Taking BPO Beyond Simple Cost Arbitrage Simon Fanning Strategic Sourcing Programme Director Deutsche

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Taking BPO Beyond Simple Cost ArbitrageSimon
FanningStrategic Sourcing Programme
DirectorDeutsche Bank
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Off-shoring is now a global phenomenon ...
With the advent of reliable and cheap global
communications and the emergence of skilled
labour forces in many developing countries,
remote offshore services have become both
feasible and real McKinsey Co. July 2003
70 of GEs work will be outsourced. Out of
this 70 will be done from offshore development
centres with about 70 done in India Jack Welch,
March 2000
SOURCE DELOITTE RESEARCH GLOBAL FINANCIAL
SERVICES SURVEY
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Smartsourcing is one of the most important tools
we have, but
1,394 CEOs interviewed
Source PriceWaterhouseCoopers
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we need to realize all of the benefits
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What and where to source is a complex decision
process
Complex / Unique
Prescriptive / Rules Based
Complexity
Non differentiating
Highly differentiating
What
Differentiation
Desk Facing
Remote from Business
Co-location with Business
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and there is no best route to the optimal
state
Diagnose existing environment and take initial
actions
Timezone Agnostic
Timezone Dependent
Location Agnostic
Location Dependent
People
Time
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The organisational challenge of multiple
sourcings

• Vendor Management difficult
• Integration complexity between vendor and client
• Issues increase exponentially
• Difficulties often result in insourcing
• Portfolio view difficult

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leads to a competency challenge
Software Development Functions
Client Relationship Management
Vendor Management
Project / Programme Management
Quality Assurance
Business Governance
IT Strategy / Architecture
1st Level Support
2nd, 3rd Level Support
Application monitoring and Support
Functional Designs
Requirement / Business Analysis
Technical Design
Technical Design
Software Dev non-proprietary
Software Dev - Proprietary
Packaging Changes for Production
Documentation
Systems Integration
User Acceptance Testing
System / Functional Testing
Production Implementation
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which therefore requires a clear Operating
Model to leverage outsourcing opportunities
Externally sourced
Internally sourced
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and the corresponding challenge is to re-tool
people to enable delivery of the operating model
From Craftsman to Craftsmen, Architects and
Merchants

• Architects
• Paid forcreative designand engineering

• Craftsmen
• Buy raw materials
• Pride in the craft
• Paid for crafting

• Merchants
• Buy saleable goods
• Pride in customer satisfaction
• Paid for realizing value

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Taking BPO Beyond Simple Cost ArbitrageSimon
FanningStrategic Sourcing Programme
DirectorDeutsche Bank