MANAGING IT SERVICE DELIVERYRifki ShihabCorporate Information Strategy and Management

The Old Days.. Filled with proprietary technologies

Until the 1990s Develop your own infrastructures Not interoperate real well Tendency to lock-in

Now Share infrastructures Simplified standardizations Incremental Investment

Remember Business Models It delivered by Service Chains

Towards virtual integration Blend in providers

Even at distant locations Not ready for software?

Outsource the logical Space or facility

Benefits of incremental Outsourcing

Shortage of skilled labor Faster time to market

Think e commerce (e.g tokobagus.com, yahoomall)

24X7 operations Economies of scale.. And its relation to redundancy

Better cash flow (bisa dicicil perbulan, tahun) Cost reduction

Think maintenance Global touch (mencakup semua poin diatas)

More on Incremental Outsourcing…

Outsourcing -> to specialized firms Advantages of specialized services:

Focus on their best@ Economies of Scale and Scope

(redundancy) Reliability, Interoperability, and Security is

almost a given!

Managing Risks Through Incremental Outsourcing

Know WHAT to outsource! Unique, Core?

Unless you can’t do it yourself Most services have no competitive

advantage Commodity like…

Prioritize on some values.. Not features.

Why is Incremental Outsourcing Favorable?

Economic Stakes Potential Mis-Management Allows for experimentation Trial error with less damage! BUT:

Each increment must tie-in Big picture thinking

Incremental Outsourcing Examples

Decide so YOU control the risks Usually back office businesses

Reduce downtime up to 87% Choose:

Real estate, networks, Platform,Application, or Business.

Look at Hosting Example… as increments of outsourceable IT

Managing Relationships with Service Providers

Most Critical Step is… Start with:

RFP Then.. Ask around Then.. Scoring mechanism

Typical RFP is… Descriptive – What is its business Financial – Is it healthy Meeting SLA – Understand what I want Risk mitigation – Availability and Security Service Guarantees – Penalties? Pricing – NOT a priority!

“If its too one sided, it’s a bad deal for both”

Relationship Management On going process… Use SLA as measurement tool Manage the WEB of SLAs What to do upon failures? Where are your data? Avoid entanglements --Slow.. Small steps.. But.. ONGOING is

incremental outsourcing –

Chapter 7 Part 2

Large Scale Outsourcing

Long Term Outsourcing. Why Is It Difficult?

Expand long term For customer? For outsourcer? Techno-Evolution

What Drives Outsourcing? Cost and Quality Breakdown in performance Less to manage (GM agenda) Financials Corporate Culture Internal Irritants More…

When to Outsource? Benefits outweigh Risks

Development Portfolio Learning Organization Market Position Current IT Organization

Structuring the Alliance Successful outsourcing is based on

successful Alliance agreement 1. Flexibility of Contract 2. Standards and Control 3. Areas to Outsource 4. Cost Savings 5. Supplier Stability (Quality) 6. Management Fit 7. Conversion Issues

Managing the Alliance Manage the relationship LESS as a

Contract, but more as a Strategic Alliance. 1. Active CIO as planner 2. Measure your performance 3. What tasks are to be outsourced? 4. Who deals with who?

Managing Legacies “Wake-up Call” Difficulities include:

Technical Incompatible

Residual Process Batch processing

Local Adaptation Not scalable

Non standard MetaData

So.. If You Are Dealing With Legacies

Ask! Can I change this for the better? YES! – work around it NO! Dump and change!

Use EAIs – To enable interactions

Know your limits Work-around could be more expensive

BUT! Not just IT rigid… it’s the people!

Managing Your IT Assets When everything is centralized and not

too many…it WAS easy to calculate Now, use TCO analysis

Talk in costs and benefits Not an easy task.. Maybe.. An article on this later on..

Use TCO as a basis for evaluation Maybe you should outsource some!

Remember.. IT is now INCREMENTAL!