Pfizer Internal Use

Sourcing Technology; Buying and Managing External

Resources

Agenda

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Introduction; This is a high level walkthrough of the IT Sourcing function, its increasing criticality (operationally and strategically), how it enables and supports corporate mandates and why progressive companies will be seeking these capabilities.

Rules & Themes; Please Ask Questions and We’ll try to keep it a “Simple as possible but no simpler” and I know that we won’t cover it all… no worries, we’ll make it happen again (if you want to…). GO EASY…

The evolving need for the IT Sourcing function; Information Technologies Evolving Supply Chain… what every CIO (and CFO and COO…) needs

Mission, Vision & Remit; “… Building fences around herds of cats.”

Skill Sets & Functional Role; “… A Geek and a Dweeb walk into a bar…” Building the IT Sourcing Resource

Strategic Actions & Critical Cornerstones; Asset Management (PC Leasing Story) Link w/Architecture (Microsoft Licensing Story), Cost Modeling (Resource Pyramids) Standardizing Agreements Leveraging the Function (Supply Strategy, “P2P” Process Flow and buying Services)Measure to understand (Metrics) and Manage what you Measure (Vendor Management)

The emergence of the IT Sourcing function…

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IT Sourcing; What it is and Why it’s important~ IT First; Sourcing Second; Purchasing Third~ Deliver Vertically; Operating Horizontally

Technical Agility = ROI + Management of Technology Evolutions~ IT’s role is maturing~ ROI cycles continue to compress~ Speed, Flexibility, Rapid execution is key

A Corporation = “Its all a bunch of Contracts…”~ IT External Labor Landscape and Trends…

The evolving need for the IT Sourcing function; Information Technologies Evolving Supply Chain… what every CIO

(and CFO and COO…) needs

IT External Labor Landscape & Trends

Internal OpportunitiesShift from Managing Resources to Deals People: Evolve BT Colleague Business Skills Shift from T&M to Outcomes Based Agreements Manage: Strengthen Vendor & Contract

Management Focus on buying Solution vs. Lower Rates Process: Enhance Speed, Agility, Quality, Value Imperative to Better Manage External Labor Measure: Advance reporting & collaboration across BT Shrinking staffing levels Process: Leverage existing deals, generate quality

SOW

ExternalIncreased Complexity of Global Delivery Model Strategy: Build & Drive BT’s Global Supply StrategyPolitical Climate – Increasingly Nationalistic Manage: Strengthen Vendor & Contract Mgmt (visa, subs…)Economic Pressures – Changing Labor Market/Supply Strategy: Build & Drive BT’s Global Supply StrategyEvolving Labor Cost / Location People: Create & Manage BT’s Resource Strategy

Recent Headlines…. 4

Time

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BT’s Workforce

0

5000

10000

Contractors

Colleagues

Managed Services

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Mission, Vision & Remit; “… Building fences around herds of cats.”

A vision statement to consider…

~ Build, Buy & Support

~ Sourcing as a Service

~ Vendor Management

~ Process Efficiency & Execution

Let’s look at a high level summary of Pfizer’s last 2+ years…

Workforce Drivers

Support & Services (“Lights – on”)Primary factors:

1. Number of Applications2. Physical Sites (plants, office, R&D

sites)3. Service Levels4. Compliance Activity

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2009 - 2012

Wor

k M

ix

BT’s Workforce: Support & Services

Contractors

Colleagues

Managed Services

2009 - 2012

Wor

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BT’s Workforce: Solutions & M&A

Contractors

Colleagues

Business Solutions, M&APrimary factors:

1. Business client partners2. Project portfolio3. Local solutions implementation4. M&A deals

NOTE: All activity in this category creates out-year expense above

Integration

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0

5000

10000

Supply Strategy & Planning Evolution

P2P CP 102CP 117MSP

BT Contractor Dashboard “3M’s” Supply Improvements Major MS Deals (e.g. MAST)Developed VM v1.0“Tail” Focused Created Contract FrameworkCreated SLA MethodologyLaunched GRMO

Lead P2P Sourcing ChannelEst. Supply Strategy ManagerDeveloped BT Supply StrategyReveal Vendor DecompositionExpose Opportunity InventoryImplementing VMO v2.0Create CM v1.0

BT wide Bus OpsMSP Re-LaunchChurn ReductionDevelopment CapabilityBT ReportingContractors

Colleagues

Managed Services

Peop

le

Time

BT’s Workforce

BT Contractor Dashboard Executive Summary

* Additional detail by BT Line provided on the following pages

CLICK HERE to view detailed 10/24 data

• Supplier Metrics– 76% of contractors are sourced from 13 BT Strategic Suppliers (BT

target is 80%)– Supplier Count decreased by 4

• Contractor Metrics– Contractor count decreased by 30– T&M % decreased by 0.3%– Low Cost Location % decreased by 0.8%– Data Quality % increased by 0.9 %

Observations:• Follow up with sponsors to improve Data Quality %• Next BT Contractor Metrics refresh scheduled for November1st

Week

based on 10/ 24 GIDM data extract

Next Steps:

BT Supply Strategy

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BT Contractor Dashboard BT Supply Strategy

Numbers FocusedTrailing IndicatorsGross MeasurementsSome Dated MetricsAssumes all Lines have same goals

Functional FocusForward LeaningPrecision MetricsRelevant/Topical MeasurementRecognizes line individualitiesAligned w/ Enabling Functions

463 Suppliers

Enterprise 28Regional 72Under Review 168SW/HW/BTI 99Projects/Exiting 96

?

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Skill Sets & Functional Role; “… A Geek and a Dweeb walk into a bar…” Building the IT Sourcing Resource

… And I say this with affection… Seriously, what is the role?

~ Has anyone been in the band? The lesson of Stepping Off…

~ Let me read what I wrote (and keep this in mind as you schedule your next semester)

Some Corner Stones

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Strategic Actions & Critical Cornerstones;

~ Asset Management (PC Leasing Story) (BTW, Assets = more than just hardware)

~ Link w/Architecture (Microsoft Licensing Story), Cost Modeling (Resource Pyramids), Standardizing Agreements

~ Leveraging the Function (Supply Strategy, “P2P” Process Flow and buying Services)

~ Measure to understand (Metrics) and Manage what you Measure (Vendor Management)

IT Labor Trends & Results

Business Technology’s workforce strategy has delivered a total labor savings of $541M (38%) over 3 years while enabling Business technology to deliver considerably more and significantly improve service levels.• Internal Labor reduced by $225M (32%)• External Labor reduced by $316M (42%)

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2009 - 2012

Wor

k M

ix

BT’s Workforce

T&M Contractors

Colleagues

Managed Services & Fixed Price Contracts

Let’s Talk….

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Where to from here?

Sourcing Channel/P2P Process Flow

Major 2010/2011 BT ADSM Deals “Shared Services”; 2012 Area of Opportunity

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BBT PDB F&BO HR BT PGS WRD Med BT Corp BT ERP BT S&P BASSD836 347 525 512 241614Contractors1 999 405 63 16 2,018

35% or 2,328 out of 6,576 BT non-integration/non-BTI contractors1 are sourced via 13 BT Major Deals2

App

licat

ion

Mai

nten

ance

Q&C TCS (56)(in trans)

Platform Infosys (232)

Maint. Infosys (104)

US Support Infosys (189)

1 GIDM 8/1/2011 Data; Excludes BTI and Integration Funded contractors as they are not applicable to the ADMS major deals2 Several BT Major Deals are in transition. Incumbent vendors/resources have not fully ramped down and/or new resources have not fully ramped up thus skewing the statistics.

OSMInfosys (284)

2012 - AREA OF OPPORTUNITY (Development)SODE

ACN(58)

Deploy IBM (289)

MASTASM ACN (426)

BAU Spt. CSC (67)

SMSC ASM ACN (30)

(in trans)

BAU Spt. HCL (224) Athena ASM

HCL (191)ASM. ACN (90)

(in trans)

BI ASM ACN (88)(In trans)

Sustain the Supply Strategy

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Vendor & Contract Management are essential to sustain the BT Supply Strategy. A Metrics & Reporting Program are required to measure not only the

BT Supply Strategy but also overall Service Delivery for Pfizer.

BT Supply

Strategy

Vendor Management

Metrics and Reporting

Contract Management

• Developed 3 Tier BT Led Vendor Management Program (See VM slide in appendix)

• Implemented BT Engagement Review with Accenture, Infosys, HCL and TCS to review overall BT performance.

• Implemented standard 3 level Governance framework in Managed Service deals.

• Implemented standard Service Level Methodology in Managed Service deals3 Tier BT Led Program

• Harmonizing how BT measures and calculates ASM metrics

• Implemented BT Engagement metrics for Accenture overall performance

• Developing Satisfaction Survey to measure quality and satisfaction for BT Enterprise suppliers (see Metrics slides in Appendix)

• Implemented standard contract format for Managed Services agreements

• Implemented Work Order Process• Driving improvements to SOW/PO

approval process • SOW Repository established for

Accenture, HCL, Infosys & TCS• investigated and initiated discussion

to leverage Pfizer Agreement Management System (AMS) for BT

• Advise line service delivery leads on contract administration

Vendor Metric Summary

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Resource Management

Quality

Operational Performance

• Staffing Effectiveness Results are based on 8 roles from August.

Trend

Trend

Trend

98.94%• Resolution Performance All severity types and support tiers combined

• Response Performance All severity types and support tiers combined• Infrastructure Performance Based on Accenture Network Uptime • Effort Variance Based on budgeted vs. actual hours for projects.

A result >100% means the budget was exceeded.• Schedule Variance Operational metric tracked by BT projects only. A

result >100% means that projects were delivered late.

96.96%

G

100%

100%

• Overall Satisfaction Based on 7 responses to the Q2 2011 MAST

Survey (sent to 9 Pfizer leads). Q1 2011 result was 89% based on 8 responses. Next survey = October.

• Defect Rate Number of problems compared to time spent on

development.

100%

0.0000%

100%

Account-Wide Metrics (including non-BT) Managed Service Metrics (MAST & BI ASM)

Resource Management

• Scheduled Roll-offs 141 current roles are forecast to end by

November 30.

• Attrition (Managed / Un-managed) There were 52 roll-offs, of which 50 were

managed and 2 were un-managed for September.

Unmanaged attrition is when a resource resigns from Accenture.

• On/Offshore Mix Total onshore resources = 648 Total offshore resources = 972

• Number of Subcontractors Total onshore resources = 123 Total offshore resources = 26

• Resource Pyramid Pyramid remains proportional.

Trend

50 / 2

40% / 60%

149

G

141

NOTE: The Managed Service Metrics are currently comprised of MAST & BI ASM only. Other managed service contracts will be included as they go live and reporting commences (e.g. ERP, SMSC).

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BT SS&P Metrics & Reporting Program

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Supplier Name: TEKSYSTEMS Program Name: WYETH ONE Scorecard Period: Q1 2009

Response Rate # Requisitions Received 35 Response Ratio 74% # Requisitions Responded 26 Ranking 4 Weight 15 Score 11

Rejected Resumes # Resumes Submitted 49 Rejected Resume Ratio 67% # Resumes Rejected 33 Ranking 1 Weight 10 Score 8

I nterview Filter # Resumes Shortlisted 49 Interview Filter Ratio 14% # Interviews Requested 7 Ranking 1 Weight 10 Score 1

Hit Rate # Resumes Submitted 49 Hit Ratio 18% # Placements 9 Ranking 1 Weight 10 Score 2

Contractor Performance # Evaluations Average Performance Bonus Points

Negative Turnover # Negative Assignment Ends 0 Negative Turnover 0% # of Opportunities 67 Ranking 1 Weight 10 Score 10

False Starts # Placements 9 False Start Ratio 22% # False Starts 2 Ranking 8 Weight 15 Score 5

Pre-Identified/ Direct Fills # Pre-Identified/ Direct Fills 1 Minus 5 points for every two Deductions 0

% of Late Timesheet Submittals % of Late Timesheets 0% Ranking 1 Weight 10 Score 10

Rate Card Competitiveness # Resumes Shortlisted 49 Rate Competitiveness 99% Weight 20 Ranking 7 Score 10

Timeliness of Rebate Status Current Deductions 0

Headcount Headcount Q1 2009 67 Bonus Points 5

Stewardship

Score Card results Overall Ranking (Total of 11 Preferred Suppliers)

6 Overall Score 62*

Supplier Action I tems:

BT Vendor Metrics Program Sample Pfizer BT MSP Scorecard

+

Expand Vendor Metrics based on BT Supply StrategyProvides Qualitative and Quantitative Measures Compare / Compete VendorsAlignment w/ Enabling FunctionsDrives Continuous and Productivity ImprovementProactive Opportunity Management