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Softtek Break Through Savings No Need Offshore 2011 Asug Final

Mauro Okamoto
Mauro Okamoto

The document discusses achieving breakthrough savings without offshoring through transforming an organization's application delivery model. It describes a 4 step process: 1) Establishing a governance model focused on business objectives and processes. 2) Mapping processes to identify improvements. 3) Implementing business service level agreements. 4) Revisiting the governance model. The approach focuses on innovation, productivity and business-driven services over short-term offshoring savings. A case study shows transforming an organization to reduce IT spending by 79% while improving performance.

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No need to go offshore to achieve break-through savings ] Okamoto, Mauro mauro.okamoto@softtek.com
[ Real Experience. Real Advantage. 2
[ My roots - 1 Real Experience. Real Advantage. 3
[ My Roots - 2 Real Experience. Real Advantage. 4
[ Rate of change has increased dramatically Transformation Ready 50 years in 5 years People Companies Countries Real Experience. Real Advantage. 5
[ As change speeds up and complexity grows, so does the cost of keeping the lights on 66% Percentage of the annual IT budget spent on application maintenance and support * 66% - Forrester Forrsights Budgets & Priorities Tracker Survey, Q2 2010 Real Experience. Real Advantage. 6
[ Typical approach to savings may be a dead end Original team New team $$$$$$ $$$$$$ Onsite Offshore Real Experience. Real Advantage. 7
[ Offshoring could be a dead end when Short-term savings provide a false sense of progress Cultural barrier perpetuate or reinforce barriers to change Governance models remain at ad hoc maturity levels Important knowledge, talent and process is lost Rate cards discussions take center stage instead of productivity, automation and efficiency Savings and impact remains inside IT, dont necessarily impact the business Real Experience. Real Advantage. 8
[ Speed of industry change means the CIO and his organization is under pressure Drop in credibility due to dismal IT industry performance Burdens of legacy technology hampers business agility Technology advancements outpace ability to adopt at enterprise IT level Requirements grow exponentially and budgets linearly (if at all) Real Experience. Real Advantage. 9
[ Rate cards and cheap labor are a thing of the past 100% 5% 5% 90% 10% 20% 80% 30% 50% 70% 60% 50% 50% Value 85% 40% Value-added IP 65% 30% 35% Process 20% Cheap Labor 30% 10% 15% 0% 2000 2005 2010 2015 Offshore CMM Lean Business Arbitrage Six Sigma Outcome Value of Services based Real Experience. Real Advantage. 10
[ A high performing application organization model Real Experience. Real Advantage. 11
[ But few organizations have ventured Distribution of Maturity Among Application Organizations Ad Hoc Repeatable Defined Quantitatively Oct-10 Managed Mar-09 Optimizing 0 20 40 60 80 Source: Gartner (February 2011) Real Experience. Real Advantage. 12
[ No need to offshore to achieve break-though savings Case Study Top 5 CPG and leading global brewer with Also tracking process accuracy, availability, operations in 23 countries performance and responsiveness From ad-hoc process to IBS plus managed services From and dozen of contractors to Business SLAs. From IT-centric organization to business process Critical apps. performance: 100%, Non-critical 99.7%. focused organization IT spending after transformation: 21% of baseline. Performance review linked to business outcomes 100% onshore. IT spending evolution 100% Base year IT spending evolution Rationalization Continuous Improvement for calculations Infrastructure Integration Payment linked to Internally Efficiency on Break/Fix business process managed Variable cost managed performance Dozens of different 53% Support new initiatives 10% additional savings Contractors Start managed year over year Service models: outsourcing Vendor Staff aug, T&M consolidation Control Demands Adjust Service 21% 19% Levels ERP Stabilization 2008 2009 2010 2011 (est.) Real Experience. Real Advantage. 13
[ Why break-though savings Before After Innovation Innovation 33% Operations 66% 66% Operations 34% Real Experience. Real Advantage. 14
[ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 15
[ Step I Governance Model Business Requirements Process Governance model Financial Concepts Managed Services (SLA) Money Outbound People > Service Money Inbound Ticket reduction Value Chain (Logistics) End User Satisfaction Value Chain (Production) Application > Business Business Intelligence Dashboard Monitoring People Technology Change Management Project Office Service Workshop AMS Governance Workshop Governance Tools Training Culture Real Experience. Real Advantage. 16
[ Step I: Governance Model Process Tree (BPPs) 1. Configuration As a Service 2.Validation (Testing) Service Governance Improvement Objectives Service 3. Data Management Delivery 4. Development SLA Implement Service Monitoring 5. GRC & Evaluating Business My Objectives 6. Change Management Business Drivers 7. Business Intelligence Business 8. Web Services/Mobile Strategy Real Experience. Real Advantage. 17
[ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 18
[ Step II Process Mapping Real Experience. Real Advantage. 19
[ Step II Its all about Transformation Red Print速: Before Blue Print: change organization before change before blue print, solve business differences before designing SAP design Vision 5 years forward (Strategic Map) Business and Pain Points Inventory Business Strategy Process Business Requirements Information Management Processes change Organizational Structure review Technology Architecture Change company policies, master data and process 20 Real Experience. Real Advantage.
[ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 21
[ Step III - Tracking Management Real Experience. Real Advantage. 22
[ Step III Business Service Level Agreements (SLAs) Real Experience. Real Advantage. 23
[ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 24
[ Step IV - Governance Again Real Experience. Real Advantage. 25
[ State of the art / transformation State No Boundaries All together of the art Transparency War Room (KPIs) Facilities Easy Communication State Application Catalog Managed Services of the art Service Catalog Application Monitoring Service Critical Applications Knowledge Management design Preventive Maintenance State SLAs Goals Cont. improvement of the art Issue/Risks Meetings Vendor Governance Performance Accountability Management Real Experience. Real Advantage. 26
[ Overview: break-though savings model Model Assumptions Productivity + Managed + Business Driven Service Drivers Lower Cost + Better Service Service Model State of the art Infrastructure State of the art Services State of the art Governance Service Location Agnostic (but requires changing the model) Real Experience. Real Advantage. 27
[ Cloud Services Transformation Ready 50 years in 5 years People Companies Countries Real Experience. Real Advantage.
[ Past Present Future Real Experience. Real Advantage.
[ Thank you for participating. Mauro Okamoto mauro.okamoto@softtek.com Please remember to complete and return your evaluation form following this session. For ongoing education in this area of focus, visit www.asug.com. ] Real Experience. Real Advantage.

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Softtek Break Through Savings No Need Offshore 2011 Asug Final

  • 1. No need to go offshore to achieve break-through savings ] Okamoto, Mauro mauro.okamoto@softtek.com
  • 2. [ Real Experience. Real Advantage. 2
  • 3. [ My roots - 1 Real Experience. Real Advantage. 3
  • 4. [ My Roots - 2 Real Experience. Real Advantage. 4
  • 5. [ Rate of change has increased dramatically Transformation Ready 50 years in 5 years People Companies Countries Real Experience. Real Advantage. 5
  • 6. [ As change speeds up and complexity grows, so does the cost of keeping the lights on 66% Percentage of the annual IT budget spent on application maintenance and support * 66% - Forrester Forrsights Budgets & Priorities Tracker Survey, Q2 2010 Real Experience. Real Advantage. 6
  • 7. [ Typical approach to savings may be a dead end Original team New team $$$$$$ $$$$$$ Onsite Offshore Real Experience. Real Advantage. 7
  • 8. [ Offshoring could be a dead end when Short-term savings provide a false sense of progress Cultural barrier perpetuate or reinforce barriers to change Governance models remain at ad hoc maturity levels Important knowledge, talent and process is lost Rate cards discussions take center stage instead of productivity, automation and efficiency Savings and impact remains inside IT, dont necessarily impact the business Real Experience. Real Advantage. 8
  • 9. [ Speed of industry change means the CIO and his organization is under pressure Drop in credibility due to dismal IT industry performance Burdens of legacy technology hampers business agility Technology advancements outpace ability to adopt at enterprise IT level Requirements grow exponentially and budgets linearly (if at all) Real Experience. Real Advantage. 9
  • 10. [ Rate cards and cheap labor are a thing of the past 100% 5% 5% 90% 10% 20% 80% 30% 50% 70% 60% 50% 50% Value 85% 40% Value-added IP 65% 30% 35% Process 20% Cheap Labor 30% 10% 15% 0% 2000 2005 2010 2015 Offshore CMM Lean Business Arbitrage Six Sigma Outcome Value of Services based Real Experience. Real Advantage. 10
  • 11. [ A high performing application organization model Real Experience. Real Advantage. 11
  • 12. [ But few organizations have ventured Distribution of Maturity Among Application Organizations Ad Hoc Repeatable Defined Quantitatively Oct-10 Managed Mar-09 Optimizing 0 20 40 60 80 Source: Gartner (February 2011) Real Experience. Real Advantage. 12
  • 13. [ No need to offshore to achieve break-though savings Case Study Top 5 CPG and leading global brewer with Also tracking process accuracy, availability, operations in 23 countries performance and responsiveness From ad-hoc process to IBS plus managed services From and dozen of contractors to Business SLAs. From IT-centric organization to business process Critical apps. performance: 100%, Non-critical 99.7%. focused organization IT spending after transformation: 21% of baseline. Performance review linked to business outcomes 100% onshore. IT spending evolution 100% Base year IT spending evolution Rationalization Continuous Improvement for calculations Infrastructure Integration Payment linked to Internally Efficiency on Break/Fix business process managed Variable cost managed performance Dozens of different 53% Support new initiatives 10% additional savings Contractors Start managed year over year Service models: outsourcing Vendor Staff aug, T&M consolidation Control Demands Adjust Service 21% 19% Levels ERP Stabilization 2008 2009 2010 2011 (est.) Real Experience. Real Advantage. 13
  • 14. [ Why break-though savings Before After Innovation Innovation 33% Operations 66% 66% Operations 34% Real Experience. Real Advantage. 14
  • 15. [ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 15
  • 16. [ Step I Governance Model Business Requirements Process Governance model Financial Concepts Managed Services (SLA) Money Outbound People > Service Money Inbound Ticket reduction Value Chain (Logistics) End User Satisfaction Value Chain (Production) Application > Business Business Intelligence Dashboard Monitoring People Technology Change Management Project Office Service Workshop AMS Governance Workshop Governance Tools Training Culture Real Experience. Real Advantage. 16
  • 17. [ Step I: Governance Model Process Tree (BPPs) 1. Configuration As a Service 2.Validation (Testing) Service Governance Improvement Objectives Service 3. Data Management Delivery 4. Development SLA Implement Service Monitoring 5. GRC & Evaluating Business My Objectives 6. Change Management Business Drivers 7. Business Intelligence Business 8. Web Services/Mobile Strategy Real Experience. Real Advantage. 17
  • 18. [ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 18
  • 19. [ Step II Process Mapping Real Experience. Real Advantage. 19
  • 20. [ Step II Its all about Transformation Red Print速: Before Blue Print: change organization before change before blue print, solve business differences before designing SAP design Vision 5 years forward (Strategic Map) Business and Pain Points Inventory Business Strategy Process Business Requirements Information Management Processes change Organizational Structure review Technology Architecture Change company policies, master data and process 20 Real Experience. Real Advantage.
  • 21. [ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 21
  • 22. [ Step III - Tracking Management Real Experience. Real Advantage. 22
  • 23. [ Step III Business Service Level Agreements (SLAs) Real Experience. Real Advantage. 23
  • 24. [ Simple steps Step I: Governance Model Step II: Process Mapping Step III: Services & SLAs Implementation Step IV: Governance Model again Real Experience. Real Advantage. 24
  • 25. [ Step IV - Governance Again Real Experience. Real Advantage. 25
  • 26. [ State of the art / transformation State No Boundaries All together of the art Transparency War Room (KPIs) Facilities Easy Communication State Application Catalog Managed Services of the art Service Catalog Application Monitoring Service Critical Applications Knowledge Management design Preventive Maintenance State SLAs Goals Cont. improvement of the art Issue/Risks Meetings Vendor Governance Performance Accountability Management Real Experience. Real Advantage. 26
  • 27. [ Overview: break-though savings model Model Assumptions Productivity + Managed + Business Driven Service Drivers Lower Cost + Better Service Service Model State of the art Infrastructure State of the art Services State of the art Governance Service Location Agnostic (but requires changing the model) Real Experience. Real Advantage. 27
  • 28. [ Cloud Services Transformation Ready 50 years in 5 years People Companies Countries Real Experience. Real Advantage.
  • 29. [ Past Present Future Real Experience. Real Advantage.
  • 30. [ Thank you for participating. Mauro Okamoto mauro.okamoto@softtek.com Please remember to complete and return your evaluation form following this session. For ongoing education in this area of focus, visit www.asug.com. ] Real Experience. Real Advantage.