slide 3

• Business dependency on IT has been constantly increasing

• IT Outsourcing productivity gains have been focused solely on labor arbitrage

• IT innovation impacts top line and bottom line - far more than IT labor arbitrage



• Traditional IT Outsourcing doesn't create innovation

• Different Business processes require different outsourcing models

• Engagement model may reward wrong behaviour

What to Know

Slide 4



What to Know

Slide 5



Traditional IT Outsourcing doesn't bring innovation

•Gartner: "Lack of IT-enabled innovation is one of the biggest complaints in outsourcing deals; yet Gartner research shows that this situation most often results from the buyer contracting for a static environment and the vendor agreeing to deliver it".

•Forrester: "According to a 2011 Forrester Survey, 41% of outsourcing clients cited lack of innovation as the biggest challenge with their existing IT services relationships".

Why??

What to Know

Slide 6



What to Know

Slide 7

Source: Dealing with Darwin, Geoffrey Moore



What to Know

Slide 8

Challenges for IT

• Volatile business requirements

• Responsiveness and adaptability

• Time-to-market

Challenges for IT

• Standardization

• Consolidation • Unity cost

productivity (labor arbitrage)



What to Know

Slide 9

Beware what your engagement model rewards:

•Predictability vs Adaptability•Efficiency vs Efficacy•Reactive vs Proactive (Working on the

Solution Space vs the Problem Space)•Conflict vs Collaboration•Hiding problems as long as possible vs

Bringing problems to the surface



• Define what's core and what's context

• Adjust outsourcing engagement models to reward what is

appropriate

Tips and Strategies

Slide 10



• Define what's core and what's context

• Get consensus about it across senior management

• Start with the definition of ‘value’ from the customer perspective

• Explicit your differentiators

• Map your processes and identify the ones your differentiators largely rely on

• Tools: Hoshin Kanri and Value Stream Mapping

What to Do

Slide 11



•Adjust engagement model for each one:

What to Do

ContextCore

Slide 12

Predictability Efficiency Working on the Solution Space (Reactive)

Contract-based relationship Well-known solutions (usually hiding real problems)

Adaptability Efficacy Working on the Problem Space (Proactive)

Collaboration-based relationship

New, unknown problems (to be brought to the surface)



• Adjust ‘core’ engagement model for Adaptability

• Establish success criteria based on business outcomes NOT on specifications

• Direct communication matter more than specs• Make change hassle free

• Define short cycles of delivery• Postpone decisions as much as possible

• Re-assess assumptions and re-prioritize scope regularly

If you tell people where to go, but not how to get there, you'll be amazed at the results.

George S. Patton

What to Do

Slide 13



• Adjust ‘core’ engagement model for Efficacy

• Beware what you measure• Change the IT scorecard to share business outcomes (ex: P&G, AB-InBev)

• The ‘cloud’ and the migration of IT ‘responsibilities’

What to Do

Slide 14



• Adjust ‘core’ engagement model for Proactivity

• Involve early• Truly share the business problem / goal• Allow IT (including external providers) to work on the Problem Space

• Ask for alternative solutions - don't be too prescriptive!

• Reward contributions - share risks and rewards!

What to Do

Slide 15



• Adjust ‘core’ engagement model for Collaboration

• Shorten communication paths between technical and biz teams

• Review structure if needed (multidisciplinary team over distributed and specialized teams)

• Establish rites for direct and constant communication (ex: daily standup meetings)

• avoid “proxies” and “multi-layers” of communication• Create an environment where shared goals prevail• Share risks/rewards

What to Do

Slide 16



• Expect (and allow!) problems to be brought to the surface

• See problems as learning opportunities - not headaches

• Be available to discuss / resolve problems together• The real issues may only be revealed along the way• Establish a problem-solving framework and mentality

• A3s, PDCA, Andon, Visual Management as examples

What to Do

Slide 17



Do’s and Don’ts

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You have to have a good combination of ‘carrots and sticks’ to get successful change:

‘Sticks’Encourage business areas

to experiment with the cloud (w/o IT involvement)

Bring in a more innovative/agile outsourcing provider to “rock the boat”

‘Carrots’Share the ‘laurels of

victory’ with IT (redesign rewarding systems)

Rotate and promote people interchangeably between biz & IT



Insurance Company •About to hire a full BPO for Acquisition, Underwriting and

Claims processing back-office•Challenged about its ability to evolve its ‘core’ processes

under BPO

Changed strategy to go with:

Case Study: BPO in ‘core’??

Slide 19

BPO • Health Claims

Processing• Auto Underwriting and

Claims Processing

Agile outsourcer• Health Acquisition &

Underwriting • Auto Acquisition



• Situation: global leader in contact lenses missing opportunity to acquire customers for lifetime

• If right lenses are not available at retailers, client will try competitor's

• Solution: spending a day with the sales rep• Simple Mobile Ordering app (iPad/Android) with great UX design, reducing each visit from 1.5 hour to 15 min (6x gain)

• There were no "requirements gathering": proactive IT

"It's not often that IT gets this type of reaction from a Sales Team"

Case Study: Lifetime Customers

Slide 20



Case Study: Sales Force Automation

• Where to focus: IT helping you sell more, or squeezing IT costs to deliver?

• Compare your cost of sales and your cost of IT: where there are more opportunities for gains?

• How to leverage a robust platform, while creating great user experience?

SAP Based Sales Force Automation on iPad or Android devices

Slide 21



Leader in mobile content distribution in Japan

Asked for a set of sales reports for its senior management

After ‘problem space’ discussions, project was redefined to provide insights in user consumption trends

‘Solution’ has completely changed to collect huge amount of data from real transactions and use prediction algorithms to generate new marketing campaigns, with intense use of Big Data and Cloud technology

Case Study: report for what??

Slide 22



#1: IT can bring productivity gains and operational cost reductions through innovation, not only through IT labor arbitrage

#2: IT engagement model must be adjusted according to "Core" or "Context" initiatives

#3: For "Core" initiatives, IT goals must be business goals

Conclusions

Slide 23



• Gartner research, Contracting for Innovation in Outsourcing, 2010-2011, ID Number: G00209597

• Forrester research, Co-creating with your Service Partners, Chris Andrews, 2012

• Dealing with Darwin, Geoffrey A. Moore, 2005

Supplemental Documents

Slide 24



Leonardo Mattiazzi•Email: [email protected]

•Phone: +1 (610) 482-4810

•Website: www.ciandt.com

•Twitter: @lmattiazzi

•LinkedIn: www.linkedin.com/in/lmattiazzi

Contact the Speakers

Bruno Guicardi•Email: [email protected]

•Phone: +1 (610) 482-4810

•Website: www.ciandt.com

•Twitter: @brunogn

•LinkedIn: www.linkedin.com/in/bguicardi

• Please email the finished PowerPoint and any other sample documents to [email protected] at least three business days before your scheduled Webinar presentation.

• If the files are too large to send through your email server, let us know and you can use our large-file email service at www.yousendit.com.

Additional Documents

mailto:[email protected]

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#1 – Using the "Core" vs "Context" concept, shouldn't we do the "Core" in-house and outsource only what is "Context"?

#2 – My outsourcer has an R&D center focused on my industry segment, why can’t I take advantage of that?

#3 –

Moderator Questions

Slide 28

coo best practices for outsourcing 2013

Technology

outsourcing productivity

outsourcing doesnt

outsourcing deals

outsourcing engagement

appropriate best practices

surface best practices

geoffrey moore best

wrong behaviourbest