Allan Colaço Orlando Utilities Commission 500 South Orange Avenue Orlando, FL 32801

1. “If we keep doing what we're doing, we're going to keep getting what we're getting.”Stephen R. Covey Yet another perspective on Outsourcing! Allan Colaço Orlando Utilities Commission 500 South Orange Avenue Orlando, FL 32801 407-236-9643 Office 407-423-9160 Fax 407-719-3015 Cell acolaco@ouc.com

2. OUC – Orlando Utilities Commission OUC— The Reliable One is a municipal utility owned by the City of Orlando. We provide electricity and water services to customers in Orlando, St. Cloud and parts of Orange and Osceola counties. In 1923, the state Legislature granted the city a charter to establish the Orlando Utilities Commission to operate the system. OUC has more than $2 billion in assets and annual operating revenues in excess of $700 million. Electric sales are at approximately 8.8 trillion kilowatt hours a year and Water sales are at approximately 30 billion gallons a year. Over the last 82 years, OUC’s customer base has grown to approximately 196,000 electric and water customers.

3. OUC – Orlando Utilities Commission IT Infrastructure: {Staff – 78} Information Systems, Information Resources, Application Systems, Micro-Computer Support, Telecommunications, CIS, Energy Management Business Infrastructure: General Counsel, Communications & Customer Relations, Power Resources, Energy Delivery, Customer Connection, Electric Transmission, OUCooling, OUConvenient Lighting, Information Technology, Water, Corporate Services, Financial Services,

4. Origin of Outsourcing It appears that outsourcing {sourcing} gained notoriety and became an industry buzz word only when our economy took a down turn and focus was placed on outsourced jobs; specifically off-shored jobs) (A June 2004 U.S. Department of Labor study showed that less than 2% of workers who lost their jobs in 1Q of 2004 lost them to offshore labor) Outsourcing has been a general business practice since even before the term risk diversification was coined. Manufacturing Industry: Parts, Tools, Raw Materials, etc. were purchased rather than acquired internally Insurance, Financial, Commerce: Private labeling, product/fund diversification, satellite services,etc.

5. Sourcing ASP Staff Augment HostedSolutions Consulting Services Remote Managed Services Shoring Offshore, Near-Shore,Onshore The Manifestations of Outsourcing {Sourcing}

6. The 4Ws; Why, What, When and Where • Why? • Improve company focus • Gain access to world-class capabilities • Accelerate reengineering benefits • Asset transfer • Share risks • Free resources for other purposes • Make capital funds available • Cash infusion • Reduce time to market • Reduce and control operating costs • Resources not available internally • Function difficult to manage or out of control • Take advantage of offshore capabilities What? {Some Examples} Human Resources Human Resources information systems Benefits Placement and outplacement Recruitment and staffing Relocation Workers compensation Forms processing General Finance Financial information systems Consulting and training Financial reporting and analysis General accounting Internal audit Investment accounting and analysis Payroll processing Purchasing Taxes Transaction processing Treasury General Finance What? {Some Examples} Sales and Marketing CRM (Customer Relationship Management) information systems Advertising Consulting and training Direct mail Field sales Market research and strategy General Sales and Marketing

7. The 4Ws; Why, What, When and Where What? {Some Examples} Administration Copy center management and copy production Consulting and training Mailroom Printing and reprographics Records management Secretarial and clerical Contact Centers/Call Centers B2B or B2C inbound sales B2B or B2C inbound customer service B2B or B2C outbound sales B2B or B2C outbound customer service B2C or B2C inbound sales Distribution and Logistics Freight audit Freight brokering Import/Export Leasing Maintenance Management Operations Returns processing Warehousing General Distribution and Logistics What? {Some Examples} Information Technology Application Service Provider (ASP) Applications management (development, maintenance, enhancements) Applications maintenance Consulting and reengineering Client/server Data entry and conversion Data networks: Local area Data networks: Wide area Desktop systems Distributed systems E-Commerce End-user support systems Full I/T outsourcing Imaging and OCR services Internet/Intranet & Web Hosting Mainframe data centers & Infrastructure Remote computing and timesharing Systems integration Transitional outsourcing Voice networks

8. The 4Ws; Why, What, When and Where What? {Some Examples} Transportation Transportation information systems Consulting and training Fleet maintenance Fleet management Fleet operations General Transportation Where/How? Off-shore Near-shore On-shore Remote Managed Services Hosted ASP Consulting Services Staff Augmentation When? 2005 2006 2007 Regardless, of the timing, make sure you give your team ample time to gather the answers to the 4Ws

9. The Sourcing Lifecycle The 4 Primary Phases ASSESSMENT RFP DEVELOPMENT SELECTION GOVERNANCE • SELECTION • Vendor selection • Proposal evaluation • Negotiation • GOVERNANCE • Transition • Post-contract relationship management • ASSESSMENT • Defining outsourcing strategy • Deciding which functions to outsource • Organizing the outsourcing effort • RFP (Request for Proposal) • Gathering data for RFP • Building RFP • Issuing RFP to service providers

10. The Sourcing Lifecycle {Lessons Learned} • Contract negotiations and SLAs • Setting internal expectations • Req. and Specs.; What is in-scope,out-of-scope, retained, assumed and pass-through • The Life After; the post go-live landscape Most common problems associated with the outsourcing process tend to be lack of; Time, Expertise, Bandwidth, Budget, and Access to Service Providers

11. Sourcing Solutions At OUC • Examples of just a few ; • Publishing, Media communication, • Telecommunications Support Services, • Software Support • Hardware Support • Network Services, • Facilities, • Legal Counsel, • Business and IT Consulting Services, • Bill Processing (EBPP, .....), • Payment Processing • Customer Self Service Components

12. Outsourcing Summary The outsourcing justification of “Cost Savings/ Cost Cutting” in just a year has changed to “Strategic Alliances“ Companies seem more inclined to outsource non-core services (but how do you define those and are they really “non-core services”) Companies considering Outsourcing should really consider multi-sourcing (Consider developing a Vendor Relations/Vendor Management Team – The most successful manage their relationships better) Decisions on sourcing should derive their bases from the Corporate Strategy (Hence Executive Strategists are a must in this process!) – The Goals Must Come From The Top!

13. Outsourcing Summary Companies that are not recognizing the benefits from outsourcing typically have two factors to blame; I. The initial approach to outsourcing was tactical rather than strategic, II. The management of the contract was adversarial rather than cooperative. The successful outsourcing ventures have; I. Strong relationships between the client and vendor, II. Hold high level strategic reviews, III. Have effective processes for continual improvements Create A Shared Vision – The Contractual Agreement Must Reflect The Vision Include effective and measurable performance measures that motivate the vendor and the client. – Develop a provision in your contract that supports the evolving nature of standards to a point that they are solidified by year 2 of the relationship.

14. Outsourcing Summary Effective Communication is a must! (The more complex the service the more active and precise the communication needs to be) Weigh the value of customized versus standardized services – It Can Be A Trap! (Customization can deliver specialization and differentiation whereas standardization can deliver agility and speed) Develop a solid contingency plan and exit strategy – Though the objective of any contingency plan is for it not to be used, it must be in place before any agreement can be reached. (When essential services are provided externally, continuity must be guaranteed) Be Realistic In Your Expectations!