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Portfolio AnalysisSizing Up the Outsourcing Opportunity
Michael Zeigler – IT Director, Micron Technology, Inc
Michael Serghiou – Sr. Director, neoIT
Agenda
• About neoIT• About Micron Technology, Inc• Process Overview – Portfolio Analysis• The Micron Experience• Lessons Learned, Wrap-Up• Q&A
Micron World-WideTo be the most innovative and lowest-cost
provider of memory-based solutions
Micron is one of the world's leading providers of advanced semiconductor solutions.Micron’s DRAM and Flash components are used in today’s most advanced computing, networking,
and communications products, including computers, workstations, servers, cell phones, wireless devices, digital cameras, and gaming systems. Micron also provides CMOS image sensor solutions to the handset
camera, digital still camera, and PC video camera markets.
Oregon
California
Idaho
UtahTexas
MinnesotaIllinois New Hampshire
New YorkVirginia
North Carolina
Puerto Rico
FinlandScotlandIreland
EnglandFrance
GermanyAustria
Italy
Singapore
India
ChinaTaiwan
S. KoreaJapan
Norway
Sweden
Process OverviewMichael Serghiou – Sr. Director, neoIT
Service Globalization Life-Cycle
35
6 7
89
2 4
10
1
Globalization Life Cycle
Valu
e R
ealiz
atio
n
AssessmentArchitecture
Sourcing
Transition
Management
IT Portfolio Assessment
Sourcing (Captive / 3rd
Party)
Negotiations and
Contracts
Migration to Global Team
Location Assessment
Business Driver Awareness
Globalization Strategy
Knowledge Transfer
Steady State
Steady State Governance
Current Scope
Assessment and Architecture (IS)
Cross linkages among applications, services, roles & employees
Location Assessment
Readiness Insights
Total IS Portfolio –
Applications &
Infrastructure
Operating Model
Migration Roadmap
Business Case
Globalization Scope(Applications, Infrastructure, Services, Roles & Employees)
App
licat
ions
Serv
ices
Rol
es
Empl
oyee
s
AS
RE
AssessmentArchitecture
Risk Flags
IS Portfolio Analysis Framework
Ease of Globalization (EoG)
Risk Flags
Distributed EnvironmentDistributed
EnvironmentSkills
AvailabilitySkills
Availability
Transition Readiness
Operational Ease
Remote Operability
Business Impact
Technology Skills
Formal Training
Non Technology Skills
Financial Benefits
Financial Benefits
Micron’s Priorities
Globalization Assessment
Multi-Dimensional Analysis
Transition ReadinessTransition Readiness
Operational EaseOperational Ease
Remote OperabilityRemote Operability
Business ImpactBusiness Impact
Distributed Environment
Skills Availability
Ease of Globalization Globalization Score
Applications, Services, Roles, Employees
Cluster Analysis
Wave Strategy
Benefits
The Micron ExperienceMichael Zeigler – IT Director, Micron
Technology, Inc
Agenda
• Background on Micron IS• Objectives of Outsourcing Micron IS
– Understand what you want from outsourcing– Establish your ground rules
• General Approach• Lessons Learned
And for those who still don’t believe…
Be Careful…
“10 Steps to
Successful Outsourcing”
“9 Tips for
Outsource-Proofing
Your IT Organization”
“Ten Steps to
Master Outsourcing”
“Challenges to Articulating
a Holistic Sourcing Strategy”
“Best Practice Process
for Creating an IT
Services Sourcing Strategy”
Background – Micron IS
• Approximately 1,100 team members• Primary global locations
– US (Boise, Texas, California, Utah, and Virginia)– Italy– Singapore– Japan
• IT spend is approximately ~3.5% of revenue• Less than 1% outsourcing• Micron’s SG&A cost structure was not
competitive
IT is Still Important!
Information Technology may not be a core competency in a manufacturing company like Micron –
but is there anyone at Micron who doesn’t understand that IT is at the core of every competency?
- Ed Mahoney, VP of IS, Micron Technology, Inc
Why?We need to do our part to make Micron competitive.
“Business as usual” is not an option, and our new service model must be:
• Agile. We must develop a service model that allows IS service levels to be easily dialed up or down to support Micron's strategy, business plan, and fluctuating revenue.
• Cost-Effective. We need to make aggressive changes to our cost structure in order to meet or exceed what our competition has attained. We need to work to make Micron the benchmark.
• Enduring. We need to make changes that are sustainable over time. Even after the new service model is in place, we must continually seek opportunities for improvement.
Dedicated Team
– Met daily• Outline work• Review action items• Discuss communication
– Met weekly with steering team
– Involved about 40-60 people for data collection• Subject matter experts• Managers/leads
Program/ProjectManager
Program/ProjectManager
CommunicationCommunication
Data AnalystData Analyst
Data AnalystData Analyst
Data AnalystData Analyst
The Approach
– Investigated outsourcing before (2003)– Extensively benchmark cost, performance, and technology.– Wanted some outside help (objective opinion and experience)– We had a very aggressive timeline
• Risk of driving incorrect assumptions/decisions• Needed to leverage a disciplined decision-making process (Kempner-
Tregoe)
Triangulation became our strategy!Triangulation became our strategy!
Triangulation Approach
KT Analysis
Data and
Experience
GlobalizationConsultants
(neoIT)
SourcingPlan
Financial Targets
Guiding Principles
– Retain elements of IT that enable competitive advantages for Micron• Differentiating applications• High-customer interaction roles• High-level domain knowledge• Service provider relationship management
– Outsource elements of IT that can be performed well by a serviceprovider• Non-differentiating applications• Industry-standard applications• Industry-standard development and support
KT Decision Analysis
neoIT
– Objectivity!– Extensive experience of processes and industry– VERY detailed templates to facilitate necessary data
collection• Team member skills and experience• Multi-dimensional assessment
– Transition Readiness– Remote Operability– Business Impact– Activities
Data Collection (example)
Micron Priorities
PARAMETERS Speed Flexible Capacity Cost Savings Weightage
Speed Equal Low Low 0.26
Flexible Capacity High Equal High 0.41
Cost Savings High Low Equal 0.33
Micron Priorities
PARAMETERS Speed Flexible Capacity Cost Savings Weightage
Speed Equal Low Low 0.26
Flexible Capacity High Equal High 0.41
Cost Savings High Low Equal 0.33
IS Portfolio Assessment
$$$$ Labor Cost1,357 Applications
346 Services64 Roles
1,121 Employees
$$$$ Labor Cost1,357 Applications
346 Services64 Roles
1,121 Employees
153 Application Buckets40 Services Buckets
153 Application Buckets40 Services Buckets
43 Application Clusters12 Services Clusters
43 Application Clusters12 Services Clusters
ApplicationsServices
RolesEmployees
ApplicationsServices
RolesEmployees
Multi Dimensional AnalysisMulti Dimensional Analysis
Total Portfolio
OutsourceablePortfolio
RecommendationsMichael Zeigler – IT Director, Micron
Technology, Inc
Recommendations
Portfolio Assessment in 6 to 8 weeks?
Viewer Warning!!!Don’t try this at home…
Recommendations
– To make it happen, you need:• Dedicated (full-time) team members• Disciplined project management• Clear expectations of the effort• Document/data control
Recommendations
–Communication role is very critical• Develop a communication strategy
– Timely but accurate
– Substantive but flexible
– Sensitive
• Be up-front with everyone about what you are doing
• Stay honest with your team
• Communicate to the business!
Recommendations
– Communication role is very critical• Techniques used:
– Weekly email updates– Monthly newsletters– ALL supervisor/manager meetings– Sharepoint sites (project sites, IS News)– FAQ’s– Presentations for VP and Directors to share (face-to-face) with
customer teams
Use consistent messages and themes throughoutUse consistent messages and themes throughout
Recommendations
– Don’t under-estimate the time commitment• This is a full-time job• You still have a business to run!
– Start early on key items• Impact to team members and how to communicate to them• Design, approval, and implementation of retention programs,
severance packages, WARN notice
– Treat your team members with respect and dignity• This is difficult for everyone
Recommendations
– Standardize on the process and data collection templates• Dates, Steps, Roles
• Field lock-down where possible
• Standard definitions
• Revision control
Recommendations
– ITIL adoption can help significantly• CMDB• Service Catalog• Well-defined processes like incident, change, and
problem management
– IT strategy must be more than just outsourcing• Service management• Demand management• Enterprise Architecture
Outsourcing Alone is Not Enough!
Business Processes/Application Portfolio Assessment
Sourcing (Captive / 3rd
Party)
Negotiations and Contracts
Migration to Global Team
Location Assessment
Business Driver Awareness
35
6 7
89
2 4
Globalization Strategy
Knowledge Transfer
Steady State
Steady State Governance10
1
AssessmentArchitecture
Sourcing
Transition
Management
• Cost Reduction
• Globalized Services and Sourcing
• Consolidated Technologies & Apps
• Demand and Portfolio Management
• Operational Excellence
Program TimelineJuly ‘07 through January ‘08January ‘08 through August ‘08
Future
Questions & Answers
Contact Information
Mike Zeigler Michael [email protected]
About neoIT
Since 1999, pioneers in advising F1000 clients on leveraging global talent to achieve business objectives
Address business issues, not just sourcing issues
Blend strategy with practical execution
Deep expertise across geographies, ITO, BPO & KPO
Provide objective expertise and advice across the globalization lifecycle
Strategy DevelopmentCapability Sourcing & Transition ManagementGovernance & Globalization Model Optimization
Black Book of Outsourcing 2007 - ‘Top Corporate Globalization Advisor’Si
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