It outsourcing contracts repositioning in light of the cloud alternative Dec 04 2014
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Transcript of It outsourcing contracts repositioning in light of the cloud alternative Dec 04 2014
IT Outsourcing Contracts:Repositioning in light of the Cloud Alternative
Alfredo SaadIT Sourcing Consultant
br.linkedin.com/pub/alfredo-saad/1/41/473/December 04th, 2014
•A Little Bit of History ...
• Outsourcing: Macroeconomic Foundations
• 2014-2017 IT Outsourcing Market
• IT Outsourcing : How to Assure the Effectiveness of Results ?
• Repositioning in light of the Cloud Alternative
06/12/2014 2
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
IT Outsourcing Contracts:Repositioning in light of the Cloud Alternative
A LITTLE BIT OF HISTORY ...
“The maxim of every prudent master is never to attempt tomake at home what it will cost him more than to buy”.
06/12/2014 3
Adam Smith, Scottish philosopher,
Father of the Modern Economics, 18th. century
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
“The maxim of every prudent master is never to attempt tomake at home what it will cost him more than to buy”.
06/12/2014 4
MAKE or BUY ?
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
Adam Smith, Scottish philosopher,
Father of the Modern Economics, 18th. century
A LITTLE BIT OF HISTORY ...
From the 80’s on... The rigidly verticalized organization model which had been
prevailing since the Industrial Era ...
Ownership and control of all resources needed to operate
Self-sufficiency = success = “big company” status
Big investments to preserve leadership position
Acirramento da concorrência
Avanços tecnológicos acelerados
Demandas mutantes dos clientes
Flexibilidade e capacidade de inovar
Eficiência e redução de custos
06/12/2014 5
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
OUTSOURCING :MACROECONOMIC FOUNDATIONS
From the 80’s on... The rigidly verticalized organization model which had been
prevailing since the Industrial Era ...
Ownership and control of all resources needed to operate
Self-sufficiency = sucess = big company status
Big investments to preserve leadership position
...had to be reexamined
Acirramento da concorrência
Avanços tecnológicos acelerados
Demandas mutantes dos clientes
Flexibilidade e capacidade de inovar
Eficiência e redução de custos
06/12/2014 6
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
OUTSOURCING :MACROECONOMIC FOUNDATIONS
06/12/2014 7
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
It´s the crisis
OUTSOURCING :MACROECONOMIC FOUNDATIONS
American scenario in 1980 cause-effect chain
Inflation
Basic interest rate
Recession
Foreign investments flux
Dollar exchange rate
Export flux
Import flux
Industry profitability and competitivity
Shareholders pressure
06/12/2014 8
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
OUTSOURCING :MACROECONOMIC FOUNDATIONS
American scenario in 1980 cause-effect chain
Inflation
Basic interest rate
Recession
Foreign investments flux
Dollar exchange rate
Export flux
Import flux
Industry profitability and competitivity
Shareholders pressure
One of the responses of the market
Outsourcing
06/12/2014 9
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
OUTSOURCING :MACROECONOMIC FOUNDATIONS
Outsourcing : a strategic tool used to reformat the old organization model ...
... increasing the organizations’ capabilities to :
Be agile and flexible to react to market demand
Identify and reach new market niches
Innovate and take the competitors by surprise
Preserve competitivity even under adverse external conditions through:
Rational cost reduction
Investments optimization and priorization
06/12/2014 10
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
OUTSOURCING :MACROECONOMIC FOUNDATIONS
06/12/2014 11
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
APPLICABILITY TO IT SCENARIO
06/12/2014 12
BusinessDrivers
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
APPLICABILITY TO IT SCENARIO
06/12/2014 13
Years 80 & 90’s
BusinessDrivers
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
APPLICABILITY TO IT SCENARIO
06/12/2014 14
Years 80 & 90’s
Years 00’s
BusinessDrivers
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
APPLICABILITY TO IT SCENARIO
06/12/2014 15
Years 10’s
Years 80 & 90’s
Years 00’s
BusinessDrivers
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
APPLICABILITY TO IT SCENARIO
IT OUTSOURCING MARKET2014-2017 (Billions of dollars)
Por área 2014 2017
IT Outsourcing (ITO) 678 778
Business Process Outsourcing (BPO) 322 384
Total (ITO + BPO) 1000 1162
Cloud Pública 57 104
Cloud Privada + Híbrida 46 74
Consultoria & Integração 11 21
Total (Cloud) 114 199
Sources :
Phil Fersht & Jamie Snowdon - State of the Outsourcing Industry 2013 – Executive Findings, HfS Research
Frank Gens - IDC Forecasts Public IT Cloud Services Spending Will Reach $127B in 2018 as the Market Enters aCritical Innovation Stage, Nov 2014
Ned May, Puneet Shivam & Jeff Baker - The Cloud´s Impact on IT Service Providers – HfS Research and AvendusCapital, Sep 2014
06/12/2014 16
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
IT OUTSOURCING MARKET2014-2017 (Billions of dollars)
Por área 2014 2017
IT Outsourcing (ITO) 678 778
Business Process Outsourcing (BPO) 322 384
Total (ITO + BPO) 1000 1162
Cloud Pública 57 104
Cloud Privada + Híbrida 46 74
Consultoria & Integração 11 21
Total (Cloud) 114 199
Sources :
Phil Fersht & Jamie Snowdon - State of the Outsourcing Industry 2013 – Executive Findings, HfS Research
Frank Gens - IDC Forecasts Public IT Cloud Services Spending Will Reach $127B in 2018 as the Market Enters aCritical Innovation Stage, Nov 2014
Ned May, Puneet Shivam & Jeff Baker - The Cloud´s Impact on IT Service Providers – HfS Research and AvendusCapital, Sep 2014
06/12/2014 17
5.1% per year
20.4% per year
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
Managing the risks intrinsic to each phase
and avoiding their materialization impact the potential benefits stated bythe business drivers which drove the outsourcing decision
06/12/2014 18
Identification and priorization of applicable business drivers
Definition of organization’s sourcing strategy
Provider(s) selection
Negotiation of contractual terms and conditions
Services transition
Contract governance
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
IT OUTSOURCING : HOW TO ASSURE THE EFFECTIVENESS OF RESULTS
06/12/2014 19
Provider(s) selection
Negotiation of contractual terms and conditions
Services transition
Contract governance
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
Identification and priorization of applicable business drivers
Definition of organization’s sourcing strategy
REPOSITIONIG OF THE PROCESS IN LIGHT OF THE CLOUD ALTERNATIVE
Managing the risks intrinsic to each phase
and avoiding their materialization impact the potential benefits stated bythe business drivers which drove the outsourcing decision
newrisks
Definition of organization’s sourcing strategy
06/12/2014 20
Provider(s) selection
Market immaturity
Solutions consistency
Integration and portability among providers
Technological update
Applications interdependency
Sovereignity laws
Taxes for services provided from abroad
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
REPOSITIONIG OF THE PROCESS IN LIGHT OF THE CLOUD ALTERNATIVE
06/12/2014
Provider(s) selection
Negotiation of contractual terms and
conditions
Market immaturity
Solutions consistency
Integration and portability among providers
Technological update
Applications interdependency
Sovereignity laws
Taxes for services provided from abroad
Service Level Agreements (SLAs) and penalties
Security / privacy
Backup / restore
Business continuity
Audit trail
Charging x consumptionevidence
Resources provisioning
Responsibility limitations
Contract renewal and termination
Subcontractors
Notification deadlines
Contractual changes process
Provider end of operations
Intellectual property
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
REPOSITIONIG OF THE PROCESS IN LIGHT OF THE CLOUD ALTERNATIVE
06/12/2014 22
Provider(s) selection
Negotiation of contractual terms and
conditions
Services transition
Market immaturity
Solutions consistency
Integration and portability among providers
Technological update
Applications interdependency
Sovereignity laws
Taxes for services provided from abroad
Service Level Agreements (SLAs) and penalties
Security / privacy
Backup / restore
Business continuity
Audit trail
Charging x consumptionevidence
Resources provisioning
Responsibility limitations
Contract renewal and termination
Subcontractors
Notification deadlines
Contractual changes process
Provider end of operations
Intellectual property
Transition planning
Stakeholders involvement
Transition management
Shadow IT
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
REPOSITIONIG OF THE PROCESS IN LIGHT OF THE CLOUD ALTERNATIVE
06/12/2014 23
Provider(s) selection
Negotiation of contractual terms and
conditions
Services transition
Contract governance
Market immaturity
Solutions consistency
Integration and portability among providers
Technological update
Applications interdependency
Sovereignity laws
Taxes for services provided from abroad
Service Level Agreements (SLAs) and penalties
Security / privacy
Backup / restore
Business continuity
Audit trail
Charging x consumptionevidence
Resources provisioning
Responsibility limitations
Contract renewal and termination
Subcontractors
Notification deadlines
Contractual changes process
Provider end of operations
Intellectual property
Transition planning
Stakeholders involvement
Transition management
Shadow IT
Escalation procedure
Jurisdiction and laws applicable to both data and contract
Provider environment internal changes
Multiple providers management
Risk management
Alfredo Saad - [email protected]
br.linkedin.com/pub/alfredo-saad/1/41/473/
REPOSITIONIG OF THE PROCESS IN LIGHT OF THE CLOUD ALTERNATIVE