This document provides an overview of a presentation given by Alsbridge and ACS comparing business process outsourcing (BPO) and information technology outsourcing (ITO). Key points include: - BPO focuses on improving business performance through outsourcing entire business functions, while ITO focuses on reducing IT costs through outsourcing well-defined IT services. - BPO deals involve more complex processes, pricing, and transitions than ITO deals which involve lifting and shifting defined IT services. - Challenges in BPO include developing controls for

1. Understanding the Differences between ITO and BPO
October 9, 2007
Alsbridge Americas
3535 Travis St., Suite 105 Ben Trowbridge – Alsbridge CEO ACS
9040 Roswell Rd., Suite 700
Dallas, TX 75204
Atlanta, GA 30075
Tel: +1 214-696-6410
Fax: +1 214-239-0698
Allan Barnes - ACS Tel: 770-829-1342
Email: alan.barnes@acs-inc.com
Email: EnquiryUSA@Alsbridge.com
www.acs-inc.com www.alsbridge.com

2. Agenda
Speaker Backgrounds
Points to Consider
Comparison of BPO and ITO
Issues by Process Phase
• Feasibility Assessment
• Strategy & Business Case
• Solution Design
• Provider Selection (OCM starts here)
• Contract Negotiation
• Transition Management
© Alsbridge 2007 Confidential and Proprietary
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3. Alsbridge Difference Quick Facts
Quick Facts
• Award winning global advisory firm providing advice on outsourcing, shared services and offshoring
• Since 2003, Alsbridge has grown to over 100 consultants headquartered in Dallas, TX and London, UK
• Management team from senior positions at Accenture, Capgemini, EDS, E&Y, KPMG, Hackett and IBM
• Changing the way traditional sourcing relationships are built through collaboration and innovation
• More than $80 billion in contracts created, negotiated and implemented for clients
© Alsbridge 2007 Confidential and Proprietary
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4. Speaker- Ben Trowbridge, CEO Alsbridge
Background Recent Projects
Best known as a thought leader in the evolution of
Best known as a thought leader in the evolution of Engagement Leader for a Global High-Tech
Engagement Leader for a Global High-Tech
Outsourcing, Ben Trowbridge is a proven leader with
Outsourcing, Ben Trowbridge is a proven leader with Company with $9B in annual revenue. Alsbridge
Company with $9B in annual revenue. Alsbridge
more than 20 years of diversified global experience as
more than 20 years of diversified global experience as was brought on to conduct a global back-office
was brought on to conduct a global back-office
Managing Partner, CEO and Senior Executive with
Managing Partner, CEO and Senior Executive with Outsourcing, Shared Services, and Best Shore
Outsourcing, Shared Services, and Best Shore
proven experience in hundreds of outsourcing, shared
proven experience in hundreds of outsourcing, shared assessment for most non-production related
assessment for most non-production related
services and offshore transactions as a consultant and
services and offshore transactions as a consultant and functions to include: Finance, HR, Call Center,
functions to include: Finance, HR, Call Center,
buyer executive. Prior to forming Alsbridge, Ben served
buyer executive. Prior to forming Alsbridge, Ben served middle-office processing, billing, customer service
middle-office processing, billing, customer service
as Managing Partner for Ernst & Young’s Outsourcing
as Managing Partner for Ernst & Young’s Outsourcing and Tele-sales.
and Tele-sales.
Services Business and COO for their Global
Services Business and COO for their Global
Outsourcing Business.
Outsourcing Business. Led the strategy and business case development
Led the strategy and business case development
process for a one of the largest energy companies
process for a one of the largest energy companies
Key areas of expertise in the world to relocate over 10,000 Finance &
in the world to relocate over 10,000 Finance &
Accounting, Human Resources and Technology
Accounting, Human Resources and Technology
Provider Relationship Management
Provider Relationship Management activities. Blue print developed a 4 year plan that
activities. Blue print developed a 4 year plan that
used a combination of outsourcing and captive
used a combination of outsourcing and captive
Offshoring
Offshoring offshore strategies
offshore strategies
Global Sourcing Strategy
Global Sourcing Strategy Led the business case development to restructure
Led the business case development to restructure
the SG&A costs for 7 major private equity
the SG&A costs for 7 major private equity
Captive Shared Services
Captive Shared Services transactions valued at over $13 billion.
transactions valued at over $13 billion.
Global F&A, HR and IT sourcing transactions
Global F&A, HR and IT sourcing transactions
Assisted a $500M publicly traded regional wireless
Assisted a $500M publicly traded regional wireless
Contract negotiaton
Contract negotiaton carrier (Sprint PCS affiliate) to renegotiate a
carrier (Sprint PCS affiliate) to renegotiate a
contract with their current outsourced billing and
contract with their current outsourced billing and
Global transactions from $150M -- $2.2B
Global transactions from $150M $2.2B call center provider.
call center provider.
© Alsbridge 2007 Confidential and Proprietary
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5. Agenda
Speaker Backgrounds
Points to Consider
Comparison of BPO and ITO
Issues by Process Phase
• Feasibility Assessment
• Strategy & Business Case
• Solution Design
• Provider Selection (OCM starts here)
• Contract Negotiation
• Transition Management
© Alsbridge 2007 Confidential and Proprietary
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6. Points to Consider - Structuring For Success
Where do you see your company?
Less Very
Control
Control
Controlled Controlled
Not Very
Speed
Speed
In Rush Rushed
Lowest Value
Price
Price
Price Based
Risk Risk
Averse Risk
Risk Tolerant
Very Very
Few
People
People Involved
Standard Value Add
Solution
Innovation
Innovation Solution
Very Team
Little
Collaboration
Collaboration Driven
Sole Competitive
Sourcing
Sourcing
Source Process
Alsbridge Solution Slider Box
© Alsbridge 2007 Confidential and Proprietary
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7. Points to Consider – Do you have a plan for BPO or ITO?
Developing a Plan
Sourcing Drivers
Sourcing Drivers Vision & Plan
Vision & Plan
• Cost, cost and cost
• Cost, cost and cost • Reason for outsourcing
• Reason for outsourcing
• Revenue
• Revenue • Executive Sponsor
• Executive Sponsor
• Employee upheaval Scope • Deal construct
• Employee upheaval • Deal construct
•
• Customer perception
Customer perception Location & •
• Business Case
Business Case
•
• Control and flexibility
Control and flexibility Configuration •
• Risk mitigation Plan
Risk mitigation Plan
• Product // Service growth plans
• Product Service growth plans • Internal & external
• Internal & external
• Service expectations
• Service expectations communications
communications
Converting Drivers to a Vision & Plan requires:
Defining the scope of the services being sourced
Evaluating potential locations
Configuring the work to drive the best value
© Alsbridge 2007 Confidential and Proprietary
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8. Points to Consider – Thoughts from an Advisor
How does a world class Client establish a Value add relationship
with a provider?
• Stop doing stupid things
• Get some meat with that sizzle
• Make sure the ring matches the engagement length
• Make sure the honeymoon matches both of your expectations
• Make the site visit memorable (very hard to do) Dilbert cubes in
Bangalore when your jet lagged are hard to get excited about
• Save your powder till you see the whites of their eyes
• Follow the drill sergeant if you want to be in the parade
© Alsbridge 2007 Confidential and Proprietary
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9. Agenda
Speaker Backgrounds
Points to Consider
Comparison of BPO and ITO
Issues by Process Phase
• Feasibility Assessment
• Strategy & Business Case
• Solution Design
• Provider Selection (OCM starts here)
• Contract Negotiation
• Transition Management
© Alsbridge 2007 Confidential and Proprietary
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10. Comparison of BPO and ITO
ITO is typically serviced based focused on reducing the costs of
operating expenditures of the IT budget.
ITO involves more mature, easily defined services that can be
offshored.
BPO is focused on improving performance, efficiency and
productivity of the entire business.
BPO has many more variances but involves less spending of capital
expenditures.
Operating environment is virtually the same.
© Alsbridge 2007 Confidential and Proprietary
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11. Comparison of BPO and ITO
Transition in BPO deals are typically more difficult.
The customer environment in BPO involves entirely different
processes and transformation while ITO is more lift and shift.
BPO transactions often take more time and involve much more
complex pricing mechanisms.
Providers in BPO transactions are much more reliant on the
customers for assistance and approvals.
In BPO transactions in-scope personnel (frequently partial FTE’s)
come into play in the implied services portion of many form
agreements.
© Alsbridge 2007 Confidential and Proprietary
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12. Comparison of BPO and ITO
Price and growth more easily determined in ITO transactions.
ITO transactions frequently have a metric that determines when to
add MIPS or DASD, but it is harder to determine when an FTE is
needed for a BPO transaction.
Help desk call volumes on BPO transactions will typically soar
during transition and therefore should be priced appropriately.
Service levels in BPO transactions often require a burn in period
because either because they have never been measured before or
there is a completely different process.
© Alsbridge 2007 Confidential and Proprietary
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13. Agenda
Speaker Backgrounds
Points to Consider
Comparison of BPO and ITO
Issues by Process Phase
• Feasibility Assessment
• Strategy & Business Case
• Solution Design
• Provider Selection (OCM starts here)
• Contract Negotiation
• Transition Management
© Alsbridge 2007 Confidential and Proprietary
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14. Issues by Phase
Months
Phase 1 Phase 2…
2-3 months 1 1 1 2-4
Define strategy: Prepare RFP: Response to RFP: Evaluate bids: Negotiate contract:
•Mobilise team •Define scope-in/ •Conduct site visits •Analyse bids •Finalise SLAs & KPIs
•Baseline out analysis •Conduct supplier •Develop lists of questions •Finalise targets/
•Identify options •Define contract & workshops - SAS •Conduct further workshops •improvements expected
•Assess business commercial terms •Respond to •Prepare business cases •Carry out transition
case •Specify pricing questions •Identify gaps v criteria planning
•Develop strategy requirements •Refine comms •Ask for BAFO •Negotiate commercial
•Test internally •Specify service/ strategy •Select supplier and and contractual terms
•Confirm plan - SAS process imps req’d •Develop detailed approve internally - SAS •Carry out supplier due
•Define selection business model diligence
criteria •Prepare SLAs & •Confirm business case
•Brief suppliers KPIs •Sign deal
•Draft document
Alsbridge Outsourcing RFP issued Bids received Go/no go Deal
starts strategy defined decision and signed
exclusive supplier
selected
© Alsbridge 2007 Confidential and Proprietary
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15. Feasibility Assessment
ITO
ITO BPO
BPO
Documented processes
Documented processes Unique customer operating
Unique customer operating
procedures and multiple processes
procedures and multiple processes
Analyzing reports
Analyzing reports that are never fully documented
that are never fully documented
Lau gauge of Microsoft, Oracle
Lau gauge of Microsoft, Oracle Significant in- depth interviews
Significant in- depth interviews
or SAP
or SAP at a junior level
at a junior level
Development of controls
Development of controls
VS
VS
Multi- lingual skills
Multi- lingual skills
© Alsbridge 2007 Confidential and Proprietary
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16. Strategy & Business Case
ITO
ITO BPO
BPO
Low margins and high capital
Low margins and high capital High margins and low capital
High margins and low capital
requirements
requirements requirements
requirements
Cost Savings
Cost Savings Business transformation
Business transformation
Easily measured outcomes
Easily measured outcomes Variable tasks
Variable tasks
Demand for resource units has a
Demand for resource units has a Difficult to define demand
Difficult to define demand
well defined language VS
VS
well defined language
© Alsbridge 2007 Confidential and Proprietary
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17. Solution Design
ITO
ITO BPO
BPO
Established standards such
Established standards such Home- grown customer work
Home- grown customer work
as ITIL
as ITIL flows
flows
Typical people transfer
Typical people transfer Potential people transfer
Potential people transfer
Potential for innovation on
Potential for innovation on Potential for innovation on
Potential for innovation on
application of technology
application of technology process
process
VS
VS
Less reengineering
Less reengineering Customer infrastructure
Customer infrastructure
Suppliers infrastructure
Suppliers infrastructure
© Alsbridge 2007 Confidential and Proprietary
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18. Provider Selection
ITO
ITO BPO
BPO
Established standards
Established standards Yet to be developed standards
Yet to be developed standards
Global providers
Global providers Fewer global solutions
Fewer global solutions
Full enterprise easier to address
Full enterprise easier to address Niche providers
Niche providers
for most components
for most components
Multi- disciplinary driven by a
Multi- disciplinary driven by a
host of issues from data privacy to
host of issues from data privacy to
VS
VS core capacities to handle language
core capacities to handle language
and issues such as HR law and
and issues such as HR law and
Accounting standards
Accounting standards
© Alsbridge 2007 Confidential and Proprietary
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19. Contract Negotiation
ITO
ITO BPO
BPO
Existing benchmarks and
Existing benchmarks and In- house knowledge of current
In- house knowledge of current
standards
standards state is usually not as well known
state is usually not as well known
Commoditized
Commoditized
Established language for
Established language for Immature pricing logic that can
Immature pricing logic that can
additional needs
additional needs drive to FTE pricing
drive to FTE pricing
VS
VS Need to document outcomes vs.
Need to document outcomes vs.
capabilities
capabilities
© Alsbridge 2007 Confidential and Proprietary
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20. Transition Management
ITO
ITO BPO
BPO
Platform driven
Platform driven Functional
Functional
Well established
Well established Vertical process support
Vertical process support
documentation processes
documentation processes
designed to take over your
designed to take over your Can be lengthy due to a host
Can be lengthy due to a host
mess for less ififneeded
mess for less needed of issues
of issues
Language of Microsoft
Language of Microsoft VS
VS Usually not well prepared for
Usually not well prepared for
makes movement of work
makes movement of work
easier
easier OCM is key
OCM is key
© Alsbridge 2007 Confidential and Proprietary
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21. Americas Europe
Ben Trowbridge Tim Lloyd
Chief Executive Officer Managing Director Europe
Email: Ben.Trowbridge@Alsbridge.com Email: Tim.Lloyd@Alsbridge.eu
Tel: +1 214-696-6410 Tel: +44 (0)207-242-0666
Alsbridge Americas Alsbridge Europe
3535 Travis St., Suite 105 22-24 Ely Place
Dallas, TX 75204 London, EC1N 6TE
United States of America United Kingdom
Tel: +1 214-696-6410 Tel: +44 (0)207-242-0666
Fax: +1 214-239-0698 Fax: +44 (0)207-242-0667
Email: EnquiryUSA@Alsbridge.com
www.Alsbridge.com Email: EnquiryUK@Alsbridge.com
© Alsbridge 2007 Confidential and Proprietary
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