selling the strategic value and implementation of the vendor management … · 2016. 1. 10. · the...
TRANSCRIPT
Selling the Strategic Value and
Implementation of the Vendor
Management Function Internally
A New Meaning for Inside Sales:
Greater Toronto Airports Authority
John AlexisDirector, IT Services
www.sig.org/eval
Selling the Strategic Value & Implementation of the Vendor Management Function
Presenter:John Alexis
Director, IT ServicesGreater Toronto Airports Authority
1) The Airport
2) The Journey
3) Preparation
4) Moving Forward
5) Results
6) Key Takeaways
7) Questions
Table of Contents
The ‘City’ We Call Toronto Pearson
45000+ Employees
7.2mi² Land Occupied
65 MillionPassengers per year
1 MillionTones of Cargo
Toronto Pearson by 2030
7
277,000Jobs Facilitated
$35.4B5.6% of the Ontario GDP
Today 2030
$59B6.6% of the Ontario GDP
457,000Jobs Facilitated
GDP
Pearson’s Economic Affect
Technology & The Marketplace
Service Desk
Automation &Advanced Analytics
End-User Computing
Unified Communication, BYOD, Workplace Productivity
Data Center Operations Services
Cloud based solutions, Self-healing Systems & Predictive Autonomics
Voice &Network Services
VOIP, Unified Communication, Web Real-Time Services,Software-Defined Networking
Applications Services
Cloud Based Applications, Web API Architecture, Application Transformation
BI & Analytics
Master Data Management, Predictive &Prescriptive Analytics
Traditional IT Services
Disru
ptive
IT Service
s
Rapid technology changes are disrupting underlying Architecture and IT services, moving to Converged and Automated Services across all domains
Digital technology disruptions are changing the very nature of what constitutes IT Services
Technology & The Marketplace
Over 40% of all outsourcing deals are up for renewal in the next 18-24 months
Over 75% of all current contracts will be terminated or renegotiated before term
More than 80% of all new contracts are based on cloud or converged IT Services
Over 50% of transformations are based on leveraging SaaS, not ERP/SI projects
Key Trends
Significant opportunity for clients to reset current relationships to leverage emerging trends
Opportunity to incorporate business and technology transformation into future Ecosystem Partnerships
Impact on Clients
Clients have a once-in-a-generation opportunity to leverage emerging trends to refresh their current sourcing relationships into Ecosystem Partnerships that are aligned to longer-term transformation and digital business objectives
Over 20% of contracts based on business outcomes and execution of digital strategies
More than 60% of IT and Business Executives are exploring alternative partnership models
The market for Ecosystem Partnerships based on business outcomes is mature and ready for exploitation
Our Case
Organizational Evolution 2010 - Outsourced most IT Services to IBM 2012 - Operating Model Change from Construction to
OperationsTechnology Reliance Technology changes and Customer Reliance on
technology has increased Agility, Innovation and Continuous Improvement a
requirement and a challenge 260+ Off the Shelf/Custom/Proprietary Applications 70 Applications Critical to Day to Day Operations History of procuring the best of breed for individual
application suites
Rapid technology changes are disrupting underlying Architecture and IT services, moving to Converged and Automated Services across all domains
Digital technology disruptions are changing the very nature of what constitutes IT Services
IT Strategic Vision
IT will focus less on hardware/software solutions and more on services and business outcomes
Infrastructure as a Service – Focus on Delivery• Scalable• High Availability• Speed to Market
Software as a Service• Application Suites• Cloud Services
Biometrics • Security Screening• Customs• IT Security
Challenges
100+ Vendor
Relationships
2.5% YoY
Static Budget
$30M+ CAPEX
YoY Investments
$40M OPEX
increasing
11% YoY
Why the VMO?
Outsourcing
Lifecycle
Strategic Sourcing vs. VMO
Strategic Sourcing is a procurement process that re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management. Strategic sourcing techniques leverage the consolidation of purchasing power to maximize value and can also be applied to nontraditional areas such as services or capital
The Vendor Management Office (VMO) is an internal unit with an enterprise, centralized or decentralized, that leads the evaluation of third party providers of goods and services. Overseeing day-to-day interactions and managing strategic relationships, the VMO enables organizations to manage cost, drive service excellence and mitigate risk
Strategic Sourcing
VMO
Gauging Organizational Maturity
Gauging Organizational Maturity
Gauging Organizational Maturity
Value & Benefits
Selling the Benefits
When designing the future state VMO, embed success factors in the design upfront will accelerate the success of the VMO and maximize the value received. The table below summarizes the success factors that are believed that are most critical and the steps required to become an effective VMO
Success Factor How a VMO will help Potential result without a VMO
Track results versus original business case
Ensure productivity targets and objectives are met
Negotiate changes and manage scope creep
Difficult to measure savings year over year; initial savings may not be realized
Contracts don’t stay static through the term and makes original cost savings even harder to track
Reduced Cost
Determine best method for tracking productivity
Establish baseline and track progress against contract terms
Translate productivity improvements into bottom line savings or increased capacity
Unstructured and limited ability to consistently mandate and track contract delivery performance and productivity
Increased Productivity
Forecast demand and minimize variance
Balance flexibility against cost and utilization
Utilize contractually committed volumes effectively
Inability to effectively forecast demand and determine resource allocations may result in additional resource expenditures
Short term rates are typically 30% higher
Flexibility
Encourage use of service providers beyond pure staff
augmentation (i.e. industry insights, best practices, etc.)
Track and improve on service levels
Ensure that quality goals are not overly optimistic and
misrepresented due to excessive metrics
Service providers are typically positioned as staff augmentation
Few service level commitments and inconsistent monitoring and / or enforcement
No real opportunity for service providers to innovate
Improved Quality
Define and implement enterprise methodology for defining and assessing progress of transition efforts
Define governance structure for approving milestone payments, exceptions and monitoring interdependencies between contracts
Inability to meet cost saving targets due to delays in contract execution, scope creep and escalation issues
Dissatisfied internal stakeholders, delays in achieving steady state status
Mitigation Of Risk
Critical Success Factors for an Effective VMO
Moving Forward
During the project the GTAA determined the following to be the desired value and outcomes of the VMO Implementation. The key points that were mentioned include:
Engage in Risk Management
Ensure our services are providing value to our customers
Increase transparency and visibility to IT and our customers, educating the business on value
Effectively measure the business to enable better buying and business decisions
Ensure outsourcing decisions are aligned to the business strategy
Act as strategic advisor in VMO related decisions
Maintain vested partnerships with suppliers to increase engagement and customer satisfaction
Act as a strategic advisor, ensuring VMO-related decisions are aligned to the business strategy and engaging in vested partnerships with suppliers providing valued service to customers
VMO mandate statement for GTAA is:
GTAA’s VMO Objective
24 VMO Design Final Report – November 2012
IT Services VMO Future State Model
Legend
IT Risk Management & Compliance
Release Management
Incident Management
Problem Management
Change Management
Service Delivery Vendor Management OfficeProject Management Office (PMO)
Tech Arch & Plan (TAP)Capacity Management
Project Management
Avail. / Disaster Recovery
Internal Capability Ass.
Internal Capability Ass.
Sourcing Vendor Capabilities
Procurement Finance
Vendor Ass. & Selection Strategic Planning
Industry Analysis
Portfolio Management
Sourcing Vendor Capabilities
Enterprise Sourcing Strategy
Vendor Management
Relationship Management
Issue & Dispute Mgmt.
Contract Management
Reporting / Comm. Mgmt.
Financial Management
Strategy Assessment
Deal Creation
Scope Definition
Current State Analysis
Business Case
Development
End of Life StrategyEnterprise Sourcing
Strategy
Execute Sourcing strategy
Purchasing & Contracting
RFP Development
Contract Management
Service Performance Mgmt.
Governance
Asset / Config. Mgmt.
IT Vendor Portfolio Mgmt.
Vendor & Sourcing Strategy
Knowledge Management
Resource Management
Inter-deal Management
Innovation Monitoring
Transition & Transformation
Oversight
Multi Service Provider Integration
Service Request Mgmt.
Service Provider Risk Mgmt.
Financial Management
Information Technology
Sup
plie
rsC
ust
om
ers
Organization Units
Functional Area
Function
Future State Function
Service Delivery Oversight
Service Delivery Mgmt.
Solution Advisory
Arch. Standards Mgmt.
Compliance
Billing & Tracking
Accounts Payable
Sales Support
Document Management
Product Lifecycle Mgmt.
Customer Satisfaction
Risk Management Regulatory Compliance
IT Satisfaction
Interaction
function Out of Scope
Results
Benefits Realized
Improved Governance and Control
Average YoY cost reductions of 6% with a 15% reduction in year 3
Healthier, Transparent Business & Vendor Relationships
Organizational Strategic Alignment
Value
Takeaways
1) Locate, Understand and Organize any Data or
Information Available
2) Be Realistic about your Organizational Maturity.
Identify Gaps and Develop a Remediation Plan Either
Prior to the Implementation or as Part of the VMO
3) Right Process, Right People, Right Roles Supported by
the Right Technology at the Right Time
4) Don’t Reinvent the Wheel
Key Takeaways
Thank you
John AlexisDirector, IT Services
Information Technology OfficeGTAA - Greater Toronto Airports Authority
Thank you
Evaluation How-to:
Your feedback drives
SIG Event content
By signing and
submitting your
evaluation, you are
automatically entered
into a prize drawing
Why?
Option 1: App
1. Select Schedule2. Select Schedule by Day3. Select Day4. Select Session5. Scroll to Description 6. Click on the Evaluation link
Option 2: Browser
1. Go to www.sig.org/eval2. Select Session (#30)
How?
Complete and
submit!
bit.ly/downloadameliaappTweet using: #SIGspring15
Session #30
A New Meaning for Inside Sales:
Selling the Strategic Value and Implementation of the
Vendor Management Function Internally
John Alexis
Greater Toronto Airports [email protected]
Speaker:
www.sig.org/eval