1. May-15 C ONFIDENTIAL confidential Pete McGarahan Executive Industry Fellow The Outsourcing Debate

2. May-15 C ONFIDENTIAL confidential Outsourcing Today’s tactical sourcing decisions made by most companies are unable to meet longer-term strategic requirements Organizations turn towards outsourcing IT services –Uncertain business climate –Cost containment –Global competition Pushing sourcing to be strongly connected to the business strategy: –Access to Best-of-Breed people, process & tools –Cost reduction –Make up for lack of skills –Outsource non-core activities –The necessity for strong IT management (SLA/budget) Unsuccessful sourcing deals will increase –Without a sourcing strategy that is aligned with the organization’s strategic requirements

3. May-15 C ONFIDENTIAL confidential A Sourcing Strategy A sourcing strategy is a process, not a one-off decision. It is continuously balancing between internal and external activities, services and know-how. It is in continuous alignment between business strategy, business processes and IT services. It is continuously balancing between the tactical decisions, the results that must achieved and the future options available. It is an instrument for flexibility –It is not a rigid decision or a static outsourcing contract based on a service provider's brand. Other Best Practices for Strategic Sourcing: –Seek out vendors with high-quality support staff. –Demand to be heard. –Search for good customer relationship management practices with support best practices.

4. May-15 C ONFIDENTIAL confidential Offshoring IDC maintains that offshore spending will quadruple by 2007 due to globalization Offshoring is actually just a trend or symptom of electronic intelligence. –“No one can work as cheap as the chip” Focus will be in: –Application development –Business Process Outsourcing (BPO) –Call Center – inbound and outbound –Technical customer support –IT Service Management The “boomerang effect” –Rising costs –High Turnover –Shaky Quality The need to explore “right-shoring”, industry best practices, value-creation and automation.

5. May-15 C ONFIDENTIAL confidential What You Must Change Manage career Continuous education The Next Degree or Career Networking Support leaders must broadened their scope of services Deliver cost-effective services that are valued Look to expand career opportunities for their staff Increase skills in customer service, project management, communication, technology and leadership areas

6. May-15 C ONFIDENTIAL confidential Let’s Not Be A Victocrat! If we do nothing, positions will get sent offshore It is MY responsibility to create a valued service that cannot be commoditized I must create, sell and market value I must continue to look for ways to be more productive, cost-effective and focused on delivering valued services aligned with the business goals and objectives I must continue to look to eliminate and automate repetitive calls and realign and focus resources on the business critical systems and processes “If you don’t like change, you’re going to like irrelevance even less” General Eric Shinseki

7. May-15 C ONFIDENTIAL confidential Are Your Services Value-Add? List all services you currently deliver Rank in order of importance/value to customer –High to Low to No Categorize services into problems and requests Identify services where you add no value –Look for ways: Deflect Eliminate Transfer Outsource Implement best practices mapped into tools Estimate current and future cost to deliver services Map your team’s skills to your services Any capacity?

8. May-15 C ONFIDENTIAL confidential Take Action! Support leaders today must increase, measure and communicate their value proposition to the business! Educate and demonstrate your value to senior management! Create a business-aligned vision and strategy! Leverage the Support story and elevator pitch to communicate your vision and value proposition to all stakeholders! Continue to expand the scope, depth and breadth of services portfolio! Make cost containment and avoidance a part of your strategy Know your cost to deliver tier-1 support, as well potential savings (cost avoidance) from shifting resolution from tier-2 to tier-1 and tier-0! Make sure all that you do is measurable, defensible and of clear value! Report business impact, report value and report often from a voice of the customer perspective!