Sourcing models galit fein presentation kenes

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

Galit Fein’s work Copyright 2012 @STKI Do not remove source or attribution from any graphic or portion of graphic

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%

$$

2


How Can We Fill The Gap?

Time

Business demand for IT services

IT Budget

$$

3


IT Budget Trends

4

• 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


Capital Organizational Spending

Technology Investments

47%

Other 53%

5

Source: IDC 2012


The Majority of IT total spending goes to Maintenance

Breakdown of Total IT Expenditure 2009-2012

Source: CIO Executive Board 2012

6

Innovation

Business opportunity

Maintenance

Mandatory


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

7


The new IT

Client/user

Packaged Application

8


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

9


State of World Wide Outsourcing is NOT better

10

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


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


IT Projects - Constraints

• Never manage to “finish” development (Capex) budget

• Lack of facilities

• Difficulties in

recruiting people

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13

Regulations


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

14

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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

Galit Fein’s work Copyright 2012 @STKI Do not remove source or attribution from any graphic or portion of graphic 16

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!


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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21

Managed Services


22

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


Thank You And Hope You Enjoyed!

23

Here you can find the latest version of this presentation :

http://www.slideshare.net/Galit

Sourcing models galit fein presentation kenes

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