Multi Vendor Sourcing Final For Hcl Global Conference April 2010

1. Track C – Operations: Multi-Vendor Sourcing Mark H. Robinson Chief Operating Officer, EquaTerra April 13, 2010 2. The Pursuit of Value <ul><li>Science…
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  • 1. Track C – Operations: Multi-Vendor Sourcing Mark H. Robinson Chief Operating Officer, EquaTerra April 13, 2010
  • 2. The Pursuit of Value <ul><li>Science </li></ul><ul><li>Sourcing is Driven by the Pursuit of Value </li></ul><ul><li>Value is a Function of Cost, Quality, Volume, Risk and Differentiation </li></ul><ul><li>Value has Quantitative (Measureable) and Qualitative (Experiential) Attributes </li></ul>Wisdom Like Beauty, Value is in the Eye of the Stakeholder Like Enlightenment, Value is Hard to Attain and Harder to Maintain Like Reality, Value is Perception
  • 3. Multi-Sourcing vs. Mono-Sourcing <ul><li>Mono-Sourcing Advantages </li></ul><ul><li>Simplifies administration </li></ul><ul><li>Concentrates spend </li></ul><ul><li>Increases negotiating leverage </li></ul><ul><li>Provides economies of scope and scale </li></ul><ul><li>One culture to learn </li></ul><ul><li>Integration is seamless </li></ul><ul><li>Reduces fragmentation risk </li></ul><ul><li>Multi-Sourcing Advantages </li></ul><ul><li>Access to best-in-class services </li></ul><ul><li>Maintains competitive pressure </li></ul><ul><li>Reduces concentration risk </li></ul><ul><li>Enables economies of focus </li></ul><ul><li>Matches culture to service recipient </li></ul><ul><li>Service segment performance is improved </li></ul><ul><li>Improves localization </li></ul><ul><ul><li>COMPROMISE </li></ul></ul><ul><ul><li>COMPLEXITY </li></ul></ul><ul><ul><li>vs. </li></ul></ul>
  • 4. Three Key Tests for Multi-Sourcing: Are You Ready? <ul><li>Culture </li></ul><ul><ul><li>Command & Control or Decentralized </li></ul></ul><ul><ul><li>Partnering/Collaborative or Contracting/Exploitive </li></ul></ul><ul><ul><li>Homogenous or Diverse </li></ul></ul><ul><li>Complexity </li></ul><ul><ul><li>Scope & Scale </li></ul></ul><ul><ul><li>Geography & Concentration </li></ul></ul><ul><ul><li>Criticality & Dependency </li></ul></ul><ul><li>Maturity </li></ul><ul><ul><li>History with Outsourcing </li></ul></ul><ul><ul><li>Concentration of Experience </li></ul></ul><ul><ul><li>Attitude to Risk </li></ul></ul>If you don’t match your sourcing solutions to your culture, to the complexity of the services required, and to your organization’s ability to manage them: You will DESTROY value, not CREATE it
  • 5. Multi-Sourcing: The Value Management Challenge A Picture of Service Complexity Bus Unit 1 Bus. Unit 2 Bus Unit 3 IT HR F&A P2P IBM Dell ACN BT IBM ACN ACN HP EDS ADP HP Convergys Internal Illustrative What is Driving Service Complexity? Regulations / Environmental Integration of Service Delivery Governance New / Existing Service Providers Near / Offshore Delivery Single / Multiple Functions Scope / Nature of the Services Contract Components (Pricing, SLAs) Multiple Relationships Enterprise Risk Organizational Experience & Culture Service Provider Capabilities Maturity of Relationships
  • 6. Multi-Sourcing: Investing in Governance Unlocks Value Five Key Investments to Create Value Through Sourcing Governance Issue Management / Escalation Process DRAFT – 01-04-05 Marriott SVP HRSS Marriott Contract Manager Marriott Relationship Manager Marriott Accounting Manager Hewitt Operations Manager Hewitt Account Executive Hewitt PMO Step 1 Identify Issue Inform appropriate parties Document outcome and implement solution Notify Marriott SVP HRSS and Contract Mgr. Issue resolved? Yes Weekly Issue Review Meeting Assign owners, target date of resolution, priority, and business impact Review and attempt to resolve outstanding issues Urgent issue with adverse business impact? Yes Provide input (if necessary) No Issue resolved? Meet with Hewiitt to resolve issue Yes No Provide input (if necessary) Complete Notice of Dispute No Step 2 Step 3 Step 4 Processes <ul><li>Service Quality & Performance Mngt </li></ul><ul><li>Change Management </li></ul><ul><li>Contract Management </li></ul><ul><li>Risk & Compliance Management </li></ul><ul><li>Financial Management </li></ul><ul><li>Relationship Management </li></ul>Subject Matter Experts Businesses Dedicated resources from TMOC Organization <ul><li>Reporting Structure </li></ul><ul><li>Roles and Responsibilities </li></ul><ul><li>Aligned with Service Providers </li></ul>Executive Steering Committee Customer Council Strategic Initiatives Council Committee Structure <ul><li>Strategic Direction and Decisions </li></ul><ul><li>Linkage to Business Strategy </li></ul><ul><li>Business Representation </li></ul>Decision Rights <ul><li>Responsibility for Key Decisions </li></ul><ul><li>Documented RACI-type Diagram </li></ul><ul><li>Guide for Client and Service Providers </li></ul>Tools <ul><li>Enables Key Processes </li></ul><ul><li>Supports Governance Team </li></ul><ul><li>Provides Actionable Intelligence </li></ul>
  • 7. Multi-Sourcing: Sizing Your Investment <ul><li>Customers with a mature mono-sourced solution typically spend 2+% of TCV on Governance </li></ul><ul><ul><li>Typically operating manual processes with a small team </li></ul></ul><ul><ul><li>Most of the focus is on the transactional elements of the governance solution (invoice validation, service level monitoring, scheduled events) </li></ul></ul><ul><ul><li>Executive involvement is minimal </li></ul></ul><ul><li>Customers with a mature multi-sourced solution typically spend 5+% of TCV on Governance </li></ul><ul><ul><li>Volume and complexity demand process automation using dedicated tools with a larger team </li></ul></ul><ul><ul><li>Tools enable focus to shift towards managing relationships with and between service providers </li></ul></ul><ul><ul><li>Executive involvement is substantial </li></ul></ul>
  • 8. Multi-Sourcing: Closing Thoughts <ul><li>In the short term, mono-sourcing often results in a lower total price than multi-sourcing – but it always involves compromise because no single service provider is equally capable in delivering all components of service that you might want to outsource </li></ul><ul><li>In the long term, multi-sourcing delivers a higher value contribution than mono-sourcing, because it allows best-in-class solutions to be deployed for every service component without requiring compromise </li></ul><ul><li>Well-executed governance unlocks the value implicit in multi-sourcing solutions while reducing the cost and performance risk to acceptable parameters </li></ul><ul><li>BUT only organizations that are ready for multi-sourcing should embrace it, because the best Governance in the world cannot prevent cultural anti-bodies from driving rejection </li></ul><ul><li>The Last Word: </li></ul><ul><li>Like Truth, There are Many Paths to Value, but in Sourcing, They ALL Pass Through Governance </li></ul>
  • 9. Thank You Mark H. Robinson Chief Operating Officer, EquaTerra [email_address] m:  +1 (954) 232-0237    F: +1 (954) 333-2551   
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