sourcing models galit fein presentation kenes
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STKI Tell me and I’ll forget Show me and I may remember Involve me and I’ll understand Galit Fein
VP & Senior Analyst
Sourcing
Market Trends
2012-13
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Capex increasing, Opex not decreasing
Time
Opex1: 5-10% decrease on existed
Capex:
New business demand for IT services
Opex2: Last year capex x 15%
$$
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How Can We Fill The Gap?
Time
Business demand for IT services
IT Budget
$$
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IT Budget Trends
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• Modest increase in IT budget -average rise of 3.7%
• IT Capex flattens at beginning
of year due to uncertainty
• Despite continued volatility,
IT staffing remains constant
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Capital Organizational Spending
Technology Investments
47%
Other 53%
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Source: IDC 2012
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The Majority of IT total spending goes to Maintenance
Breakdown of Total IT Expenditure 2009-2012
Source: CIO Executive Board 2012
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Innovation
Business opportunity
Maintenance
Mandatory
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From unresponsive corporate overhead
to an agile business partner
All-you-can-eat buffet
• Everyone pays the same price
• Food selections are driven by the chef’s priorities
Fast-food restaurant
• Price is affordable
• Choices driven by market demand
• Customers pay only
for what they consume
VS
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The new IT
Client/user
Packaged Application
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Outsourcing
• In recent years the number of comprehensive and infra
outsourcing new deals significantly decreased , except for public sector, SMB and some niche areas
• On the other hand - successful examples of existing clients,
who recently had revaluated and renewed their
outsourcing contracts (with a lot changes)
• Disappointment from conventional outsourcing for failing to meet client expectations
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State of World Wide Outsourcing is NOT better
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2010 2011 2012
25%
35%
Applications Outsourcing
Infrastructure Outsourcing
Source: CIO Executive Board 2012
PMO DB admin. Testing/QA Voicecommun.
Network Help Desk AppMainten.
AppDevelop.
25% 36% 39% 40% 41%
47% 47% 52%
Percentage of Org. Allocating More than 20% of Total IT Spending to Outsourcing 2011
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Outsourcing transforms into Cloud Computing
Traditional Outsourcing
Your own assets
Resources control
Fix price
Location does matter
Vendor monitoring SLA based
Minimal ability to change the terms of the contract
Cloudy Sourcing
Multi-tenant, shared resources
Outcome focused
Usage-based pricing
Location-agnostic
Automated provisioning, self-service requesting
Cloud computing
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Sourcing models explosion
Onsite Staff Augmentation
• Shoot & Forget • Cost plus • Fix price • Time & material
NearSite
• Vendor SLA • Cost plus • Fix price
NearShore
• Client/ Vendor SLA • Cost plus • Fix price • Time & material
OffShore
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IT Projects - Constraints
• Never manage to “finish” development (Capex) budget
• Lack of facilities
• Difficulties in
recruiting people
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Regulations
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Internal employee = Opex
License
Development
Testing
Delivery Day 1
Hatmaa
Testing
Rollout
Investment (Capex) Expenditure (Opex)
Time & Materials SOW RFP SLA Fix
Vendor/Client revenue asymmetry
Maintenance
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IT Risk responsibility is shifting guards
IT Staff (internal AND external)
Executive management
...עצמורק את הקבלן לא אפשר יהיה לתבוע גם מזמין של שירותי קבלן לראשונה "
העמדה לדין פליליאפשרות
, קובע כי בעלי משרות בתאגידים או במשרדי ממשלה שיימצאו אחראים לחתימת חוזה הפסד, החוק שהתקבל
השירות יהיה אחראי גם מזמין . עשויים לעמוד לדין פלילי, שאינו מבטיח את תנאי השכר הבסיסיים של העובדים
. דמי חגים ותוספת יוקר לעובד הקבלן, פנסיה, הוצאות נסיעההחזר , הבראהלתשלום דמי
החוק לאכיפת זכויות עובדי הקבלן
Subcontractor
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IT Risk responsibility is shifting guards
IT Staff (internal AND external)
Executive management
...לראשונה אפשר יהיה לתבוע גם מזמין של שירותי קבלן לא רק את הקבלן עצמו"
אפשרות העמדה לדין פלילי
, קובע כי בעלי משרות בתאגידים או במשרדי ממשלה שיימצאו אחראים לחתימת חוזה הפסד, החוק שהתקבל
מזמין השירות יהיה אחראי גם . עשויים לעמוד לדין פלילי, שאינו מבטיח את תנאי השכר הבסיסיים של העובדים
. דמי חגים ותוספת יוקר לעובד הקבלן, פנסיה, החזר הוצאות נסיעה, לתשלום דמי הבראה
החוק לאכיפת זכויות עובדי הקבלן
Subcontractor
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Outsourcing Liability: Employer-Employee Relationships
10 main tests: 1. Supervision
2. Premises
3. Tools & instruments
4. 3’d party’s representation
5. Am I an employer?
6. Replacement
7. Contract
8. Dependency
9. Blending in
10. Core purpose of employment: Project or workforce?
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National Security Test Case: it’s a Duck!
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Some ways to solve problems
• Managed services – “fix variable price” Budget utilization
• Nearsite
• Nearshore
Employer- employee relationship disconnection
• Sourcing models - QA / HD are the first to be examined
Lack of facilities
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Staff Augmentation Trends
• IT will always use some Staff Augmentation for flexibility and
scalability, BUT…
• The need for Opex reduction and also for
disconnecting employer - employee relations,
is driving ITOs to look for
new sourcing models
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Managed Services
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Variable fix price
• Small packages of work
• SLA
• Fix price with a variable
component
PM
Experts
Junior employees
Best service
Best price
People
Kn
ow
led
ge B
ack Office
Profit
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Thank You And Hope You Enjoyed!
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http://www.slideshare.net/Galit