David Guest Do Offshore Managed Services Really Work?

• Background Experience

• Provide Some Real Examples and Data

• Debate:– What can we use a Managed Service for?– What has worked well for other people?– What should people look for from their suppliers?– Is there still a place for T&M contracts?

Objectives and Agenda

Over the past 10 years I have used off-shore extensively: • 2000 - 2006

– Offshore (O/S) development and support using very large GE programme– Largely staff augmentation/body shopping

• 2006 - 20010– Developed O/S programme (now 500+ FTE and growing)– Introduced Managed Services for Core Support

• 2010 - 2012– Developed O/S programme (now 250+ FTE and growing)– O/S Managed Services for Support and Testing– Capacity Service for development

T&M

ManagedServices

We have the following managed services:• 2/3 Line Application Support (Delhi and Bangalore)

– Accenture – Retail and Supply Chain– JKT Central and Group Systems

• Independent Testing – SQS (Pune)– System Testing – test creation and execution– Regression test automation creation and execution

• And .... We have Store Break Fix – Fujitsu– All UK based

‘Managed services is the practice of outsourcing management responsibilities as a strategic method for improving operations’

Managed Services

100+ FTE

70 FTE

• Common Complaints

– ‘Its harder in India than doing it on-shore’– ‘We will have to transfer the knowledge’– ‘Its not as productive as doing it in the UK’– ‘Its expensive during transition’– ‘We’ll lose the IP’

• But if done properly – They can be transformational from a service and cost perspective

Managed Services Implementation

• Unit Cost Reduction– Unit cost saving for support and testing of 40%– Effective rates have dropped by over 33% since we moved to managed services – Domestic contractor usage has dropped to zero in these areas– This is a multi-million pound saving and its increasing

• Service Improvements– Testing coverage has increased by 30%, automation is up to 80% on our retail systems and productivity has increased by 20%– Incident volumes and active problems have reduced across all application portfolios by 20 - 40%– Regular release cycles have been introduced for problem fixes and small changes – System availability has improved dramatically and most systems are within SLAs

• Intangible– IP is better protected – Improved documentation and rigour– Permanent staff have been freed up and have better career prospects– Best practices & disciplines from our suppliers

Managed Services Benefits

• Incentivising our teams to accept Managed Services – financially, professionally and emotionally

• Incentivising our partners to improve service and reduce costs – risk reward contracts

• Accepting that we would manage the contract and they would manage the service – we have good contracts

• Trusting our partners and stopping our teams from interfering – we choose our partners carefully

• Building relationships at the highest levels and visiting the teams in India regularly – we have no travel restrictions and everyone flies business

• Commercially we keep our options open – we are multi vendor and they all know it

What Makes the Difference?

• Discussion topics

– Have other people had similar experiences?– What has worked well for other people?– What can we use managed services for?– What should one expect from suppliers?– Is there still a place for T&M?