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Sourcing Technology; Buying and Managing External Resources

Sourcing Technology; Buying and Managing External Resources. Agenda.

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Sourcing Technology; Buying and Managing External Resources

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  1. Sourcing Technology; Buying and Managing External Resources

  2. Agenda 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)

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

  4. IT External Labor Landscape & Trends BT’s Workforce InternalOpportunities Shift 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 External Increased Complexity of Global Delivery Model Strategy: Build & Drive BT’s Global Supply Strategy Political Climate – Increasingly Nationalistic Manage: Strengthen Vendor & Contract Mgmt (visa, subs…) Economic Pressures – Changing Labor Market/Supply Strategy: Build & Drive BT’s Global Supply Strategy Evolving Labor Cost / Location People: Create & Manage BT’s Resource Strategy Recent Headlines…. Colleagues People Contractors Managed Services Time

  5. 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…

  6. Workforce Drivers BT’s Workforce: Support & Services Support & Services (“Lights – on”) Primary factors: • Number of Applications • Physical Sites (plants, office, R&D sites) • Service Levels • Compliance Activity Business Solutions, M&A Primary factors: • Business client partners • Project portfolio • Local solutions implementation • M&A deals NOTE: All activity in this category creates out-year expense above Colleagues Contractors Work Mix Managed Services 2009 - 2012 BT’s Workforce: Solutions & M&A Colleagues Integration Work Force Contractors 2009 - 2012

  7. Supply Strategy & Planning Evolution BT’s Workforce Colleagues BT wide Bus Ops MSP Re-Launch Churn Reduction Development Capability BT Reporting Lead P2P Sourcing Channel Est. Supply Strategy Manager Developed BT Supply Strategy Reveal Vendor Decomposition Expose Opportunity Inventory Implementing VMO v2.0 Create CM v1.0 People Contractors BT Contractor Dashboard “3M’s” Supply Improvements Major MS Deals (e.g. MAST) Developed VM v1.0 “Tail” Focused Created Contract Framework Created SLA Methodology Launched GRMO P2P CP 102 CP 117 MSP Managed Services Time

  8. BT Contractor Dashboard Executive Summary based on 10/ 24 GIDM data extract • Additional detail by BT Line provided on the following pages Observations: Next Steps: • 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 % • Follow up with sponsors to improve Data Quality % • Next BT Contractor Metrics refresh scheduled for November1st Week CLICK HEREto view detailed 10/24 data

  9. BT Supply Strategy BT Supply Strategy BT Contractor Dashboard Numbers Focused Trailing Indicators Gross Measurements Some Dated Metrics Assumes all Lines have same goals Functional Focus Forward Leaning Precision Metrics Relevant/Topical Measurement Recognizes line individualities Aligned w/ Enabling Functions • Enterprise 28 • Regional 72 • Under Review 168 • SW/HW/BTI 99 • Projects/Exiting 96 463 Suppliers ?

  10. 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)

  11. Some Corner Stones 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)

  12. IT Labor Trends & Results BT’s Workforce 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%) Colleagues Work Mix T&M Contractors Managed Services & Fixed Price Contracts 2009 - 2012

  13. Let’s Talk…. Where to from here?

  14. Sourcing Channel/P2P Process Flow

  15. Major 2010/2011 BT ADSM Deals “Shared Services”; 2012 Area of Opportunity 35% or 2,328 out of 6,576 BT non-integration/non-BTI contractors1 are sourced via 13 BT Major Deals2 Med BT BASSD BT S&P ERP Corp BT HR BT WRD F&BO PGS PDB BBT 2,018 241 512 16 525 63 347 614 Contractors1 999 405 836 Project Mgt. 2012 - AREA OF OPPORTUNITY (Development) Deploy IBM (289) SODE ACN(58) App. Dev MAST ASM ACN (426) Maint. Infosys (104) Application Maintenance BAU Spt. HCL (224) Athena ASM HCL (191) ASM. ACN (90) (in trans) SMSC ASM ACN (30) (in trans) BAU Spt. CSC (67) Application Support BI ASM ACN (88) (In trans) US Support Infosys (189) OSM Infosys (284) Other Platform Infosys (232) Q&C TCS (56) (in trans) 1 GIDM 8/1/2011 Data; Excludes BTI and Integration Funded contractors as they are not applicable to the ADMS major deals 2 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.

  16. Sustain the Supply Strategy 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. • 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 • 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) 16

  17. Vendor Metric Summary Account-Wide Metrics (including non-BT) Managed Service Metrics (MAST & BI ASM) Resource Management Resource Management Trend • 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. • Staffing Effectiveness • Results are based on 8 roles from August. Trend 100% 141 Operational Performance Trend • 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. 98.94% 50 / 2 96.96% G 40% / 60% 100% 149 100% G Quality • 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. Trend 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). 100% 0.0000%

  18. BT SS&P Metrics & Reporting Program BT Vendor Metrics Program Sample Pfizer BT MSP Scorecard + Expand Vendor Metrics based on BT Supply Strategy Provides Qualitative and Quantitative Measures Compare / Compete Vendors Alignment w/ Enabling Functions Drives Continuous and Productivity Improvement Proactive Opportunity Management

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