Systems In Motion IAOP Presentation

Designing a globally competitive, cost efficient US IT Services model

Presented by:

Debashish SinhaChief Marketing Officer

Colin ChapmanVP and GM, Michigan DC

June 24, 2010Copyright © 2010 Systems In Motion. All rights reserved.

Introducing Systems In Motion

• Launched in 2009 by leaders in global technology services

• Backed by Cervin Ventures with ~$17 million in available capital

• Leading the way in services focused on business technology transformation programs

• Pioneering the ‘Inshore’ service model - an agile, integrated, cost-optimized US service delivery capability

• Based on standards and best practices of remote service delivery, with strong focus on workforce training and development

• Deep expertise in Media, Telecom, Retail and Manufacturing

• Two current service centers − Silicon Valley (Innovation Hub)− Ann Arbor (Delivery Center)

• Clients include F-500 (Thomson Reuters, Best Buy) mid-sized enterprises (Leap Frog, Matson) and high-performing growth companies (Chegg, Zephyr)

Copyright © 2010 Systems In Motion. All rights reserved.

Leadership team with deep experience in global services industry


New technology trends are forcing business transformation

Significant potential for disruption in the competitive landscapeExcellence in customer experience will be the hallmark of future industry leaders


Business Environment

IT Applications

IT Infrastructure

Sourcing

Traditional models Industry evolution

• Buy, install and run yourself• License, maintenance and upgrade extra• On-premise with multiple versions

• Rented applications • Pay-go model with automatic upgrades• Platform based architecture (PaaS, SaaS)

• Traditional Datacenters• Capital intensive• Difficult to implement and scale

• Cloud infrastructure• No capex and low cost of ownership• On-demand scaling with agile deployment

• Predictable, repeatable business cycle• Brick & mortar + web interface• Customer interaction management

• Highly dynamic business cycles• Multi-channel (web, social, mobile, etc.)• Customer engagement management

(personalization, participation and control

• Labor intensive engagements• Standardized processes• Effort and SLA driven contracts

• Expertise intensive engagement• Flexible, agile service delivery• Outcome and value driven

Le

Solution frameworks to accelerate technology

deployment

Focus on outcomes and strategic value of new technology initiatives

New technology transformation

Cost effective operations


Driving the need for a different kind of service partnership

Leadership and experience in understanding business

requirements

Agile teams tightly integrated with

customer

Global service delivery models fail to drive value in these relationships

Enterprises make significant investments to bridge the “value gap” in the global delivery model. This is likely to increase in the future.


Global Delivery Challenges

• Domain and process knowledge

• Technical competence

• Resource productivity

• Communication challenges

• Lack of interaction/integration

• Flexibility/agility of teams

• Program management and governance

• Infrastructure cost

• Risk management

‘Inshore’ model can provide an alternative to global delivery for a significant part of enterprise services sourcing strategy

Inshoring fills a white space between in-house and offshore engagements that is currently sub-optimally filled by supplemental staffing, boutique firms or large onshore staff of offshore vendors


Three strategic pillars of the Systems In Motion service model


The new service paradigm combines deep domain leadership with an ecosystem of IP assets and an operating model that can create agile and integrated delivery teams

Typical Resource Profile

Program Leads

Technical/Functional Experts

Developers, Test and Support Engineers

Optim

ized

Pyra

mid

Mod

el

Dedicated centers of excellence pyramid structure for service delivery builds scale and efficiency

• Over 12 years of business-IT experience• Program management, technical, solutions architecture

and/or leadership skills• Experience in operating models incl. global delivery• Strong focus on methodology and IT processes• Specialist in business or technology domain

• Over 5 years of IT experience• Process, technical, architecture skills• Strong implementation and support experience• Understanding of business or technology domain

• Educational background in IT• Process, technical skills• Strong fundamentals in primary area of expertise• Knowledge of IT lifecycle

* Pyramid structure and skills will vary based on stage of project, type of work (dev vs. support), and program duration



Tightly integrated service operation through ‘Inshore’ centers of expertise

‘Inshore’ center of expertise is a US based domestic service delivery model, combining cost-efficient remote service delivery with strong local workforce development and management

US resources have a competitive advantage over India in supporting this transformation in technology services

Quality India US# of Institutions 1800 350

# of Graduates 450K 70K

Tier 1 1% 15%

Tier 2 15% 70%

Tier 3 84% 15%

Productivity India USLecture: Lab 3:1 3:1

Supervised: Unsupervised 3:1 1:3

Lecture: Group Work 2.3:1 1:3

Total hrs/week on major 40 50

Total hrs/week on other 3 15

Summer Internships 10% 100%


Research by Rafiq Dossani, Director, Center for South Asia, Stanford University

While India produces a larger number of engineers, the US has

higher level engineering resources. India produces 84% of their

engineers from Tier 3 schools.

US engineers get a significantly more intensive education, are more self-directed and can lead/work in

teams

Strong partnership among business, education and government to create the right environment


Systems In Motion partners with government to provide

the right incentive and infrastructure investments

• Quality and relevant education in engineering, science, math and management• Drive greater business participation in

coursework, especially in associate degree apprenticeship programs (EMU)• Provide the hub for business connect (U of M

and EMU)• Support business with infrastructure and

processes for training and development

Systems In Motion partners with universities to provide

talent, training and workforce development support

Universities Government/Economic Dev Agencies

• Vertical integration of Local and State institutions (MEGA, Michigan Works, SPARK)• Invest in training, talent development and

workforce management• Invest in incentive programs (tax incentives

and OJT training reimbursements)• Co-invest in marketing and PR initiatives to

drive location attractiveness

• Partner in building SIM University (EMU)

• Business development support with local enterprises

True cost of service delivery Inshore vs. Offshore

Offshore Rate$17.28

Hou

rly tr

ue c

ost o

f ser

vice

s de

liver

ed(A

pp D

ev/B

I Exa

mpl

e)

Global Delivery Model Inshore Delivery Model

Onsite Rate$21.84

Transition* $6.73

PMO$2.25

Travel&1.17

Inshore Center Blended Charge

Rates$50.00

Transition $2.00

72%@$24.00

75% of $17.28

15% of $44.88

5% of $44.88

4 trips a year

Travel Costs are negligible

Program Management costs are negligible

Productivity Factor is 25% lower in offshore model

Transition Costs are 30% due to faster transition process, higher overall productivity

Inshore Center charge rate combines offshore, onsite and infrastructure costs

5

4

2

3

1

$52/hr

Productivity$5.76

28%@$78.00

$55/hr (with transition)$48/hr (in steady state)

Significant wage difference equals a negligible cost of service difference

Copyright © 2010 Systems In Motion. All rights reserved. * Offshore transition amortized over a 3-year contract

Key Takeaways

• New technology trends are transforming the business environment

• Enterprises need service partners with deeper domain expertise, and tighter alignment with internal IT and business stakeholders

• Global delivery models will need higher caliber resources, and even greater program management and governance investments to meet the future needs of US enterprises

• A well-structured Inshore operations center can be very competitive

• Requires strong collaboration among business, education and government to develop the appropriate level of expertise and structure of the workforce

• Investments must continue in developing the foundation for service delivery and innovation, through broadband deployment, tax policy, etc.


Questions

Debashish SinhaChief Marketing Officer

Systems In MotionEmail: [email protected]

Direct: (650) 704-8843www.systemsinmotion.com


mailto:[email protected]

mailto:[email protected]

http://www.systemsinmotion.com/

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