Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and...
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Structured Approach to Implementing and Operating Outsourcing and Managed Services for Suppliers and Outsourcing Organisations
Alan McSweeney
April 3, 2011 2
Objectives
Describe at a high-level a structured approach to implementing outsourcing/managed services from both
service provider and end-user organisation
April 3, 2011 3
Scope
Provide a high-level view of a common set of processes to be used by service providers and end-user organisations to implement and operate an outsourcing/managed services arrangement
April 3, 2011 4
Topics
Introduction
Overview
Risks and Lessons Learned
Principles of Outsourcing and Core Competencies
Phases of Outsourcing Relationship
Outsourcing for Service Providers
Phases of Outsourcing Relationship
Key Issues For Successful Outsourcing
Key Capabilities and Constituent Practices
Outsourcing for End-User Organisations
Outsourcing Challenges
Key Issues For Successful Outsourcing
Key Capabilities and Constituent Practices
April 3, 2011 5
What is Outsourcing?
Outsourcing is delegating the responsibility for performing an information technology or business function to a third party
You outsource because the outsourcing supplier will do:
What the organisation currently does
At the same or better level of performance
For the same or lower price
April 3, 2011 6
Potential Advantages of Managed Services
Better Use of Staff: allows agencies to focus human resources on strategic planning and core mission support
Cost Savings: choose not to build and support IT and network infrastructure available in the commercial sector;
use limited capital to purchase needed service levels and reduce total cost of ownership
Ability to Use Optimal Technologies: adjust types and mix of hardware, software, skilled labour, capital investment
and technology to support changes in mission needs
Rapid Response to Organisation and Business Changes: supplier is measured by ability to produce solutions
April 3, 2011 7
Types of Outsourcing Arrangement
Efficiency/Utility (Make it Cheaper) arrangement outsourcing focuses primarily on cost control and, over time, cost reduction, with
the goal of maintaining consistency in the delivery of services
Business Enhancement (Make it Better) arrangement is about business productivity. The organisations performance, as compared
with their competitors, will improve, resulting in movement toward defined business goals
Transformational (Make me Money) arrangement is characterised by a partnership between the service provider and service recipient
that is focused on innovation and new business, changing the very basis on which an organisation competes
April 3, 2011 8
Benefits of Managed Services
Managed Services offers an alternative approach for a client to acquire IT or telecom support services
Managed services solutions are designed and delivered by service providers according to a predefined statement of deliverables and generally includes end-to-end service, service level agreements, and assets (if desired)
A managed service typically includes monthly recurring service-based pricing offering a more predictable cost approach for the client
Ongoing visibility of operational performance is provided and managed through pre-agreed performance parameters (known as service-level agreements)
The client may include their unique performance requirements such as degree of control and visibility, security, availability, capacity, service continuity and other requirements as it relates to
the specific service
Because this is a core competency, the service provider is able to optimise the best balance of facilities, processes, resources, tools, and metrics, resulting in the best overall value for the client
Cost effectiveness is typically achieved through instituting process standards and establishing and supporting a standard operating environment (SOE) consisting of COTS (Commercial Off the Shelf) services and solutions
Managed services can be delivered either in a BOCO (Business-owned, contractor-operated) or COCO (contractor-owned, contractor-operated) model and is largely based on client preference
April 3, 2011 9
Outsourcing Organisations - Developing a Vision for IT Services is Required
What do we do today?
What do our customers want us to do?
What changes do we need to make to align with our customers needs?
How will they pay for those services?
How will we deliver those services consistently and measure their delivery?
What kind of organisation (Governance/Contract Management/Structures/Staff/Skills/Service Providers) will
we need to achieve it?
What service management processes we should use?
April 3, 2011 10
Reasons Organisations Outsource
17%
16%
12%
12%
8%
6%
6%
4%
3%
3%
Reduce And Control Operating
Costs
Improve Company Focus
Gain Access To World-Class
Capabilities
Free Resources For Other
Purposes
Resources Not Available
Internally
Reduce Time To Market
Take Advantage Of
Capabilities
Accelerate Reengineering
Benefits
Share Risks
Function Difficult To Manage
Or Out Of Control
April 3, 2011 11
Outsourcing Experiences
13% to 25% of outsourcing contracts are brought in-house within the first two years
Buyers replace 80% of their service contractors in the first three years
Contractors turn over 40% of their contracts each year, on average
Nearly 70% outsourcing organisations feel their service provider does adequately understand what they are supposed to do
Not good
April 3, 2011 12
Key Issues For Successful Outsourcing
Many outsourcing relationships fail, are terminated early, are unsatisfactory to either or both of the service provider and the client
Outsourcing is a business issues and should be treated as such
Many common issues, problems and concerns arise across outsourcing contracts
Learn from the issues to avoid them
April 3, 2011 13
Hidden Costs of Outsourcing
Transfer of knowledge
Processes and procedures
Documentation
Personal knowledge
Quality issues and their resolution
Inspection programmes
Sustaining quality programmes
Cost of rework
Communication
Poor customer service
Daily operational issues
April 3, 2011 14
Cease's Law on the Nature of the Firm
A firm will tend to expand until the cost of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction on the open market
This means when it is cheaper to buy the service externally it will generally be bought externally
However there is an assumption of perfect knowledge and perfectly rational use of this knowledge to achieve the most logical solution
In reality this perfection is rarely if ever achieved Other less rational factors affect the decision
Everybody Else Is Doing It I Want To Do It So It Appears On My Resume I Like New Technology Vendors Keep Talking About It I Need One Good Idea To Stamp My Mark On The Organization It Will Solve All My Problems I Hate Dealing With IT I Do Not Want to Setup a Large IT Function
Cost estimates are rarely accurate What we know about most projects is that they either or both overrun on costs and deliver less
than expected Cost overruns are generally caused by a mix of errors in the initial cost estimates and deliberate
distortions in order to cause the decision to be made
April 3, 2011 15
Transaction Costs
Along with production costs, there are costs for preparing, entering into and monitoring the execution of all kinds of contracts as well as costs for implementing allocation and tracking measures for the contracted services
When internal transaction costs become greater than the costs of externally sourcing the service, the service will be obtained externally
There are hidden costs associated with sourcing a service externally Selecting the wrong supplier Costs of writing contract Costs of enforcing contract Having a poor service contract that results in hidden cost and/or reduced service Overlooking personnel issues Loosing control over the outsourced activity Management, quality assurance and supervision overhead Implementation and termination costs Loss of flexibility Loss of integration between applications and data Data extraction costs Security framework implementation
Transition to utility computing model requires full knowledge of costs current and future
Note that anything can be outsourced except the management of what is outsourced
April 3, 2011 16
Outsourcing Planning
Structured approach can form the basis for an outsourcing implementation plan for both service providers and for companies performing outsourcing
April 3, 2011 17
Sample Service Transfer Plan Outsourcing Service Provider
Plan subset
Based on activities
1 Service Transfer
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
April 3, 2011 18
Sample Service Transfer Plan Outsourcing Organisation
Plan subset
Based on activities
1 Outsourcing Opportunity Analysis
1.1 Define Current State
1.2 Outsourcing Criteria
1.3 Demand Identification
1.4 Outsourcing Options
April 3, 2011 19
Where Outsourcing Problems Happen
Inadequate Preparation = Problems Start Here
Flawed Service Provider Selection = Project Failure Starts Here
Unclear Contract = Conflict Begins Here
Wrong Performance Measurement = Management Failure Starts Here
Ineffective Ongoing Management = Service Delivery Problems Start Here
April 3, 2011 20
Risks in Outsourcing Lots of Them
Outsourcing Risks
Strategic Reputation
Compliance Operational
Termination Financial
Country Contract
Access Concentration/Systemic
April 3, 2011 21
Strategic Risks
Outsourcing provider may conduct activities that are inconsistent with the overall strategic goals of the outsourcer
Outsourcer fails to implement appropriate and effective oversight of the outsourcing provider
Outsourcer has inadequate expertise to oversee the outsourcing provider
April 3, 2011 22
Reputational Risks
Outsourcing provider delivers a poor service
Outsourcers customer service does not meet expectations in areas serviced by outsourcing provider
Outsourcing provider practices do not comply with stated practices of outsourcer
April 3, 2011 23
Compliance Risks
Outsourcing provider does not comply with relevant laws and regulations
Outsourcing provider does not comply with consumer laws
Outsourcing provider has inadequate compliance systems and control
April 3, 2011 24
Operational Risks
Outsourcing provider experiences technology failures that impact outsourcer
Outsourcing provider has inadequate financial capacity to fulfil obligations and/or provide remedies in the event of failure or breach
Outsourcing provider experiences fraud or error
Outsourcer experiences difficulties or high costs in undertaking inspections
April 3, 2011 25
Termination Risks
Outsourcer has no exit strategy are not in place because of from over-reliance on one provider or the loss of relevant in-house skills
Ability to return services from outsourcing provider is difficult, time-consuming or costly because of a lack of staff or loss of intellectual capacity
April 3, 2011 26
Financial Risks
Inadequate cost controls and charging mechanism leads to unexpectedly higher costs for outsourcer
Changes to services requested from outsourcing provider are very expensive
April 3, 2011 27
Country Risks
Outsourcer cannot enforce contract
Incorrect selection of applicable legal jurisdiction
April 3, 2011 28
Access Risks
Outsourcing arrangement negatively impacts ability to provide accurate and timely information
There is an additional layer of complexity in understanding activities of the outsourcing provider
April 3, 2011 29
Concentration/Systemic Risks
Concentration of services from multiple outsourcers in small number of outsourcing providers can mean lack of control by individual outsourcer and overall systemic risk
April 3, 2011 30
Lessons Learned from Outsourcing Problems
Smoothly Transferring Services And Resources Common cause of failure is the ineffective management of the transfer of services and
resources to the service provider, leading to service delivery problems
Successful service providers rigorously control the transfer of services and resources to ensure that the new service is able to adequately deliver the service and the service continuity is maintained.
Maintaining Stakeholder Expectations Common source of failure in outsourcing engagements is a difference in expectations
between the client, the service provider and the suppliers and partners
Identifying and managing those expectations helps to ensure a common understanding of what is necessary for success
Translating Implicit And Explicit Needs Into Defined Requirements With Agreed Upon Levels Of Quality
Frequent cause of failure in outsourcing is that the service provider does not fully understand the needs of the client
Successful service providers rigorously gather and analyse the stated and unstated needs, then translate those needs into a set of documented requirements
Successful service providers also recognise that needs change over time and establish provisions for gathering and analysing modifications to their services
April 3, 2011 31
Lessons Learned from Outsourcing Problems
Reviewing Service Design And Deployment To Ensure An Adequate Coverage Of The Clients Requirements
Failure in outsourcing is caused by the service provider not fully addressing the needs of the client
To ensure that the service delivery will meet the clients needs successful engagements include rigorous reviews of the service design and deployment
activities by the clients and the service provider prior to service delivery
Managing Clients Security Managing security and controlling critical data and assets are critical to
establishing trust Security management includes protection of intellectual property,
confidentiality and privacy concerns
Monitoring And Controlling Activities To Consistently Meet The Service Delivery Commitments
Successful service providers rigorously monitor their service delivery activities to ensure that the clients commitments are being met
Actions are taken to resolve and prevent problems, thereby escalating issues as appropriate to ensure that they are addressed in a timely basis
April 3, 2011 32
Lessons Learned from Outsourcing Problems
Monitoring And Managing Clients And End Users Satisfaction Success is not always defined in terms of meeting the agreed upon commitments,
because clients and end users may be unsatisfied even when commitments are being met
Successful outsourcing engagements monitor the satisfaction levels of the stakeholders to identify problems and take action
Managing Employee Satisfaction, Motivation, And Retention IT-enabled outsourcing often involves challenges during transition, deployment and
service delivery
High employee turnover jeopardises the service providers ability to meet its clients requirements and undermines their expected gains and performance levels
Proactively monitoring and managing employee satisfaction and motivation can improve personnel retention and effectiveness
Managing Technological Shifts And Maintaining The Availability, Reliability, Accessibility, And Security Of Technology
Technology is a key component of outsourcing
Major challenges for the service provider include keeping pace with rapid changes in technology and effectively managing the technology infrastructure while changes are incorporated
April 3, 2011 33
Principles of Outsourcing
Need a comprehensive policy to guide the assessment of whether and how activities can be appropriately outsourced
Senior management needs to be responsible for outsourcing policy and related overall responsibility for activities undertaken under the policy
Need to establish a comprehensive outsourcing risk management programme to address the outsourced activities and the relationship with the service provider
Need to ensure that outsourcing arrangements does diminish its ability to fulfil obligations to customers and stakeholders
Need to conduct appropriate due diligence in selecting outsourcing service providers
Outsourcing relationship needs to be governed by contract that clearly describes all material aspects of the outsourcing arrangement, including the rights, responsibilities and expectations of all parties
Need to establish and maintain contingency plans, including a plan for availability and disaster recovery and regular testing of backup arrangements
Need to take appropriate steps to ensure that outsourcing providers protect confidential information from intentional or inadvertent disclosure
Need to be aware of the potential risks posed where the activities of multiple outsourcers entities are concentrated within a small number of outsourcing providers
April 3, 2011 34
Core Competencies for Exploiting Outsourcing and Managed Services for Organisations Selecting Outsourcing
Sourcing having an effective approach to outsourcing
Concerned with managing the IT function like a business
Supplier Management plan, analyse and manage the ongoing relationships with suppliers
Concerned with managing the IT function
April 3, 2011 35
Sourcing and Supplier Management
Supplier Management competence and associated processes operationalises the strategic decisions taken
within the Sourcing competence
Supplier Management Sourcing
April 3, 2011 36
Sourcing
Competence
Supplier Management CompetenceSourcing Competence
Sourcing and Supplier Management
Strategic
Sourcing
Decision
Supplier
Selection
Contracting
Governance and
Partner
Integration
Transition
Supplier
Engagement
Order
Management
(Ordering/
Delivery/
Distribution)
Supplier
Communications
Supplier Risk
Monitoring
Contract
Management
(Payment,
Penalties)
Performance
Measurement
And Monitoring
Supplier
Development
Evaluation
Procurement of IT Services and IT Hardware/Software
April 3, 2011 37
Sourcing Competence
Strategy
Alignment
Objectives
and Scoping
Sourcing
Model
Business Case
Calculation
Organisational
Readiness
Partner
SelectionContracting Transition
Partner
integration
and
Governance
Reevaluation
Planning Cycle
Sourcing Cycle
April 3, 2011 38
Sourcing Competence
Define sourcing strategy and sourcing model
Evaluate outsourcing potential of IT processes
Select optimal partner(s)
Manage the transition to selected partner(s)
Setting the basis for a successful relationship with selected partner(s) to maximise business value contribution
April 3, 2011 39
Sourcing Competence Scope
Strategic sourcing decisions on what processes are in- or outsourced to what extent
The decision on what sourcing model is applied
Internal/external
Onshore/nearshore/offshore
Single vs. multiple vendor relationship
Calculation of business cases for outsourcing projects
The process of selecting the optimal partner(s)
Preparation, negotiation, closing and re-evaluation of contracts with selected partner(s)
Managing the transition process and setting up requirements for an enduring and successful relationship with partner(s)
April 3, 2011 40
Dimensions of Sourcing Competence Measurement Framework
Measure state of Sourcing competence along three dimensions
Sourcing Strategy
Contracting
Sourcing Execution
Define facets of each dimension
Measure each facet in terms of:
Associated processes and their state of development
Scope or extent within the organisation
Sourcing Strategy
Contracting
Sourcing Execution
April 3, 2011 41
Supplier Management Competence
Supplier management is concerned with the execution of the IT supplier strategy and manages the suppliers on an operational basis
Supplier management operationalises the strategic decisions of IT suppliers and contracts agreed in the
Sourcing competence
Effective supplier management provides opportunities for cost reduction from better control of assets and people, as well as value-creation opportunities by supporting IT supplier collaboration and innovation
April 3, 2011 42
Supplier Management Competence Scope
All activities related to managing ongoing (operational) relationship with suppliers and associated systems/ tools
Analysis of existing suppliers to identify suitable ongoing engagement strategies at an individual and portfolio level
Manage supplier relationship in line with evolving IT strategy
Measure and monitor supplier performance from both the organisations own perspective and the suppliers perspective
Manage the ongoing external risks (e.g. supplier insolvency) andongoing internal risks (e.g. unchecked SLAs) derived from the organisations relationships with its suppliers
Long-term development of suppliers, their products and services to help them improve internally to achieve improved levels of innovation, quality and performance, and to be aligned optimallywith the enterprise
April 3, 2011 43
Dimensions of Supplier Management Competence Measurement Framework
Measure state of Supplier Management competence along three dimensions
Supplier Alignment
Relationship Management
Performance And Risk Management
Define facets of each dimension
Measure each facet in terms of:
Associated processes and their state of development
Scope or extent within the organisation
Supplier Alignment
Relationship Management
Performance And Risk
Management
April 3, 2011 44
Phases of Outsourcing Relationship
Ongoing
Initiation Delivery CompletionAnalysis
For outsourcing organisation
For both outsourcing organisation and service provider
April 3, 2011 45
Phases of Outsourcing Relationship
Management of outsourcing lifecycleManagement of outsourcing lifecycleOngoing
Close-out the service after the contract ends or the service has been terminated
Close-out the service after the contract ends or the service has been terminated
Completion
Provide service and manage and measure its provision
Provide service and manage and measure its provision
Delivery
Prepare for and transition to provision of service
Prepare for and transition to provision of service
Initiation
Analyse operations and functions to identify those services, processes or functions that could potentially be outsourced and develops the approach to be taken to source the identified opportunities
Analysis
Service ProviderOutsourcing OrganisationPhase
April 3, 2011 46
Roles of Service Provider and Outsourcing Organisation During Phases of Outsourcing Relationship
Initiation
Delivery
Completion
Analysis
Ongoing
Service Provider Outsourcing Organisation
Determine if outsourcing represents a business opportunity
Prepare for service transition, transfer resources and personnel from outsourcing organisation and ensure
service continuity
Plan for outsourcing of selected services, evaluate and select a service provider, create an outsourcing
agreement and transfer resources and personnel to service provider
Define and agree requirements, negotiate contract, plan, design and deploy service, implement service
delivery
Implement the capability to manage the service provider, administer the agreement and the issues,
challenges and changes that arise after the agreement has been reached, reviewing the service providers
performance
Implement knowledge management processes, perform people management, implement
performance management, manage relationship, manage technology and manage risks and threats
Develop outsourcing strategy management, manage relationship with service provider, ensure value,
implement knowledge management processes, manage technology and manage risks and threats
Prepare for service transition, transfer resources and personnel from outsourcing organisation and ensure
service continuity
Plan for completion, ensure service continuity, transfer resources and personnel from outsourcing
organisation and transfer knowledge
April 3, 2011 47
Roles of Service Provider and Outsourcing Organisation During Phases of Outsourcing Relationship
Initiation Delivery CompletionAnalysis Ongoing
Service Provider
Outsourcing Organisation
Common Language
andExpectations
Agreed Roles and
Responsibilities
April 3, 2011 48
Key Capabilities and Constituent Practices
Idealised set of steps for a service provider and end-user organisations and outsourcing organisation to perform when taking on a new outsourcing service
Provides a detailed checklist of work to be done
Each practices contains a set of activities and tasks
Can be modified to suit the circumstances: scope of outsourcing, size of service, duration of contract
Can forms the basis of a project plan for elements of outsourcing work such as initiation
Reduces risk of failure
April 3, 2011 49
Key Capabilities Within Outsourcing Lifecycle for Service Providers
Ongoing
Initiation Delivery Completion
People Management
Performance Management
Relationship Management
Technology Management
Knowledge Management
Threat Management
ContractingService Design
and Deployment
Service Delivery
Service Transfer
Service Transfer
April 3, 2011 50
Key Capabilities Within Outsourcing Lifecycle for End-User Organisations
Outsourcing Strategy
Management
Governance Management
Relationship Management
Value Management
Technology Management
People Management
Outsourcing Planning
Outsourcing Agreements
Sourced Services
Management
Outsourcing Completion
Outsourcing Opportunity
Analysis
Ongoing
Initiation Delivery CompletionAnalysis
Knowledge Management
Organisational Change
Management
Threat Management
Outsourcing Approach
Service Transfer
Service Provider
Evaluation
April 3, 2011 51
Key Capabilities Within Outsourcing Lifecycle for Service Providers and End-User Organisations
Outsourcing Capabilities
and Skills
Analysis Initiation Delivery Ongoing Completion
Outsourcing Organisation
Outsourcing Organisation
Service Provider
Outsourcing Organisation
Service Provider
Outsourcing Organisation
Service Provider
Outsourcing Organisation
Service Provider
Outsourcing Opportunity
Analysis
Outsourcing Approach
Service Transfer
Service Transfer
Contracting
Service Design and
Deployment
Service Delivery
Outsourcing Completion
Sourced Services
Management
Outsourcing Planning
Service Provider
Evaluation
Outsourcing Agreements
Service Transfer
Knowledge Management
People Management
Performance Management
Relationship Management
Technology Management
Threat Management
Outsourcing Strategy
Management
Governance Management
Relationship Management
Value Management
Organisational Change
Management
People Management
Knowledge Management
Technology Management
Threat Management
April 3, 2011 52
Key Capabilities and Constituent Practices for Service Providers
Outsourcing Capabilities
and Skills
Initiation/ Completion
Delivery Ongoing
1 Service Transfer
2 Contracting3 Service
Design and Deployment
4 Service Delivery
5 Knowledge Management
6 People Management
7 Performance Management
8 Relationship Management
9 Technology Management
10 Threat Management
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
1.4 Resources Transferred
Out
1.5 Personnel Transferred
Out
2.1 Negotiations
2.2 Pricing
2.3 Confirm Existing
Conditions
2.4 Market Information
2.5 Plan Negotiations
2.6 Gather Requirements
2.7 Review Requirements
2.8 Respond to Requirements
2.9 Contract Roles
2.10 Create Contracts
2.11 Amend Contracts
3.1 Communicate
Requirements
3.2 Design and Deploy Service
3.3 Plan Design and
Deployment
3.4 Service Specification
3.5 Service Design
3.6 Design Feedback
3.7 Verify Design
3.8 Deploy Service
4.1 Plan Service
Delivery
4.2 Train Clients
4.3 Deliver Service
4.4 Verify Service
Commitments
4.5 Correct Problems
4.6 Prevent Known
Problems
4.7 Service Modifications
4.8 Financial Management
5.1 Share Knowledge
5.2 Provide Required
Information#
5.3 Knowledge System
5.4 Process Assets
5.5 Engagement
Knowledge
5.6 Reuse
5.7 Version and Change
Control
5.8 Resource Consumption
6.1 Encourage Innovation
6.2 Participation
in Decisions
6.3 Work Environment
6.4 Assign Responsibilitie
s
6.5 Define Roles
6.6 Workforce Competencies
6.7 Plan and Deliver
Training
6.8 Plan and Deliver
Training
6.9 Performance
Feedback
6.10 Performance
Feedback
6.11 Rewards
7.1 Engagement
Objectives
7.2 Verify Processes
7.3 Adequate Resources
7.4 Organisational
Objectives
7.5 Review Organisational
Performance
7.6 Make Improvements
7.7 Achieve Organisational
Objectives
7.8 Capability Baselines
7.9 Benchmark
7.10 Prevent Potential
Problems
7.11 Deploy Innovations
1.6 Knowledge Transferred
Out
8.1 Client Interactions
8.2 Select Suppliers and
Partners
8.3 Manage Suppliers and
Partners
8.4 Cultural Fit
8.5 Stakeholder
Information
8.6 Client Relationships
8.7 Supplier and Partner
Relationships
8.8 Value Creation
9.1 Acquire Technology
9.2 Technology Licenses
9.3 Control Technology
9.4 Technology Integration
9.5 Optimise Technology
9.6 Proactively Introduce
Technology
10.1 Risk Management
10.2 Engagement
Risk
10.3 Risk Across
Engagements
10.4 Security
10.5 Intellectual
Property
10.6 Statutory and Regulatory
Compliance
10.7 Disaster Recovery
April 3, 2011 53
Key Capabilities and Constituent Practices for End-User Organisations - 1 Outsourcing Capabilities and
Skills
Analysis Phase Initiation Phase Delivery Phase
1 Outsourcing Opportunity
Analysis
2 Outsourcing Approach
3 Outsourcing Planning
4 Service Provider Evaluation
5 Outsourcing Agreements
6 Service Transfer
Completion Phase
8 Outsourcing Completion
7 Sourced Services Management
1.1 Define Current State
1.2 Outsourcing Criteria
1.3 Demand Identification
1.4 Outsourcing Options
2.1 Outsourcing Approach
2.2 Business Case
2.3 Governance Model
2.4 Impact and Risk Analysis
2.5 Outsourcing Initiation Decision
3.1 Establish Outsourcing
Project
3.2 Service Definition
3.3 Service Provider Selection
Procedures
3.4 Evaluation Criteria
3.5 Prepare Service
Requirements
4.1 Communicate Requirements
4.2 Evaluate Potential Service
Providers
4.3 Select Candidate Service
Providers
5.1 Negotiations Guidelines
5.2 Confirm Existing Conditions
5.3 Negotiations
5.4 Agreement Roles
5.5 Define SLAs and Measures
5.6 Create Agreements
5.7 Amend Agreements
6.1 Service Transition
6.2 Verify Design
6.3 Resources Transferred Out
6.4 Personnel Transferred Out
6.5 Knowledge Transferred Out
7.1 Perform Outsourcing
Management
7.2 Performance Monitoring
7.3 Financial Management
7.4 Agreement Management
7.5 Problem and Incident
Monitoring
7.6 Service Delivery Change
Management
7.7 Service Change Management
7.8 Review Service Performance
7.9 Stakeholder Feedback
7.10 Service Value Analysis
7.11 Continuation Decision
8.1 Completion Planning
8.2 Service Continuity
8.3 Resources Transfer from
Service Provider
8.4 Personnel Transfer from
Service Provider
8.5 Knowledge Transfer from
Service Provider
April 3, 2011 54
Key Capabilities and Constituent Practices for End-User Organisations - 2
Outsourcing Capabilities and
Skills
Ongoing Phase
Governance Focused
Competency and Change
Focused
Environment Focused
9 Outsourcing Strategy
Management
10 Governance Management
11 Relationship Management
12 Value Management
13 Organisational
Change Management
14 People Management
15 Knowledge Management
16 Technology Management
17 Threat Management
9.1 Outsourcing Sponsorship
9.2 Outsourcing Constraints
9.3 Potential Outsourcing
Areas
9.4 Outsourcing Objectives
9.5 Organisational
Outsourcing Strategy
10.1 Outsourcing
Policy
10.2 Service Provider
Management
10.3 Internal Stakeholder
Management
10.4 Defined Outsourcing
Processes
10.5 Align Strategy and
Architectures
10.6 Business Process
Integration
10.7 Adapt to Business Change
11.1 Service Provider
Interactions
11.2 Service Provider
Relationships
11.3 Internal Relationships
11.4 Issue Management
11.5 Cultural Fit
11.6 Collaborative
Relationships
11.7 Innovative Relationships
12.1 Organisational
Outsourcing Performance
12.2 Capability Baselines
12.3 Benchmark Outsourcing
Processes
12.4 Improve Outsourcing
Processes
12.5 Innovation
12.6 Business Value and
Impact
12.7 Outsourcing
Alignment
13.1 Prepare for Organisational
Change
13.2 Stakeholder
Involvement
13.3 Define Future State
13.4 Human Resource
Changes
13.5 Communicate
Organisational Changes
13.6 Organisational
Change
14.1 Assign Outsourcing
Responsibilities
14.2 Personnel Competencies
14.3 Organisational
Outsourcing Competency
14.4 Define Roles
15.1 Provide Required
Information
15.2 Knowledge System
15.3 Market Information
15.4 Lessons Learned
15.5 Share Knowledge
16.1 Asset Management
16.2 License Management
16.3 Technology Integration
17.1 Outsourcing
Risk Management
17.2 Organisational
Risk Management
17.3 Intellectual Property
17.4 Security and Privacy
17.5 Compliance
17.6 Business Continuity
April 3, 2011 55
Analysis Phase
End-User Organisation Concerned with analysing operations and
functions to identify those services, processes, or functions that could potentially be outsourced
Understanding the current, or as-is, state of the client organisations structure and processes
Identifying the relevant criteria for selecting outsourcing opportunities
Identifying outsourcing opportunities to meet outsourcing objectives and criteria
Organising options for outsourcing Developing and validating the Business Case
for each outsourcing option Identifying the outsourcing approach and
governance model for the proposed outsourcing action
Performing impact and risk analyses of the proposed outsourcing action
Making the decision whether or not to source the proposed outsourcing action
April 3, 2011 56
Initiation Phase
Service Provider Concerned with preparation for and initiation of
service delivery Gather requirements Perform due diligence to validate customer
information Assess if and how the requirements can be met Prepare for negotiation Negotiate and sign contract Confirm assumptions Confirm responsibilities and commitments Design the service Review the service design Create service specification Deploy the service Transfer resources - personnel, technology,
infrastructure, applications Transition of service
End-User Organisation Concerned with preparation for and initiation of
managing outsourced services Preparing for service selection by developing the
solicitation and criteria for selection Soliciting and evaluating potential service
providers Preparing for negotiation by having an
organisational position on cost, quality and other topics that need to be negotiated
Defining the formal service level agreements and service provider performance measures
Understanding service providers capabilities by gathering information about the service provider and confirming the assumptions that impact commitments
Establishing a formal agreement with service providers that clearly articulates the clients and service providers responsibilities and commitments
Providing feedback on the service design in order to ensure that the services are meeting the clients requirements and the agreed-upon commitments
Managing the effective transfer of resources needed for service delivery, including personnel, technology infrastructure and work environment
April 3, 2011 57
Delivery Phase
Service Provider Concerned with service delivery including
management of service delivery, verification that commitments are being met and management of costs associated with the service provision
Planning and tracking the service delivery activities
Delivering services according to the agreed commitments
Managing the finances associated with the service delivery
Identifying and controlling modifications to the services being provided
Identifying and controlling modifications to associated service commitments
Identifying problems that impact the service delivery and taking both preventive and corrective actions
End-User Organisation Concerned with monitoring the service
providers service delivery capabilities, including the ongoing monitoring of service provider performance to verify that commitments are being met, monitoring changes, management of the finances and agreements associated with the service provision, fostering realistic expectations and performing value analysis
Planning and tracking the outsourcing management activities
Ensuring that services are delivered according to the agreed-upon commitments
Managing the finances associated with the service delivery
Identifying and controlling modifications to the services being provided or to the associated service commitments
Facilitating problem resolution for problems that impact the service delivery
Reconciling performance against expectations and ensuring that the service provision returns value to the client organisation
April 3, 2011 58
Ongoing Phase
Service Provider Management functions that need to
be performed during the entire outsourcing lifecycle
Manage and motivate personnel to effectively deliver services
Manage relationships with clients, suppliers and business partners
Measure and review the organisations performance and taking action to improve it
Manage information and knowledge systems so that personnel have access to the knowledge needed to effectively perform their work
Identify and control threats to the organisations ability to meet its objectives and client requirements
Manage the technology, systems and applications infrastructure used to support delivery of service
End-User Organisation Management functions that need to
be performed during the entire outsourcing lifecycle
Manage and motivate personnel to effectively deliver services
Manage relationships with clients, suppliers and business partners
Measure and review the organisations performance and taking action to improve it
Manage information and knowledge systems so that personnel have access to the knowledge needed to effectively perform their work
Identify and control threats to the organisations ability to meet its objectives and client requirements
Manage the technology, systems and applications infrastructure used to support delivery of service
April 3, 2011 59
Completion Phase
Service Provider
Concerned with closing down the engagement at the end of the outsourcing lifecycle
Manage the transfer of resources to the new service provider, whether it is to the client or to another service provider
Ensure service continuity during transfer
Identify and transferring the knowledge critical for the delivery of service
End-User Organisation
Concerned with closing down the engagement at the end of the outsourcing lifecycle
Planning for closing down a outsourced service and managing the agreement during the close-down period including managing the agreement during termination proceedings, during renewal, or during normal completion
Managing the transfer of resources to the new service provider, whether it is to back to the organisation or to another service provider including the potential transfer of people, technology infrastructure and intellectual property
Ensuring service continuity during the transfer of responsibilities for service provision
Identifying and transferring the knowledge capital critical for the delivery of service
April 3, 2011 60
Benefits of Structured Approach
Service Provider
Minimises problems
Provides common language
Provides common understanding of roles and responsibilities
Provides mechanism for resolving issues
Know what is expected and what should be done
End-User Organisation
Provides structured approach to evaluating and adopting outsourcing
Demonstrates due diligence in selecting outsourcing partner
Provides common understanding of roles and responsibilities
Provides mechanism for resolving issues
Knows service to be provided and measures delivery
April 3, 2011 61
Outsourcing for Service Providers
April 3, 2011 62
Phases of Outsourcing Relationship
Ongoing
Initiation Delivery Completion
April 3, 2011 63
Phases of Outsourcing Relationship
Every outsourcing relationship has four phases
Initiation prepare for and transition to provision of service
Delivery provide service and manage and measure its provision
Completion close-out the service after the contract ends or the service has been terminated
Ongoing management of outsourcing lifecycle
April 3, 2011 64
Initiation Phase
Concerned with preparation for and initiation of service delivery
Gather requirements
Perform due diligence to validate customer information
Assess if and how the requirements can be met
Prepare for negotiation
Negotiate and sign contract
Confirm assumptions
Confirm responsibilities and commitments
Design the service
Review the service design
Create service specification
Deploy the service
Transfer resources - personnel, technology, infrastructure, applications
Transition of service
April 3, 2011 65
Delivery Phase
Concerned with service delivery including management of service delivery, verification that commitments are being met and management of costs associated with the service provision
Planning and tracking the service delivery activities
Delivering services according to the agreed commitments
Managing the finances associated with the service delivery
Identifying and controlling modifications to the services being provided
Identifying and controlling modifications to associated service commitments
Identifying problems that impact the service delivery and takingboth preventive and corrective actions
April 3, 2011 66
Completion Phase
Concerned with closing down the engagement at the end of the outsourcing lifecycle
Manage the transfer of resources to the new service provider, whether it is to the client or to another service provider
Ensure service continuity during transfer
Identify and transferring the knowledge critical for the delivery of service
April 3, 2011 67
Ongoing Phase
Management functions that need to be performed during the entire outsourcing lifecycle
Manage and motivate personnel to effectively deliver services
Manage relationships with clients, suppliers and business partners
Measure and review the organisations performance and taking action to improve it
Manage information and knowledge systems so that personnel have access to the knowledge needed to effectively perform theirwork
Identify and control threats to the organisations ability to meet its objectives and client requirements
Manage the technology, systems and applications infrastructure used to support delivery of service
April 3, 2011 68
Key Capabilities Within Outsourcing Lifecycle
Ongoing
Initiation Delivery Completion
People Management
Performance Management
Relationship Management
Technology Management
Knowledge Management
Threat Management
ContractingService Design
and Deployment
Service Delivery
Service Transfer
Service Transfer
April 3, 2011 69
Key Capabilities and Constituent PracticesOutsourcing
Capabilities and Skills
Initiation/ Completion
Delivery Ongoing
1 Service Transfer
2 Contracting3 Service Design
and Deployment4 Service
Delivery5 Knowledge
Management6 People
Management7 Performance
Management8 Relationship
Management9 Technology
Management10 Threat
Management
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
1.4 Resources Transferred Out
1.5 Personnel Transferred Out
2.1 Negotiations
2.2 Pricing
2.3 Confirm Existing
Conditions
2.4 Market Information
2.5 Plan Negotiations
2.6 Gather Requirements
2.7 Review Requirements
2.8 Respond to Requirements
2.9 Contract Roles
2.10 Create Contracts
2.11 Amend Contracts
3.1 Communicate
Requirements
3.2 Design and Deploy Service
3.3 Plan Design and Deployment
3.4 Service Specification
3.5 Service Design
3.6 Design Feedback
3.7 Verify Design
3.8 Deploy Service
4.1 Plan Service Delivery
4.2 Train Clients
4.3 Deliver Service
4.4 Verify Service Commitments
4.5 Correct Problems
4.6 Prevent Known Problems
4.7 Service Modifications
4.8 Financial Management
5.1 Share Knowledge
5.2 Provide Required
Information#
5.3 Knowledge System
5.4 Process Assets
5.5 Engagement Knowledge
5.6 Reuse
5.7 Version and Change Control
5.8 Resource Consumption
6.1 Encourage Innovation
6.2 Participation in Decisions
6.3 Work Environment
6.4 Assign Responsibilities
6.5 Define Roles
6.6 Workforce Competencies
6.7 Plan and Deliver Training
6.8 Plan and Deliver Training
6.9 Performance Feedback
6.10 Performance
Feedback
6.11 Rewards
7.1 Engagement Objectives
7.2 Verify Processes
7.3 Adequate Resources
7.4 Organisational
Objectives
7.5 Review Organisational
Performance
7.6 Make Improvements
7.7 Achieve Organisational
Objectives
7.8 Capability Baselines
7.9 Benchmark
7.10 Prevent Potential
Problems
7.11 Deploy Innovations
1.6 Knowledge Transferred Out
8.1 Client Interactions
8.2 Select Suppliers and
Partners
8.3 Manage Suppliers and
Partners
8.4 Cultural Fit
8.5 Stakeholder Information
8.6 Client Relationships
8.7 Supplier and Partner
Relationships
8.8 Value Creation
9.1 Acquire Technology
9.2 Technology Licenses
9.3 Control Technology
9.4 Technology Integration
9.5 Optimise Technology
9.6 Proactively Introduce
Technology
10.1 Risk Management
10.2 Engagement Risk
10.3 Risk Across Engagements
10.4 Security
10.5 Intellectual Property
10.6 Statutory and Regulatory
Compliance
10.7 Disaster Recovery
April 3, 2011 70
Key Capabilities and Constituent Practices
Idealised set of steps for a service provider to perform when taking on a new outsourcing client
Provides a detailed checklist of work to be done
Each practice contains a set of activities and tasks
Can be modified to suit the circumstances: scope of outsourcing, size of client, duration of contract
Can forms the basis of a project plan for elements of outsourcing work such as initiation
Reduces risk of failure
Demonstrates professionalism to potential clients
April 3, 2011 71
Key Issues For Successful Outsourcing
Many outsourcing relationships fail, are terminated early, are unsatisfactory to either or both of the service provider and the client
Outsourcing is a business issues and should be treated as such
Many common issues, problems and concerns arise across outsourcing contracts
Learn from the issues to avoid them
April 3, 2011 72
Key Issues For Successful Outsourcing
1. Establishing and maintaining trust with stakeholders
2. Managing stakeholder expectations
3. Translating implicit and explicit needs into defined requirements with agreed-upon levels of quality
4. Establishing well-defined contracts with stakeholders, including clients, suppliers and partners
5. Reviewing service design and deployment to ensure adequate coverage of the requirements
6. Ensuring the effectiveness of interactions with stakeholders
7. Managing supplier and partner relationships to ensure that commitments are met
8. Ensuring compliance with statutory and regulatory requirements
9. Managing clients security
10. Managing cultural differences between stakeholders
11. Monitoring and controlling activities to consistently meet the service delivery commitments
April 3, 2011 73
Key Issues For Successful Outsourcing
12. Monitoring and managing clients and end-users satisfaction
13. Building and maintaining the competencies that enable personnel to effectively perform their roles and responsibilities
14. Managing employee satisfaction, motivation and retention
15. Establishing and maintaining an effective work environment
16. Maintaining a competitive advantage
17. Innovating, building flexibility and increasing responsiveness to meet unique and evolving client requirements
18. Managing rapid technological shifts and maintaining the availability, reliability, accessibility and security of technology
19. Capturing and using knowledge
20. Smoothly transferring services and resources
21. Maintaining continuity of the service delivery
22. Capturing and transferring knowledge gained to the client during contract completion
23. Measuring and analysing the reasons for termination, to prevent reoccurrence
April 3, 2011 74
Issue 1 - Establishing And Maintaining Trust With Stakeholders
Building a trusting relationship with stakeholders is critical to success
Important for all suppliers and partners involved in the outsourcing relationship hardware, software, communications, services
By effectively managing expectations and responding to personnel, clients and end-users, service provider establishes trust with its stake- holders to help establish long-term relationships
April 3, 2011 75
Issue 2 - Managing Stakeholder Expectations
Differences in expectations between the client, the service provider and the suppliers and partners is a common source of failure
Identifying and managing those expectations helps to ensure a common understanding of what is necessary for success
April 3, 2011 76
Issue 3 - Translating Implicit And Explicit Needs Into Defined Requirements With Agreed-Upon Levels Of Quality
Frequent cause of failure in outsourcing is that the service provider does not fully understand the needs of the client
Inability of clients to adequately express their needs
Lack of rigor by the service provider in gathering and analysingthose needs
Successful service providers rigorously gather and analyse the stated and unstated needs
Translate those needs into a set of documented requirements
Successful providers also recognise that needs change over time and establish provisions for gathering and analysing modifications to their services
April 3, 2011 77
Issue 4 - Establishing Well-Defined Contracts With Stakeholders, Including Clients, Suppliers And Partners
Poorly written contracts are a common cause of failure and result in a large number of contracts being renegotiated
Outsourcing arrangements are typically long-term in nature and require contracts that are clear and detailed as well as being flexible enough to account for business changes
Formal mechanisms are required in order for the provider to identify changing needs, modify services based on those changes and amend contracts to reflect the current requirements and commitments
April 3, 2011 78
Issue 5 - Reviewing Service Design And Deployment To Ensure Adequate Coverage Of The Requirements
Failure in outsourcing can be caused by the service provider not fully addressing the needs of the client
To ensure that the service delivery will meet the clients needs, successful engagements include rigorous reviews of the service design and deployment activities by the clients and the service provider prior to service delivery
April 3, 2011 79
Issue 6 - Ensuring The Effectiveness Of Interactions With Stakeholders
Large-scale outsourcing often involves a combination of face-to-face and remote interactions
Interactions with clients need to be managed in order to effectively understand their needs
Clear communications with all stakeholders can have a strong positive impact on the ability to effectively perform work
April 3, 2011 80
Issue 7 - Managing Supplier And Partner Relationships To Ensure That Commitments Are Met
Outsourcing engagements can include multiple service providers working together to meet the clients needs
Regardless of the type of relationship suppliers and partners can have a significant impact on the effectiveness of the service delivery and they must be actively managed
April 3, 2011 81
Issue 8 - Ensuring Compliance With Statutory And Regulatory Requirements
Service providers are often faced with the need to comply with a large variety of laws and regulations
Effectively operating in this environment requires rigorous analysis and management of all applicable legal requirements to protect themselves and their clients
April 3, 2011 82
Issue 9 - Managing Clients Security
Managing security and controlling critical data and assets are critical to establishing trust
Security management includes protection of intellectual property, confidentiality and privacy concerns
Breakdowns, such as security breaches, can impact the service providers ability to provide adequate service and can irreparably damage the relationship with the client
April 3, 2011 83
Issue 10 - Managing Cultural Differences Between Stakeholders
In large-scale outsourcing there are many potential cultural differences between service providers, clients, end-users, suppliers and partners
These include differences between country, region and organisational culture
These differences need to be identified and addressed in order to guard against breakdowns in communication
April 3, 2011 84
Issue 11 - Monitoring And Controlling Activities To Consistently Meet The Service Delivery Commitments
Successful service providers monitor their service delivery activities to ensure that the clients commitments are being met
Actions are taken to resolve and prevent problems, thereby escalating issues as appropriate to ensure that
they are addressed in a timely basis
April 3, 2011 85
Issue 12 - Monitoring And Managing Clients And End-Users Satisfaction
Success is not always defined in terms of meeting the agreed-upon commitments because clients and end-users may be unsatisfied even when commitments are being met
Successful outsourcing engagements monitor the satisfaction levels of the stakeholders to identify problems
and take action
April 3, 2011 86
Issue 13 - Building And Maintaining The Competencies That Enable Personnel To Effectively Perform Their Roles And Responsibilities
Outsourcing is often highly dependant on specialised competencies without which personnel cannot effectively perform the work assigned to them
Service providers need to manage the competencies of individuals as well as the workforce as a whole in order to ensure that work is effectively performed and that the clients requirements are met.
April 3, 2011 87
Issue 14 - Managing Employee Satisfaction, Motivation And Retention
IT-enabled outsourcing often involves challenges during transition and deployment and service delivery
High employee turnover jeopardises the service providers ability to meet its clients requirements and undermines their expected gains and performance levels
Proactively monitoring and managing employee satisfaction and motivation can improve personnel retention and effectiveness
April 3, 2011 88
Issue 15 - Establishing And Maintaining An Effective Work Environment
A work environment that is well suited to the service being delivered enables personnel to effectively perform their work
Also contributes to employee satisfaction and retention
April 3, 2011 89
Issue 16 - Maintaining A Competitive Advantage
Service providers need to effectively demonstrate their capabilities relative to competitors
Initially done to differentiate the service provider from the competition in such a way that they will be chosen over other providers
Done to continually improve the organisations capabilities and demonstrate to clients that the current service provider is the organisation best equipped to meet clientschanging needs
Important aspect of being competitive is demonstrating financial stability and longevity
April 3, 2011 90
Issue 17 - Innovating, Building Flexibility and Increasing Responsiveness To Meet Unique And Evolving Client Requirements
Successful outsourcing engagements are those where the service provider is able to be flexible and responsive to clients changing needs
Adopting innovations is one way to add value and meet new needs
Actively manage the performance of the organisation and continuously improve its capabilities
April 3, 2011 91
Issue 18 - Managing Rapid Technological Shifts And Maintaining The Availability, Reliability, Accessibility And
Security Of Technology
Technology is a key component of IT outsourcing such as public cloud
Challenges for the service provider include keeping pace with rapid changes in technology and effectively managing the technology infrastructure while changes are incorporated
April 3, 2011 92
Issue 19 - Capturing And Using Knowledge
Managing knowledge is critical to a service providers ability to avoid rework and improve the consistency and quality of work performed by personnel
includes the effective storage, retrieval and use of knowledge gained on engagements
April 3, 2011 93
Issue 20 - Smoothly Transferring Services And Resources
A common cause of failure in outsourcing is the ineffective management of the transfer of services and resources to and from the service provider leading to service delivery problems
Successful service providers rigorously control the transfer of services and resources to ensure that the new service provider is able to adequately deliver the service and that service continuity is maintained
April 3, 2011 94
Issue 21 - Maintaining Continuity Of The Service Delivery
Effectiveness of outsourcing is related to the service providers ability to maintain service continuity despite any problems that arise
Successful providers manage service continuity by effectively controlling and preventing problems during
service delivery, preparing and responding to threats and coordinating the transfer of service during periods of transition
April 3, 2011 95
Issue 22 - Capturing And Transferring Knowledge Gained To The Client During Contract Completion
Frequent concern of clients who consider outsourcing is that in-house knowledge will be eroded, making it impossible to bring outsourced services back in-house
Successful service providers address this concern by making provisions for capturing and transferring knowledge back to the client during contract completion
April 3, 2011 96
Issue 23 - Measuring And Analysing The Reasons for Termination to prevent Reoccurrence
Termination may happen for a number of reasons, including an inability of the service provider to meet
changing client needs, resolve problems, meet commitments, or match the capabilities of competitors
Analysing the reasons for termination and taking action based on the findings helps to prevent issues from recurring with other clients and ensure the long-term success of the service provider
April 3, 2011 97
Key Capabilities and Constituent PracticesOutsourcing
Capabilities and Skills
Initiation/ Completion
Delivery Ongoing
1 Service Transfer
2 Contracting3 Service Design
and Deployment4 Service
Delivery5 Knowledge
Management6 People
Management7 Performance
Management8 Relationship
Management9 Technology
Management10 Threat
Management
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
1.4 Resources Transferred Out
1.5 Personnel Transferred Out
2.1 Negotiations
2.2 Pricing
2.3 Confirm Existing
Conditions
2.4 Market Information
2.5 Plan Negotiations
2.6 Gather Requirements
2.7 Review Requirements
2.8 Respond to Requirements
2.9 Contract Roles
2.10 Create Contracts
2.11 Amend Contracts
3.1 Communicate
Requirements
3.2 Design and Deploy Service
3.3 Plan Design and Deployment
3.4 Service Specification
3.5 Service Design
3.6 Design Feedback
3.7 Verify Design
3.8 Deploy Service
4.1 Plan Service Delivery
4.2 Train Clients
4.3 Deliver Service
4.4 Verify Service Commitments
4.5 Correct Problems
4.6 Prevent Known Problems
4.7 Service Modifications
4.8 Financial Management
5.1 Share Knowledge
5.2 Provide Required
Information#
5.3 Knowledge System
5.4 Process Assets
5.5 Engagement Knowledge
5.6 Reuse
5.7 Version and Change Control
5.8 Resource Consumption
6.1 Encourage Innovation
6.2 Participation in Decisions
6.3 Work Environment
6.4 Assign Responsibilities
6.5 Define Roles
6.6 Workforce Competencies
6.7 Plan and Deliver Training
6.8 Plan and Deliver Training
6.9 Performance Feedback
6.10 Performance
Feedback
6.11 Rewards
7.1 Engagement Objectives
7.2 Verify Processes
7.3 Adequate Resources
7.4 Organisational
Objectives
7.5 Review Organisational
Performance
7.6 Make Improvements
7.7 Achieve Organisational
Objectives
7.8 Capability Baselines
7.9 Benchmark
7.10 Prevent Potential
Problems
7.11 Deploy Innovations
1.6 Knowledge Transferred Out
8.1 Client Interactions
8.2 Select Suppliers and
Partners
8.3 Manage Suppliers and
Partners
8.4 Cultural Fit
8.5 Stakeholder Information
8.6 Client Relationships
8.7 Supplier and Partner
Relationships
8.8 Value Creation
9.1 Acquire Technology
9.2 Technology Licenses
9.3 Control Technology
9.4 Technology Integration
9.5 Optimise Technology
9.6 Proactively Introduce
Technology
10.1 Risk Management
10.2 Engagement Risk
10.3 Risk Across Engagements
10.4 Security
10.5 Intellectual Property
10.6 Statutory and Regulatory
Compliance
10.7 Disaster Recovery
April 3, 2011 98
1 Service Transfer - ActivitiesOutsourcing
Capabilities and Skills
Initiation/ Completion
Delivery Ongoing
1 Service Transfer
2 Contracting3 Service Design
and Deployment4 Service
Delivery5 Knowledge
Management6 People
Management7 Performance
Management8 Relationship
Management9 Technology
Management10 Threat
Management
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
1.4 Resources Transferred Out
1.5 Personnel Transferred Out
2.1 Negotiations
2.2 Pricing
2.3 Confirm Existing
Conditions
2.4 Market Information
2.5 Plan Negotiations
2.6 Gather Requirements
2.7 Review Requirements
2.8 Respond to Requirements
2.9 Contract Roles
2.10 Create Contracts
2.11 Amend Contracts
3.1 Communicate
Requirements
3.2 Design and Deploy Service
3.3 Plan Design and Deployment
3.4 Service Specification
3.5 Service Design
3.6 Design Feedback
3.7 Verify Design
3.8 Deploy Service
4.1 Plan Service Delivery
4.2 Train Clients
4.3 Deliver Service
4.4 Verify Service Commitments
4.5 Correct Problems
4.6 Prevent Known Problems
4.7 Service Modifications
4.8 Financial Management
5.1 Share Knowledge
5.2 Provide Required
Information#
5.3 Knowledge System
5.4 Process Assets
5.5 Engagement Knowledge
5.6 Reuse
5.7 Version and Change Control
5.8 Resource Consumption
6.1 Encourage Innovation
6.2 Participation in Decisions
6.3 Work Environment
6.4 Assign Responsibilities
6.5 Define Roles
6.6 Workforce Competencies
6.7 Plan and Deliver Training
6.8 Plan and Deliver Training
6.9 Performance Feedback
6.10 Performance
Feedback
6.11 Rewards
7.1 Engagement Objectives
7.2 Verify Processes
7.3 Adequate Resources
7.4 Organisational
Objectives
7.5 Review Organisational
Performance
7.6 Make Improvements
7.7 Achieve Organisational
Objectives
7.8 Capability Baselines
7.9 Benchmark
7.10 Prevent Potential
Problems
7.11 Deploy Innovations
1.6 Knowledge Transferred Out
8.1 Client Interactions
8.2 Select Suppliers and
Partners
8.3 Manage Suppliers and
Partners
8.4 Cultural Fit
8.5 Stakeholder Information
8.6 Client Relationships
8.7 Supplier and Partner
Relationships
8.8 Value Creation
9.1 Acquire Technology
9.2 Technology Licenses
9.3 Control Technology
9.4 Technology Integration
9.5 Optimise Technology
9.6 Proactively Introduce
Technology
10.1 Risk Management
10.2 Engagement Risk
10.3 Risk Across Engagements
10.4 Security
10.5 Intellectual Property
10.6 Statutory and Regulatory
Compliance
10.7 Disaster Recovery
April 3, 2011 99
1 Service Transfer - 1.1 Resources Transferred In
Scope
Establish and implement procedures to verify and account for resources transferred to the organisation
Track and manage resource transfers in order to facilitate a smooth transfer of responsibilities prior to service delivery
Activities
Provide support for creating and maintaining the procedures for verifying and accounting for resources transferred to the organisation
Document and implement the procedures for verifying and accounting for resources transferred to the organisation
Support the implementation of the procedures for verifying and accounting for resources transferred to the organisation
April 3, 2011 100
1 Service Transfer - 1.2 Personnel Transferred In
Scope
Establish and implement procedures to manage the transfer of personnel to the organisation
Transfer the necessary personnel and ensure that the necessary personnel competencies are in place in order to enable the organisation to effectively deliver service
Activities
Provide support for creating and maintaining the procedures for managing the transfer of personnel to the organisation
Document and implement the procedures for managing the transfer of personnel to the organisation
Support the implementation of the procedures for managing the transfer of personnel to the organisation
April 3, 2011 101
1 Service Transfer - 1.3 Service Continuity
Scope
Establish and implement procedures to ensure the continuity of service
Maintain service continuity as service is transferred to the client, or to another service provide, in order to improve client satisfaction
Activities
Provide support for creating and maintaining the procedures for ensuring continuity of service across the organisation
Document and implement the procedures for ensuring continuity of service
Support the implementation of the procedures for ensuring continuity of service across the organisation
April 3, 2011 102
1 Service Transfer - 1.4 Resources Transferred Out
Scope
Establish and implement procedures to transfer resources from the organisation
Manage the transfer of resources in order to help ensure a smooth hand-over and improve the clients satisfaction, thereby establishing a basis for
future relationships with the client
Activities
Provide support for creating and maintaining the procedures for transferring resources from the organisation
Document and implement the procedures for transferring resources from the organisation
Support the implementation of the procedures for transferring resources from the organisation
April 3, 2011 103
1 Service Transfer - 1.5 Personnel Transferred Out
Scope
Establish and implement procedures to manage the transfer of personnel from the organisation
Activities
Provide support for creating and maintaining the procedures for managing the transfer of personnel from the organisation
Document and implement the procedures for managing the transfer of personnel from the organisation
Support the implementation of the procedures for managing the transfer of personnel from the organisation
April 3, 2011 104
1 Service Transfer - 1.6 Knowledge Transferred Out
Scope
Establish and implement procedures to transfer to the client theknowledge gained from the specific client engagement
Activities
Provide support for creating and maintaining the procedures for transferring knowledge to the client
Document and implement the procedures for transferring knowledge to the client
Support the implementation of the procedures for transferring knowledge to the client
April 3, 2011 105
2 Contracting - ActivitiesOutsourcing
Capabilities and Skills
Initiation/ Completion
Delivery Ongoing
1 Service Transfer
2 Contracting3 Service Design
and Deployment4 Service
Delivery5 Knowledge
Management6 People
Management7 Performance
Management8 Relationship
Management9 Technology
Management10 Threat
Management
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
1.4 Resources Transferred Out
1.5 Personnel Transferred Out
2.1 Negotiations
2.2 Pricing
2.3 Confirm Existing
Conditions
2.4 Market Information
2.5 Plan Negotiations
2.6 Gather Requirements
2.7 Review Requirements
2.8 Respond to Requirements
2.9 Contract Roles
2.10 Create Contracts
2.11 Amend Contracts
3.1 Communicate
Requirements
3.2 Design and Deploy Service
3.3 Plan Design and Deployment
3.4 Service Specification
3.5 Service Design
3.6 Design Feedback
3.7 Verify Design
3.8 Deploy Service
4.1 Plan Service Delivery
4.2 Train Clients
4.3 Deliver Service
4.4 Verify Service Commitments
4.5 Correct Problems
4.6 Prevent Known Problems
4.7 Service Modifications
4.8 Financial Management
5.1 Share Knowledge
5.2 Provide Required
Information#
5.3 Knowledge System
5.4 Process Assets
5.5 Engagement Knowledge
5.6 Reuse
5.7 Version and Change Control
5.8 Resource Consumption
6.1 Encourage Innovation
6.2 Participation in Decisions
6.3 Work Environment
6.4 Assign Responsibilities
6.5 Define Roles
6.6 Workforce Competencies
6.7 Plan and Deliver Training
6.8 Plan and Deliver Training
6.9 Performance Feedback
6.10 Performance
Feedback
6.11 Rewards
7.1 Engagement Objectives
7.2 Verify Processes
7.3 Adequate Resources
7.4 Organisational
Objectives
7.5 Review Organisational
Performance
7.6 Make Improvements
7.7 Achieve Organisational
Objectives
7.8 Capability Baselines
7.9 Benchmark
7.10 Prevent Potential
Problems
7.11 Deploy Innovations
1.6 Knowledge Transferred Out
8.1 Client Interactions
8.2 Select Suppliers and
Partners
8.3 Manage Suppliers and
Partners
8.4 Cultural Fit
8.5 Stakeholder Information
8.6 Client Relationships
8.7 Supplier and Partner
Relationships
8.8 Value Creation
9.1 Acquire Technology
9.2 Technology Licenses
9.3 Control Technology
9.4 Technology Integration
9.5 Optimise Technology
9.6 Proactively Introduce
Technology
10.1 Risk Management
10.2 Engagement Risk
10.3 Risk Across Engagements
10.4 Security
10.5 Intellectual Property
10.6 Statutory and Regulatory
Compliance
10.7 Disaster Recovery
April 3, 2011 106
2 Contracting - 2.1 Negotiations
Scope
Establish and implement guidelines for negotiations with currentor prospective clients
Activities
Provide support for creating and maintaining the guidelines for negotiations with current or prospective clients across the organisation
Document and implement the guidelines for negotiations with current or prospective clients
Support the implementation of guidelines for negotiations with current or prospective clients across the organisation
April 3, 2011 107
2 Contracting - 2.2 Pricing
Scope
Establish and implement guidelines for pricing services
Activities
Provide support for creating and maintaining the guidelines for pricing services
Document and implement the guidelines for pricing services
Support the implementation of guidelines for pricing services
April 3, 2011 108
2 Contracting - 2.3 Confirm Existing Conditions
Scope
Establish and implement guidelines for confirming existing conditions about potential engagements
Activities
Provide support for creating and maintaining the guidelines for confirming existing conditions
Document and implement the guidelines for confirming existing conditions
Support the implementation of guidelines for confirming existingconditions
April 3, 2011 109
2 Contracting - 2.4 Market Information
Scope
Analyse and use market information about prospective clients
Activities
Provide support for creating and maintaining the work products and tasks for analysing and using market information about prospective clients
Document and implement the work products and tasks required for analysing and using market information about prospective clients
Support the implementation of analysing and using market information about prospective clients
April 3, 2011 110
2 Contracting - 2.5 Plan Negotiations
Scope
Plan and track negotiations with current or prospective clients
Activities
Provide support for creating and maintaining the work products and tasks for planning and tracking client negotiations
Document and implement the work products and tasks required for planning and tracking client negotiations
Support the implementation of planning and tracking client negotiations
April 3, 2011 111
2 Contracting - 2.6 Gather Requirements
Scope
Establish and implement procedures to gather a clients requirements
Activities
Provide support for creating and maintaining the procedures for gathering requirements
Document and implement the procedures for gathering requirements
Support the implementation of the procedures for gathering requirements
April 3, 2011 112
2 Contracting - 2.7 Review Requirements
Scope
Prior to committing to the prospective client, review requirements and verify that the organisation can meet them
Activities
Provide support for creating and maintaining the work products and tasks for reviewing requirements and verifying that the organisation can meet them
Document and implement the work products and tasks required for reviewing requirements and verifying that the organisation can meet them
Support the implementation of reviewing requirements and verifying that the organisation can meet them
April 3, 2011 113
2 Contracting - 2.8 Respond to Requirements
Scope
Establish and implement procedures to respond to the requirements of a prospective client
Activities
Provide support for creating and maintaining the procedures for responding to requirements
Document and implement the procedures for responding to requirements
Support the implementation of the procedures for responding to requirements
April 3, 2011 114
2 Contracting - 2.9 Contract Roles
Scope
Establish and implement procedures to respond to the requirements of a prospective client
Activities
Provide support for creating and maintaining the procedures for responding to requirements
Document and implement the procedures for responding to requirements
Support the implementation of the procedures for responding to requirements
April 3, 2011 115
2 Contracting - 2.10 Create Contracts
Scope
Define the roles and responsibilities of the organisation and the client with respect to the proposed contract
Consistent and effective legal agreements in order to enable all the parties to have a clear understanding of what services will be delivered and at what level of quality
Given the long-term nature of most outsourcing engagements, implementing procedures for contracts and flexibility in the relationship between the client and the organisation are critical to success
Activities
Provide support for creating and maintaining the work products and tasks for defining the roles and responsibilities of the organisation and client
Document and implement the work products and tasks required for defining the roles and responsibilities of the organisation and client
Support the implementation of defining the roles and responsibilities of the organisation and client
April 3, 2011 116
2 Contracting - 2.11 Amend Contracts
Scope
Establish and implement procedures to amend contracts
Activities
Provide support for creating and maintaining the procedures for amending contracts
Document and implement the procedures for amending contracts
Support the implementation of the procedures for amending contracts
April 3, 2011 117
3 Service Design and Deployment - ActivitiesOutsourcing
Capabilities and Skills
Initiation/ Completion
Delivery Ongoing
1 Service Transfer
2 Contracting3 Service Design
and Deployment4 Service
Delivery5 Knowledge
Management6 People
Management7 Performance
Management8 Relationship
Management9 Technology
Management10 Threat
Management
1.1 Resources Transferred In
1.2 Personnel Transferred In
1.3 Service Continuity
1.4 Resources Transferred Out
1.5 Personnel Transferred Out
2.1 Negotiations
2.2 Pricing
2.3 Confirm Existing
Conditions
2.4 Market Information
2.5 Plan Negotiations
2.6 Gather Requirements
2.7 Review Requirements
2.8 Respond to Requirements
2.9 Contract Roles
2.10 Create Contracts
2.11 Amend Contracts
3.1 Communicate
Requirements
3.2 Design and Deploy Service
3.3 Plan Design and Deployment
3.4 Service Specification
3.5 Service Design
3.6 Design Feedback
3.7 Verify Design
3.8 Deploy Service
4.1 Plan Service Delivery
4.2 Train Clients
4.3 Deliver Service
4.4 Verify Service Commitments
4.5 Correct Problems
4.6 Prevent Known Problems
4.7 Service Modifications
4.8 Financial Management
5.1 Share Knowledge
5.2 Provide Required
Information#
5.3 Knowledge System
5.4 Process Assets
5.5 Engagement Knowledge
5.6 Reuse
5.7 Version and Change Control
5.8 Resource Consumption
6.1 Encourage Innovation
6.2 Participation in Decisions
6.3 Work Environment
6.4 Assign Responsibilities
6.5 Define Roles
6.6 Workforce Competencies
6.7 Plan and Deliver Training
6.8 Plan and Deliver Training
6.9 Performance Feedback
6.10 Performance
Feedback
6.11 Rewards
7.1 Engagement Objectives
7.2 Verify Processes
7.3 Adequate Resources
7.4 Organisational
Objectives
7.5 Review Organisational
Performance
7.6 Make Improvements
7.7 Achieve Organisational
Objectives
7.8 Capability Baselines
7.9 Benchmark
7.10 Prevent Potential
Problems
7.11 Deploy Innovations
1.6 Knowledge Transferred Out
8.1 Client Interactions
8.2 Select Suppliers and
Partners
8.3 Manage Suppliers and
Partners
8.4 Cultural Fit
8.5 Stakeholder Information
8.6 Client Relationships
8.7 Supplier and Partner
Relationships
8.8 Value Creation
9.1 Acquire Technology
9.2 Technology Licenses
9.3 Control Technology
9.4 Technology Integration
9.5 Optimise Technology
9.6 Proactively Introduce
Technology
10.1 Risk Management
10.2 Engagement Risk
10.3 Risk Across Engagements
10.4 Security
10.5 Intellectual Property
10.6 Statutory and Regulatory
Compliance
10.7 Disaster Recovery
April 3, 2011 118
3 Service Design and Deployment - 3.1 Communicate Requirements
Scope
Establish and implement procedures to communicate the clients requirements to the service design and deployment team
Activities
Provide support for creating and maintaining the procedures for communicating requirements
Document and implement the procedures for communicating requirements
Support the implementation of the procedures for communicating requirements
April 3, 2011 119
3 Service Design and Deployment - 3.2 Design and Deploy Service
Scope
Establish and implement procedures to design and deploy the service to meet client requirements
Activities
Provide support for creating and maintaining the procedures for designing and deploying the service across the organisation
Document and implement the procedures for designing and deploying the service
Support the implementation of the procedures for designing and deploying the service across the organisation
April 3, 2011 120
3 Service Design and Deployment - 3.3 Plan Design and Deployment
Scope
Plan and track the design and deployment of the service
Activities
Provide support for creating and maintaining the work products and tasks for planning and tracking the design and deployment ofthe service
Document and implement the work products and tasks required for planning and tracking design and deployment
Support the implementation of planning and tracking the design and deployment of the service
April 3, 2011 121
3 Service Design and Deployment - 3.4 Service Specification
Scope Create the service specification
Create a service specification that clearly, accurately and comprehensively describes the services to be provided in order to effectively meet the clients requirements
Service specification is the basis for designing, deploying and delivering service. It is a comprehensive document that describes the services that the organisat