Docstoc

Global Business Failure Statistics - PDF

Document Sample
Global Business Failure Statistics - PDF Powered By Docstoc
					            Offshore Technology Outsourcing
                          Are You Really Ready?




           Harjeet S. Gulati
President, Netsoft Global Services
Offshore Technology Outsourcing
Are you really ready?

Presentation Contents
   Technology Outsourcing Models
   Knowing the Field ‐ Key Statistics
   Why is it So Hard?
   Succeeding at Outsourcing ‐ The Importance of Readiness
   Defining and Measuring Readiness
   Getting Ready 
   Staying Ready
Audience Questions

  How many of you are entrepreneurs?
  How many of you have outsourced in the past?
  How many are considering outsourcing at this point of 
  time?
             Technology Outsourcing Models
Long Term




                                       Strategic Outsourcing
              Strategic Outsourcing       Multi‐Sourcing
                                             In‐House 
Short‐Term




              Tactical Outsourcing           In‐House




              No Domain Knowledge     Domain Knowledge Required
Tactical Outsourcing Characteristics

  Driven by the need to reduce costs
  Generally Adopted for Non‐Critical Processes
  Project/Turnkey Engagements
  Low Domain Knowledge Requirement
  Vendors easier to find 
  Vendor Change has little impact
  Effective for smaller projects, prototyping, startups
Strategic Technology Outsourcing

  Capability and Innovation‐Centric
  Significant Bottom‐line Impact 
  High Criticality
  Specialized Domain Knowledge Required
  Vendor Selection is harder
  Vendor lock‐in significantly higher
  Characterized by tighter, stronger partnerships
What Can You Outsource?

  Consulting
     Technology Strategy and Alignment with Business 
     Objectives
     IT Effectiveness Roadmaps
  Engineering
     Application Development
     Web Applications
     System Integration
     Research and Development Services
  Quality Assurance
  Operational and Support Processes – IT Enabled 
  Services
     Some Offshore Outsourcing Statistics
     Key Reasons for Going Offshore


80                                    Cost Saving
70
                                      Improve Quality
60
                                      Reduce Time to Market
50
                                      Gain Technical Skillsets
40
                                      Forced Strategy
30
                                      Cost Predictability
20
                                      Market Penetration
10
                                      Gain Industry Expertise
0
                Percentage
Some Offshore Outsourcing Statistics
Key Reasons for Going Offshore

  Tactical
       • Cost‐Centric
       • Short‐Term, Multi‐vendor engagements
  Strategic 
       • Capability Centric
       • Redistribution of expenses and effort to support 
         better decision making
       • Longer Term
       • Strategic Investments
       • Harnessing Diversity and Innovation
Some Offshore Outsourcing Statistics
Services vs. Manufacturing Outsourcing
Some Offshore Outsourcing Statistics
Success and Failure Statistics
   Offshore Statistics: Ventoro Survey of over 5,000 IT user 
   companies in the United States, Canada, and Europe 
      19% had an offshore strategy
      Only 45% of these considered Offshoring a success
      36% had project failures
      33% had to move work back onshore due to performance 
      problems with their offshore strategy and teams
   Project Failure: KPMG Canada Survey
      Over 60% of all IT projects failed to achieve their stated 
      objectives completely
      31.1% of projects will be canceled before they ever get 
      completed
      Further results indicate 52.7% of projects will cost over 189%
      of their original estimates. 
Why is Offshore Outsourcing so hard?
Key Challenges

  Communications and Collaboration
  Cultural Differences
  Project and Program Management
  Time Zone Differences
  IPR Protection
  Knowledge Management
  Team Retention
  Budget and Schedule Overruns 
  Managing Risk in the offshore environment
The Concept of Readiness

You don’t win a marathon 
in just 2 hours – it takes 
years of practice, effort 
and preparation.
Business is no different!!
Defining Readiness

  Readiness is simply a ‘point‐in‐time’ state of an 
  organization to utilize offshore outsourcing as a part 
  of the strategic toolset. 
  Its key components include: 
     People and Culture
     Processes and Systems Support
     Finance and Control Systems
     Maturity of Technology Development Capability
     Organizational Commitment to Success
Measuring Readiness

  Cultural Aspects
     Tolerance for change and risk
     Exposure Level of Executive Management to Offshore 
     environment
     Organizational Diversity
     Past Results with outsourcing and behavioral aspects
     Decision Making Style – Participative or Top‐Down
     Distributed or Centralized operations
Measuring Readiness

  Process Focus, Systems and Technology Capability
     Defined and Documented Processes – Sharing and 
     Measurement 
     Ongoing Process Improvement Programs
     Communications and Collaborative Environment
     Technology Design and Delivery Systems in Place?
     Documentation and Formal Specification Expertise?
     Governance, Control and Oversight systems in place?
Measuring Readiness

  Organizational Readiness
     Understanding Key Business Drivers
     Criticality and Knowledge‐Level Requirements
     Evaluation and Measurement Capability
     Organizational Structure Supports Offshore operations?
     SLA defined for each area?
NGS Readiness Quotient

Netsoft’s Outsourcing Readiness Quotient is derived from 
a custom‐designed model that factors in all the aspects 
mentioned earlier in the presentation. 

Is it enough? 
No

What’s Missing?
Trust
Getting Ready
  One size doesn’t fit all in offshore outsourcing
  Build capability in key business areas, including:
      Understand business needs
      Define baseline RoI on the offshore program
      Institute SLA Performance Monitoring Systems and Contract 
      Governance structures
      Begin Cultural Sensitization programs for your staff
      Build Knowledge Management capability with shared 
      knowledge‐repositories
      Build organizational maturity in Program Management, 
      Requirements Definition and Change Management
      Formal Risk Management Strategies in line with the business 
      level requirements.
Best Practices – Staying Ready

  Put Business Needs ahead of Technology needs and strategies
  Define Expectations, Metrics and Success Factors ‐ Before You 
  Outsource
  Combine Strategic and Tactical Approaches to retain operational 
  flexibility
  Monitor SLA zealously – No transgressions are small enough and yet 
  relationships are important
  Invest in Program Management 
  Managing Staff Turnover with Outsourcing Partner
  Adopt Multi‐sourcing for critical functions to derisk delivery
  Stronger, Deeper relationships for critical functions, and aggregation 
  mode for routine, small projects.
  Importance of Pilot runs
  Stay abreast of cultural requirements
Next Steps – Readiness Review/Assessment

 Readiness Reviews
       No‐obligations service
       One‐to‐One, 2‐hour consulting session via a teleconference with Netsoft 
       Global Services consulting teams 
       Provides initial suggestions and advice you can use 
       For Small Businesses or Startup corporations that has no experience with 
       Offshore Outsourcing. 
 Readiness Assessment
       Detailed on‐site engagements 
       5 and 20 days depending on the scale of the engagement
       Involves review of business strategy, operational models and technology 
       requirements in depth. 
       Recommended for Small to Medium Enterprises that have evolved IT
       needs and have had some exposure to outsourcing.

Download Event Materials directly from our event website at
http://www.NetsoftGlobal.com/SDSUEMC/
Questions

				
DOCUMENT INFO
Description: Global Business Failure Statistics document sample