Boston Credit Card Debt Reduction

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					www.argosy-inc.com




             Master Outsourcing
                         (Or Else!)

                     By Beth Perdue


               Argosy, Inc.•293 K Street•Boston, MA 02127
                 Tel. 617-269-1677•beth@argosy-inc.com
                   Topics
1.   Trends and facts
2.   Top 10 risks
3.   Outsourcing contracts
4.   Relationships
5.   In closing…



                             2
Topic 1


             Trends and Facts

   • 80% of U.S. Companies discuss
   • 40% complete pilot program or more
   • Offshore dominant – grows 20%+ annually




                           Source: Computerworld, Gartner Group


                                                                  3
               Hidden Costs
•   Supplier searching
•   Contracting
•   Contract management
•   Post-outsourcing reintegration
•   Who tracks them?



                                     4
     Thinking of Outsourcing?

• Not necessarily cheaper
• At least, not right away




                                5
                Downside
• Big- name companies bringing it back
  – Dell, Lehman Brothers, Conseco


• Still have offshore operations




                                         6
Have You Ever Seen a Grown Man Cry?




                                7
Topic 2




          Top 10 Risks
Top 10 Risks



    1. Cost-reduction Expectations




                                     9
Top 10 Risks

      2. Data Security/ Protection




                                     10
How Patient Files Got to Pakistan




                                11
Personal Info Outsourced Abroad
Medical        Bank records   Debt records
records

Credit histories Brokerage    Social Security
                 records      numbers

Tax documents Insurance       Credit card
              records         numbers

                                             12
Where It Goes




                13
Meet Ankit




             14
      Why More Risk Overseas?
•   Security not priority
•   Using small/mid-sized firms
•   Software piracy means few patches
•   Lack tough laws and legal tools




                                        15
      Take Nothing For Granted
•   Penetration testing
•   Background checks
•   Device restrictions
•   Visit, manage, audit




                                 16
Top 10 Risks



          3. Process Discipline




                                  17
You can learn a lot from fast food




                                     18
       Start With Out-tasking
• Keep command, control, coordination

• Assign well-defined tasks




                                        19
Top 10 Risks



     4. Intellectual Property Drain




                                      20
Top 10 Risks



     5. Supplier Failure to Deliver




                                      21
Top 10 Risks


               6. Scope Creep




                                22
Top 10 Risks
7. Government Oversight/ Regulation




                                23
Top 10 Risks

               8. Border Concerns




                                    24
Top 10 Risks

    9. Turnover of Key Personnel




                                   25
Top 10 Risks

       10. Knowledge Transfer




                                26
Topic 3




          Outsourcing Contracts
When the only tool you
own is a hammer, every
  problem begins to
   resemble a nail.




                         28
Outsourcing Contracts



           Incomplete by Nature
  •   Assets
  •   Uncertainty & measurement
  •   Frequency
  •   Time & costs



                                  29
Outsourcing Contracts



         Prices and Adjustments
  • Contract length
  • Cost-savings program or index




                                    30
Outsourcing Contracts



         Prices and Adjustments
  • Benchmarking
  • Baselining
  • Multiple suppliers




                                  31
This here's Miss Bonnie Parker. I'm Clyde Barrow...
                  We rob banks.




                                                 32
Outsourcing Contracts



       Intellectual Property Rights
  • Transferred licenses
     – Software developed by supplier
     – Processes developed by supplier
  • Transfer to another supplier



                                         33
Licenses Don’t Travel Well




                             34
Outsourcing Contracts


        Is It Your Software or the
               Outsourcer’s?

   • Either way can work
   • Flexible licenses




                                     35
Outsourcing Contracts


           Get Better Licenses
 • Asset management
 • Know your opponent
 • Timing




                                 36
Outsourcing Contracts


             Contract Structure

    1. Framework contract
    2. SLAs
       – By geography and business unit, then service
       – By service
       – Degree of completion




                                                        37
Outsourcing Contracts

             Contract Structure
    1. Degree of exclusivity
       Sole supplier
       Preferred supplier
    2. Liability
    3. Termination
       Bankruptcy,force majeure, default
       Change in ownership
       Business needs

                                           38
Outsourcing Contracts

                   Metrics
 • Keep an eye on offshore practices

 • Service (customer)
 • Process (supplier)




                                       39
Outsourcing Contracts


               Minimize Risk
  • Objectives
  • Meeting structures
     – Keep minutes
  • Disputes



                               40
Topic 4




          Relationships
Let’s Call the Whole Thing Off




                                 42
Relationships

                Bringing It Back
  • Provider –
      – Had financial difficulties
      – Failed to deliver on commitments
  • Buyer consolidated vendors




                                           43
Relationships



                Change Suppliers

  • Knowledge
  • Documentation
  • Transfer process




                                   44
Relationships


            Business Continuation

  • Preserve price & service
  • Unilateral right




                                    45
Relationships



          Transition Cooperation

 • Efforts
 • Disclosure
 • Licenses & agreements



                                   46
Topic 5




          In Closing…
In Closing…


          Selective Outsourcing
 • Big risks
    – Requirements
    – Specifications
    – Business smarts


 • Make outsourcing a core competency


                                        48
In Closing…

     Satisfaction Isn’t Guaranteed
  • Inflated expectations
     – Cost savings
     – Productivity
  • You don’t get what you expect, you get
    what you inspect



                                             49
     “I haven’t failed. I’ve found
ten thousand ways that don’t work.”




                                  50

				
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