Outsourcing
2010-10-04
Agenda
•Introduction
•Market & customer view
•How we position Logica
•Global delivery
•How do we work?
•Working with outsourcing
© Logica 2010. All rights reserved
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No. 2
Intro
Myself
Pia Kullström
Director Sales & Marketing Outsourcing service, Logica Sweden
© Logica 2010. All rights reserved
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No. 4
This is Logica
• Leading business and technology service company, employing 39,000 people.
• Revenues of £3.7 billion in 2009
• Providing business consulting, systems integration and outsourcing to clients
around the world, including many of Europe's largest businesses.
• Creating value for clients by successfully integrating people, business and
technology.
• Committed to long term collaboration, applying insight to create innovative
answers to clients‟ business needs
• Listed on both the London Stock Exchange and Euronext (Amsterdam).
© Logica 2010. All rights reserved
No. 5
Some of our clients
© Logica 2010. All rights reserved
No. 6
Swedish IT services market – Logica position
2009
2010
2011
2012
-5.0
4.0%
3.4%
3.4%
144 100
147 000
IT services market,
MSEK
51 543
52 272
53 651
55 642
58 116
IT services market
growth
-5.9%
1.4%
2.6%
3.7%
4.4%
Logica market share
10.8%
11.1%
11.7%
12.5%
13.3%
GDP growth
Total it spending,
MSEK
2013
Total spending
150 mrd
External
spending
55 mrd
• Market growth in all segments from a new lower baseline.
• Continued high level of competition combined with high
client expectation for further cost reductions (i.e. continued
price erosion, need for efficiency improvements etc).
• IM cloud services entering the market.
• AM outsourcing breakthrough as tool for transformation
Logica
6.5
mrd
of business as well as reducing cost levels.
© Logica 2010. All rights reserved
No. 7
Number 1 in Sweden
Vendor
Rank
Vendor
Rank
Logica
1
Logica
1
IBM
2
Tieto
2
HP
3
Ericsson
3
Tieto
4
TeliaSonera
4
EDB
5
IBM
5
Capgemini
6
EDS
6
CSC
7
HP
7
Sigma
8
Capgemini
8
Volvo IT
9
EDB
9
Accenture
IT-services
© Logica 2010. All rights reserved
10
ErgoGroup
“Logica
is the #1
holistic
provider in the
Nordics”
Source:
EquaTerra, Nordic
Region Outsourcing
Service
Provider Performance
Study 2009
10
IT-services
Logica in Sweden
Outsourcing
No.
Market & customer
view
European Outsourcing market is still growing
140 000
120 000
100 000
80 000
60 000
40 000
20 000
M€ 0
2008
2009
2010
2011
2012
2013
Overall outsourcing market to grow at CAGR of 5.3%
until 2013.
© Logica 2010. All rights reserved
Outsourcing Drivers
Increased
Regulatory
compliance
Global Integration
Economy
“More for Less”
Emergent &
adoption
of off-shore
Capabilities
Industry
Consolidations
Evolution of
technology
© Logica 2010. All rights reserved
Outsourcing evolving into 3rd generation
1st generation
One big vendor took home a mammoth deal
Second wave (1990s till 2007/8)
Deal size still big but smaller than the first generation. Mostly transfer of credit
risk, with the vendor taking over the people and assets
3rd generation
Deals coming up for renewal and being renegotiated mid-way, typified by the
rise of offshore companies. Deals are getting smaller and being split among
multiple vendors.
Companies renegotiating deals want to change what they signed on the dotted
line
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Effective sourcing of IT
Core
competence
In-house
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Peripheral
Complementary competence competence
Strategic
partnership
Preferred
supplier
Single
sourcing
Market
transaction
No. 13
The impact of outsourcing
Changes in organisation
Usual Mistakes
New roles and responsibilities
Unclear expectations
- from operational to tactical and strategic •- service levels, technology, budget,
issues
investment
- less direct contact with the applications
Relationship not stimulated
More business driven relationship
•- cultural differences
- ”real money”
•- „We against them‟ problem
- specifications and formal orders
•- Grey zone discussions.
New formal governance of IT
Internal Organisational Issues
- hidden costs become visible
•- old roles not transforming to new
responsibilities
- stronger management and control.
•- employees‟ uncertainty handled wrongly
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No. 14
Criteria for selecting suppliers
Most important factor – TRUST
Culture, understanding and affinity
Executive commitment
Size
Geographical coverage
Service atmosphere
Knowledge, business and
technology
Type of co-operation and contract
Pro-activeness, incentives, common
goals
Focus on employees
Governance
Decision-making process
© Logica 2010. All rights reserved
No. 15
Twelve capabilities of a potential supplier
Relationship competency
Planning &
contracting
Organisational
design
Governance
Customer
development
Leadership
Program
management
Delivery
competency
Business
Management
Sourcing,
behaviour
management
Domain
expertise
Process
Re-engineering
Transformation
competency
Technology
exploitation
Source: The Outsourcing Enterprise – The CEO‟s guide to selecting effective suppliers
© Logica 2010. All rights reserved
No. 16
How we position Logica
Why companies „should‟ outsource to Logica?
Manage Cost
AND
•
•
•
•
•
Reduce cost
Focus on core business
Predictability
Impact balance sheet
Improved cost
effectiveness
• Spreading of initial
investment cost
Industrialisation
© Logica 2010. All rights reserved
Manage Risk
AND
• Reduce vulnerability to
staff changes
• Access to skills when
needed
• Technology
refresh/change
• Free up cash for
investment
• Avoid IT capital
investments (non-core)
Trust and flexibility
Accelerate
• Accelerate speed to
market
• Enable business focus
transformation
• Access to new skill set
• Mergers and acquisitions
• Focus on core business
• Improved quality of
service
• Flexibility
Innovation
The key questions
“Can I trust you to
work with me?”
Client
Intimacy
“Can you add value to
my business?”
“Can you do it at the
right priceperformance?”
Domain
Excellence
Operational
Effectiveness
“Will you be successful?”
Commitment to delivery
© Logica 2010. All rights reserved
No. 19
What makes Logica different
Client
Intimacy
Domain
Excellence
Operational
Effectiveness
• Cultural affinity
• Better understanding
• Global delivery model
• Low risk
• Added business value
• Blended sourcing
• Local Management
• Closer to the market
• Customised processes
• Durable relationships
• Industry standards
• Excellent tools
• Secure and state-ofart infrastructure
Account
management
Sector
knowledge
Global service
delivery
Commitment to delivery
© Logica 2010. All rights reserved
No. 20
Client Intimacy: strong local operations
• We are the leading supplier to utilities
in the UK, the Netherlands and
Portugal
• We are one of the leading suppliers to
UK government
Security
Public Sector
Utilities
Testing
• We have 1,400 Oracle, 3,300 SAP,
and 6,000 Microsoft specialists in
Europe and are the prime Microsoft
partner in the Nordics
• We are recognised experts in
security, payroll, transport and
managed testing in a number of
geographies
• Our strengths in key geographies
and sectors help underpin around
75% of revenue
© Logica 2010. All rights reserved
Oracle
Consulting
SAP
SOA
Microsoft
Public Sector
Transport
Financial
Services
Utilities
Testing
Testing
Utilities
Top 3 positions
Domain Excellence: Market leading propositions
Industry,
Distribution
and Transport
*
*
Principal
Services
Principal Services
• Intelligent
Transport
Systems (ITS)
• Manufacturing
IT
• IT excellence
and Business
transformation
• Enterprise
Resource
Planning (ERP)
Implementation
Financial
Services
Public Sector
• Case mgt,
Information
mgt and data
sharing
• Shared
Services
• e-Services
• Security
• Business
Intelligence
• Training
© Logica 2010. All rights reserved
*
Energy and
Utilities
*
Telecoms and
Media
*
Principal
Services
Principal
Services
• Payments
• Business
Transformation
• Risk and
Compliance
• Insurance
• Smart
Metering
• Operational
excellence
• Competitive
markets
• Oil & Gas
(Upstream and
downstream)
• Environment
and regulatory
compliance
*
Principal
Services
• Operational
and business
support
systems
• Service
fulfilment
• Billing
• Managed
Virtual
Network
Operators
(MVNO)
Service portfolio
Operational Effectiveness:
Outsourcing Services portfolio
Business
Process
Outsourcing
Human Resource
Outsourcing
Application
Management
Application Portfolio
Management
Enterprise
Application Services
Infrastructure
Management
Remote
Infrastructure
Management
Logica Private Cloud
Managed Test
Services
Over 35 years of experience
© Logica 2010. All rights reserved
No. 24
Business Process Outsourcing
Business
Process
Outsourcing
Application
Management
Infrastructure
Management
Human Resource
Outsourcing
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No. 25
Shared services
Customer Services
Corporate & Employee
Services
Business Process Outsourcing
HR & Payroll
Services
•Process more than $200 billion of salaries globally each year
•Process more than 60 million payslips per annum across Europe
•Supporting over 5,500,000 employees on HR & Payroll
Training and
Learning Services
•We operate the UK‟s largest acquisition skills training centre,
which delivers more than 20,000 delegate days of training pa.
• We deliver over 500,000 hours of eLearning worldwide to UK
Ministry of Defence each year
Finance &
Accounting and
Procurement
• Full service provider of commodity and complex processes
• Technology independent, with skills in SAP, Oracle, Agresso
• Award winning Total Invoice Management, compliant
in 90 countries, handles 40m e-invoices pa, with 75% carbon
reduction
Banking and
Insurance
Energy and
Utilities
Contact Centres
Document Services
• We handle more than 2.5 million transactions for banking,
cards and insurance each year
• Process in excess of 150,000 life insurance policies per year
• Process in excess of 200,000 indemnity insurance policies pa
• We settle €9.8 billion of electricity supply payments every year
• Have never missed a daily billing run
• One of Europe‟s largest suppliers of fuel card services
• Leading provider of broadband end- customer services in UK
Our service desks handle over 80,000 contacts per month
7m invoices captured; 25 m e-invoices B2B; 2m e-invoices B2C;
16m captured documents; 500m processed pages; 800m printed
pages; 300m mail pieces per year
© Logica 2010. All rights reserved
No. 26
Application Management
Business
Process
Outsourcing
Application
Management
Application Portfolio
Management
Infrastructure
Management
Enterprise
Application Services
Managed Test
Services
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No. 27
Application Management
Over 6,000 staff in application management
Application
Portfolio
Management
Application
Maintenance
Services
• value-based approach
• focus on quick wins
• key to optimising application landscape
• ITIL-based support model
• leverages blended sourcing model
• commitment to continuous improvement
• legacy as well as latest technologies
Application
Development
• collaborative environments for .Net, Java (Resu!t
Centre)
• leverages blended sourcing model
• project and programme management heritage
Enterprise
Application
services
• 15+ years of established ERP support model
• Alliance partnership with SAP, Oracle and Microsoft
• supporting well over 100,000 SAP end users
• over 400 successful SAP implementations worldwide
Managed
Test Services
• over 7,000 testing experts worldwide
• developed testing tools, techniques, models and
environment
• results based testing, innovative utility model
© Logica 2010. All rights reserved
Infrastructure Management
Business
Process
Outsourcing
Application
Management
ERP Services
Testing
© Logica 2010. All rights reserved
Infrastructure
Management
Remote
Infrastructure
Management
Logica Private Cloud
No. 29
Infrastructure Management
Remote Infrastructure Management and Logica Private Cloud
Data Centre
services
• Over 14,825 sqm of data centre space worldwide
• Control bridge network ensures global service
excellence
• Data centres in Europe, Australia, Brazil and India
Server
services
• Over 14,000 servers supported
Network
services
• 70,000 networked devices supported
• 3400 networks managed
Desktop
services
• Over 166,000 desktops supported; 145,692
supported from Western Europe
Managed
Storage
services
• 396 databases supported, including the world‟s
largest civil database (UK NHS Spine)
• 1940 TB storage managed
© Logica 2010. All rights reserved
No. 30
Global delivery
Global Service Delivery enablers
GLOBAL
SERVICE
DELIVERY
enablers
Global
Blended
Sourcing
Customer
Service
Global
Processes
& Tools
© Logica 2010. All rights reserved
Global
Infrastructu
re
Flexible
Commercial
Models
No. 32
Creating the right Blend
HIGH
Complexity/ Risk
On-site
Onshore
Blended Sourcing Model
Offshore
Near Shore
LOW
Customer interaction/ intimacy
© Logica 2010. All rights reserved
No. 33
Creating the blend - criteria 1: Industry factors
Category
Financial
Structure
(40%)
People Skill
and
Availability
(30%)
Sub categories
Metrics
Compensation Cost
• Average wages
Infrastructure Cost
• Occupancy, electricity and telecommunication system
• Travel to major customer destinations
Tax and Regulatory cost
• Relative tax burden, cost of corruption and exchange
rate
Cumulative Business process
experience and skills
• Existing IT and BPO market size
• Contact centre and IT experience
• Management and training quality
Labour force availability
• Total workforce
• University educated work force
Education and Language
• Scores on standardised education and language tests
Attrition rate
Business
Environment
(30%)
• Investor rating for the country
Country environment (economic and
• Extent of bureaucracy
political aspects)
• Government support
Country infrastructure
Cultural adaptability
Security of intellectual property
© Logica 2010. All rights reserved
• Software piracy laws
Critical parts
CORTEX - Standard Global Processes & Tools
Manage
Markets
Manage
Products
Manage
Service
Manage
Consultanc
y
Do
Work
Cortex
Win
Business
Manage
Projects
Manage
Customer
Assignmen
t
Support
Work
Manage Staff
Manage Relationships
Run Logica
The set of best
practice business
processes that
provide a framework
for everything we
do, anywhere in the
world.
Buy
Things
Tools
© Logica 2010. All rights reserved
No. 36
Competency Centre-based Certifications
BS 7799
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No. 37
Tools
Services delivered globally using a standard set of tools
Change &
Issue
Management
Knowledge
Management
© Logica 2010. All rights reserved
Quotations
Project
Planning
Remote
Management
Network Device
Automation
Server and
Software
Automation
Asset
Management
Transition - principles for planning, and execution for
success
Approach to
business critical
periods
Protecting the
service during
transition
Additional support during business critical periods
Phased approach to knowledge transfer and go-live of
applications support
Retention of core staff within the service if required
Acceptance
criteria for
transition
Measurable evidence of service readiness
Thorough test
of service
delivery model
Early transition of non-critical application sets, staged
service delivery tests
© Logica 2010. All rights reserved
No. 39
Transformational proposition
• Transformation will focus on
– fast cost reduction, quicker ROI
– Low risk transformation programmes
– Improvement of service and satisfaction
Transformation will deliver
– Services in Blended Delivery model
–
–
–
–
New architecture for applications like SOA etc
Modernisation of applications
Business change management
Business Process management
© Logica 2010. All rights reserved
People transfer
Getting the people aspects right is business-critical
We have performed more than 1500 transfers
We have a proven model for staff transfer
About 45 - 50 % of our employees are from outsourcing deals or acquisitions
Successfully merged four large organisations: Logica, CMG, Unilog, WM-data with
39,000 staff in total
© Logica 2010. All rights reserved
Logica global Infrastructure model
Customer
Remote
Site
Remote
users
Customer
Data-centre
Secure network
Control Bridge
Central
Data
Centre (UK)
Data-centre
MPLS-based Global WAN
Secure network
Control Bridge
Data-centre
Secure network
Regional
data-centre
Control Bridge
Data-centre
LAN
WAN
Data-centre locations – UK, Portugal, Czech Republic, France, NL, Nordics, India, Brazil and Australia
© Logica 2010. All rights reserved
No. 42
Our robust global control bridge network
Portugal
United
Kingdom
Netherlan
ds
Sweden
Finland
Global Control Bridge network
India
Australia
• Multiple locations and multiple networks ensure true, follow-the-sun service covering
applications support
• Implementation of Service Level Management solution provides greater visibility of the
service impact of alerts
© Logica 2010. All rights reserved
Different types of relationship/Commercials
Service
Supplier
Time &
Materials
Programme
Partner
Target Pricing
Reward
by results
Business
Partner
Shared
Benefits
Shared
Business Case
Value Creation
Transactional
Relationship
Co-dependence
Shared Business
Objectives
Shared Risk/Reward
Inputs
Measurement by...
Outputs
Increasing complexity and increasing value
© Logica 2010. All rights reserved
No. 44
Commercial Flexibility
Client
IT Service
Responsibility
Logica
T&M
resources
T&M
projects
Fixed Price
projects
Risk/Reward
projects
Application
Management
IT/BPO
Outsourcing
Partnering options
© Logica 2010. All rights reserved
No. 45
Some of the key governance issues
Control
Relationship management
Planning
Tracking, monitoring and reporting
Change control
Issues and risk management
Project dependencies management
Resource management
Support
Project support
Co-ordination and communication
Administration
Project administration
Programme administration
Configuration management
Accounting
© Logica 2010. All rights reserved
Our approach:
strong focus on relationship
management
balance between relation, trust and
control
informal meetings and discussions
retention of key competencies from
sales to delivery
Governance versus day-to-day management
•
•
•
•
What is governance?
What is management?
What is the retained organisation?
Where do we draw the line?...do we draw one?
Strategic
Governance
Tactical
Etc.
Commercial
Architecture
Service
Improvement
Configuration
Management
IT Service
Continuity
Service
level mgt
Availability
Release
management
Operational
Change Mgt
Incident &
problem Mgt
Transformation
Operational
Operational Management
© Logica 2010. All rights reserved
No. 47
Customer Services | Europe
Sweden
Finland
UK
Netherlands
Czech
Republic
Portugal
© Logica 2010. All rights reserved
France
Germany
No. 48
Customer Services | World wide
Philippines
Europe
Morocco
Australia
Brazil
India
© Logica 2010. All rights reserved
No. 49
The Cost Challenge (IM)
© Logica 2009. All rights reserved
Critical success factors for successful outsourcing
 View outsourcing as a major change project
 “Begin with the end in mind” – Set clear and measurable objectives
 Take care of the employees; Reduce uncertainty
 Choose the right supplier/partner (culture and communication)
 Express clearly your expectations on suppliers‟ performance
 Secure a win-win situation
 Develop incentives for continuous improvements
 Establish a competent ordering function (mandate)
 Establish a governance structure on all levels
 Implement with speed and strong commitment.
© Logica 2010. All rights reserved
How do we work?
Main processes
Manage Service
Manage Staff
Manage Relationships
Win Business
Manage Customer Assignment
© Logica 2010. All rights reserved
No. 53
Win business
Pipeline development…
25 000
20 000
15 000
10 000
5 000
0
© Logica 2010. All rights reserved
No. 55
How to manage growth potential
Governance
Governance
• Strong Account governance
• Process and Support
Steering Committee
Industry Sector MD
Executive Sponsor
OS CSD
Sales & Marketing Dir SE
Client Intimacy
• Account based activities
• Round table events
• Relations
KAD
Client
Knowhow
Client Understanding
Offering/
solutions
• Client lead consultants
• Client alignment of solutions
• Account Teams – Account Portal
Proactive sales approach
• Business Development
• Contract database
• Value match
• IT Mapping
Client Lead
Consultant
Account
Sales
CSM
Proactive Sales approach
Value Match
Opportunities
Contract
database
Blueprint - Roadmap
Contracts
Relation - Brand
IT-Pain/op
Knowledge - Proactive
Opportunit
y
Solution
Offer
IT Mapping
0
Suspect management
© Logica 2010. All rights reserved
Account Portal
1
5
Bid Mgmt
No. 56
Bid Smart Gates
Sign-ON
Bid Gate 1
Functional
Reviews
Bid Gate 2
• Early stakeholder
involvement
• Strategy
• Early view of Risk
• Mobilise appropriate
resources
Deep dive ‘peer’
review e.g.
Technical
Finance
Risk Management
USPs
© Logica 2010. All rights reserved
Sign-Off
Bid Gate 3
Precommitment
Bid Gate 4
• Strategic review
• Negotiation plan
• Proposition
• Contract review
• Mobilisation
No. 57
Roles & responsibility
Role
Activities
Responsibility
Bid manager
Lead bid team and
manage bid through bid
process.
Manage bid process.
Lead
approver
Emphasize responsibility
for ensuring right offer,
deliverable solution, at
right price and with risk
awareness.
Consistent, senior
involvement
throughout all Gate
Reviews. Coach and
approve bid process.
Steering
group
Group meetings.
Go/No go decisions.
Approve bid to
continue through
gates.
© Logica 2010. All rights reserved
No. 58
Bid Smart Tools
1) Bid Smart portal
Created to capture the new group-wide
process & documentation
2) Consolidated Bid Repository (CBR)
Will serve as a central repository for all bid
related documentation. Track status of each
gate and keeps auditable history of all bids.
3) Pricing Support Tool (PST) / PRM
One common tool for pricing, reviews & risk
estimations. Replaces QMS and today’s
PRM-calculation templates.
© Logica 2010. All rights reserved
No. 59
Manage service
AM - delivery mix…
AC
Services
10%
65%
T&M
Projects
Projects
T&M - Competence
© Logica 2010. All rights reserved
25%
Services
Application Center – Set up
AC Director
Resource Management
Controller
Quality
Methods & Processes
Architecture
Security
Production Manager
Client
Team
Service
Delivery
Manager
Client 2
Client 3
SDM
Client 4
SDM
Client 5
SDM
Client 6
© Logica 2010. All rights reserved
Project Office
Client 1
MTS/QTC
Logistics
Retail
Finance
Mainframe
SAP
Oracle
SDM
Microsoft
SDM
JAVA/J2EE
SDM
No. 62
Manage customer
assignment
Contract management & relations
Client Director
Service levels
Reporting
Add on sales
(farming)
Re-negotiations
Key persons in
delivery
Client Lead
Consultant
Account
Sales
Client Service
Manager
© Logica 2010. All rights reserved
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No. 64
What‟s needed if you want to
work with outsourcing?
Anything…
Like of customers…
Patience
Knowledge
Financials
Some.. technology, but not necessarily
Psychology
Structural thinking
Creativity & innovation
Complex situations
© Logica 2010. All rights reserved
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No. 66
Outsourcing is all about
Relations & SLA’s
Keep & attract
Local & global
Strategic &
operational
AND
Complexity &
to make it simple
Low cost & modern solutions
© Logica 2010. All rights reserved
No. 67
Thank you
Logica is a business and technology service company, employing 39,000 people. It provides business consulting, systems integration and
outsourcing to clients around the world, including many of Europe's largest businesses. Logica creates value for clients by successfully
integrating people, business and technology. It is committed to long term collaboration, applying insight to create innovative answers to
clients’ business needs. Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More
information is available at www.logica.com