It outsourcing transformation_whitepaper

IT Outsourcing Transformation
Demand of the time

Overview
IT Services have been an in-house function for most of
organizations across the globe a decade ago. With rapid growth in
new technologies and expansion of customer base, organizations
were unable to adapt to changes relying solely on their in-house IT
teams. This gave rise to external IT service providers and
proliferation of multiple engagement models.
In-House IT Team – Organizations were using in-house IT
teams to manage the IT work.
Co-Sourcing Model - Organizations started using consultants
from the service providers to manage the work along with the
In-house IT team. Service provider‘s consultants were managed
by the IT manager.
Staff Augmentation (T&M) Model – Organizations use IT
service providers to complement the in-house IT teams in
execution of projects and pricing model was based on the
effort put by the consultant.
Fixed Price Model – Fixed price model is similar to Staff
Augmentation model in terms of tasks being outsourced to the
service provider. Pricing model is different from Staff
Augmentation. In Fixed price model, cost of service is
measured in terms of quantity of deliverables and overall
program is managed by the organization.
Managed Services Model – In Managed services engagement
model, the service provider is responsible for end-to-end
responsibility to deliver a service which was being delivered or
managed by the organization‘s in-house IT department. Pricing
model is outcome based as compared to activity based in the
earlier models.
Figure 1: In-House IT Vs Co-Sourcing Vs Managed
Definition
A managed service is the practice of transferring day-to-day
management and operations responsibility to a third party service
provider, as a strategic method for improving effectiveness and
efficiency.
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IT Outsourcing Transformation - Demand of the time
© 2011, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.

efficiency.While the organization that owns or has direct oversight
of the entity or system being managed is referred to as the client or
customer, the person or organization that accepts and provides the
managed service is regarded as the service provider.
Concept
The service managed and delivered by a service provider under a
contracted service level agreement is generally termed as a
―Managed Service‖. This term is used by various providers
differently based on the context of their business and the services
that they provide. The service provider takes complete management
responsibility to deliver a service that was traditionally performed by
the internal staff or by the service providers in either T&M or Fixed
price model. Managed services are definitely not a one-size-fits-all
concept. They have to be customized based on the unique needs of
the organization and the service provider‘s portfolio of services.
In a managed services scenario the customer organization
compensates the service provider for the services that it provides
and not for the components that constitute the service. The
customer organization is not required to plan, design, manage, and
deliver the services in a managed services scenario, as all these
activities that are related to service delivery and operations
management are the responsibility of the service provider. While
working with an organization that has a highly matured managed
services setup the customer is required to only manage, monitor and
evaluate the overall service provider performance.
Scope
The diagram shown below depicts the scope of the Managed
services Portfolio starting from mere Team augmentation to the
level of complete outsourcing of all Assets (Hosting & IT),
planning, designing through an SLA based end-to-end service
management. The scope in Model-4 gets extended up to managing
other service providers for a defined scope of work. It also includes
driving RFP and selecting the final service provider to provide the
service.
Figure 2: Levels of Outsourcing
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The Needs
There are several drivers for a managed services set up depending
on the organization, the industry it is operating in, the
applications/systems that it uses, service provider penetration, and
the IT industry outlook. They range from reducing delivery risk to
leveraging the service provider‘s capabilities for service delivery.
CIOs are facing the challenges of –
IT Managers spending time in micro management of
individual projects
Managing financial pressure of high cost of operation and
inadequate year-on-year improvement
Fierce competition
Handling all business and technology risk
CTO, SMEs and IT Managers spending the precious time
in finding the ways of application modernization and lack
of support from the service provider
Having roadblocks in adopting mission critical technology
and going for business transformation
Inadequate Value addition by the service providers.
Lack of transparency from the service provider.
Service Providers also face the problem of –
Lack of Visibility
Lack of Ownership
Non involvement in planning activity and execution as per
the plan
No focus on the productivity improvement and
competency enhancement.
Inadequate opportunity of moving up in value chain during
the engagement.
These challenges are mainly because of the reasons illustrated
below.
Multi Vendor Scenario – Customers are working with multiple
service providers and tracking each and every service provider is a
cumbersome task.
While working in Co-souring model, service provider lacks in
demonstrating the -
Accountability – Customer is accountable for any issue even if
services are offered by the service providers.
Capability enhancement – Service Provider‘s consultant sticks to
a technology and the application without any capability
enhancement in technology or business applications.
Productivity Improvement – Supplier‘s consultant does not work
in the line of productivity improvement to deliver more for less.
Innovation – There is a lack of innovation by the service provider‘s
consultants when they don‘t get opportunity to define, execute,
deliver and measure their performance.
Scalability – Scalability becomes an issues when planning is done
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by somebody and execution by somebody else. In case of In-house
IT team also, scalability is an issue to address.
Visibility – Service provider does not have the visibility of the
complete landscape and it impacts the performance of service
provider.
Partnership – Service provider does not work in partnership mode
to bring maturity into the business.
Outsourcing in Managed Services -
Benefits
IT Industry has seen tremendous benefits by transforming the
engagements into Managed Services. In a matured managed services
engagement model, customer gets benefits not only in making a
better strategy for the coming years but also gets cost effective and
quality services from the service provider in partnership mode. Few
key benefits are -
Risk, Responsibility and Rewards sharing by the trusted
partners
Predictable costing
Innovative solution framework
SLA Based Delivery - Driving Efficiency through Service
Level Management
Customer FTEs are ―freed up‖ to take-up other important
activities
Clearly stated, measurable outcomes – Accountability is built
into the model so that roles and responsibilities are strictly
defined and ambiguity eliminated wherever possible with
Quantitative metrics and milestones.
Consistent High Quality Delivery
Continuous improvement - Simple staff augmentation does
not provide the incentive for process improvement. The
managed outcome model, by comparison, encourages the
provider to exploit savings opportunities through shared
knowledge of best process practices, standardization, and
application life-cycle improvements
Development of Reusable components
Access to Experts, Enterprise Tools and World-Class
Methodologies
Improved efficiency and productivity
Knowledge Retention
Reduced Total Cost of Operations
Improved Customer Satisfaction
Transformation to Managed Services
Purpose
This document provides a methodology for transforming staff
augmentation model to managed services model. It contains detailed
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process for identifying and prioritizing the applications / projects /
services for managed services model and then how to start the
managed services engagement. Prioritization is done based on the
weight assigned against numerous parameters. The methodology
explains the following–
Facilitates the service provider to develop and submit the
business case.
Helps the customer in defining the road map for transitioning
to Managed Services Model.
How to define and establish Service Level Agreements for
different types of services.
Embracing Managed Services Model will benefit the customer in
terms of cost optimization, process maturity and improved quality.
Customers get all the advantages of a matured outsourcing model in
managed services mode.
Approach towards Managed Services
Model
Managed Services Framework is typically designed with the
following key objectives-
Enable transition to Managed Services in a phased manner
Provide a standardized service model
Reduce client effort‘s on operational management
Extend benefits from economies of scale
Will provide IT Managers necessary job aids, guidelines,
templates and checklists to enable transition into the
framework
The process any established service provider would like to follow
the approach is represented below (while working with Customer
counterparts)-
Prepare Application Services Catalog
 Prepare exhaustive list of services provided for each
application
 Categorize these services for each application in to
various application management services (AMS) category
 Prepare a volume baseline per application per service
Categorize Applications
 Applications are categorized (Platinum, Gold, Silver etc)
based on the business criticality
Document As-Is Processes for each of the AMS Categories in
the following lines
 Incident Management , Problem Management,
 Change Management
 Service Request Management
 Configuration, Release and Availability Management
Collect Service Level Requirements based on business
criticality
Define SLAs based on Service Level Requirements
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Based on the analysis, a roadmap is prepared to transition services
from the existing setup to service provider‘s Managed Services
model.
Figure 3: Managed IT Operations Services
The Elements
There is a need for establishing strong practices both on the
customer and service provider front to move into a managed
services setup. Moving into this setup calls for putting in place a
framework that governs the organization and its service providers
and certain operational practices that need to be followed by them.
Both these would include financial aspects, service level agreements
and a cataloguing model, among others. Generally the following are
key components of a managed services framework -
1. Service Cataloguing toolkit – Contains the types of services
offered, detailed description of the services offered, customizations,
scope, service windows, support specifications, DR specifications,
requisition procedures and related dynamics.
2. Service Level Agreement Framework – A framework that is
aimed at managing the services being offered to the customer with
targets defined for performance, quality, rewards and penalty
mechanisms, review and monitoring guidelines.
3. Pricing and costing model – The financial framework used for
the provision of the services that includes the budgeting model,
costing and pricing mechanisms, chargeback mechanism and other
accounting procedures.
4. Governance Framework – The Managed services governance
framework talks of the structure, policies, practices that are
necessary for the governance of the managed services setup. It also
includes establishment of forums/focus groups around specific
areas with representation from key stakeholders from Business &
IT.
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5. Strategic Uptake Planning – Is aligned to the Customer
strategy as a whole and creates higher value for business.
6. Optimized Demand Management – Helps in minimizing the
execution cycle time, standardizes the processes to ensure consistent
customer experience.
7. Quality Delivery through standardized deliverables, engagement
success and best practices cascaded across the Managed Service.
8. Optimized Service support with better resource mobilization,
higher offshore % and improved governance, scoping & reviews.
Additional elements could form a part of the managed services
framework based on the Project requirements. However, there are
other IT operations and management practices like support
processes, and documentation that any organization must establish
in order to move into a managed services framework.
Strategy
The approach starts with the agreement on scope of services
targeted in managed services model and Identification of
opportunities for managed services within the customer‘s
organization.
Prioritization of candidates for Managed Services:
Application prioritization is one of the important steps in moving
the projects from staff augmentation to Managed Services Model.
Prioritization of projects, tasks and activities must be carried out
using a set of parameters.
Parameters to prioritize the candidates
Parameter Description
Desired outcome of the
Parameter for Faster
transformation
Business Criticality
Where ever there is scope for huge financial,
regulatory impacts, it is better to transition those
services at a later stage after detailed due diligence.
Low
Management Support
Having senior management‘s commitment with
some business representation is critical.
High
Risks
A clear understanding of the risks and mitigation
plans to reduce exposure to them is necessary. Risk
areas to be considered are
Regulatory & legal risks
Services that could impact the business in
terms of revenue
Risks that can cause instability in the IT
organization
Critical proprietary information and rights
Medium
Application Stability
Number of changes to the application functionality
/ architecture
High
ROI
Identification of the applications / services that can
provide high yield / ROI.
Medium
Productivity
Increase in the productivity and the need for
reduction in the cycle time
Low
Performance
improvement potential
Services where there is a scope for performance
and quality improvement are best candidates for
transitioning into managed services.
Medium
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Parameter Description
Desired outcome of the
Parameter for Faster
transformation
Technical Expertise
Services where there is skills shortage or lack of
technological expertise in customer organization
Low
Documentation
Many applications and Infrastructure related work
requires documentation. This technical or non-
technical documentation is necessary when a third
party is managing the delivery.
Medium
Process maturity
Services where there is a level of process maturity
with clear roles and responsibilities, standardized
processes and procedures
High
Organizational
Readiness
Having the capabilities within the client
organization for managing service delivery in the
new setup.
High
Level of Authorization
For transitioning into a managed services model,
one of the most critical element is having authority
for the SPOC from customer side for the services,
associated applications and infrastructure
High
Application Stability
The candidate services / applications are
reasonably stable.
High
Complexity
Complexity of the applications being transitioned
into managed services mode plays a major role on
the tenure of the transformation.
Low
The below table has parameters related to service provider‘s
capabilities and these can be used by CIOs to evaluate a service
provider for any particular piece of work to be outsourced in
managed services model.
Methodologies,
practices, processes
Service providers with proven capabilities that can be leveraged
further is extremely important, by not only taking over support but
also create value by leveraging their proprietary methodologies,
practices and processes.
High
Ability to manage
demand
The service provider should have a set up to meet the demand for
Managed Service Model.
Medium
Domain &
Technical
Competency
Strong expertise in domain and technology areas and the expertise in
using multiple technologies for a business objective.
High
MSM Expertise
Service Providers with proven expertise in delivering the projects
with MSM
High
The above parameters will help in deriving the Managed Service
Index which will indicate how soon the service / application /
project can be transformed to Managed Serviced Mode.
Implementing this model across all services / applications / projects
shall derive the Managed Services Transition Roadmap.
Design
The main goals and objectives of Design are to:
Design services to meet agreed business outcomes
Design processes to support the service lifecycle
Identify and manage risks
Design secure and resilient IT infrastructures, environments,
applications and data/information resources and capability
Design measurement methods and metrics
Produce and maintain plans, processes, policies, standards
and architecture.
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 Frameworks and documents to support the design of quality
IT solutions
Develop skills and capability within IT
Contribute to the overall improvement in IT service quality.
This phase involves creating IT operations service catalogue,
mapping business and IT processes through a contract managed
service business and operational solution. Outcome of this phase is
a clearly defined business case for moving towards managed
services. This phase comprising of two sub phases viz. Due
Diligence, SLA Framework and Business Case preparation.
Plan / Solution
Inputs gathered during the due diligence phase are considered for
defining plan for delivering the agreed services to customer. This
plan can include the technology solutions, process solutions, a high
level schedule and effort to deliver predefined scope of services.
This scope of work along with SLAs defined below will be the key
inputs for preparing the business case.
Service Level Agreements (SLAs) – Life
cycle
This section explains the process steps involved in managing the
Service Level Agreements.
Define SLAs — this process covers the work of drafting and
refining SLAs, ensuring they meet the customer requirements
and gaining agreement from all the parties involved.
Implement the SLA — once all parties have agreed, the SLA
is published, a start date determined and the affected
operational teams notified.
Measure SLA performance and report results.
Refine — assess the effectiveness of the service, locate where
the gaps or changes are occurred and execute the SLA
definition process to adjust the SLA.
Managed Services Business Case
Detailed Managed Services business case will be prepared and
submitted to the customer. The proposal will focus on the
below items to deliver the services.
 Scope of Work
 Assumptions and Dependencies
 Methodology and Approach
 Proposed Technical Solution for new projects
 Service Level Agreements
 ROI
 Time lines & Commercials
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 Governance Model (Engagement Model, Project
Organization Structure, Project Management Processes,
Project Progress Tracking & Communication, Risk
Management, Change Management, Escalation
Management)
 Responsibility Matrix
 Case Studies
Finally, Signed Managed Services contract is an outcome of
Service design phase
Transition and Service Delivery
The transition phase involves taking over the management and
operational responsibility of the given scope of work. This is
executed by leveraging a program management framework and
working closely with the customer to assess, document and validate
the steps that are applicable to the defined scope.
Transition has below steps and that should be executed with a
detailed checklist and toll gate review at regular intervals.
Due Diligence – To understand the scope of work
Transition Planning – To make the plan and schedule for the
actual transition. It also defines the team structure and the
mode of training.
Transition – Actual knowledge acquisition happens as per the
agreed transition plan between different stakeholders.
Shadow Support – The new service provider provides the
secondary support where as the incumbent service provider or
internal staff contributes for the primary support.
Reverse Shadow Support – The new service provider
provides the primary support and the incumbent service
provider or internal staff provides help to the new service
provider in execution.
Steady State – The new service provider takes the complete
charge of service delivery.
Optimization stage – This is the continuous improvement
activity and the service provider shows the continuous
productivity improvement throughout the engagement.
Managed Services Framework
The key elements that frame the managed services model include
Delivery Framework, Governance Model, SLA framework and
Processes & Tools
Delivery Framework that aligns with the service scope and
leverages on application development / support needs and
skill requirements. The delivery model aims to provide the
client benefits from improved quality of service, economies
of scale and visibility
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Governance Model ensures that engagement related
decisions varying in criticality, urgency and financial impacts
are appropriately addressed through a multi layered
governance mechanism operating at strategic, tactical and
operational levels
Service Level Agreements are defined for each of the
services identified and measured during the execution of the
project. SLAs are reviewed on a periodic basis and necessary
changes are incorporated in consultation with customer.
Process and Tools ensures that the delivery teams have
appropriate capabilities to provide the services defined. An
engagement specific policy and procedures manuals
supported by service delivery plans is provided to internal
stake holders to clearly define the approach for service
delivery. A typical established service provider uses a
combination of client provided request handling tools and
3rd party tools to deliver services.
Program Management
The best of class Framework is implemented with the Program and
Project Management methodologies at the organization level, and
practice specific engineering life cycle methodologies at the
customer engagement level.
Figure 4: Program and Project Management
Every program sets out their vision and goals based on the
stakeholder expectations, Business Unit level KRAs and customer-
specific business commitments. This Program Vision and Targets
govern Project Initiation and Planning activities, which include
Project-level Measures and Goals setting. Similarly, the Project-level
performance acts as a feedback loop in monitoring and stabilizing
program execution
A Program is defined as a ―group of projects managed using the
established Delivery Framework to deliver Software Products and
Services, based on customer requirements, to leverage Benefits and
Controls, not available from managing them individually‖.
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The Program Management methodology provides for processes
required to plan, track and manage programs / customer
engagements from a strategic perspective
Figure 5: Program and Project Management Framework
Project Management
Figure 6: Project Management - Delivering Right First Time
A Project is a value creating business executed in a defined time
period which enables delivery of services to the end consumers.
Projects provide for further breaking of the scope of engagement /
program (strategic business needs of the customer) in to manageable
work packets (Development, Maintenance, support, etc.) for
effective execution and delivery.
The phases of project management include – Initiation, Planning,
Execution (Tracking & Monitoring, Delivery & Deployment) and
Closure. The approach following for delivering project level output
right first time is depicted below:
Practice / engineering methodologies for
Solution / Delivery
Software Engineering Life Cycle / practice specific methodologies
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should have been defined to direct the execution and delivery of
solutions and services across disparate technologies. Detailed
methodologies and procedures must be available with any service
provider‘s quality process. The relevant portion of the same will be
shared with the customer during the engagement kick off.
Delivery Structure
 Delivery team(s) collaborate with the representatives in the
customer organization in the context of project delivery
 Customer Management Team collaborates with the customer
at an engagement level, in providing a comprehensive picture
of all delivery.
 Delivery Support by Quality, Competency Solutions, HR, KM
and others
Figure 7: Delivery Structure
Service provider should have a comprehensive governance structure
and process in place. The key activities in planning for the
governance structure and process include-
 Establishing a review plan for critical milestones, deliverables
and periodic progress
 Defining a detailed communication plan – identify reporting
requirements and the various stakeholders who need to be
communicated. Determine the frequency of communication
and responsibility and,
 Defining the escalation matrix for issue resolution
At program level, every program manager captures communication
and review plans pertaining to their programs in any Program
Management Portal. The escalation matrix applicable for issue
resolution will also be updated in the portal. Program Managers
have a provision to upload plans pertaining to document
management and knowledge management as a part of the overall
program planning phase. Effective program governance is a
cornerstone for successful change management and incident /
exception management. The change register and an incident /
exception register, is used to monitor changes / incidents /
exceptions impacting the program. Program Managers leverages on
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the above features in the portal, in defining a comprehensive
governance plan for their programs. This would facilitate the
effective monitoring of the governance mechanism during the
program execution phase, and help program managers in steering
their programs towards success. The typical Governance model for
followed in HCL is depicted below-
STEERING
COMMITTEE
(Executive Management)
Governance Forum Participants Inputs Outputs
Steering Committee
Meeting
(Quarterly)
Engagement Review
Meeting
(Monthly)
Delivery Meeting
(Weekly)
 Customer’s Project
Sponsor
 Customer’s Senior
Management
 HCL’s Head of Delivery
 HCL’s Engagement
Director
 Customer’s Program
Manager
Manager
 HCL’s Program Manager
 HCL’s Account Manager
Manager
 Customer’s SMEs
 HCL’s Project Manager
 HCL Technical/Module/
Test/Project Leads
 Project Highlights
 Review Key Performance
Indicators
 Escalated Issues
 Progress Reports
 Escalated Issues
 Directions from Steering
Committee
 Risk Analysis
 Metrics
 Project Status
 Metrics
 Directions From
Engagement Group
 Current issues
 Executive Commitments
 Issue Resolutions
 Strategic Directions
 Issue Resolution
 Project Plan realignment
 Issue Escalation
 Resource Requisition
 Issue Escalation
 Revised Plan
 Metrics
 Risks
DELIVERY GROUP
(Project Management)
ENGAGEMENT
GROUP
(Relationship
Management)
MEETING SCHEDULE REPORTS SCHEDULE
Steering Committee
Engagement Committee
Delivery Meeting
Once every 3 Months
Once every Month
Once a week
REPORT SENT TOPREPARED BY
Weekly Status
Report
All StakeholdersProject Manager
Monthly Progress
Report
Steering Committee
Project Manager &
Account Manager
Figure 8: Governance Model
Indicative SLAs
In any managed services engagement, SLAs are aligned with only
two objectives – One is on time delivery and the other is bug fixing
time for resolution.
In addition to the above SLA‘s, the following table contains the
sample SLAs that can be followed for the engagement in the
Managed Service Model. The actual SLAs will be discussed and
mutually agreed upon commencement of the managed services
model:
Indicative SLAs for Production Support projects are given below.
SLA
Measurement
Matrix
Metric Formula Expected
Severity 1 Ticket
Response
Response Time
Time of Ticket
Response minus Time
of Ticket Assignment
15 minutes
Severity 2 Ticket
Response
Response Time
Time of Ticket
Response minus Time
15 minutes
Severity 3 Ticket
Response
Response Time
Time of Ticket
Response minus Time
1 hour
Severity 4 Ticket
Response
Response Time
Time of Ticket
Response minus Time
2 hours
Severity 1 Ticket
Resolution
Resolution Time
Time of Ticket
Resolution minus Time
4 hours
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SLA
Measurement
Matrix
Metric Formula Expected
Severity 2 Ticket
Resolution
Resolution Time
Time of Ticket
3 days
Severity 3 Ticket
Resolution
Resolution Time
Time of Ticket
30 days
Severity 4 Ticket
Resolution
Resolution Time
Time of Ticket
30 days
Post Mortem Incident
Report
Time
Time within which the
Post Mortem report to
be sent to the customer
for Severity 1 & 2
tickets
24 Hrs
Challenges in moving into Managed
Services
Like any other scenario where there is a substantial organizational
change, transitioning into managed services also presents tough
challenges in the way of the transformation. Some of these
challenges are process related, some technological and some related
to organizational & behavioral changes. One of the most important
criteria and challenge for the customer organization is to have
enough trust on the capabilities of the service provider. Since
Managed services requires less oversight and management burden
for the customer organization, in spite of
clearing all odds, not having trust on the service provider
organization and its capabilities can undermine all efforts. Below is a
list of few prominent challenges that most organizations face in this
transformation.
Challenges & their mitigation while moving
into the Managed Services Mode:
Based on our past experience in converting the engagements into
managed services mode, we have listed the possible issues that
might develop. We have also given below the mitigation or
resolution for each of these issues in order to move the engagement
to managed services mode successfully.
S.No Challenge Resolution / Mitigation from the Service Provider
1 Dependency on
the customer
SME
Service provider will go through the training / KT during the first 6
months to become the subject matter experts for the identified
skill/stream. This will help in minimizing the customer SME involvement
on a staggered mode and eventually the service provider‘s team will
become self dependent.
2 Gaining
Customer
stakeholder
confidence for
moving into
Managed
Services Model
In order to get the confidence, the movement will be done in a staggered
mode - Partially managed and eventually into a fully managed services
mode. This will also help in minimizing the risk for the business.
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S.No Challenge Resolution / Mitigation from the Service Provider
3 Lack of
transparency
from Service
provider
Upon conversion to partially managed / fully managed, service providers
follow the defined communication plan to share the project progress,
issues/concerns, performance SLAs and metrics with customer. This will
be planned at multiple levels. Service provider‘s onsite co-coordinator will
be interfacing between onsite, offshore and customer to minimize any
gaps.
4 Lack of
Accountability
from Service
provider
The SLA based engagement with performance incentives & credits to
ensure required accountability from the service provider.
5 Handling
architectural
changes
Service provider team will be supported by the internal Technical
Architecture Group and competency groups. These groups provide the
technical guidance and also perform technical & architectural reviews to
ensure that the deliverables meet the standards.
7 Knowledge
Retention
Service provider should have a dedicated Knowledge Management portal
and framework for customer engagement. The framework enables the
service provider to capture, retrieve and re-use the documented
knowledge and tacit knowledge.
8 Lack of
engagement
oversight by the
customer
Customer will continue to manage the engagement by way of the
following: - (a) Prioritization of projects (b) Approving milestones (c)
Estimation revalidation and approvals (d) SLA based performance
monitoring and provision of incentives & credits (e) Toll gate reviews and
signoffs for the milestone based deliverables.
9 Complaint with
the service
provider‘s
SDLC
processes
(a) Before migrating to the Managed Services Model, Service provider
would have worked with Customer for nearly 24 months time in project
mode. This is a good timeframe for any large application to get the
required Knowledge on the service provider‘s SDLC process followed by
Customer.
(b) In addition to this, before moving to the Managed services model, a
charter will be prepared which describes the process to be adopted.
Service provider should be open to follow the process prescribed by the
customer, or service provider can suggest its own or a combination of
both. In any case, the process will be mutually agreed and implemented.
10 Organizational
change
management and
people
communication
By moving into managed services model, Customer managers will be freed
from the routine operational, technical and resource related matters. This
will enable them to have more bandwidth for more value added services as
well as taking up some of the high end work. This will allow required
acceptance from the customer staff. It is also important to provide the
direction of the managed services model from the senior leaders of the
organization for better and faster implementation.
11 Business
Continuity Plan
By outsourcing the work in managed services, customer has very little
control in day to day operations. In this case, service provider needs to
have a disaster recovery plan to run the business as usual in case of any
disruption. This should be tested and audited in regular interval.
Managed Services Model – HCL way of
Transformation and Sustenance
HCL proposes to leverage its proven MASCoT framework
(Managed Application Services with Continuous Improvement to
Transformation) that incorporates experiences from previous,
similar size engagements wherein HCL has brought value to the
customer while over time exhibiting continuous improvements to
create the target Operating model for any customer. This Model is
designed to provide values to the customer with:
Robust Service Delivery Model delivering predictable
services
Mechanism to effectively measure HCL Performance
Control and flexibility
Reduced TCO
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Potential Improvement initiatives driving cost down year
on year
The model outlines the complete journey from transition to steady
state with a focus on continuous improvement and value creation.
Figure 9: MASCoT™ Framework
HCL provides Application Development, Maintenance, Support
and any transformation work in this model. The below figure
provides the levers for each phase.
Figure 10: MASCoT™ Framework Phases
End Note
Defining a long term vision and the roadmap for its execution are
the utmost priorities for any CIO. This can be achieved only if
CIOs and IT managers outsource the IT work to a service provider
in managed services model. This gives more bandwidth to work on
strategic things. All operational work to run the business is
outsourced to a service provider with agreed service level
agreement. It also reduces the total cost of ownership and annual
HR and OCM
Tools (MAST™) CMMi / ITIL-based Processes and Quality Control
Shared Services
Knowledge Management
Global Delivery Model
Resource Management
Demand Management
Multi-Vendor Governance
Risk Management
Governance
Productivity benefits through Continuous Improvement
Proactive initiatives for Value Creation within the scope of service
Proactive preparation of business cases for Transformation
TRANSITION
How will the service be
transitioned?
DELIVER
How will the Service
be delivered?
MANAGE
be managed?
IMPROVE
be improved?
ADD VALUE
How will HCL
create value?
TRANSFORM
How will HCL help
in transformation?
Disaster Recovery / Business Continuity
Tools & Automation driven Best Practice driven Process & Quality driven Knowledge driven
Value Register through MyCustomerPortal
Discovery and optimization of business processes, applications, databases and IT infrastructure through BAIT™
Standard Development and Estimation methodologies
Project Management
MEASURE
be measured?
Integrated reporting through MyCustomerPortal
SLA / KPIs CSAT
MASCoT™
Robust Governance
Managed Application Services
with Continuous improvement to Transformation
Scope (RTB – App. Support & CTB – App. Development)
DEFINE
What is the Service?
Price
Mature and proven ASSeT™ methodology
SLA Finalization
Process Harmonization
Tools Setup
Infrastructure Setup
Technical and Commercial Solution
Governance
Transition Strategy & Engagement Roadmap
IOMC Information Security
Risk Project Reporting Billing
Scope Changes
18

budget can be used for transformation of application to meet the
business and market demands. It also brings improved customer
delight index.
References
http://en.wikipedia.org/wiki/Managed_services
http://www.cio-weblog.com
http://technologyoutsourcingblog.com
http://managedservicesblueprint.com
About the Author
Praveen Sinha is part of Mainframe Solution CoE team as ADMS
consultant and has 15 years of experience in various areas of
Mainframe. In the past, he has worked in several large engagements
and converted Staff augmentation or Semi-Managed Services
engagement to Managed Service Model successfully. He has also
contributed in starting an engagement in managed services model
for various Transformation, Development, Maintenance and
Support projects across various technologies.
19

ABOUT HCL
HCL Technologies
HCL Technologies is a leading global IT services company, working
with clients in the areas that impact and redefine the core of their
businesses. Since its inception into the global landscape after its
IPO in 1999, HCL focuses on ‗transformational outsourcing‘,
underlined by innovation and value creation, and offers an
integrated portfolio of services including software led IT solutions,
remote infrastructure management, engineering and R&D services
and BPO. HCL leverages its extensive global offshore infrastructure
and network of offices in 31 countries to provide holistic, multi-
service delivery in key industry verticals including Financial Services,
Manufacturing, Consumer Services, Public Services and Healthcare.
HCL takes pride in its philosophy of ‗Employees First‘ which
empowers our 72,267 transformers to create real value for
customers. HCL Technologies, along with its subsidiaries, had
consolidated revenues of US$ 3.1 billion (Rs. 14,101 crores), as on
31st December 2010
About HCL Enterprise
HCL is a $5.7 billion leading global technology and IT enterprise
comprising two companies listed in India - HCL Technologies and
HCL Infosystems. Founded in 1976, HCL is one of India's original
IT garage start-ups. A pioneer of modern computing, HCL is a
global transformational enterprise today. Its range of offerings
includes product engineering, custom & package applications, BPO,
IT infrastructure services, IT hardware, systems integration, and
distribution of information and communications technology (ICT)
products across a wide range of focused industry verticals. The
HCL team consists of over 79,000 professionals of diverse
nationalities, who operate from 31 countries including over 500
points of presence in India. HCL has partnerships with several
leading Global 1000 firms, including leading IT and Technology
firms. For more information, please visit www.hcl.com
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