Off-shoringBringing value to

Stanford University

Bob O’Leary and Nick Pavlakos

October 10th, 2006Copyright Robert O’Leary 2006. This work is the intellectual property of the author. Permission is granted for this material to be shared for non-commercial, educational purposes, provided that this copyright statement appears on the reproduced materials and notice is given that the copying is by permission of the author. To disseminate otherwise or to republish requires written permission from the author.

Presenters

Bob O’Leary – Executive DirectorAdministrative SystemsStanford University

Nick Pavlakos, PMP – DirectorStudent and Human Resource SystemsStanford University

Presentation Goal

To provide you with an overview of the experience at Stanford University in selecting and integrating an Off shore vendor into our operations within the Administrative Systems

organization

Stanford Facts Opened its doors in 1891

Jane and Leland Stanford established the university in memory of their only child, Leland Jr., who died of typhoid fever at age 15

Plan was to provide for all of the children in California Coed from the start Campus is located between San Francisco and San Jose (at Palo Alto)

in the heart of Silicon Valley where it occupies 8,100 acres Enrollment

Undergraduate 6,800 Graduate 6,800

Research Revenue is approximately $1,100M Faculty count 1,779 Number of non-teaching employees is approximately 10,000

Administrative Systems Background

Stanford had suffered through a long and costly upgrade of its core administrative systems PeopleSoft for HR/Payroll/Student Admin Oracle for Financials

Legacy systems were very mature and built on Stanford developed infrastructure

Institution developed a strategy to migrate to commercial ERP products Results were not stellar Large number of customizations Great difficulty managing change Faculty rejection Serious cost and schedule problems

Administrative Systems Background

Administrative Systems staff experienced significant turnover Voluntary and involuntary Multiple re-organizations attempted to address problems

Staffing for new generation of product was not well understood Large number of high priced domestic consultants took up residency Large number of improvement projects undertaken before production

stability was achieved with core ERP Process discipline was a low priority Costs were excessive for value received Silicon Valley location and High Tech relationships influenced

leadership to have a positive opinion about potential gains from Off shoring

Administrative Systems Organization

Administrative Systems

Financials

Student HR/Payroll

Data Management

and Reporting

Middleware & Integration Services

Infrastructure & Architecture

Quality Assurance

Communications

Administration

Initial Attempt at Off Shoring In an effort to lower costs and attract qualified resources Stanford

made a decision to aggressively pursue off-shoring Qualified resources were acquired (from Wipro) but they were not optimally

utilized Applied in a staff augmentation model Managed by Stanford resources Followed Stanford processes (?) Off-shore component never successfully implemented

Resources primarily worked on-shore Decision was made to move more aggressively with a goal of moving most

administrative work offshore An RFP was developed to maximize off-shore content of support and

development Employee’s were confused and threatened

Our Current Contract Selection process resulted in an Infosys decision based on their strong

process orientation Selection process and early planning was facilitated by NeoIT Key decision was made to fund an on-site, permanent manager from

Infosys At time of engagement, CIO left the Institution, CFO took over

CFO promised employees that no jobs would be lost for one year Intended to stabilize work force Fate of Infosys and off shore program unknown

Employee’s sensed a reprieve, but remained apprehensive New Executive Director hired Future of off shore program hung in balance

Initialization of off shore Decision to proceed with off shore program driven by:

Lack of internal technical skills and process 50 on site consultants from 23 firms

In working with Infosys in the planning phase we came to several critical realizations:

1. We needed to build support for the change through demonstrated success 2. We needed to start small, focus, and build confidence 3. Relationships needed to be built within IT and across customer base 4. We could not follow the transition model of large commercial companies or the

recommendations of our consultant 5. We needed a strategy (end state definition) and we needed to communicate it

consistently 6. We were breaking new ground 7. This was viewed as a long term relationship

Used Infosys to help us build new operational model Developed a strategy for immediate use of Infosys

Left future role open

Early Success

Selected a project to implement several enhancements to our PeopleSoft Application Had Infosys take on major role Internal PeopleSoft team was very threatened Customers took a wait and see attitude Decided to have all resources work on-site (5)

Project was very successful Quality of vendor staff was obvious to all Process centric approach was evident Documentation was excellent Price was right Customers were pleased IT staff was impressed

SDLC Roles & Involvement

Level of Involvement

OpportunityIdentif ication

OpportunityValidation

Project Charter Requirments Design Develop Test Deploy

InfoSys Administrative Systems Stanford Business Clients

Support ModelStanford University Support Process – Student and HR Systems

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Stanford Community

http://helpsu.stanford.edu

5-HELPSU

AS – ERP HelpDesk

Infosys Off ShoreStanford Manager

Infosys On Shore Coordinator

UAT ProductionDEV

Stanford Community

Business Office

Infosys On Shore Developer

Prioritozation

Stanford

Prioritozation

Current Role of Off-shore Vendor Maintenance and Support

PeopleSoft team Oracle team Data Warehouse team Infrastructure team (DBA)

Projects Data Warehouse design and build Oracle/PeopleSoft upgrades Several custom applications Oracle/PeopleSoft enhancements

Process enhancements Data masking Quality Assurance

Data warehouse strategy Approximately 50 Infosys resources currently engaged (20 onshore, 30

offshore)

Significant Gains from the Relationship

Predictable outcomes on projects Productivity on support tasks Process discipline Ability to scale rapidly Cost savings (offshore = 2.5 to 1 employee, onshore is even) Bench strength Customer confidence 24 hour operations Unexpected benefits

Staff training Hired some staff Strong PM capability

Issues Encountered

Staff resistance Cultural bias Customer resistance Staff augmentation mentality Re-defining ongoing Stanford IT roles Project phase continuity Keeping the pipeline full

Best and worst actions at StanfordRelative to Off-shoring Best

Hired an onsite manager from the vendor

Started slowly Began on-site Found a patient partner Eventually had strong

leadership commitment to the model

Forced all consulting contracts to off-shore vendor

Engaged without full knowledge of how it would work

Realized we were not General Motors

Worst Initially tried to engage vendor in

a staff augmentation model Showed early indecision about

off-shore action Engaged a domestic off-shore

consulting firm to plan for transition

Had no realistic strategy for off-shore

Thought cost savings would come quickly

Profile of an Institution that could benefit from off-shore

Not driven by political opinion Strong Institution leadership support IT leadership openness to the concept Clear reason for change Willingness to give up some control Commitment to working through start up issues

Willingness to take a risk

Willingness to deal with staff resistance

Stanford Future Plans

Continue to exploit this capability Move more work offshore (goal is 3 to 1 count of

employees) Engage other components of the school

Medical school, GSB, etc Infrastructure

Develop new org models and job descriptions which facilitate this model Grow – Architects, Business analysts, Project Managers

Develop skills in managing offshore partners Develop all in working with Infosys methodology

Take Away

As Thomas Friedman told us “The World is Flat”. It's flat because technology makes it possible for anyone with the smarts, a computer and an Internet connection to collaborate in a global network of knowledge

Bob Dylan told us “The times they are A-changin” We have to be big thinkers, taking advantage of

global resources Think value proposition What expectations does the Institution have of us

as Leaders of IT?

Questions?

Thank You.