avasense sourcing at your fingertips

AvaSenseAvaSense

Sourcing At Your Fingertips

Shvet Desai, CTO

With uncertainty in the global economy. . .

Will you choose the right path or be left behind?

Avasant and Avasense Confidential 2

Challenges Solution Capabilities & Features

AvaSenseAvaSenseAvaSenseAvaSense™

is Avasant’s web-based Contract and Vendor Management solution

designed to deliver governance best practices to support managed services and

other key enterprise agreements

Avasant and Avasense ©2011 3

Avasant and AvaSense Background

• Avasant is a global management consulting company focused on

– Strategic sourcing

– Enterprise optimization

– Globalization

• Avasant team has experience of 1000+ plus consulting assignments Avasant team has experience of 1000+ plus consulting assignments across 40 countries.

• Avasant customers include Fortune 500 companies and public sector.

• AvaSense is wholly owned subsidiary of Avasant focused on building and marketing Outsourcing and Software License Governance Solutions.

4Avasant and Avasense ©2011

Agenda

• Outsourcing Market and Best Practices

• The AvaSense™ Solution

• Case study

5Avasant and Avasense ©2011

Today’s Outsourcing Relationships

Come with High Expectations

• Larger Size

• Longer duration

• Complex service levels

• Larger number of Programs• Larger number of Programs

• Diverse internal groups

• Higher impact on top and bottom line

• High impact end-customer experience


Given what’s at stake, good Contract Governance and

Relationship Management have become imperative.

Importance of Outsourcing

Governance

� Breakdowns in trust

� Build-up of negative

partisan perceptions

Alliances are failing because partners are unable to work together effectively

Foremost Cause of Outsourced Services Failure among large

Companies


� Questioning of one

another’s motives

� Festering conflicts

� Little joint problem

solving

� Feelings of

disrespect/coercion

30%

6%

64%

Poor or Damaged

Relationships Between Firms

Bad Legal and Financial Terms and Conditions

Poor Strategyand Business Planning

Impact of Poor Governance

Poor working relationships

affect both Service Recipient

and Service Provider leading

to sub-optimal results

Service Recipient Perspective


Service Provider Perspective

Poor Governance Puts 30% of Annual

Contract Value at Risk

+15%

Added Value Through Effective Governance

� Customer satisfaction

� Delivery of value-added projects on time and on budget

� Quick response time to requests

� Innovation and thought leadership

� Resources freed internally to do other work


Annual Contract Value

� Resource waste due to inability to trust/delegate

� Greater need to monitor/audit

� Frequent conflict escalation

� Low internal customer satisfaction

� Ineffective execution & follow-through

� Lack of clarity around roles and responsibilities

� Decisions made based on limited information

Lost Value Through Poor Governance

-15%

Added Value Through Effective Governance

Analyst Community Agrees


“Respondents report that on average their enterprises lose 9% of their

revenues due to regulatory penalties, missed deadlines, lost sales,

maverick pricing, and transactional errors.”

“Ineffective control and management of supplier contracts costs

businesses $153 billion per year in missed savings opportunities”

Source: Aberdeen Group

There is some awareness….

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However, Contract Automation alone is not enough. Governance should

include ability to capture, define every single matrix and process around

contract and ability to monitor and manage these matrix and processes.

Organizations must Invest in Outsourcing

Governance Solutions to . . .

• Streamline Operations

– Contract Visibility through report and dashboards

– Automation of Contract Processes

– Centralized repository for single source of truth.

• Improve Performance Management• Improve Performance Management

– SLA Creation and tacking

– Program and Project KPI visibility

– Ability to respond to exceptions and issues.

– Proactive alerts and notification for important milestones


Organizations must Invest in Outsourcing

Governance Solution to . . .

• Mitigate Risk– Identify risks through detailed analysis of execution

– Effective processes to respond to risks.

– Complete visibility compliance and audit.

• Drive Financial Management• Drive Financial Management– Track spending

– Processes around invoice and spend approvals.

– SLA accountability

– Forecasting and budgeting for better cash flow management

– Elimination of unwanted programs.

Avasant and Avasense ©201113

Good Governance in Sourcing

• Understand your sourcing strategy and objectives– What to source externally– Objectives

• Establish a baseline– Costs– Service levels

• Short-term focus on cost-cutting– Deal starts to go bad within a year

• Poor communication– Morale plummets– Exodus of most valuable staff members

• Inadequate service levels– Performance becomes a matter of opinion

Keys to Success Common Pitfalls


– Service levels

• Conduct a careful provider selection process– Obtain 3rd party adviser– Competitive process

– Proactive management

• Develop a good contract– Change mechanisms, benchmarking,

innovation process– Performance-based

• Vigilantly manage the relationship– Retained organization roles– Well-defined governance process

– Performance becomes a matter of opinion– Performance not tied to pricing

• No benchmarks– Do we have a good deal (service levels,

pricing)?

• Insufficient Resources– Relationship not managed to achieve original

objectives

• Failure to recognize risk– Unrecognized risks are unmitigated risks

Governance Organization Best Practice

Manage Risk ThresholdsManage Risk Reviews

Manage Sourcing RoadmapManage Program Communications

Manage Training & Education

Analyze/Monitor Sourcing Marketplace & TrendsDevelop/Maintain Outcomes (Objectives)

Develop/Maintain PrinciplesDevelop/Maintain Tower -Specific Strategies

1. Develop Sourcing Strategy

9. Manage Program & Communications

10. Manage Sourcing RiskManage Risk Thresholds

Manage Risk Reviews

Manage Sourcing RoadmapManage Program Communications



Develop/Maintain PrinciplesDevelop/Maintain Tower -Specific Strategies

1. Develop Sourcing Strategy

9. Manage Program & Communications

10. Manage Sourcing RiskManage Risk Thresholds

Manage Risk Reviews

Manage Program Communications



Manage Sourcing RoadmapDevelop/Maintain Service Specific Strategies

Perform Capacity Planning

Manage Delivery Demand

Facilitate Multi-Provider Operational Interfaces

1. Strategic Sourcing Management

2. Sourcing Program Management

3. Risk ManagementRisk Mitigation

Strategy

Business Mgmt.


Maintain ScorecardsManage SLA/Contract Compliance

Maintain CI/Benchmarking

Manage Regulatory ComplianceManage Standards Compliance

Manage Security/Controls Compliance

Manage Sourcing FinancialsManage Reconciliation & Payment

Manage Contract & License NegotiationsMaintain Contract and Manage Compliance

Resolve Contract DisputesManage Licenses and Compiance Verifications

Set Provider Goals & ObjectivesManage Supply Infractions

Manage Multi -Provider Interaction Manage Staff Augmentation

7. Manage Contract & License Admin

8. Manage Financials

6. Manage Compliance

5. Manage Sourcing Performance

3. Manage Delivery Demand

4. Manage Provider Relationship





Manage Sourcing FinancialsManage Reconciliation & Payment

Manage Contract & License NegotiationsMaintain Contract and Manage Compliance

Resolve Contract DisputesManage Licenses and ComplianceVerifications


Manage Multi -Provider Interaction Manage Staff Augmentation

7. Contract Management

8. Manage Financials

6. Manage Compliance

5. Manage Sourcing Performance

3. Manage Delivery Demand

4. Manage Provider Relationship





Manage Sourcing Financials

Manage Reconciliation & Payment


Manage Multi -Provider Interaction

Manage Provider Relationship

Manage Delivery Demand

Fulfill Project Resource Requests

9. Financial Management

6. Compliance Management

8. Performance Management

4. Demand Management

5. Relationship Management

Resolve Imbalances in Delivery & Demand

Business Mgmt.

Contract Mgmt.

Source: Avasant

The AvaSense™

Solution

Contract Management

Contract Capture

• What did we agree on ?– Guided Contract capture

• All agreement types– MSAs, SOW’s,

Service/License/Maintenance agreements, Amendments

• Lifecycle terms• Lifecycle terms– License term, renewals ,termination rights

and consequences

• Actionable resource and milestone information – Transitions, monthly management cost,

projects and hardware /software resources

• Financial terms– Baseline cost, ARC’s, RRC’s , T & M rates,

milestone based payments and rewards and penalties

• Optional Excel upload of contract data


Contract Management..

Contract Governance

• Best Practice processes

– For contracting and governance

• Compliance and Audit trail

– Tracking of new change orders to

tracking key contract milestonestracking key contract milestones

• Milestone alerts

– Notifications for pending review,

disputes and approvals

• Tracking and automation

– Projects, service requests, change

requests and task orders including

estimation, approvals, initiation,

delivery and termination activities


Financial Management

• Rate cards and consumption levels tracking.

• Service credits and Claw-back calculations

• Earn-backs, invoice listing

• Invoice Management processes– Pre-build and processes for review – Pre-build and processes for review

and approval of supplier invoices

• Detailed pre-build and configurable financial reports

• Alignment with pricing metric benchmarks

• Leverage financial information– Re-negotiate financial and non-

financial license terms with Service Provider/Vendors


Performance Management

• Track performance metrics– Configure and measure custom SLA’s

– Analysis and reporting of metrics /SLAs such as up-time, response cycle time, quality across service categories and supplier locations

• Best practice performance review processes– Support operational, tactical, strategic – Support operational, tactical, strategic

reviews and reporting processes

– Support SLA reviews

– Automated detection and reconciliation of Service Credits and Charge Backs

• Integration with financial management– Ensures compliance of Invoice with

outcomes of Performance Management reviews

• Tracking performance of internal program objectives and strategies


Relationship Management

• Service Provider Spend and Analysis– Overview of the budgets and spend

analysis

– Root cause issues like resource attrition and percentage of onshore offshore resources

• Track and monitor• Track and monitor– Relationship, and scope across

multiple service providers and entire portfolio of outsourced services.

• Relationship Alignment– Align at the right levels with key

Service Providers/Vendors to maximize benefits/discounts

• Service Providers comparison matrix


Software License Management

• Manage utilization– Monitor and manage current and future

license utilization

• Manage license allocation

• Leverage data for other uses– CMDB and service management tools

• Compliance Management and risk analysisanalysis– Actual license usage against contracted

amounts

– Territorial rights, transfer rights and license grant

• Analysis of one-time and recurring spend– Analyze relative to market best

practices

• Product Renewal Schedule & Risk Analysis

• Analyze complex fee terms– Combined software

license/Maintenance/bundled fees across agreements


Key Differentiators of Avasense

Drill-down reports

User Friendly

Web based interface

Standards based

Integration

Pre-capture Best practice Governance Processes and Matrix - Configurable

Actionable and Configurable Dashboards, reports, SLA’s and scorecards

End to End Visibility with Drill down to finer details


Enterprise Class

Technology Foundation Light-

weight

Best Practice Based

Process Flows

SaaS Based

details

Built on enterprise class BI, BPM and DM technology platforms

Ability to deploy On premise as well as on cloud

Security Focus, Audit Trails, Field Level Permissions

User Friendly web based interface.

avasense sourcing at your fingertips

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