Download - Trends+market evolutions influencing risk mngt in cloud sourcing contracts D.Kindt EquaTerra KPMG
Research » Strategy » Transformation » Governance
Trends & Market Evolutions influencing Risk
management in cloud (out)sourcing contracts
Prepared for Cevora
26th October 2011
Dominique Kindt, Country Manager EquaTerra KPMG BeLux
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Agenda
» About EquaTerra
» Cloud Demystified
» Market Research: 8 Key Trends & Associated Risks
influencing the operational cloud environment
» Governance fit-for-purpose
» Conclusions and Key Success Factors
2
Research » Strategy » Transformation » Governance
About EquaTerra
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Americas 64 %
EMEA 34 %
Asia Pacific 2 %
EquaTerra – the Sourcing Advisory Organisation
4
Advisor Presence
HR 16%
IT 38%
Business & Financial 20%
Other Specialist 26%
Advisor Specialisation
Advisors 350+
Engagements 2000+
TCV under control $300bn
Countries served 60+
Key Facts
Our Mission: “Helping clients achieve sustainable value in their IT and Business processes by
providing expert advice on how to get the most out of their sourcing relationships”
» One of the global leading Outsource and Shared Services
Advisory firms
» A recognised leader in IT, HR, BPO, F&A competencies
» Full Sourcing Lifecycle advisory capability
» We‟re Practitioners and trusted Advisors, not Consultants
» Global provider with 16 offices across 3 continents
» Incorporated Morgan Chambers in 2007
» Acquired by KMPG in 2011
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
EquaTerra – What truly sets us apart...
5
» Impartial objective practical advice
» Sourcing Lifecycle specialists
» Tested Approach
Collaborative – Work together with Clients & providers (non-confrontational)
Flexible – Tailor services to meet your exact requirements (not one size fits all)
Sustainable – Look at the „big‟ picture, and what it will mean for the long term
Knowledge Transfer – We encourage 100% knowledge transfer in all our engagements
Speed to Market – Focused on achieving the objectives (not just about rigour and method)
» Track record with proven complex deal capability
» Our People
» Industry leading Methodology
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
EquaTerra Methodology & Approach
6
» Diagnostic and
Benchmark
» Renegotiation Support
» Contract Review
» Performance & Satisfaction
Measurement
» Internal
Improvements
» Shared Services –Captive Center
» Outsourcing - Offshore
» InSource (back in house)
» Negotiation & Contracting
» Service Delivery or
Sourcing Strategy
» Service Delivery or Sourcing Assessment
» Opportunity Analysis
& Business Case
» Transition
» Transformation
» Change Management
» Project Management
» Interim
Management
Governance
» Service Delivery Management
» Business Alignment
» Governance WorkPlace
» ITO & BPO sourcing approach based on
comprehensive Sourcing Delivery Lifecycle
Methodology focusing on all sourcing
domains:
– Strategy
– Solution
– Implementation
– Optimization
– Governance
» Significant added value to our
Methodology through continuous
investments in:
– Managed Peer Networks
– Proven Market research
– Practitioner‟s Knowledge sharing
– Continuous Training and Education
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Implementation Solution Strategy Optimisation
EquaTerra Methodology
1 Prepare and Define
2 Assess current delivery
3 Define future delivery
options
4 Develop strategy
5 Plan & align
Internal Solution
• Shared Services
• Captive Center
• Internal Process
Improvement
External Solution
• Outsourcing
• Offshore
1 Prepare & launch
2 Realign & execute
3 Govern & review
1 Prepare & define
2 Measure
3 Analyse
4 Improve
5 Monitor
7
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Sourcing Lifecycle Advising our clients through the complete sourcing lifecycle
Operate &
Innovate
In-sourcing
& Transforming
Governance
Design (Process & Structure)
Strategy &
Assessments
Outsourcing
Transactions
Transition &
Change Mgmt
Assistance
Mark to
Market
Health Checks
& Remediation
Value Assurance
/ Benchmarking
Re-negotiations
& Re-bidding
• Infrastructure
• Operations
• Apps. Development
• Apps. Maintenance
• Network (ICT)
• Accounting
• Banking Processes
• Insurance Processes
• Re-engineering
• Transformation
• Source-to-pay
• Click-to-procure
• Category Mgmt
• Procurement process
• Frameworks
• Admin. (inc. Payroll)
• Resourcing
• Talent Management
• Org. Effectiveness
• Learning & Dev.
I.T.
Human Resources
Finance & Acc.
Supply Chain
Research » Strategy » Transformation » Governance
Cloud Demystified
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Definition of Cloud: from horizontal to vertical sourcing
10
Horizontal Outsourcing
Vertical Outsourcing
aka Cloud
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Why organizations chose cloud solution
» Minimized capital expenditure
» Access to systems regardless of location or device
» Multi-tenancy (enabling a pool of users to share resources and cost)
» Reliability/redundancy for business continuity
» Scalability & access to new applications
» Energy efficiency through shared infrastructure
» Convenient on demand access
11
But … often main reason for choosing cloud solutions is
CapEx & OpEx costs savings driven by the business
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Can Cloud Pricing Really Bring a Shower of
Savings?
» Paying by the drink is appealing to many buyers.
But:
– Hidden clauses, such as minimum volume levels, can automatically
lock you into a minimum level of commitment for fees.
– Unit of measure pricing is inclusive of all services, including
software and hardware upgrades.
– The conditions on software functionality, and how your price
changes with requests for new functionality.
– The sustainability of your pricing over time. Will it remain valid for
changes in volume or technology?
– The upfront and ongoing costs associated with configuration and
integration needs, if any, back into legacy internal applications.
– The upfront and ongoing costs associated with training, user
support, etc.
– The termination charges for exiting these types of agreements.
– The potential costs associated with changing business operations
and processes to support the new cloud environment.
– The standard SLAs that are offered
12
Cloud Service
Provider is controlling
& standardizing the
environment and
“dictates” SLAs and
QoS
In other words: you
chose to step into
their standard way of
working … better be
prepared and
understand where the
real cost saving is …
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Typical Risks in Cloud
» Security & Privacy Outsourcing data storage to a cloud, for example, could mean housing it beyond agency firewalls, which
could potentially raise the risk of compromise. Another concern is service providers‟ security measures,
which could affect an agency‟s compliance with regulatory guidelines
» Transitional & ancillary costs Despite the cost advantages of cloud computing, organizations will still need to invest in the transition.
Preparing custom applications to run on the cloud, for example, will be a time- and labor-intensive activity,
and you may need to continue supporting the legacy applications that don‟t run on the cloud
» Availability & Performance Cloud providers promise great processing power and scalable services, but the reality is that leasing space
on a cloud means you‟re dependent on someone else‟s capacity. Downtime, even if it‟s scheduled, will
directly affect your access to cloud resources.
» Change Management Cloud computing, still an emerging technology, may not be widely understood in all organizations. For
example, your constituents and internal customers will have rapid access to servers, storage and computing
platforms that were once the exclusive turf of IT.
13
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Cloud Service Providers
» Next to typical & traditional global
players (often offering cloud back-end
solutions), the market will more and
more be dominated by niche players
offering a very specific business
solution (often offering cloud front-
end solutions) (www.cloudbook.net
select Directories -> Applications)
» Also, service providers that were in a
totally different business enter the
cloud arena (e.g. Amazon)
» Access to cloud services is made very
easy: Visa should do the job.
14
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Good Cloud – Bad Cloud
Cloud computing is not a
good option when ...
» You‟re running applications that
weren‟t written for the Internet
» You want permanent or
inflexible parameters on IT
spend
» You have significant sunk cost
that will affect your business
case
» You approach it opportunistically
Cloud computing is a good
option when …
» You‟re running modern Internet
enabled applications
» You want variable costs due to
varying levels of consumption
» You‟re trying to reduce capital
expenditure for data processing
» You know exactly what you
want in the cloud and with what
service provider(s)
15
Research » Strategy » Transformation » Governance
Market Research: 8 Key Trends & Associated Risks influencing
the operational cloud environment
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
8 Key Trends & Associated Risks Different EquaTerra Research Sources to present market information & trends
17
» Pulse Surveys: Quarterly and periodic market studies of EquaTerra advisors business and IT service
providers, and buyers of third party services. Global, regional (UK, Netherlands), industry (US public
sector, life sciences) and functional (legal, HR) focus.
» EquaTerra Echo: A quarterly wrap-up analysing all business & IT services market events and reporting.
» Service Provider Performance and Satisfaction (SPPS) Studies: Yearly market study by geography and
function on outsourcing trends and buying patterns and buyer assessment of service provider performance
and satisfaction.
» Topical and customised commissioned and EquaTerra internal market research studies
» Research embedded in EquaTerra client engagements, events, and service provider offerings
» Events: EquaTerra hosted buyer events, primarily in the European market; potential select service provider
sponsorship.
» Customised consulting: Flexible and customisable services to support vendor and service providers‟
strategic and operational needs. Sample topical areas covered include the following.
– Strategy projects (e.g., market and service offering positioning, M&A support)
– Sales and marketing effectiveness (e.g., brand management, training: pursuit, commercial, legal, working with sourcing
advisors)
– Operational efficiency (e.g., service delivery, transition management, outsourcing governance and relationship
management)
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
18 18
Comparison 2009/2010/2011:
70%
60%
30%
29%
22%
8%
55%
43%
34%
36%
16%
8%
56%
50%
22%
28%
16%
16%
44%
54%
31%
15%
14%
8%
Cost savings
Access to skills
Quality improvement
Financial flexibility
Time to market
Change agent
2011
2010
2009
2008
Trend 1: Increasingly, cost savings and War for Talent drive outsourcing
Risk 1: Both drivers often are contradictory (good skills don’t come cheap)
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
» Often buyers are not employing the most
applicable outsourcing governance model to
meet the needs of their outsourcing efforts
» Mismatched needs and models can limit
outsourcing governance effectiveness and
work against overall outsourcing
governance success
» Even when the most applicable model is
identified some buyers may not have the
skills, resources and support to deploy it
successfully
» Implementing the outsourcing governance
model starts during transition, another area
where many buyers struggle
19
5% 4%
51%
26%
32%
37%
12%
26%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Advisors Service Providers
5 - Very good fit/supports outsourcing efforts well
4
3 - Neutral
2
1 - Poor fit/does not support outsourcing efforts well
To learn more:
• Sourcing Governance and Change Management: Elusive Enablers of Outsourcing Success
• Governance 2.0: New Management Tool Supports Achievement of IT Sourcing Objectives
• Best Practice in Governing Outsourcing Contracts: Establishing and Managing a Center of Excellence
Trend 2: Inadequate Governance due to cost savings outsourcing driver
Risk 2: Too optimistic Clients & opportunistic Service Providers that
underestimate impact of governance endangering the deal and relationship
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
20 20 20
“Net” Value Gained
From the
Relationship
Total Potential Value
Gained From the
Relationship
10%–20%
Value Loss
Operational
Challenges
20%–30%
Value Loss
Performance
Challenges
5%–10%
Value Loss
Portfolio Management
Challenges
Efforts
Duplicated Resources
Wasted Problems
Not
Managed
Performance
Not at
Expected
Levels
Vendors
Deployed
Against
Conflicting
Or Wrong
Goal Opportunities
Untapped
Loss of Value from Ineffective Service Provider Governance
Trend 2: Inadequate Governance due to cost savings outsourcing driver
Risk 2: Too optimistic Clients & opportunistic Service Providers that
underestimate impact of governance endangering the deal and relationship
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
1,0 2,0 3,0 4,0 5,0
Limitation of liability
Indemnities
Regulatory compliance
Step-in rights
Supplier financial risk
Data protection/privacy
Pre-defined direct damages
IT systems/network/data security
Financial covenants
Proprietary intellectual property rights
License/usage of third party intellectual property
Representations and warranties
Audit rights
Physical security
Force majeure
1=Not Challenging, 5=Very Challenging
Global
Europe
North America
Trend 3: “The usual suspects” in contract legal terms & conditions
negotiations
Risk 3: too much focus on these GTCs as procurement is driving many
outsourcing deals currently
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
1,0 2,0 3,0 4,0 5,0
Termination fees
Termination rights
Service levels
Fee structure
Transition fee/credit structure
Scope of services
Transformation
Inflation
Foreign exchange rates
Consent fees for third party contracts/licenses
Service provider labor
Service provider delivery locations
1=Not Challenging, 5=Very Challenging
Global
Europe
North America
Trend 4: High focus on Termination in commercial negotiations
Risk 4: Too much focus on building a super flexible (and super complex)
contract able to exit at all times
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
23
Trend 5: Today, most companies are in search for rapid ROI as many projects
& investments have been frozen in 2008 - 2009
Risk 5: Outsourcing does not bring rapid ROI
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
24
Trend 6: Advisors Key Challenge = Retained Org & Management Support
Trend 6: Service Providers Key Challenge = Change, Politics & Market
Risk 6: Misaligned RfPs and Negotiations leading to inadequate contract
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
25
Trend 7: Indian Service Providers lead 2010 European Customer Satisfaction
Risk 7: It looks “tempting” to work with Pure Plays, but it requires different
governance skills to manage them
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Trend 8: Ever increasing contract & market complexity
Risk 8: Contract not in the satisfaction zone
26
Research » Strategy » Transformation » Governance
Governance fit-for-purpose
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
28 28 28
“Net” Value Gained
From the
Relationship
Total Potential Value
Gained From the
Relationship
10%–20%
Value Loss
Operational
Challenges
20%–30%
Value Loss
Performance
Challenges
5%–10%
Value Loss
Portfolio Management
Challenges
Efforts
Duplicated Resources
Wasted Problems
Not
Managed
Performance
Not at
Expected
Levels
Vendors
Deployed
Against
Conflicting
Or Wrong
Goal Opportunities
Untapped
Loss of Value from Ineffective Service Provider Governance
Trend 2: Inadequate Governance due to cost savings outsourcing driver
Risk 2: Too optimistic Clients & opportunistic Service Providers that
underestimate impact of governance endangering the deal and relationship
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Demand – Supply Management Best Practice
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Demand – Supply Management Best Practice
Management
Management
control
Operational
control
Change
&
innovation
Business
governance
Strategic
planning
Service manager
Contract manager
Vendor (portfolio) manager
Asset manager
Application/ infraconsultant
Project sourcingmanager
Release manager
Test manager
IT project manager
Service portfolio manager
IT landscape architectInformation architect
Application portfolio manager
Security & complianceofficer
Business processarchitect
Business service manager
Administrativesupport
Project portfolio manager
Functional support
Change manager
Data administrator
Data quality analyst
Information analyst
End user
Information strategyanalyst
Program manager
Key user
Business processManager
Information owner
Application owner
Quality officer
Business director
Risk & complianceofficer
Business project manager
Service desk agent
Business consultant
IT process manager
Database administrator
Application engineer
Systems engineer
Process owner
CEO IT director
Information securityofficer
Demand manager Supply manager Delivery manager
Business processdesigner
Meta data manager Test coordinator Solution test manager Solution tester
IT purchaser
Service level Manager
IT controller
Service deliverymanager
Contract deliverymanager
Service coordinator
Solution architect
Solution designer Solution engineer
Deployment manager
BusinessDemand
management
Supply
managementIT Delivery
Enterprise architect
CIO
Auditor
Manager
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Demand – Supply Management Ratio’s
31
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Demand – Supply Management Ratio’s
32
The impact of scale on demand supply spend:
1. In small organizations the tactical
coordination of IT is relatively expensive
2. The optimum lies around 25 MiO; with spend
above 25 MiO complexities increase, as do
the demand supply mgt costs
3. Above 75 MiO scale advantages lead to
decrease in spend towards the optimum
€ 25 MiO
Millions Outsourced
€ 75 MiO
24%
12%
Spend on
Demand mgt
+ Supply mgt
as a % of total
IT spend
1
2
3
1
2
3
The impact of the investment strategy on
demand supply spend:
1. Apart from scale, the second factor with a
large impact on demand supply management
spend is the investment strategy.
Organizations that invest aggressively in
improvement projects tend to score on the
high end of the spectrum. The graph
represents an average investment strategy
4
4
Research » Strategy » Transformation » Governance
Conclusions & Key Success Factors
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Key Success Factors
34
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
Conclusions
» Know and understand the market (local, European and global)
» RfI, RfP & Contract should be market competency driven combined with
translation of internal (business) need
» Understand the service provider community to know on what they react
well and what “scares them off”
» Understand what is driving the current market (and how service
providers react, position and protect themselves against current market
trends)
» Know your own (internal) strengths & weaknesses before addressing the
market
35
Research » Strategy » Transformation » Governance
Contact Details
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
37
Dominique Kindt
» Dominique Kindt has a strong expertise in ITO and BPO advisory in different industries. He
developed a particularly expertise with respect to Financial Services Industry and Supranational
(Government) Institutions. Dominique is able to provide assistance in all phases of the IT and
Business Process Outsourcing Lifecycle. This equally includes providing guidance in governance,
project risk management, organizational (re)design and process and financial methodologies.
» Before joining EquaTerra, Dominique headed the Outsourcing Risk Advisory business unit at
Deloitte. He was responsible for the delivery of several ITO and BPO projects. Prior to joining
Deloitte, Dominique obtained hands-on people management and outsourcing experience in working
at a Belgian fund institution acting as an ICT and general manager responsible for the internal
services. He reorganized the internal service lines in selecting multiple vendors and service
providers for ITO and BPO solutions to outsource eg. competence management, facilities,
infrastructure and software development activities.
» Dominique has served, amongst others, companies like Argenta, LBK, ING, ING IM, Dexia, Fortis
IM, Aon, Swift, Euroclear, Base, City of Antwerp, Tech Data, Kyphon, BARC, Avnet, Unilin,
Deloitte, Fabricom, VIL, Infrabel, ICANN, Puratos, Eurocontrol and NATO across multiple
geographies.
» Dominique initiated his career at the University of Antwerp (Ufsia) where he was engaged as
research and education coordinator.
» Dominique holds two Master degrees. He holds a Master in Applied Economics at the University of
Antwerp and achieved an additional Master in Applied Computer Science at the University of
Brussels. He successfully graduated both degrees with distinction.
» Dominique is the founder and chairman of the Belgian Chapter of the European Outsourcing
Association (www.eoa-belgium.be).
» Dominique is based in Brussels, Belgium
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
38
Str
ate
gy
Sele
ction
Imple
menta
tion
Optim
aliz
ation
Govern
ance
2011 Financial Institution – Belgium Benchmark on full outsourced ICT environment
2011 European Financial Institution – Service Providers Customer Satisfaction program and Off-shoring
workshops
2011 Service Provider – Belgium Development of a companywide Service Catalogue
2011 Energy Provider – Belgium Workshops and definition of ICT sourcing strategy.
2011 Government – Belgium Assistance in definition and implementation off-shoring processes.
2011 Government – Belgium Benchmark on Servers, Storage and Network environment.
2011 Government – Belgium Strategy and go-to-market definition of BPO process.
2010 Chemical Manufactoring – Global Strategy and Selection support for BPO (HR) process
2010 Global Commercial Bank – Belgium Assistance in vendor selection of back-office environment.
2010 HR services organization – Belgium Definition of ICT strategy outsourcing.
2010 Belgian Retail Bank – Belgium Definition of Infrastructure management outsourcing strategies, RFP
and contracting & negotiation.
2010 Global Beverage Company – Europe Benchmark of the Deskside support activities in Europe.
2010 Global Beverage Company – Europe Review and Benchmark of Project Management activities in
Europe.
2010 Belgian Retail Bank – Belgium Benchmark of the LAN/WAN outsourced services
2010 Belgian Energy Provider – Belgium Benchmark of housing and hosting services
Belgian Railway Infrastructure operator (2009)
Advisor for delivery of SLA‟s and Governance models for IT Infrastructure and Telecom services delivered by
a Shared Service Center.
European Financial Transaction Company (2009) – Brussels Outsourcing strategy and risk assessment of
the Order to Cash process
Flemish Government (Maritime) Transport Organiation (2008) – Antwerp Trusted advisor in the setup
and implementation of a new platform (full BPO advise)
European Financial Clearing Company (2008) – Brussels Audit of the Vendor Management organization
Global Insurance Company (2008) – Hong Kong: Development of a sourcing strategy, Rfp, MSA, Contract
Schedules and Selection process
European Aviation Controlling Body (2007-2009) – Brussels trusted sourcing advisor and operational
support through a 3 year framework agreement for all phases of all ITO and BPO deals
Global Internet Controlling Body (2007) – Los Angeles Outsourcing risk assessment and business impact
assessment in global RFP release procedure
Global Supranational Government Organization (2005- 2009) – Belgium: support and trusted advisor in
several ITO and IT governance projects.
Global bank (2004-2009) – Brussels / Netherlands support and trusted advisor in several ITO and IT
governance projects.
Mobile Operator (2006) – Brussels Contract review of a strategic & company wide IT renewal project
Global Investment Management Organization (2004-2006) – Netherlands support and trusted advisor in
all phases of a strategic / pilot ITO deal.
» A selection of Dominique's sourcing projects:
Dominique Kindt
© 2011 EquaTerra Europe Limited, a UK limited liability company, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its
circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. The KPMG name, logo and “cutting through complexity” are registered trademarks of KPMG International Cooperative (“KPMG International”). The
EquaTerra name and logo are trademarks of KPMG International.
39
Contact us
BeLux: +32 (0)2 709 29 32 [email protected]
China: 86 (0)21 28909093 [email protected]
Finland (Baltics and Russia):
+358(0) 925 108100 [email protected]
Germany: +49 (0)69 67733423 [email protected]
India: +91 80 4022 4209 [email protected]
Netherlands: +31 (0)88 002 2900 [email protected]
Sweden (Nordic HQ): +46 (0)8 662 30 67 [email protected]
UK: +44 (0) 845 838 7500 [email protected]
Americas: +1 713 470 9812 [email protected]
About EquaTerra
EquaTerra sourcing advisors help clients achieve sustainable
value in their IT and business processes. Our advisors average
more than 20 years of industry experience and have supported
over 2000 transformation and outsourcing projects across more
than 60 countries.
Supporting clients throughout the Americas, Europe, and Asia
Pacific, we have deep functional knowledge in Finance and
Accounting, HR, IT, Procurement and other critical business
processes. EquaTerra helps clients achieve significant cost
savings and process improvement with internal transformation,
shared services and outsourcing solutions.
Key Contacts
Dominique Kindt Country Manager, EquaTerra BeLux +32 (0) 477 77 2512 [email protected]