logica in outsourcing - idatddd31/lectures/lecture 03_logica.pdf · •providing business...

Outsourcing

2010-10-04

© Logica 2010. All rights reserved

•Introduction

•Market & customer view

•How we position Logica

•Global delivery

•How do we work?

•Working with outsourcing

No. 2

Agenda

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Pia Kullström

Director Sales & Marketing Outsourcing service, Logica Sweden

No. 4

Myself

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• Leading business and technology service company, employing 39,000 people.

• Revenues of £3.7 billion in 2009

• Providing business consulting, systems integration and outsourcing to clients around the world, including many of Europe's largest businesses.

• Creating value for clients by successfully integrating people, business and technology.

• Committed to long term collaboration, applying insight to create innovative answers to clients‟ business needs

• Listed on both the London Stock Exchange and Euronext (Amsterdam).

This is Logica

No. 5


Some of our clients

No. 6

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No. 7© Logica 2010. All rights reserved

2009 2010 2011 2012 2013

GDP growth -5.0 4.0% 3.4% 3.4%

Total it spending, MSEK

144 100 147 000

IT services market, MSEK

51 543 52 272 53 651 55 642 58 116

IT services market growth

-5.9% 1.4% 2.6% 3.7% 4.4%

Logica market share 10.8% 11.1% 11.7% 12.5% 13.3%

Swedish IT services market – Logica position

Total spending150 mrd

Externalspending

55 mrd

Logica6.5

mrd

• Market growth in all segments from a new lower baseline.

• Continued high level of competition combined with high client expectation for further cost reductions (i.e. continued price erosion, need for efficiency improvements etc).

• IM cloud services entering the market.

• AM outsourcing breakthrough as tool for transformation of business as well as reducing cost levels.


Vendor Rank

Logica 1

IBM 2

HP 3

Tieto 4

EDB 5

Capgemini 6

CSC 7

Sigma 8

Volvo IT 9

Accenture 10

Number 1 in Sweden

Vendor Rank

Logica 1

Tieto 2

Ericsson 3

TeliaSonera 4

IBM 5

EDS 6

HP 7

Capgemini 8

EDB 9

ErgoGroup 10

“Logicais the #1 holistic

provider in the Nordics”

Source: EquaTerra, Nordic

Region Outsourcing Service

Provider Performance Study 2009

IT-services IT-services Outsourcing

Logica in Sweden No. 8

Market & customer view


European Outsourcing market is still growing

Overall outsourcing market to grow at CAGR of 5.3%until 2013.

M€ 0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2008 2009 2010 2011 2012 2013


Global Integration

Industry Consolidations

IncreasedRegulatorycompliance

Emergent & adoption

of off-shoreCapabilities

Evolution of technology

Economy“More for Less”

Outsourcing Drivers


1st generationOne big vendor took home a mammoth deal

Second wave (1990s till 2007/8)Deal size still big but smaller than the first generation. Mostly transfer of credit risk, with the vendor taking over the people and assets

3rd generationDeals coming up for renewal and being renegotiated mid-way, typified by the rise of offshore companies. Deals are getting smaller and being split among multiple vendors.Companies renegotiating deals want to change what they signed on the dotted line

Outsourcing evolving into 3rd generation


Corecompetence

Peripheral competenceComplementary competence

In-houseMarket

transaction

Preferredsupplier

Single sourcing

Strategicpartnership

Effective sourcing of IT


Changes in organisation

New roles and responsibilities

- from operational to tactical and strategic issues

- less direct contact with the applications

More business driven relationship

- ”real money”

- specifications and formal orders

New formal governance of IT

- hidden costs become visible

- stronger management and control.

The impact of outsourcing

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Usual Mistakes

Unclear expectations

•- service levels, technology, budget, investment

Relationship not stimulated

•- cultural differences

•- „We against them‟ problem

•- Grey zone discussions.

Internal Organisational Issues

•- old roles not transforming to new responsibilities

•- employees‟ uncertainty handled wrongly


Culture, understanding and affinity

Executive commitment

Size

Geographical coverage

Service atmosphere

Knowledge, business and technology

Type of co-operation and contract

Pro-activeness, incentives, common goals

Focus on employees

Governance

Decision-making process

Criteria for selecting suppliers

Most important factor – TRUST


Twelve capabilities of a potential supplier

Leadership

Program management

Governance Customer development

Domain expertise

Planning & contracting

Organisational design

Sourcing, behaviour

management

Business Management Process

Re-engineering

Technology exploitation

Relationship competency

Delivery competency

Transformation competency

Source: The Outsourcing Enterprise – The CEO‟s guide to selecting effective suppliers

How we position Logica


Why companies „should‟ outsource to Logica?

AccelerateManage RiskManage Cost

• Reduce cost

• Focus on core business

• Predictability

• Impact balance sheet

• Improved cost effectiveness

• Spreading of initial investment cost

• Reduce vulnerability to staff changes

• Access to skills when needed

• Technology refresh/change

• Free up cash for investment

• Avoid IT capital investments (non-core)

• Accelerate speed to market

• Enable business focus transformation

• Access to new skill set

• Mergers and acquisitions

• Focus on core business

• Improved quality of service

• Flexibility

AND AND

Industrialisation Trust and flexibility Innovation


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The key questions

“Can I trust you to work with me?”

“Can you do it at the right price-performance?”

“Can you add value to my business?”

ClientIntimacy

DomainExcellence

OperationalEffectiveness

“Will you be successful?”

Commitment to delivery


What makes Logica different

ClientIntimacy

DomainExcellence

OperationalEffectiveness

• Cultural affinity

• Low risk

• Local Management

• Durable relationships

• Global delivery model

• Blended sourcing

• Customised processes

• Excellent tools

• Secure and state-of-art infrastructure

• Better understanding

• Added business value

• Closer to the market

• Industry standards

Account management

Sectorknowledge

Global servicedelivery

Commitment to delivery


Client Intimacy: strong local operations

• We are the leading supplier to utilities in the UK, the Netherlands and Portugal

• We are one of the leading suppliers to UK government

• We have 1,400 Oracle, 3,300 SAP, and 6,000 Microsoft specialists in Europe and are the prime Microsoft partner in the Nordics

• We are recognised experts in security, payroll, transport and managed testing in a number of geographies

• Our strengths in key geographies and sectors help underpin around 75% of revenue

Public Sector

Utilities

Utilities

Utilities

Transport

FinancialServices

SAP

Consulting

Oracle

MicrosoftSecurity

Top 3 positions

SOA

Public Sector

Testing

Testing

Testing


Domain Excellence: Market leading propositions

Principal Services

•Intelligent Transport Systems (ITS)

•Manufacturing IT

•IT excellence and Business transformation

•Enterprise Resource Planning (ERP) Implementation

Industry, Distribution

and Transport

Principal Services

•Case mgt, Information mgt and data sharing

•Shared Services

•e-Services

•Security

•Business Intelligence

•Training

Public Sector

Principal Services

•Payments

•Business Transformation

•Risk and Compliance

•Insurance

FinancialServices

Principal Services

•Smart Metering

•Operational excellence

•Competitive markets

•Oil & Gas (Upstream and downstream)

•Environment and regulatory compliance

Energy andUtilities

Principal Services

•Operational and business support systems

•Service fulfilment

•Billing

•Managed Virtual Network Operators (MVNO)

Telecoms andMedia

* * * * **

Service portfolio


Operational Effectiveness: Outsourcing Services portfolio

Over 35 years of experience

Business Process Outsourcing

Human Resource Outsourcing

Infrastructure ManagementRemote Infrastructure Management

Logica Private Cloud

Application ManagementApplication Portfolio Management

Enterprise Application Services

Managed Test Services



Infrastructure Management

Application Management


Human Resource Outsourcing


HR & Payroll Services

Training and Learning Services

•We operate the UK‟s largest acquisition skills training centre, which delivers more than 20,000 delegate days of training pa. • We deliver over 500,000 hours of eLearning worldwide to UK Ministry of Defence each year

• Full service provider of commodity and complex processes• Technology independent, with skills in SAP, Oracle, Agresso• Award winning Total Invoice Management, compliantin 90 countries, handles 40m e-invoices pa, with 75% carbon reduction

Finance &Accounting and

Procurement

Cu

sto

mer S

ervic

es

Co

rp

orate

& E

mp

loyee

Servic

es

Banking andInsurance

• We handle more than 2.5 million transactions for banking, cards and insurance each year• Process in excess of 150,000 life insurance policies per year• Process in excess of 200,000 indemnity insurance policies pa

Energy andUtilities

• We settle €9.8 billion of electricity supply payments every year• Have never missed a daily billing run• One of Europe‟s largest suppliers of fuel card services• Leading provider of broadband end- customer services in UK

Sh

ared

servic

es

Contact Centres

Document Services 7m invoices captured; 25 m e-invoices B2B; 2m e-invoices B2C;16m captured documents; 500m processed pages; 800m printedpages; 300m mail pieces per year

Our service desks handle over 80,000 contacts per month


•Process more than $200 billion of salaries globally each year•Process more than 60 million payslips per annum across Europe •Supporting over 5,500,000 employees on HR & Payroll

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Application ManagementApplication Portfolio Management

Enterprise Application Services






Application Portfolio

Management

Application Maintenance

Services

Application Development

Enterprise Application

services

Over 6,000 staff in application management

• 15+ years of established ERP support model

• Alliance partnership with SAP, Oracle and Microsoft

• supporting well over 100,000 SAP end users

• over 400 successful SAP implementations worldwide

• value-based approach

• focus on quick wins

• key to optimising application landscape

• ITIL-based support model

• leverages blended sourcing model

• commitment to continuous improvement

• legacy as well as latest technologies

• collaborative environments for .Net, Java (Resu!tCentre)

• leverages blended sourcing model

• project and programme management heritage


• over 7,000 testing experts worldwide

• developed testing tools, techniques, models and environment

• results based testing, innovative utility model

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ERP Services

Testing

Infrastructure ManagementRemote Infrastructure Management

Logica Private Cloud



Managed Storage services

Data Centre services

Server services

Network

services

Desktop services

• Over 166,000 desktops supported; 145,692 supported from Western Europe

• Over 14,825 sqm of data centre space worldwide• Control bridge network ensures global service

excellence• Data centres in Europe, Australia, Brazil and India

• Over 14,000 servers supported

• 70,000 networked devices supported• 3400 networks managed

• 396 databases supported, including the world‟s largest civil database (UK NHS Spine)

• 1940 TB storage managed

Remote Infrastructure Management and Logica Private Cloud

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Global delivery


Global Service Delivery enablers

GLOBAL SERVICE

DELIVERYenablers

GlobalProcesses

& Tools

Global Blended Sourcing

FlexibleCommercial

Models

CustomerService

Global Infrastructu

re


Creating the right Blend

Offshore

On-site

Onshore

Near Shore

Blended Sourcing Model

Com

ple

xit

y/

Ris

k

HIGH

Customer interaction/ intimacyLOW


Creating the blend - criteria 1: Industry factors

Cultural adaptability

Country infrastructure

• Investor rating for the country• Extent of bureaucracy• Government support

Country environment (economic and political aspects)

Business Environment

(30%)

• Existing IT and BPO market size• Contact centre and IT experience• Management and training quality

Cumulative Business process experience and skills

People Skill and

Availability (30%)

• Scores on standardised education and language testsEducation and Language

• Occupancy, electricity and telecommunication system• Travel to major customer destinations

Infrastructure Cost

Attrition rate

• Software piracy lawsSecurity of intellectual property

• Total workforce• University educated work force

Labour force availability

• Relative tax burden, cost of corruption and exchangerate

Tax and Regulatory cost

• Average wagesCompensation Cost

Financial Structure

(40%)

MetricsSub categoriesCategory

Critical parts


CORTEX - Standard Global Processes & Tools

CortexThe set of best

practice business processes that provide a framework for everything we do, anywhere in the world.

Tools

Run Logica

WinBusiness

Manage Markets

Manage Service

Manage Projects

Manage Products

Manage Customer

Assignment

Manage Consultanc

y

SupportWork

BuyThings

DoWork

Man

ag

e S

taff

Man

ag

e R

ela

tion

sh

ips


Competency Centre-based Certifications

BS 7799

http://www.iso.ch/iso/en/ISOOnline.frontpage

http://www.isixsigma.com/

http://www.indiana.edu/~tickit/index.htm

http://www.copc.com/


Network Device Automation

Server and Software Automation

Asset Management

Tools

Knowledge Management

Quotations

Change & Issue Management

Services delivered globally using a standard set of tools

ProjectPlanning

Remote Management

http://www.remedy.com/

http://www.opsware.com/


Early transition of non-critical application sets, staged service delivery tests

Measurable evidence of service readiness

Phased approach to knowledge transfer and go-live of applications support

Retention of core staff within the service if required

Additional support during business critical periods

Transition - principles for planning, and execution for success

Approach to business critical periods

Protecting the service during transition

Acceptance criteria for transition

Thorough test of service delivery model


Transformational proposition

• Transformation will focus on

– fast cost reduction, quicker ROI

– Low risk transformation programmes

– Improvement of service and satisfaction

Transformation will deliver

– Services in Blended Delivery model

– New architecture for applications like SOA etc

– Modernisation of applications

– Business change management

– Business Process management


Getting the people aspects right is business-critical

We have performed more than 1500 transfers

We have a proven model for staff transfer

About 45 - 50 % of our employees are from outsourcing deals or acquisitions

Successfully merged four large organisations: Logica, CMG, Unilog, WM-data with

39,000 staff in total

People transfer


Logica global Infrastructure model

Remote users

Customer Remote

Site

Customer Data-centre

MPLS-based Global WAN

Secure network

Control Bridge

Data-centre

Secure network

Control Bridge

Data-centre

Secure network

Control Bridge

Data-centre

Regional data-centre

Data-centre locations – UK, Portugal, Czech Republic, France, NL, Nordics, India, Brazil and Australia

Central Data

Centre (UK)

LAN

WAN


• Multiple locations and multiple networks ensure true, follow-the-sun service covering applications support

• Implementation of Service Level Management solution provides greater visibility of the service impact of alerts

PortugalUnited

KingdomNetherlan

dsSweden Finland India

AustraliaGlobal Control Bridge network

Our robust global control bridge network


ServiceSupplier

ProgrammePartner

BusinessPartner

Time &Materials

Target PricingReward

by resultsSharedBenefits

SharedBusiness Case

Inputs Outputs

Transactional Relationship

Shared Business Objectives

Value Creation

Co-dependence

Shared Risk/Reward

Measurement by...

Increasing complexity and increasing value

Different types of relationship/Commercials


Commercial Flexibility

Partnering options

T&Mresources

T&Mprojects

Fixed Priceprojects

Risk/Rewardprojects

ApplicationManagement

IT/BPOOutsourcing

Client

Logica

IT ServiceResponsibility


Some of the key governance issues

Project administration

Programme administration

Configuration management

Accounting

Project support

Co-ordination and communication

Administration

Support

strong focus on relationship management

balance between relation, trust and control

informal meetings and discussions

retention of key competencies from sales to delivery

Relationship management

Planning

Tracking, monitoring and reporting

Change control

Issues and risk management

Project dependencies management

Resource management

Our approach:

Control


Governance versus day-to-day management

• What is governance?

• What is management?

• What is the retained organisation?

• Where do we draw the line?...do we draw one?

Strategic

Tactical

Operational

Tran

sfo

rm

ati

on

In

cid

en

t &

pro

ble

m M

gt

Op

erati

on

al

Ch

an

ge M

gt

Rele

ase

man

ag

em

en

t

Avail

ab

ilit

y

Servic

e

level m

gt

IT

Servic

e

Co

nti

nu

ity

Co

nfi

gu

rati

on

M

an

ag

em

en

t

Servic

e

Im

pro

vem

en

t

Arch

itectu

re

Co

mm

ercia

l

Etc

.

Operational Management

Governance


Customer Services | Europe

Sweden

UK

Portugal France Germany

Czech Republic

Netherlands

Finland


Customer Services | World wide

Europe

India

Australia

Philippines

Morocco

Brazil


The Cost Challenge (IM)


View outsourcing as a major change project

“Begin with the end in mind” – Set clear and measurable objectives

Take care of the employees; Reduce uncertainty

Choose the right supplier/partner (culture and communication)

Express clearly your expectations on suppliers‟ performance

Secure a win-win situation

Develop incentives for continuous improvements

Establish a competent ordering function (mandate)

Establish a governance structure on all levels

Implement with speed and strong commitment.

Critical success factors for successful outsourcing

How do we work?


Main processes

Win Business

Manage Service

Manage Customer Assignment

Man

ag

e S

taff

Man

ag

e R

ela

tion

sh

ips

Win business


Pipeline development…

0

5 000

10 000

15 000

20 000

25 000


How to manage growth potential

Governance

• Strong Account governance

• Process and Support

Client Intimacy

• Account based activities

• Round table events

• Relations

Client Understanding

• Client lead consultants

• Client alignment of solutions

• Account Teams – Account Portal

Proactive sales approach

• Business Development

• Contract database

• Value match

• IT Mapping

0 1 5

Opportunity Solution Offer

Bid MgmtSuspect management

Opportunities

Contracts

IT-Pain/op

Blueprint - Roadmap

Relation - Brand

Knowledge - Proactive

IT Mapping

Contract database

Value Match

Account Sales

Client LeadConsultant

KAD

Offering/solutions

ClientKnowhow

CSM

Steering CommitteeIndustry Sector MDExecutive Sponsor

OS CSDSales & Marketing Dir SE

Governance

Proactive Sales approach

Account Portal

http://ws2.global.logica.com/sites/010011/default.aspx

http://ws2.global.logica.com/sites/010011/default.aspx


Bid Smart Gates

Sign-OffBid Gate 3

Pre-commitmentBid Gate 4

FunctionalReviews

Bid Gate 2

Sign-ONBid Gate 1

• Early stakeholder involvement• Strategy

• Early view of Risk• Mobilise appropriate

resources

Deep dive ‘peer’ review e.g.TechnicalFinance

Risk ManagementUSPs

• Strategic review• Negotiation plan

• Proposition

• Contract review• Mobilisation


Roles & responsibility

Role Activities Responsibility

Bid manager Lead bid team and manage bid through bidprocess.

Manage bid process.

Leadapprover

Emphasize responsibility for ensuring right offer, deliverable solution, at right price and with risk awareness.

Consistent, senior involvementthroughout all Gate Reviews. Coach and approve bid process.

Steeringgroup

Group meetings.Go/No go decisions.

Approve bid to continue throughgates.


Bid Smart Tools

1) Bid Smart portal Created to capture the new group-wide

process & documentation

2) Consolidated Bid Repository (CBR)Will serve as a central repository for all bid

related documentation. Track status of each gate and keeps auditable history of all bids.

3) Pricing Support Tool (PST) / PRMOne common tool for pricing, reviews & risk

estimations. Replaces QMS and today’s PRM-calculation templates.

Manage service


AM - delivery mix…

AC Services

Projects

10% 65% 25%T&M Projects Services

T&M - Competence


Application Center – Set up

MTS

/Q

TC

ClientTeam

SA

P

Oracle

Mic

rosoft

JA

VA

/J2

EE

Log

istic

s

Reta

il

Fin

an

ce

Main

fram

e

ServiceDeliveryManager

Proje

ct O

ffice

AC Director Resource ManagementController

QualityMethods & Processes

ArchitectureSecurity

Production Manager

Client 1SDM

Client 4

Client 3

Client 5

Client 6

Client 2SDM

SDM

SDM

SDM

SDM

Manage customer assignment


Contract management & relations

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Account Sales

Client LeadConsultant

Client Director

Client ServiceManager

Service levelsReporting

Add on sales(farming)

Re-negotiationsKey persons in

delivery

What‟s needed if you want to work with outsourcing?


Like of customers…

Patience

Knowledge

Financials

Some.. technology, but not necessarily

Psychology

Structural thinking

Creativity & innovation

Complex situations

No. 66

Anything…

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© Logica 2010. All rights reserved No. 67

Outsourcing is all about

AND

Keep & attract

Low cost & modern solutions

Relations & SLA’s

Complexity & to make it simple

Strategic &operational

Local & global

Logica is a business and technology service company, employing 39,000 people. It provides business consulting, systems integration and outsourcing to clients around the world, including many of Europe's largest businesses. Logica creates value for clients by successfully integrating people, business and technology. It is committed to long term collaboration, applying insight to create innovative answers to clients’ business needs. Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More information is available at www.logica.com

Thank you

logica in outsourcing - idatddd31/lectures/lecture 03_logica.pdf · •providing business...

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