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Securities Institute - Risk Forum Outsourcing – Risking Breakthrough… A Risk Professionals Guide to Strategic Value from Outsourcing… Roger Bach London,

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Presentation on theme: "Securities Institute - Risk Forum Outsourcing – Risking Breakthrough… A Risk Professionals Guide to Strategic Value from Outsourcing… Roger Bach London,"— Presentation transcript:

1 Securities Institute - Risk Forum Outsourcing – Risking Breakthrough… A Risk Professionals Guide to Strategic Value from Outsourcing… Roger Bach London, December 2004

2 SI - Risk Forum Outsourcing Outsourcing – The Holy Grail ? …will outsourcing deliver the radical improvements we as an industry seek to achieve ?

3 SI - Risk Forum Outsourcing Outsourcing – The Holy Grail ? What is new about outsourcing today ? Outsourcing is Not New ! So What is New Now ? And is it going to Deliver ? …take Custody Outsourcing …a mature business with several large global players…

4 SI - Risk Forum Outsourcing Outsourcing - The Traditional View Traditional Outsourcing Wisdom… …All routine support or non core activities are prime targets for outsourcing…  Achieve management focus on core competencies  Higher quality and productivity at reduced costs  Eliminate capital outlay for non core activities  Eliminate/Reduce risks from non core activities  Buy-in capabilities not available in-house

5 SI - Risk Forum Outsourcing Outsourcing - The Traditional View Traditional Benefits of Outsourcing…  Quick response  Reduces risk  Reduces cost  Reduced capital …helps achieve strategic focus and delivers many tactical benefits…  Flexibility and choice  Predictability of costs  Service innovation  Flexible capacity

6 SI - Risk Forum Outsourcing Outsourcing - The Traditional View Traditional Triggers for Outsourcing… …I’m in a mess… get me out of here…  Perennial problems in peripheral activities  Quickfix for missing capabilities  Tactical cost or risk reductions

7 SI - Risk Forum Outsourcing The Picture on the Ground… …84 out of 100 small and medium sized firms in the city use outsourcing… SOURCE: Recent FSA study

8 SI - Risk Forum Outsourcing The Picture on the Ground… …large proportion of fund managers use outsourcing… Various Sources

9 SI - Risk Forum Outsourcing The Picture on the Ground… …the message we are getting is that outsourcing is increasing at a very substantial pace… Hector Sants

10 SI - Risk Forum Outsourcing The Picture on the Ground… …and some firms are now reporting problems to us… Hector Sants !

11 SI - Risk Forum Outsourcing Growing Wave of Problems Latest wave meets growing problems… …Latest surveys show growing dissatisfaction with outsourcing…  66% of companies are disappointed or feel envisaged benefits are not being achieved (PA Consulting ’04)  in international poll of 150 companies 40% of respondents claimed it outsourcing had been a failure or delivered fewer benefits than expected ( Proudfoot 2004)

12 SI - Risk Forum Outsourcing Outsourcing – Symptoms of Trouble Outsourcing - Symptoms of Trouble What’s is Going Wrong ?  Failure to deliver expected tactical benefits  Failure to contribute to strategic success  Static contracts fail to adapt to change  Global deals - unwieldy & lacking focus ?  One-size-fits-all seems to fit no-one-at-all

13 SI - Risk Forum Outsourcing Outsourcing - To Stay Prominent …is dead – long live Outsourcing ! O utsourcing is here to STAY

14 SI - Risk Forum Outsourcing The Outsourcing Equation Value Created Value Destroyed When Does Outsourcing Fail ? + Cost Savings Value Added - Transaction Costs

15 SI - Risk Forum Outsourcing The Outsourcing Equation What makes Outsourcing Profitable ?

16 SI - Risk Forum Outsourcing Chore or Core ? Chore Core High Impact Low Impact Strategic Outsourcing Traditional Outsourcing Venture Partnering Core Business How to Map Your Outsourcing Landscape ? IT Outsourcing Marketing Fulfilment Canteen Services HR & Payroll Portfolio Management Client Services Reference and Market Data

17 SI - Risk Forum Outsourcing Shaping Outsourcing Initiatives –Traditional Why What How Who 20 %80 % The Traditional Process…

18 SI - Risk Forum Outsourcing Shaping Outsourcing Initiatives –Traditional WhyWhat HowWho 80 %20 % A Better Balance !

19 SI - Risk Forum Outsourcing Shaping Outsourcing Initiatives –Traditional WhyWhat HowWho 50 %20 % The Ideal Balance ! 30 %

20 SI - Risk Forum Outsourcing The Outsourcing Continuum Profit Risk Control Resource The Outsourcing Continuum ClientSupplier

21 SI - Risk Forum Outsourcing Outsourcing – Conclusion Outsourcing - Conclusion Where do I go from here…?  Understand your Strategy & Capabilities  Know how outsourcing works as a Strategic Tool  Decide Why & How outsourcing fits your strategy  Choose the size-that-fits-you  Define WHAT to achieve & maintain your course

22 SI - Risk Forum Outsourcing Contact Information Speaker Contact Roger Bach Mobile:+44 (07905) Marcelle von Wendland Mobile:+44 (07931) Contributing Consultant this website will include further background material and links to sites with information related to the topic of this talk. Weblink


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