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Successful Outsourcing March 2008 Steve Phillips Chief Information Officer

Successful Outsourcing March 2008 Steve Phillips Chief Information Officer. About Avnet. Incorporated in 1955 NYSE: AVT 1960 June 30 fiscal year end ~ $6B market cap ~ 12,0 00 employees 73 countries Enabling Success from the Center of Technology™ Electronic components

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Successful Outsourcing March 2008 Steve Phillips Chief Information Officer

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  1. Successful Outsourcing March 2008Steve PhillipsChief Information Officer

  2. About Avnet • Incorporated in 1955 • NYSE: AVT 1960 • June 30 fiscal year end • ~ $6B market cap • ~ 12,000 employees • 73 countries • Enabling Success from the Center of Technology™ • Electronic components • Avnet Electronics Marketing (EM) • Computer products • Avnet Technology Solutions (TS) FY07 Revenue $15.68B TS 38% EM 62%

  3. Actual Avg Pctl 25 Pctl 75 Step 1: Making the Decision to Outsource Benchmark first. Where do we stand amongst • similar companies in the industry? • cross-regional internal teams? How do internal cost/service levels compare with potential third-party partners? Cost Client Help Desk LAN WinTel Unix WAN WAV Mainframe VPT

  4. Step 1: Making the Decision to Outsource Consider offshoring to yourself. • Take advantage of skills and cost efficiencies at overseas sites • Employees benefit from same training, development and career opportunities • Develop clear communication channels and project documentation methodology

  5. Step 2: Identifying a Partner • Involve them in the decision-making process • Explain what, when and why • Be candid; stop the rumor mill Talk to your team.

  6. Step 2: Identifying a Partner • Can save you money and help negotiate a fair contract • Outsource specialists: TPI, Morgan Chambers/Equa Terra Hire a consultant.

  7. Step 3: Negotiating the Contract Negotiate based on cost, but decide based on quality and people. Allow your partner to make a reasonable profit. • Avoid change-orders and/or poor service by negotiating a reasonable profit for your partner • Consider open-book accounting • People matter: handpick the outsource team • Key players: outsource leader and in-house team leader assigned to project

  8. Include measurements of success that map to business objectives Guiding principle: Provided service must be at lower cost and higher level of service than existing service Step 3: Negotiating the Contract Plan for the end at the beginning. • Get a “prenup” in writing Make a detailed SLA.

  9. Step 4: Maintaining a Healthy Relationship Even if you outsource it, you own it. • Set priorities and stay in charge of the process • Get updates from your team • Provide political cover • Give your partner feedback

  10. Step 4: Maintaining a Healthy Relationship Use an independent company for quality assessment. • Unbiased view of both in-house and outsource teams’ performance • Motivation to get things done right the first time

  11. Maintain a Healthy Relationship Get independent QA. You own the results. Negotiate a Contract Allow your partner to make a profit. Place quality before cost. Plan for the end at the beginning. Iron-clad SLA. Identify a Partner Talk to your team. Hire a consultant. Determine Where You Stand Benchmark first. Consider offshoring to yourself. Summary Action Plan

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