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Best Practices For IdentifyingOffshore Vendors
Arup GuptaMay 4, 2016
ContentsCurrent Scenario
Risks involved in Off-shoring and issues that need to be addressed
Steps to reduce the risks of Off-shoring
Why is vendor selection important
Best practices for Offshore vendor selection
What makes a good vendor?
Top 5 Practical Needs
Training needed at the Client end
Training needed at the vendor end
Program Governance Framework
Top 10 Tips for finding the right vendor
D2E Consulting - PMO Expertise and Leadership Team
D2E Consulting – Offshore Outsourcing Framework
Q and A
Did You Know?
Over 60% of Clients feel they have not achieved the goals of the Offshore Outsourcing initiative • What to expect from the outsourcing initiative?• How to communicate the expectations to the selected vendor?
Over 40% of Offshore Outsourcing contracts are not renewed
• Is the outsourcing initiative adding value to the business?• Is the vendor aligned to the business goals of the customer?
Over 30% of Offshore Outsourcing Engagements in fact have a negative ROI. They lose money.• Is there too much re-work• Is there price escalation
Risks Involved in Off-Shoring
Service Quality• High employee turnover• Loss of managerial control
Data Security• Lack of IP protection• Lack of internal controls
Operational Inefficiency• Lack of internal capabilities/Process knowledge• Wage inflation
What are the issues?
Loss of internal know-how, loss of core group
Poorly articulated requirements
Incompatible development tools and technology
Poor process discipline
Scope creep
Culture
Turnover of key personnel
Steps To Reduce The Risks
Select Right Offshore Vendor
Training needed at the Client End and Vendor End
Set expectations - SLAs
Put a Program Governance Framework in place
Why is Vendor Selection Important?
Right vendor selectionreduces risk of failure
• Management Commitment• Process and Technology maturity• Organizational stability
Right vendor selectionaligns the goals and objectives of the two companies
• Vendor is aligned to the business of the customer• Value driven rather than cost driven
What Makes a Good Vendor?
Reputation and positive track record
Level of proven integrity
Management attitude and compatibility
Relationship closeness and feeling of trust
Technical and managerial competence of project managers
Communication openness
International quality certifications
Basic Process For Selection
Identify a set of vendors
Publish RFP
Shortlist vendors
Proposal Presentation by Vendors
Site visits
Price negotiations
Finalize vendor list for selected areas
Top 5 Practical Needs - CSFs and Performance Measures for Vendors
Integrated solution offering through alliances
Leadership skills and management team
Innovative solution offering
Strong business impact at Customer end / case studies
• Helps Customer generate significant internal efficiencies after solution/product deployment quickly
• Helps Customer identify quick levers of growth through deployment of solution
• Patented solution makes it a unique offering
• Solution offering holistic- scalable and portable
• Strong management team with global outlook and adept with strong communication and influencing skills
• Attractive ROI • Business impact 1.5 x-thro efficiencies
– Improved bottom line• Business impact x through topline
growth
• Solution cannot be replicated/copied easily-entry barriers
• Reduction of overall TCO for enterprise
• Issue Reduction – RCCA• Offers quick deployment-bug free• TCO low and easy to support
• Vision aligned to CSF• Can convert deals 1/8 strike rate
CSF identification CSF drill down Performance measure drill down
1
2
3
4
5Delivery excellence • six sigma rigor , tools and
methodology• CMMI level 3 or higher process rigor
• Reduction of cycle times in enterprise and improved TATs
• Zero defects during implementation/support
Training Needed At the Client End
The Strategists (Senior managers responsible for deciding the right approach) • Understanding Off-shoring in today’ business models• Off-shoring and business strategy• Off-shoring – risk assessment and management• How to produce an off-shoring game plan
Deal Makers (Senior and upper level middle managers who establish specific objectives)• Setting criteria for identifying suitable vendors• Vendor selection processes and methods• Cross cultural communication (with target country guidelines)• Cross cultural negotiations (with target country guidelines)• Establishing Service Level Agreements
Training Needs At the Client EndManagers
Managers (Middle managers responsible for everyday oversight)• Distance management and virtual teamwork• Knowledge transfer techniques• Cross cultural change management and
conflict management• Measuring ROI/Balanced Score card metrics)
Training Needs At the Vendor EndImplementers
Onsite• Working across distance via technology• Cross cultural communication
Offshore• Working across distance via technology• Understanding client requirements and standards• Cross cultural communication
Program Governance FrameworkObjects
Contract Management
Risk Management
Business Process Management
Program Management
Change Management
Program Governance FrameworkContract Management
Obligation Capture (One time and/or
repititive)
Dependency Mapping
(interrelated obligations)
Acceptance criteria for deliveries
Program Governance FrameworkRisk Management
Performance track record
including CSAT
Policy and Regulatory Compliance
Privacy, Confidentiality and Security
Supplier Audits
Program Governance FrameworkBusiness Process Management
Application development
and maintenance
processes
Standards and Tools
Configuration Management
Release Management
Program Governance FrameworkProgram Management
Preparation of work plans and schedules
Management of Deliverables
Scope control
Reporting to steering committee
Issues and conflict resolution
Program Governance FrameworkChange Management
Institutionalization of knowledge
from past engagements
Retention of knowledge from
current engagement
Reuse of knowledge for
future engagements
Quality & Process improvement track
• Peer reviews• Final inspection• Check point controls deliverable
adherence• Defect prevention• RCCA• FTR • Compliance and configuration audits• Adherence to quality goals and KRA
Vendor Management/Contract Mgt/Risk
&Controls track
• FMEA and Risk Analysis• Adherence to contract and
deliverables• Adherence to SLAs if any• Vendor escalation matrix and key
stakeholder connect
Delivery /execution track
• Program baselining•Work plan& schedule•Management of deliverables •Scope control•Scheduling steering committee meetings and status reporting to steercom.
•Weekly status reporting and dashboard reporting for overall project health.
•Issue, Risk and conflict resolution-Mgt alerts
•Check point and control reviews (CCR)• Escalation framework and ops reviews
Change Management/KM
track
•Stakeholder mapping and analysis•Stakeholder engagement•Expectation setting of user teams•Change Management workshops•Newsletters and Program updates•Institutionalization of knowledge from past engagements
• Retention of knowledge from current engagements
• Reuse of knowledge for future engagements
PMO Services- Key tracks to monitor Program Governance and Controls
Top 10 Tips for Finding the Right Vendor
1. Right Size– Find a vendor who is not so large that you are a small fish, but also find a vendor large enough to
handle growth and issues.2. Make sure the values, cultural dynamics and styles match.
– How -by randomly selecting a few of the staff and question them about the culture of the vendor. 3. Look for Thought Leadership
– More than just a technical resource, a business value partner– Do they blog, write whitepapers, teach, etc.
4. Find a Partner who asks about your business objectives and Goals, not just technical needs
– They should understand what you are trying to accomplish. If not it is doomed to failure.5. Ensure communications and reporting is consistent among teams
– How by auditing an ongoing project or two to see if process is being followed6. Look for a region that fits what you need
– AGILE vs. Traditional, 27/7 operations, and other business needs7. Hire an independent company (D2E) to evaluate the facilities of the shortlisted
companies. – Someone with experience running quality centers.– Have them do periodic audits of the facility and team.
8. Visit the city and visit the location. – Is it accessible, safe, would you want to work there?
9. Find out who your resource manager will be at the offshore site. – Why? This position carries great weight. Get a powerful resource manager.
10. Don’t cheat the process. – It takes longer, but it is proven
D2E ConsultingOffshore Outsourcing Framework
Establish processes and structures
• Application rationalization and prioritization• Tools finalization• Knowledge transition and knowledge retention• Value delivery to client’ business
Execution to set up ODC and deliver value
• Infrastructure• Organization structure• Capability assessment and capability building
Deliver value to customer’ business using D2E’ Governance and program management frameworks
D2E ConsultingLeadership Team
Arup Gupta, CEO and Chairman-Ex President TCS North America
Alan Kocsi, Director, Ex-GE
Subrata Dutta, Director, Strategy, Planning and Operations –Ex VP General Electric
Hugo Yepez, Ex VP Johnson&Johnson US
Pavan Krishnamurthy, Director Investments - Ex PwC
Bill Aimetti and John Hammitt, Advisors
Krishnendu Sengupta Director Global Sales
Q & A
Thank You