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Master Outsourcing

www.argosy-inc.com. Master Outsourcing. (Or Else!) By Beth Perdue. Argosy, Inc. • 293 K Street • Boston, MA 02127 Tel. 617-269-1677 •beth@argosy-inc.com. Topics. Trends and facts Top 10 risks Outsourcing contracts Relationships In closing…. Topic 1. Trends and Facts.

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Master Outsourcing

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  1. www.argosy-inc.com Master Outsourcing (Or Else!) By Beth Perdue Argosy, Inc.•293 K Street•Boston, MA02127 Tel. 617-269-1677•beth@argosy-inc.com

  2. Topics • Trends and facts • Top 10 risks • Outsourcing contracts • Relationships • In closing…

  3. Topic 1 Trends and Facts • 80% of U.S. Companies discuss • 40% complete pilot program or more • Offshore dominant – grows 20%+ annually Source: Computerworld, Gartner Group

  4. Hidden Costs • Supplier searching • Contracting • Contract management • Post-outsourcing reintegration • Who tracks them?

  5. Thinking of Outsourcing? • Not necessarily cheaper • At least, not right away

  6. Downside • Big- name companies bringing it back • Dell, Lehman Brothers, Conseco • Still have offshore operations

  7. Have You Ever Seen a Grown Man Cry?

  8. Topic 2 Top 10 Risks

  9. Top 10 Risks 1. Cost-reduction Expectations

  10. Top 10 Risks 2. Data Security/ Protection

  11. How Patient Files Got to Pakistan

  12. Personal Info Outsourced Abroad

  13. Where It Goes

  14. Meet Ankit

  15. Why More Risk Overseas? • Security not priority • Using small/mid-sized firms • Software piracy means few patches • Lack tough laws and legal tools

  16. Take Nothing For Granted • Penetration testing • Background checks • Device restrictions • Visit, manage, audit

  17. Top 10 Risks 3. Process Discipline

  18. You can learn a lot from fast food

  19. Start With Out-tasking • Keep command, control, coordination • Assign well-defined tasks

  20. Top 10 Risks 4. Intellectual Property Drain

  21. Top 10 Risks 5. Supplier Failure to Deliver

  22. Top 10 Risks 6. Scope Creep

  23. Top 10 Risks 7. Government Oversight/ Regulation

  24. Top 10 Risks 8. Border Concerns

  25. Top 10 Risks 9. Turnover of Key Personnel

  26. Top 10 Risks 10. Knowledge Transfer

  27. Topic 3 Outsourcing Contracts

  28. When the only tool you own is a hammer, every problem begins to resemble a nail.

  29. Outsourcing Contracts Incomplete by Nature • Assets • Uncertainty & measurement • Frequency • Time & costs

  30. Outsourcing Contracts Prices and Adjustments • Contract length • Cost-savings program or index

  31. Outsourcing Contracts Prices and Adjustments • Benchmarking • Baselining • Multiple suppliers

  32. This here's Miss Bonnie Parker. I'm Clyde Barrow... We rob banks.

  33. Outsourcing Contracts Intellectual Property Rights • Transferred licenses • Software developed by supplier • Processes developed by supplier • Transfer to another supplier

  34. Licenses Don’t Travel Well

  35. Outsourcing Contracts Is It Your Software or the Outsourcer’s? • Either way can work • Flexible licenses

  36. Outsourcing Contracts Get Better Licenses • Asset management • Know your opponent • Timing

  37. Outsourcing Contracts Contract Structure • Framework contract • SLAs • By geography and business unit, then service • By service • Degree of completion

  38. Outsourcing Contracts Contract Structure • Degree of exclusivity Sole supplier Preferred supplier • Liability • Termination Bankruptcy,force majeure, default Change in ownership Business needs

  39. Outsourcing Contracts Metrics • Keep an eye on offshore practices • Service (customer) • Process (supplier)

  40. Outsourcing Contracts Minimize Risk • Objectives • Meeting structures • Keep minutes • Disputes

  41. Topic 4 Relationships

  42. Let’s Call the Whole Thing Off

  43. Relationships Bringing It Back • Provider – • Had financial difficulties • Failed to deliver on commitments • Buyer consolidated vendors

  44. Relationships Change Suppliers • Knowledge • Documentation • Transfer process

  45. Relationships Business Continuation • Preserve price & service • Unilateral right

  46. Relationships Transition Cooperation • Efforts • Disclosure • Licenses & agreements

  47. Topic 5 In Closing…

  48. In Closing… Selective Outsourcing • Big risks • Requirements • Specifications • Business smarts • Make outsourcing a core competency

  49. In Closing… Satisfaction Isn’t Guaranteed • Inflated expectations • Cost savings • Productivity • You don’t get what you expect, you get what you inspect

  50. “I haven’t failed. I’ve found ten thousand ways that don’t work.”

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