1. Sourcing Trends: What is Next?
Challenges and Opportunities Facing Service
Providers
Outsourcing Institute Service Provider Summit
January 30th, 2013
Stanton Jones, Analyst, Emerging Technology
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2. Sourcing and the CIO
Over the past decade, many sourcing decisions and projects have evolved to from
the strategic to the tactical.
Strategic CIO Fewer Lower Longer
Sourcing Related Projects
General Trend
Deals Competition Duration
N-1 2002: 377 2000: 32% TMS 1999: 6.5Y
2011: 933 2010: 64% TMS 2012: 4.8Y
Tactical N-2 More Higher Shorter
TMS: True Multi-Source where no one provider has more than 80% of spend
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3. Trends in the Technology Sourcing Market
As technologies evolve, Functional Out-Tasking and Service Integration will emerge
as the growth areas for Third Party Services. SI Management is strategic.
Strategic Tactical
Out-Tasking Players
► EMC
Tower 1
► Akamai
► VMWare
Multi- Tower 2 ► Hitachi
Tower
One Neck ► iPSoft
To Choke ► Oracle
Tower 3
Model
► SFDC
► Rackspace
Tower 4 ► Amazon
► Workday
Importance of Software, Platforms,
► Etc.
Labor Automation,
Importance of Labor Arbitrage Scalability
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4. Functional Out-Tasking: What is the big deal?
Think of the market progression from the left hand side of the chart to the right in
two waves: Wave 1: Labor Arbitrage; Wave 2: Labor Automation
Wave 1 Wave 2
Labor Labor
Arbitrage Automation
Wave 1 Characteristics Wave 2 Characteristics
► 15%-30% cost take out ► Projecting 40%-60% cost take out for
automated functions (need more data)
► Model is scalable to the extent that you can
scale labor ► Model is scalable and is largely independent
of labor growth
► Custom/complex, legacy :“Your mess for less”
► Transformative – New way of doing business
► Access to Low Cost Labor necessary to
provide continuous value ► Access to “Rocket Scientists” who can codify
manual processes
► Revenue/Profit correlated to People
► Revenue/Profit NOT correlated to People
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5. Research: Is the Automation Trend Real?
Most providers feel that labor is likely to decrease in favor of automation over the
next three years…
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6. Live Poll: Instructions
You can also use Twitter: send a Tweet to @Poll with the code (vote)
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7. Live Poll: What do you think?
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8. Process Level Perspective: ADM Services
ADM is a mature outsourcing market offering both on and offshore service providers.
Solutions include multi-sourcing models with on and offshore business models.
Suitability For Sourcing ADM Strategy Development
Strong retained candidate
Possible outsourcing candidate
High
Requirements Definition
Strong outsourcing candidate Application Architecture Strategic
Application QA Services
Application Testing
Enterprise Value Added
Tower 1 Configuration Management
Version Control
Application Build
Application Design
Performance Testing Operational Services
Application Coding
Security Administration
Technical Training
2nd Level Technical Support
Application Maintenance
1st Level Technical Support
User Training Transaction Services
Basic Complexity of Interaction High
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9. Process Level Perspective: IT Infrastructure Services
IT is a mature outsourcing market that offers top global service providers and
evolving offshore services in remote monitoring and administration services.
Suitability For Sourcing Strategy Development
Service Management
Strong retained candidate
Possible outsourcing candidate
High
Integration Services
Strong outsourcing candidate Optimization Services Strategic
Disaster Recovery Services
Data Center Management
Enterprise Value Added
Tower 2 Production Control / Scheduling
Desktop/Mobile Device Management
LAN Management
Data Backup & Recovery
Security Administration
Network Administration Operational Services
Systems Administration
Technical Training
2nd Level Technical Support
Server Administration
Data Administration
Desktop/Mobile Device Administration
1st Level Technical Support
User Training
Network Monitoring
Systems Monitoring Transaction Services
Basic Complexity of Interaction High
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10. Functional Perspective: End User Computing (EUC) Services
EUC is a mature outsourcing market that offers top global service providers and
evolving offshore services in remote monitoring and administration services.
Suitability For Sourcing IT Strategy Development
Platform Strategy Development
Strong retained candidate Business Continuity Management
Strategic
Risk Management Services
Possible outsourcing candidate
High
Disaster Recovery
Strong outsourcing candidate Platform Engineering
VIP/Executive Support
Remote Access Services
Enterprise Value Added
Tower 3 Directory Services (DHCP, DNS, Active Directory)
Service Management Operations
Site Operations (IMACs, Deskside Support)
Access Control Infrastructure Administration
Video Conferencing
Virtual Platform Operations (Citrix)
2nd level Technical Support
Peer to Peer Messaging
Shareware (WebEx, SharePoint, etc.) Operational Services
Software Distribution
Email Services (Email Servers, Blackberry Servers)
Asset Management
Technical Training
Mobile Device Support (Client side, PDA/Blackberry/iPhone support)
Printer
1st level Technical Support
User Training
Systems Monitoring Transaction Services
Low Complexity of Interaction High
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11. Functional Out-Tasking: What is the catch?
There is a market void in the area of Service Integration. Without robust Service
Integration, Out-Tasking will have limits as organizations struggle to govern.
► Service Providers who pursue Service Integration as a strategy
Credibility need to have both Credibility and Capability
Capability  Credibility: Will the C-Suite “let you drive”
 Capability: Solutions have to be “Wow”, no retreads
► Service Integration by its very nature covers “end-to-end”.
► Service Providers must provide comprehensive solutions in
Comprehensive logical groups – no sub-optimization.
 Solutions will vary by industry and major process grouping
► The role of Service Integrator will necessarily deal with multiple
independent parties, both internally and externally.
Independent
► To be successful, a SI Provider must demonstrate a level of
independence with respect to the underlying work functions
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12. Sourcing: Getting Back to CIO Office
The “CIO Agenda” is a narrative to move Sourcing and back to the CIO office and
has three majors themes.
CIO Agenda
Strategic CIO Themes
Market is
Changing Rapidly
CIO
N-1
Agenda Sourcing New
Technology Services
is more Nuanced
CIO’s need to get
Tactical N-2 back to First
Principles
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13. CIO Agenda Highlights
Each theme has a myriad of topics to discuss and will vary from company to
company and firm to firm, however, the major elements are the same.
► Big Data driving analytics and business predicative models.
Market is ► Software defined ______. Bots, Droids, Algorithms replacing human labor.
Changing Rapidly ► Exponential rate of change challenging humans linear paradigms.
► Technology is impacting all functions in businesses.
Sourcing New ► Because of the rapid change, 5, 7 and 10-year contracts are dated.
Technology
► Static operating models (and contracts) are aging quickly.
Services is more
Nuanced ► RFP is morphing into transformation projects.
► CIO – Chief Information Officer. Key Word: Information
Getting Back to ► CIO’s need to embrace “Information” as their primary agenda.
First Principles  Real Time, reliable, predictive, relevant, and democratic.
► Style and Design of Information/Data platforms are key to success.
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14. Next Steps: CIO Agenda In Action
CIO’s are hungry for thought leadership and education in this dynamic market. The
myriad of choices can at times be paralyzing to organizations as they consider their
strategic direction with respect to the Service Delivery models.
► Develop a quarterly briefing package for the C-Suite for all major clients
 Cover major technology, business, financial, political trends
Market is
► NO Selling  this is an educational opportunity and meant to build the relationship,
Changing Rapidly credibility, and jointly developed visions for the future
► Let the client pull – don’t push. If the briefings are good, you will not need to push.
► The RFS is gaining traction as alternative to RFP; be prepared for more open-
Sourcing New ended responses and presentations based on standard platforms.
Technology
► Help clients understand what they need to change and the benefits when
Services is more adopting standard services/platforms.
Nuanced ► Unlike Wave 1, Innovation is inherent in shared platforms!
► Organized data is the key to actionable information.
► Follow Apple’s design lead for this area:
Getting Back to
 Cool sells – Easy connected ecosystems sell – Design sells
First Principles
► Focus on design of Big Data and Presentation formats. Design for the end user, not the operations
manager. (video)
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15. Hans Rosling: Stats that reshape your worldview
Source: http://www.ted.com/talks/hans_rosling_shows_the_best_stats_you_ve_ever_seen.html
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16. Let’s Talk…
► stanton.jones@isg-one.com
► As long as we’ve met, I’ll accept!
► @stantonmjones
► Public decks and white papers
► Blog on Consider the Source focused on how emerging
technology is impacting the broader sourcing market
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17. www.isg-one.com

18. ISG Operating Model - Services Framework
Service Strategy, Planning & Control (Governance)
Service Portfolio Programme Sourcing Strategy Architecture & Policy & Standards Organizational
Management Management & Lifecycle Standards Mgt (e.g. Security, Change &
Management (Design Authority) Processes) Communications
Service Integration
Business Demand Service Delivery
Business Cross-Provider Service Management for
Relationship Mgt IT and Business Process Services: Service Towers
Business Units • Service Component Catalog
• Service Level EUC
Business Unit n
Business Service • Capacity
Catalog Mgt • Availability Hosting
Providers & Vendors
Aligning Services to
Budgeting &&
Budgeting • Service Continuity
Management of
Business Needs
Systems Integration
Budgeting &
Forecasting
Forecasting • Information Security & Access Network
Forecasting Demand Mgt • Event
Service Desk
• Incident & Problem Mobile Voice
• Service Request
Requirements
Requirements Project Mgt • Change AMS
Requirements
Definition (incl. Transition & • Service Asset and Configuration
Definition
Definition Transformation) • Release & Deployment AD
• Service Validation & Testing
Customer • Evaluation
Satisfaction Mgt • Knowledge HR
F&A
Financial Mgt & Risk Mgt & Measurement &
Chargeback Controls Assurance Reporting Other
Corporate Support Functions
Legal/ Corporate Risk Compliance
Audit Procurement
Regulatory HR/Finance/IT Management
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