Outsource.ppt
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This document discusses outsourcing and service level agreements (SLAs). It begins by defining outsourcing as procuring services from a third party using integrated processes and systems. It then discusses reasons for outsourcing like reducing costs and focusing on core competencies. The document also covers types of outsourcing like IT and administrative processes. It provides an overview of developing SLAs including initiation, specifications, documentation, and agreement phases. Finally, it discusses key elements of SLAs like service objectives, metrics, and issues to address.
Outsource.ppt
- 1. Outsourcing
- 2. A Working Definition of Outsourcing Outsourcing denotes the continuous procurement of services from a third party, making use of highly integrated processes, organization models and information systems. OUTSOURCER COMPANY Services Organization Level Agreement Service Level Agreement
- 3. Need for Outsourcing O Outsourcing - O “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources” Dave Griffiths O Why Outsource? O Provide services that are scalable, secure, and efficient, while improving overall service and reducing costs
- 4. Reasons for Outsourcing Traditional role - reaction to problem O Reduction and control of costs O Avoid large capital investment costs O Insufficient resources available Modern role – business strategy O Allows company to focus on their core competencies O Keeping up with cutting-edge technology O Creating value for the organization and its customers O Building partnerships
- 5. Why do companies outsource? Focus on core competence – 36% Reduce Costs – 36% Improve Quality – 14% Increase Speed to Market – 10% Foster Innovation – 4% Conserve Capital – 1%
- 6. Gaining Competitive Advantage 1. The market for outsourced facilities management will become broader 2. The market for outsourced facilities management will grow internationally 3. Property Management and Facilities Management will merge 4. Contracts will become more performance based and collaborative resulting in new skill sets for contract management
- 7. What Can be Outsourced? O System Integration O Data Coordination O Data center O Maintenance/Repair O e-commerce O end-user support system O Workforce Mgmt O Energy Mgmt O Project Mgmt O Governance and Change Mgmt
- 8. Pros and Cons of Outsourcing Pros Cons O Resource Savings O Specialized Expertise O Strategic Focus O Buyer specifies the work process O Powerful Business Tool O Less Control O Inefficiencies O Slower Change Management O Threat to Security & Confidentiality O Bad publicity and Ill Will O Tied to the financial well being of another company O Quality Problems
- 9. 9 INTRODUCTION Types of Outsourcing Business processes Application Development and Maintenance IT-infrastructure BPO: Business Process Outsourcing ASP: Application Service Provider DBRO: Design, Build, Run & Operate ADM: Application Develop & Maintenance ITO: IT Infrastructure Outsourcing ITS: IT Services, Managed Hosting Administrative processes APO: Administrative Process Outsourcing Outsourcing models: BPO AMO SDO
- 10. When to Outsource? Grey Area Not Outsourced In House if Possible Outsource Competitive Strategic Non-Strategic Non-Competitive
- 11. How to Implement Outsourcing O Program initiation O Opinions and ideas shared to form draft contract O Program implementation O Transferring staff O Service Level Agreement (SLA) O Establish communications between partners O Actual transfer of the service O Establish management procedures O Contract agreement O Contract fulfillment
- 13. Problems With Outsourcing Loss of Control Increased cash outflow Confidentiality and security Selection of supplier Too dependent on service provider Loss of staff or morale problems Time consuming Provider may not understand business environment Provider slow to react to changes in strategy
- 14. Criteria to be considered in new FMC O How long they are in business O What the level of their turnover is O Where they are geographically located O Can you work with this particular team in partnership O Who in business development is pricing the contract O Evaluate Business Needs
- 15. Saad Haj Bakry, PhD, CEng, FIEE 15 Definition of SLA An agreement involving “internal / external“ “parties” concerned with network “problems” Parties: Users Services Providers Resources Suppliers Problems: Demands Services Control Management Types: Internal: within the organization External: with external parties
- 16. SLA
- 19. Content of a service level agreement • Identify the types of services to be delivered together with what is excluded from the service provision • Terms and conditions under which the services will be provided • Performance measurement and standards by which the service provider will be evaluated • Legal structure for managing the service • Penalties related to sub-standard delivery, late delivery, non- delivery, contract change or termination • Remuneration details for core services and expenses incurred • Specification of any assets/resources provided to or transferred to the service provider
- 20. Advantages of SLAs • The service provider is forced to seriously consider available resources in the light of customer expectations. • Both parties consider the level of service that can realistically be sustained with existing resources. • Both parties consider, if necessary, an increase in available resources, and the risk factors associated with such actions. • The service provider is forced to examine projected costs of fulfilling the client’s expectations, thus enabling more realistic budgeting for both parties. • An SLA provides a basis for the effective management and monitoring of the developing service relationships via mutually agreed key performance indicators.
- 21. 21 Services Issues Supply Maintenance Repair Call for Repair • Trial Systems • Installation • Testing • Spare Parts • Support • Timetable Response: • Maximum interval to attend. • Availability of skills • Specifications: sites equipment skills… • Types regular upgrade
- 22. Development of SLAs Initiation Phase Specifications Phase Documentation Phase Agreement
- 23. Best Practices in developing SLA’s O Keep it simple! O Look at the overall mission and develop a small set of key service level metrics—find things that are measurable, meaningful and have real impact on the bottom line O Stay focused on mission success and customer satisfaction O Leave measuring of activities and processes to the contractor O Manage AQL expectations – be realistic O The closer to 100% perfection you require, then the higher the price -- be practical and realistic O Performance standards cannot exist in a vacuum; there must be a forum for discussion and negotiation
- 24. Service Objectives Service Desk Provide, implement, operate and maintain a fully-functional, reliable Service Desk… ….for successfully recording, troubleshooting and resolving/ redirecting customer support requirements and ensuring minimum user downtime. Do what? To accomplish what? Example
- 25. Sample SLA O Service Level Agreement O (Title of Agreement) O 1.0 Introduction O 1.1 Statement of Need O 1.2 Background O 2.0 Service Objectives O 4.0 Service Level Metrics/AQLs O 3.0 Applicable Directives O 3.1 Compliance O 3.2 Reference O 4.0 Constraints and Assumptions O 5.0 Data Deliverables O 6.0 Government Furnished Property (GFP)
- 26. Saad Haj Bakry, PhD, CEng, FIEE 26 Initiation Phase User O Current State O Awareness O Drive / Investment O Objectives O Opportunities / Problems Provider OInternal / External ORegulations OCapabilities OExperience: Local / International OWillingness
- 27. 27 Specifications Phase User O Expectations O Requirements O RFP OLegal Issues OServices Issues OService Level Provider O Response to RFP O Cost Saving versus Difference O Value Added Services O Strategic Relationships
- 28. Documentation Phase Joint (User / Provider) Description of Issues with Emphasis on the Following Services Service Level / Performance Fees / Penalties
- 29. Final Agreement “Provider” Proposes SLA Joint Refinement Signing “User” Reviews SLA RFP / Response / Documentations
- 30. Issues O Legal: O Basic O Technical O Policy O Services: O Supply O Maintenance O Repair O Service Level: O Availability O Congestion O Response Service Level Agreements Internal / External Management: Responsibilities Documentation Incentives / Penalties Step by Step Progress SLA - In a Nut Shell