Featured Featured guests:guests:

Effective Outsourcing StrategiesEffective Outsourcing Strategies

George J. AtisGeorge J. Atis Dan McLean Dan McLean

Slide Menu

2002: A year in review

The Outsourcing Topology

IDC Survey data

Client-side methodology

Vendor-side methodology

Contacts

2002 – A Year in Review2002 – A Year in Review

Canadian outsourcing market was strong in 2002

Many Canadian contracts appeared: $2.2B Canada Post and CGI $1.3B CIBC and HP Services (but doesn’t really count) $700M Bombardier and CSC $660M OPG and CGE&Y $535M Manulife Financial and IBM GS $250M Sun Life and IBM GS $200M Desjardins Group and CGI $200M Alcan and CGI $160M Stelco and EDS

Typically five- to 10-year contracts

The Outsourcing TopologyThe Outsourcing Topology

IncreaseEfficiencies

Keep upWith RapidlyAdvancingTechnology

RefocusCritical

Resources

Reduce orStabilize

Costs

Drivers

Losing control

Complexity: what to

outsource

Can’tbring IT

back in-house - if I want

Too risky, too uncertain

Inhibitors

Network and DesktopOperations C

all Centre

Help D

esk

Eco

mm

erce

Applicatio

ns

Outsourcing

ApplicationDevelopment

Data Centre

Outsourcing

Business

Process

Pro

cess

ing

Ser

vice

s

N=100; Q16. Which of the following activities do you currently outsource?Source: IDC Canada, 2002

Activities Currently OutsourcedActivities Currently Outsourced

0 5 10 15 20 25 30 35 40 45 50

Logistics management

Human Resources

Customer support callcentre

Network operations

Desktop management

Data centre management

Application developmentand maintenance

Percentage

N=100; Q18. What event ultimately prompted – or would prove to be the determining factor – in your organization’s decision to outsource an activity?Source: IDC Canada, 2002

Determining Factor in Organizations’ Decision to Outsource ActivitiesDetermining Factor in Organizations’ Decision to Outsource Activities

0 5 10 15 20 25 30 35 40

Other

Merger/Acquisition

Change in SeniorExecutive levelmanagement

Technology audit

Poor businessperformance

Percentage

Benefits derived from outsourcing – a matchBenefits derived from outsourcing – a match

0 10 20 30 40 50

Increased customer satisfaction

Improve business processes

Convert fixed costs to variable

Intro new/improved products/svcs

Lower capital investment costs

Lower operational costs

Improve focus on core business

Access to skills resources

Percentage

Currently OS-No

Currently OS-Yes

Total

N=177; A04. What do you perceive are the top 2 benefits/value derived from outsourcing?Source: IDC Canada, 2003

If Outsourcing, Organization Prefers to Retain Control Over…If Outsourcing, Organization Prefers to Retain Control Over…

0 10 20 30 40 50

DK/Refused

People

Process design

Day to daymanagement

Service levels

Business outcomes

Strategy

Percentage

Currently OS-No

Currently OS-Yes

Total

N=177; A07. If or when considering to outsource an aspect of your business, what ONE aspect of control of your outsourcing arrangement do you prefer to retain?Source: IDC Canada, 2003

ThoughtsThoughtsIf a customer does not have a clear understanding of IT costs, then they should not outsource.

General rule in outsourcing is have an exit strategy:- Are you equipped to take over when the contract expires- Be vigilant in measuring performance and value

What’s in store for IT service providers in 2003?- Are telcos still targeting IT services? There’s evidence to suggest

some are looking to retrench into familiar territory. Bell, Aliant, Telus.

- Consultants also want to be outsourcers – Accenture, CGI, Bearing Point

- One-stop shops

Is there a trend towards dealing with advisors and brokers? Would they be helpful to you?

George J. Atis George.Atis@mcmillanbinch.comPartner; Chair of the Outsourcing Practice GroupMcMillan Binch LLP

Dan McLean dmclean@idc.comDirector, Outsourcing & IT Utility Services ResearchIDC Canada

John Pickett jpickett@itworldcanada.comVP; Editor-in-chief, IT World Canada Inc.

Contacts

Mark your calendars: Toronto, May 5, 2003

Info and registration at: www.itworldcanada.com/events