Assuming that costs savings is the most important factor to consider when evaluating a potential outsourcing arrangement, what do you think is next in importance?  Service Levels?  Innovation?  Greater access to technology?  While I would agree that these are important components of an outsourcing agreement, I would argue that these pale in comparison to building a flexible agreement that holds up over time.

What do I mean by flexibility?  I’m really talking about the mechanisms that allow the outsourcing contract to withstand the inevitable pressures that will come as a result of business and market changes.  These pressures can include:

1) Changing business priorities
Things that are highly important now from a client perspective may not be nearly as important in the out years.  For example, the original deal may have been constructed to minimize delivery risk and maximize availability.  However, from a business perspective, perhaps the client is now better positioned to accept some risk in return for freeing up dollars/resources/capacity to work on IT activities that add additional business value.

Continue Reading "The Second Most Important Factor in an Outsourcing Agreement"

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Well over a year ago, I had the pleasure of advising a client that was willing to “take a risk” by doing something non-traditional with their external IT services provider.  This client followed Alsbridge advice and used innovative price methods for application maintenance services outsourced to a Tier 1 Provider.  The savings they achieved were expected, but the relationship improvement with business end-users was a surprise.

During a re-negotiation of the IT outsourcing contract in which the provider was to receive significant increases in work volumes, the client insisted on new price methods for Application Maintenance Services (AMS.)  As many people have experienced, outsourced AMS is difficult to price in ways that keeps both parties happy.   Many IT outsourcing contracts settle on pricing staff levels of effort or simply establish annual budgets for the services. 
   

Continue reading "Taking a Risk Reveals Hidden Value"

 

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I’m always interested in hearing about the trends and best practices for maximizing the business value from outsourcing relationships.  With the news of several outsourcing service providers being acquired (e.g., ACS/Xerox, EDS/HP and Perot/Dell) a common “trend” being touted is that the acquired companies should be able to leverage the innovation that comes from the Xerox’s, HP’s and Dell’s and apply it to their sourcing model thereby offering their clients something more than simply a lower-cost way of doing what they already had been doing via labor arbitrage. 

Having dealt with many large scale systems integration projects, innovation is not just about applying new technology from the parent company. Innovation is about changes in IT operations, reinventing a business process entirely, developing new or improved products and services, or changing the business model or how the company competes.  Yes, technology plays its part as seen in the Xerox/ACS partnership where Xerox can use its vast R&D capabilities to address the business problems of ACS’ customers. Add them together in a collaborative environment, and the hope is that they will be able to solve problems in new ways and provide new services to their clients. 

So I’m wondering why developing this type of innovation is so hard for the outsourcers? Well, according to a recent Harvard article, collaboration is good but if you keep asking questions to over-analyze a decision an original innovative idea will never move forward because the process of getting the innovation to market takes too long.  Hopefully, the new alliances will build collaborative environments that enable innovative ideas to be auctioned and go beyond the traditional outsourcing services. That’s a trend I’m sure we would all would like to see.



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I was recently working with a CIO that wanted to know what “operational alignment” truly meant, and how it could affect a sourcing decision.  This client was weighing the pros and cons of outsourcing versus a shared services solution.  The CIO felt that with either solution, the new retained organization had already been defined, and that meant the company had already had achieved operational alignment.  While having the retained organization defined and ready to implement is an important step in the sourcing journey, it is not a component of having operational alignment.

As we walked down the hall to the CEO’s office, I quickly explained the three critical elements to achieving operational alignment:

1.    Process Alignment - This particular client had been in business for over a century and had always done infrastructure and applications development and support in-house.  In order to align with a new potential outsourcing partner, or to align multiple disparate IT organizations, it is important to document current IT processes and align those processes.  I told the CIO that while it is important to use ITIL®V3 as a guideline, it was more important that the company document their current processes and align those with the future way of doing business.

2.    Governance Alignment – Focus on the future governance structure, account management process, and the team that will be in place.  Additional areas to focus on would include: performance monitoring and reporting, service level agreements, tracking, reporting and approach, and the use of tools for reporting to the business.

3.    Transition Alignment – Document the internal transition plan, timeline and milestones.  Create documentation on what capabilities, tools, methodologies, processes and technology are currently available to the company.  Some additional items to document would be transition approach, plan for knowledge transfer, and training milestones and deliverables.

I continued down the hall and left the CIO to introduce the CEO to the three cornerstones to operational alignment:

Operational Alignment = Process Alignment + Governance Alignment + Transition Alignment

Documented processes, governance structure, and transition plans should be vetted with the new provider, or with individual business units if going the shared service path.  Once these processes, structures, and plans have been reviewed and agreed upon, you can correctly say that you have operational alignment and are prepared for a successful sourcing relationship.


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Over the years I’ve worked with dozens of tier one and tier two outsourcing providers.  I recently asked some of them to provide their perspective as to “why their clients and potential clients should hire a sourcing advisor.”  One would initially think that a provider would be opposed to having a sourcing advisor involved as it might slow down the process and lessen the advantages that a provider could have over the client without the benefit of independent advice.  I found quite the contrary.

Listed below are a dozen “uncut” reasons why providers believe clients should hire a sourcing advisor:

A Dozen Good Reasons
1.    Ensures objectivity – brings in impartiality to the provider selection process
2.    Acts as a catalyst – a good sourcing advisor spurs the sourcing discussion within the client environment
3.    Provides a financially sound approach and rigor – develops a sound data-centric business case for sourcing options leveraging a data-driven approach

Continue reading Provider’s Point of View: 12 Reasons to Hire a Sourcing Advisor


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Outsourcing is comparable to the synergies created by an acquisition in which the algebraic properties are no longer applicable to the rules of mathematics.

The value of acquisitions create the concept of revenue growth multiples through product and service line leverage; additional geographic penetration; and sharing innovation through research, development and best practices.  At the same time, redundant processes, expenses and staffing are eliminated, and the benefit result of lower costs increase the bottom line.  Benefits also flow through to the final customer, higher sales and lower costs are achieved by one entity (as opposed to the two, separately) and shareholder value is increased exponentially.  Combining the two entities achieve results of:


Placing processes with an outside provider brings lower costs, leveraged industry experience, improved processes and innovation that was not readily available while working in an isolated environment away from others.  Companies not using outside providers define its best practices as what employees know as existing, and the only reference point is oneself.  Outsourcing algebra equation is:



Here are some of the pieces of value creation and how it works:

•    Labor arbitrage
•    Elimination of tools
•    Training costs reduction
•    Leveraged environment
•    Capital preservation
•    Buying by the drink
•    Cost control and avoidance
•    Soft savings in telephony, benefits, environmentals and human resources

Savings opportunities exist with the elimination of a layer of management staffing that is no longer required to oversee the staff and replaced with a leaner vendor management organization to manage the provider.  Available department time allows for greater focus for supporting company strategies and business growth.


Share your comments with others about how outsourcing achieves:  2 – 1 equals something < 1; Value Creation > 2



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In recent work with a client and major IT sourcing provider, I discovered how important organization really is!  Getting organized to begin a transition with multiple towers is critical to your success, and perhaps more importantly, to reducing transition management efforts.

In this particular case, it was clear the transition planning was aligned by tower rather than for an overall transition effort.  The provider, with good intentions, created a transition reporting structure with leads for each tower.  The leads in turn created their transition plan, in some cases a Word document rather than a MS Project plan.  This would no doubt add challenges to the transition manager’s responsibilities because the plans were not integrated into a single plan.  Additionally, the provider did not include the client in developing the plans – the client’s detailed tasks, efforts and interdependencies were only estimated.

Here are some thoughts surrounding setting up a TMO, Transition Management Office, with an integrated project plan in mind:

1.    Begin with a TMO structure that outlines the areas of responsibility and identifies individuals who will be held accountable.  Include representatives from all parties, at a minimum the client’s organization as well as the provider.  There may be multiple providers and outside advisors too.  Starting at the top, the TMO structure will include a TMO Steering Committee with IT executives responsible to the stakeholders affected by the transition with an executive from the provider.  I recommend a “2 in the box” TMO structure for daily management activities with the top level being the overall transition manager from the client and provider.   The “2 in the box” approach should have a transition lead from the client as well as the provider for each area of responsibility – doing so tower by tower is a good example.

2.    In our writing classes, we learned to start with an outline.  In project work, start with a Work Breakdown Structure, or WBS.  Now that we have a TMO, outline in a WBS the highest level deliverables in a collaborative effort with all the parties.  From there, drill down to the next level prerequisite deliverables.  Once you have organized your deliverables, tasks and interdependencies will be well-organized in your project plan.

3.    Development of an integrated plan is best practice.  Interdependencies and prerequisites, especially with multi-tower transitions, will be easier to manage as well.  As discussed above, organizing your deliverables first in a WBS will support the creation of a well-organized and complete integrated plan.  The management and report of this plan will be simplified, which will allow more effort and time to focus on the fulfillment of the transition.

A mentor of mine shared this with me: “Plan your work, work your plan.”  With this front effort, or planning, you should be organized to deliver a successful transition by working your plan.




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Unlike others perhaps, I didn’t learn the adage “you never have a second chance to make a good first impression” until I had graduated from college and was in my early working years.  I know for sure there have been times I did not put my best foot forward.  It may have been that I was just too nervous to know how best to make that good first impression.

Over the last year or so I’ve dealt with dozens of service providers both onshore and offshore who have had the opportunity to make a really good first impression.  For some reason, several have made it more difficult for themselves in the next scheduled interaction with the client because they came off as looking not as good as they really are to the client.  I am not sure if they didn’t take the time to plan for the meeting or couldn’t muster the right resources to engage with the client.

I know this is going to sound a bit too trite… but it’s the simple things that make the difference to clients.  Let me cite three that stand out: 

1) Take notes - Sounds a bit ridiculous but I have had clients who after an interaction came away with the impression that the people they met with were not really interested in their business.  I believe this was quite to the contrary, however, there sat five executives who just listened, nodded, but didn’t take a single note.  Taking notes demonstrates you are interested in what the client is saying.

2) Engage - More often than not I’ll see three or four people attending a meeting and one or two of them do all the talking.  After they leave, the client is not sure why the others were brought along.  Everyone should have a defined role to play and needs to contribute to the topic.  Otherwise leave them behind.

3) Push back - I think sometimes service providers go too far in agreeing with the client.  We had one client recently who told a provider, “Tell us what we need to hear, not what you think we want to hear.”  The clients I have worked with want to hear the truth.  If you don’t agree with what they say, tell them.  But do it in such a way that you can factually back up your position, not just provide an opinion.

I realize these sound very trivial, but whether you are a service provider seeking new business or interacting with your own senior executives, all three apply.  I have to remind myself every time I meet a new client or service provider that I too am held to the same standard of making a good first impression.  Make yours count.



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I think you may have heard the news by now, but if you haven’t, then you should know that the telecom advisory firm that I founded, TAG, has been acquired by Alsbridge, Inc. I’m excited about the change, and I know that you will be too. TAG will operate as a service line of Alsbridge, and will offer the same world-class staff and processes that we always have. We’ve even added more staff to our team during this exciting period of acquisitive growth. The combined offerings of TAG and Alsbridge bring a unique value proposition to our clients. We now provide global advisory services dedicated to helping clients reduce costs and improve service levels in information technology and business processes in addition to telecommunications network services. No other advisory firm provides the combined services that we offer.

You can learn more about us, what we do and how we can save you 15 to 50 percent on your telecom network services by checking out our website. And coming soon, you’ll also find resources, such as articles and white papers, that will help you make decisions on managing your telecom expenses.

Have a prosperous 2010!



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What a way to kick off the New Year?  Alsbridge continues to grow organically and has just added a new service line to our suite of offerings to clients.  I’m excited!

We’ve just introduced what I believe is a step-change in the sourcing advisory space by acquiring TAG, the leading experts in procurement, contract negotiation and expense management of telecommunications services including voice, data, wireless, internet, local, and international services. 

In my opinion, Alsbridge already had the best methodology and database of information to assist clients to reduce costs and improve services levels in information technology and business processes.  Now, we have data-driven capabilities in the telecommunications network space as well. 

I’ve watched the outsourcing industry grow up and seen its sibling – the telecommunications network services industry – growing side by side.  And since moving to the sourcing advisory space in 2003, we’ve worked side by side with consulting firms in the telecom network spaces.  Combining the expertise in both spaces has long made sense to me, but I hadn’t found a firm with the right focus on service delivery excellence until we began talks with TAG.  The acquisition of TAG is a continuation of a strategic plan to acquire data-rich consulting capabilities to be able to provide a wider set of services to our clients and meet today’s as well as tomorrow’s need to reduce cost across the enterprise.

Simply put, no other sourcing advisory firm can provide clients with the depth of expertise in sourcing information technology, business processes and telecommunications network services.  Our current and future clients will benefit greatly from the synergies!



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