COO Best Practices for Outsourcing 2013

Best Practices for Outsourcing -
- How Leading COOs Are
Gaining Workforce Productivity
While Cutting Costs

Leonardo Mattiazzi / Bruno Guicardi
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About the Webinar Speakers
Leonardo Mattiazzi Bruno Guicardi
VP, International Business COO
Ci&T, www.ciandt.com Ci&T, www.ciandt.com

Led Ci&T's expansion into international Led the company to constantly innovate
markets in technology and processes

Responsible for differentiating the Responsible for keeping competitive edge
company in the fierce global competition in all company’s lines of business

Bringing value to customers through Almost 20 year of accumulated
innovation knowledge in the outsourcing industry

Best Practices for Outsourcing -- How Leading COOs Are Gaining Workforce Productivity While Cutting Costs
Leonardo Mattiazzi & Bruno Guicardi
www.ExecSense.com © ExecSense, Inc.

Overview
• Business dependency on IT has been constantly increasing

• IT Outsourcing productivity gains have been focused solely on
labor arbitrage

• IT innovation impacts top line and bottom line - far more than IT
labor arbitrage


What to Know

• Traditional IT Outsourcing doesn't create innovation

•Different Business processes require different outsourcing
models

• Engagement model may reward wrong behaviour


What to Know


What to Know
Traditional IT Outsourcing doesn't bring innovation
• Gartner: "Lack
of IT-enabled innovation is one of the biggest
complaints in outsourcing deals; yet Gartner research shows that this
situation most often results from the buyer contracting for a static
environment and the vendor agreeing to deliver it".

• Forrester: "According to
a 2011 Forrester Survey, 41% of outsourcing
clients cited lack of innovation as the biggest challenge with their
existing IT services relationships".

Why??

What to Know

Source: Dealing
with Darwin,
Geoffrey Moore


What to Know

Challenges for IT Challenges for IT

• Volatile business • Standardization
requirements • Consolidation
• Responsiveness • Unity cost
and adaptability productivity
• Time-to-market (labor arbitrage)


What to Know
Beware what your engagement model rewards:

• Predictability vs Adaptability
• Efficiency vs Efficacy
• Reactive vs Proactive (Working on the Solution
Space vs the Problem Space)
• Conflict vs Collaboration
• Hiding problems as long as possible vs Bringing
problems to the surface


Tips and Strategies

• Define what's core and what's context

• Adjust outsourcing engagement models
to reward what is appropriate


What to Do
• Define what's core and what's context
• Get consensus about it across senior management
• Start with the definition of „value‟ from the customer
perspective
• Explicit your differentiators
• Map your processes and identify the ones
your differentiators largely rely on
• Tools: Hoshin Kanri and Value Stream Mapping


What to Do
• Adjust engagement model for each one:

Core Context
 Adaptability  Predictability
 Efficacy  Efficiency
 Working on the Problem Space  Working on the Solution Space
(Proactive) (Reactive)
 Collaboration-based relationship  Contract-based relationship
 New, unknown problems (to be  Well-known solutions (usually
brought to the surface) hiding real problems)


What to Do
• Adjust „core‟ engagement model for Adaptability

• Establish success criteria based on business outcomes NOT on
specifications
• Direct communication matter more than specs
• Make change hassle free
• Define short cycles of delivery
• Postpone decisions as much as possible
• Re-assess assumptions and re-prioritize scope regularly
If you tell people where to go, but not how to get there, you'll be amazed at the results.
George S. Patton

What to Do
• Adjust „core‟ engagement model for Efficacy

• Beware what you measure
• Change the IT scorecard to share business outcomes (ex:
P&G, AB-InBev)
• The „cloud‟ and the migration of IT „responsibilities‟


What to Do
• Adjust „core‟ engagement model for Proactivity

• Involve early
• Truly share the business problem / goal
• Allow IT (including external providers) to work on the
Problem Space
• Ask for alternative solutions - don't be too prescriptive!
• Reward contributions - share risks and rewards!


What to Do
• Adjust „core‟ engagement model for Collaboration

• Shorten communication paths between technical and biz teams
• Review structure if needed (multidisciplinary team over
distributed and specialized teams)
• Establish rites for direct and constant communication (ex: daily
standup meetings)
• avoid “proxies” and “multi-layers” of communication
• Create an environment where shared goals prevail
• Share risks/rewards


What to Do
• Expect (and allow!) problems to be brought to the
surface
• See problems as learning opportunities - not headaches
• Be available to discuss / resolve problems together
• The real issues may only be revealed along the way
• Establish a problem-solving framework and mentality
• A3s, PDCA, Andon, Visual Management as examples


Do’s and Don’ts
You have to have a good combination of ‘carrots
and sticks’ to get successful change:
„Sticks‟ „Carrots‟
 Encourage business areas to  Share the „laurels of victory‟ with
experiment with the cloud (w/o IT IT (redesign rewarding systems)
involvement)  Rotate and promote people

 Bring in a more innovative/agile interchangeably between biz & IT
outsourcing provider to “rock the
boat”


Case Study: BPO in ‘core’??
Insurance Company
• About to hire a full BPO for Acquisition, Underwriting and Claims
processing back-office
• Challenged about its ability to evolve its „core‟ processes under BPO

Changed strategy to go with:

Agile outsourcer BPO
•Health Acquisition & •Health Claims Processing
Underwriting •Auto Underwriting and
• Auto Acquisition Claims Processing


Case Study: Lifetime Customers
• Situation: global leader in contact lenses missing opportunity to
acquire customers for lifetime
• If right lenses are not available at retailers, client will try
competitor's

• Solution: spending a day with the sales rep
• Simple Mobile Ordering app (iPad/Android) with great UX design,
reducing each visit from 1.5 hour to 15 min (6x gain)
• There were no "requirements gathering": proactive IT

"It's not often that IT gets this type of reaction from a
Sales Team"

Case Study: Sales Force Automation
• Where to focus: IT helping
you sell more, or squeezing
IT costs to deliver?

• Compare your cost of sales
and your cost of IT: where
there are more
opportunities for gains?

• How to leverage a robust
platform, while creating
SAP Based Sales Force Automation on iPad or Android devices
great user experience?

Case Study: report for what??
Leader in mobile content distribution in Japan
 Asked for a set of sales reports for its senior

management
 After „problem space‟ discussions, project was redefined

to provide insights in user consumption trends
 „Solution‟ has completely changed to collect huge

amount of data from real transactions and use
prediction algorithms to generate new marketing
campaigns, with intense use of Big Data and Cloud
technology


Conclusions
#1: IT can bring productivity gains and operational
cost reductions through innovation, not only through
IT labor arbitrage

#2: IT engagement model must be adjusted according
to "Core" or "Context" initiatives

#3: For "Core" initiatives, IT goals must be business
goals

Supplemental Documents
• Gartner research, Contracting for Innovation in
Outsourcing, 2010-2011, ID Number: G00209597

• Forrester research, Co-creating with your Service
Partners, Chris Andrews, 2012

• Dealing with Darwin, Geoffrey A. Moore, 2005


Contact the Speakers

Leonardo Mattiazzi Bruno Guicardi
•Email: leonardo@ciandt.com •Email: bruno@ciandt.com

•Phone: +1 (610) 482-4810 •Phone: +1 (610) 482-4810

•Website: www.ciandt.com •Website: www.ciandt.com

•Twitter: @lmattiazzi •Twitter: @brunogn

•LinkedIn: www.linkedin.com/in/lmattiazzi •LinkedIn: www.linkedin.com/in/bguicardi


Additional Documents
• Please email the finished PowerPoint and any other sample
documents to katie.bryson@execsense.com at least three business
days before your scheduled Webinar presentation.

• If the files are too large to send through your email server, let us know and you can
use our large-file email service at www.yousendit.com.

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Moderator Questions
#1 – Using the "Core" vs "Context" concept, shouldn't we do
the "Core" in-house and outsource only what is "Context"?

#2 – My outsourcer has an R&D center focused on my
industry segment, why can‟t I take advantage of that?

#3 –


COO Best Practices for Outsourcing 2013

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