Best Practice Approach for Successful IT Sourcing

1. © Copyright LEXTA GmbH 2013
Dieser Bericht ist ausschließlich für Mitarbeiter des Klienten bestimmt. Die Verteilung, Zitierung und Vervielfältigung – auch auszugsweise – zum Zwecke der Weitergabe an
Dritte ist nur mit vorheriger schriftlicher Zustimmung der LEXTA GmbH gestattet.
Die hier zusammengefassten Texte und Grafiken wurden von der LEXTA GmbH im Rahmen einer Präsentation eingesetzt; sie stellen keine vollständige Dokumentation der
Veranstaltung dar.
Competence in IT Management
IT Sourcing
Berlin, May 2013

2. The Four Objectives Of Sourcing
Optimising IT costs
Professionalise IT services
Implementing an IT strategy
Optimising IT resources
Company-Profile-LEXTA-MAS.pptx
Slide 1Source: LEXTA
Benchmark IT costs
Budget IT costs transparently
Economies of scales
Reduce factor cost, liability, risks

3. The Four Objectives Of Sourcing
Optimising IT costs
Professionalise IT services
Implementing an IT strategy
Optimising IT resources
Company-Profile-LEXTA-MAS.pptx
Slide 2Source: LEXTA
Create a transparent service spectrum
Optimise service quality
Increase flexibility
Reduce technological risks
Optimise time-to-market

4. The Four Objectives Of Sourcing
Optimising IT costs
Professionalise IT services
Implementing an IT strategy
Optimising IT resources
Company-Profile-LEXTA-MAS.pptx
Slide 3Source: LEXTA
Concentrate on core competencies
Increase standardising / automatisation
Increase IT value for overall business

5. The Four Objectives Of Sourcing
Optimising IT costs
Professionalise IT services
Implementing an IT strategy
Optimising IT resources
Company-Profile-LEXTA-MAS.pptx
Slide 4Source: LEXTA
Align task profiles with employee skills
Avoid bottlenecks
Profit from external know-how

6. Five Phases for IT Sourcing Projects
Company-Profile-LEXTA-MAS.pptx
Slide 5Source: LEXTA
5. Transition4. Negotiations3. Tender2. Sourcing
Strategy
1. Strategic
Monitoring
• Evaluation of current
service provision
 Requirements
 Use of services
 Pricing
 Know-how
• Processes
• Indicative
benchmark
• Analysis of the
market and
competition
environment
• Analysis of demand
and capacities
• Determination of
sourcing objectives
• Alignment with core
business
• Grouping of IT
services
• Control of individual
areas
• Derivation of
sourcing scenarios
• Economic
calculation /
Business Case
• SWOT Analysis
• Tender strategy
• Evaluation of
market options
• Regulation of
SLAs and service
documents
• Request for
Information (RFI)
• Long list
• Request for
Proposal (RFP)
• Shortlist
• Exploratory talks
• Due Diligence
• Analysis of
references
• Conduction of
negotiations
• Development of
contract structure
and pricing model
• Letter of Intent (LOI)
• Ad-hoc benchmarks
• Drafting of
framework contract
• Assistance in
transfer of business
• Support for
migration and
transformation
process
• Definition of
applications /
services in SLAs
• Supervision of
transfer of
knowledge
• Partner cost control
• Introduction of KPI-
based monitoring
and reporting
• Introduction of asset,
licence, contract and
service level
management

7. Sourcing Happens Here
Company-Profile-LEXTA-MAS.pptx
Slide 6Source: LEXTA
ServicelevelProcesslevel
Business
processes
Applications
Platforms
Infrastructure
Facilities
Management
Implementation
Operation
Support
Point
Sourcing
Service
Sourcing
Process
Sourcing

8. Sourcing Options for All Services
Company-Profile-LEXTA-MAS.pptx
Slide 7Source: LEXTA
6.Support Services
5.User Help Desk
4.Systems Operation
3.Cross-over services
2.Server platform
1.Client hardware and software
platforms
 Layer 6: Service provider or own operation
according to region / country
 Layer 5: Service provider per language
 Layer 4: Service provider or own operation /
country
 Layer 3: All services centrally-controlled,
internally delivered (internal competition of the
IT locations / Follow-the-Sun)
 Layer 2: A hardware manufacturer, three
operating systems, six templates for Windows,
three templates for Linux
 Layer 1: A hardware manufacturer, one
operating system, three devices, one image per
device
EXAMPLE

9. Best Practice IT Sourcing
Company-Profile-LEXTA-MAS.pptx
Slide 8Source: LEXTA
Base (Layer 1 - 3)
Complete service
provided by
IT supplier
Base (Layer 1 - 3)
Services through IT supplier
Services through own personnel
Services through local provider
Example of a local costs optimisation (outsourcing vs. outtasking)
Optimisation
of the local costs
Costsbenchmark
EXAMPLE

10. Tendering and Negotiation Processes
Company-Profile-LEXTA-MAS.pptx
Slide 9Source: LEXTA
Request for Information
(Optional)
Request for Proposal
Letter of Intent
Scoring
Short List
Due Diligence
Negotiated offers
Knock-out
Sourcing contract
Long List

11. Evaluation and Decision Matrix
Company-Profile-LEXTA-MAS.pptx
Slide 10Source: LEXTA
Assessment factors Weighting /
reference**
Bidder 1 Bidder 2 Bidder 3 Bidder 4 Bidder 5 Bidder 6 Bidder 8 Own IT
Qualitative* Impression 16 % 90 % 80 % 75 % 75 % 90 % 65 % 85 % 75 %
Performance 14 % 60 % 75 % 80 % 90 % 85 % 75 % 80 % 85 %
Technical Perspective
26 % 80 % 85 % 90 % 75 % 90 % 95 % 80 % 60 %
True to RfP 18 % 65 % 60 % 70 % 70 % 75 % 85 % 90 % 80 %
Price model 26 % 70 % 55 % 75 % 80 % 75 % 75 % 90 % 75 %
Weighted result
100 % 74 % 71 % 79 % 78 % 83 % 80 % 85 % 73 %
Quantitative Prices 36 months 36 3,000,000 EUR 2,500,000 EUR 3,250,000 EUR 2,750,000 EUR 3,500,000 EUR 2,800,000 EUR 3,000,000 EUR 2,750,000 EUR
Project and
one-off costs
1 50,000 EUR 75,000 EUR 25,000 EUR 70,000 EUR 25,000 EUR 50,000 EUR 30,000 EUR 10,000 EUR
Hourly rates 100 90 EUR 100 EUR 80 EUR 75 EUR 95 EUR 100 EUR 85 EUR 90 EUR
Result /
36 months
3,266,000 EUR 2,815,000 EUR 3,467,000 EUR 3,000,000 EUR 3,753,000 EUR 3,090,000 EUR 3,234,000 EUR 2,976,000 EUR
Quantitative / Qualitative**: 4.4 4.0 4.4 3.9 4.5 3.8 3.8 4.1
* Summary of a comprehensive criteria catalogue
** Emphasis to be agreed individually
*** Smallest value = best cost-performance value
EXAMPLE

12. Transition Phase
Company-Profile-LEXTA-MAS.pptx
Slide 11Source: LEXTA
• Definition of
services in SLAs
• Service level
management
• Quality control
Services
• Validation of
costs / prices
• Development of
cost allocation
models
Finance
• Implementation
of control
structures
• Development of
contract
management,
e. g., asset and
licence
management
Contracts
• Establishing a
governance
• Communication
• Escalation
management
• Control of
knowledge
transfer
Supplier
• Support of the transfer of operations
• Outsourcing of services to the IT service provider
• Support of migration and transformation projects
• Introduction of figure-based monitoring und reporting
• Building ‘client competence’

13. IT Provider Management – ITIL
Company-Profile-LEXTA-MAS.pptx
Slide 12Source: LEXTA
Service
Strategy
Service
Design
Service
Transition
Service
Operation
Change
management
Service validation
and testing
Knowledge
management
Applications development
and customising
Service asset and
configuration management
Transition planning
and support
Release and
deployment
management
Access
management
IT operations
management
Request
fulfilment
Event
management
Incident
management
Problem
management
IT facility
management
Financial
management
Service portfolio
management
IT security
management
IT architecture
management
Compliance
management
Supplier
management
Availability
management
Catalogue
management
IT service continuity
management
Capacity
management
Service level
management
Risk
management
Continual-Service-
Improvement
Tasks and targets (ITIL)
• Service Design (SD)
IT suppliers support the requirements of
the business and fulfill their contractual
obligations
• Continual Service Improvement (CSI)
- CSI manager
- Process architect
- Process owner

14. Continuous IT
supplier
control
Implementatio
n of contract
management
Implementation
of steering
methods
Priorisation of
IT suppliers
Definition of
Objectives
Analysis of the
outset position
Introduction of IT Provider Management
Company-Profile-LEXTA-MAS.pptx
Slide 13Source: LEXTA
• Kick-off
• Definition of
contacts
• Assessment of
the current
situation
• Methods and tools
evaluation
• Assessment of
extent of work,
quantity
structures, service
levels, contracts,
prices
• Acceptance of
company-specific
framework
conditions
• Schedule
• Annual turnover of
the supplier is
assessed
• Risk analysis of
the supplier using
known methods
• Evaluation of all
IT suppliers in
terms of turnover
and risk with
identification of
the strategic IT
suppliers
• Design of the
regulation method
as a function of
the classification
• Introduction of
standardized
reporting
• Attendance at
service-review
meeting
• Design of the
necessary
supplier
information
• Relevant
information from
contracts is
available
• Identification and
initialisation of
measures
• Standardisation of
contracts
• Standardisation of
tenders

15. Company-Profile-LEXTA-MAS.pptx
Slide 14Source: LEXTA
Please note that this document is shortened and only shows a fraction of LEXTA’s
competencies in IT sourcing.
For a full set of slides on IT sourcing and additional insights to other areas of IT management,
please get in touch with us.
IT
Benchmarking
IT
Governance
IT Security
IT Service
Catalogue
IT Key
Performance
Indicators
IT Sourcing
IT Cost
Optimization
IT StrategyProject
Management
Matthias Seidl
seidl@lexta.com
+49 30 887124-122
LEXTA GmbH
Dorotheenstrasse 37
10117 Berlin
Germany
http://www.lexta.com