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The Official Magazine of the International Association of Outsourcing Professionals

GlobalizationToday September 2010

Commerce Redefined

Special Issue: Cloud Computing The All-Powerful Cloud Is cloud computing really the future or just the latest IT fad? (page 16)

HP versus Dell: The 3Par Acquisition Did HP really win, or is Dell still lurking in the background? (page 8)

Shifting Roles in a Cloudy World The new role of VARs and channels in the rise of the cloud and SaaS models (page 42)

Global Supply Chain & Outsourced Manufacturing Consulting

Because the world really isn’t flat!!

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INSIDE September 2010

7 PUBLISHER’S NOTE 8 NEWS FEED

What’s new and noteworthy in global commerce

13 BLOG BEAT

Outsourcing news and commentary from the blogosphere

15 REAPING THE BENEFITS

Governance is integral in ensuring enterprises obtain full benefits from cloud computing

32 CENTRAL/EASTERN EUROPE: HOW TO GET AHEAD IN GLOBAL OUTSOURCING New research bares the strengths and weaknesses of the world’s safest outsourcing spot

42 SHIFTING ROLES IN A CLOUDY WORLD The new role of VARs and channels in the rise of the cloud and SaaS models

47 TAKING THE RIGHT TURN

The IAOP heads to the right direction with the newest: a judging panel for the GEO award and a standardized proficiency test for service-delivery professionals, plus more

16

THE ALL-POWERFUL CLOUD

Is cloud computing really the future or just the latest IT fad?

54 SCRAPBOOK

Snapshots from the IAOP’s 2010 Outsourcing World Summit

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EDITORIAL ADVISORY BOARD Dr. Bruce Greenwald Prof. Asset Management and Finance Columbia Business School Dr. Matt Waller Prof. Marketing and Logistics University of Arkansas Dr. John Hindle Sr. Manager - Accenture, Adjunct Prof Vanderbilt University Mike Corbett Chairman - International Association of Outsourcing Professionals Matt Shocklee CEO & President - Global Sourcing Optimization Services Arijit Sengupta CEO of BeyondCore, Inc Chair of the Cloud Computing Chapter of IAOP

Address: 6501 E. Greenway Pkwy., Ste 103-494 Scottsdale, AZ, 85254, USA Phone: 1-602-494-4194

PUBLISHER’S NOTE

changing how businesses operate today. The Cloud Computing chapter carefully examines cloud computing’s potential impact on the outsourcing ecosystem as well as how major players in the industry—consumers, providers and advisors—can utilize the cloud to their maximum advantage. Pioneering companies, namely Accenture, Microsoft, Infosys, Genpact and BeyondCore have come together to author this issue’s main feature, The All-Powerful Cloud.

This month’s columns, Reaping the Benefits and Shifting Roles in a Cloudy World, provide information on how to best make use of cloud computing. How enterprises could guarantee obtaining the full benefits of cloud computing is discussed on page 15. Furthermore, guest columnist Joseph Hanna of OneNeck IT Services tackles the role shift of value-added resellers (VARs) and channels in the rise of the cloud and Software as a Service (SaaS) models. Learn more on page 42.

It’s OK to Have Your Head in the Clouds By 2014, cloud-based services are predicted to grow to about a whopping $150B from a humbler $60B in 2009. With business-process services making up 77% of the cloud-computing market, these are expected to have a remarkable impact on business, especially outsourcing.

Hence our cloud-computing issue.

The International Association of Outsourcing Professionals (IAOP) has devoted a chapter solely for this paradigm shift that is

As promised, Globalization Today continues proprietary research on another major outsourcing hotspot. This month, we take a closer look on Central/Eastern Europe, highlighting its strengths and weaknesses, among others. Read about what the region needs to get ahead of outsourcing on page 32.

Not only do we like hearing from you, dear reader, but we’re all for publishing your thoughts in print and online as well. Play an active part by becoming an editorial contributor. Globalization Today understands that true experts like you are most credible in delving on relevant issues influential to outsourcing, so your submissions are most welcome. Visit globalizationtoday.com to set up your editorial contributor account and start sending your stories.

Cheers to another rich issue!

Founder and publisher

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NEWS FEED

NEWS Feed

WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCING THE HP-DELL BIDDING WAR Oftentimes, storage isn’t given enough attention in system architecture, but it can make or break the service level agreement (SLA) for your application response times.

Understanding how to build a cost-effective, high-performance storage system can save money not only in the storage subsystem, but in the rest of the system as well. Further compounding the need for resilient storage solutions is the huge amount of data being generated across enterprises and accessed by a highly mobile global workforce.

The outlook for the next two decades rests significantly on not just computing power and access to the same through cloud and other utility-based models, but the necessary infrastructure required to be set up and maintained as volumes of data increases exponentially. Come storage providers and their differentiated solutions, especially ones that are able to leverage the cloud significantly while provisioning enterprise-class SAN solutions. “Talk about a David-versus-Goliath scenario. Yet 3PAR has been winning deal after deal. They are making great progress and are becoming that fourth vendor for enterprise-class SAN storage—just like what Fox did to ABC, CBS and NBC. 3PAR is the Fox of the storage industry,” says blogger Tony Asaro. “3PAR can build a billion-dollar business just going after the enterprise market. And in many ways, it’s a smarter strategy than going after the mid-market.

The average selling price is higher. They know exactly who the customers are. Costefficiencies and management benefits that thin-provisioning and quality of storage

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GlobalizationToday September 2010

service features bring to data centers will within the next few years make them ‘must-have’ features with IT organizations experiencing high rates of data growth.

The entire future of a company or industry can hinge on one little deal. The $50,000 IBM paid to license Windows was the foundation for Microsoft and the technology industry for the last couple of decades. Apple’s licensing contract with Portal Player to create the iPod was nearly as big—and certainly huge for that company.

The sale of 3PAR could also be one of those pivotal deals, as huge firms like HP, IBM, Oracle, Microsoft, Dell, VMware, Cisco and EMC position themselves around the

new “cloud” opportunity. It’s interesting to note that were Microsoft to be offered another IBM-like deal, or Apple a Portal Player offer, both companies would likely refuse, which is why huge opportunities rarely strike mature companies.

THE VIRTUAL CLAMORERS

CLOUD

AND

THE

The battle for the next big wave of revenue targeted at the server market, both standalone and hosted, is cloud computing or “the cloud.” It represents a blend of technologies ranging from high endservers to storage systems and the software

that makes it all work. Vendors are targeting this opportunity with full solutions, but few have the needed breadth of offerings.

Each has critical holes in its offerings.

The major players often have to partner to complete their solution, an approach that provides faster times to market and higher consistency. But this approach lacks competitive advantage because partners generally can also partner with competitors and Microsoft and VMware, two of the pivotal players. This fight has resulted in huge unanticipated acquisitions like the purchase of Sun Microsystems

by Oracle (Snorkel) and unique power blocks like that created by the formation of Acadia and the powerful coalition of Cisco/EMC/VMware targeted at this very space. IBM is one of the most powerful players, second only to Oracle on software, HP on hardware, and no one on services. This puts the total amount of resources pointed at this opportunity in line with the initial move to the Internet in the 1990s. 3PAR is seen as a critical link between virtualized systems and storage. It has demonstrated that it can significantly increase the effectiveness of systems using either Microsoft or VMware technology.

HP and Dell are the vendors using the highest mix of VMware and Microsoft technology; most of the other players use more proprietary stacks of software in their solutions. This makes 3PAR uniquely valuable to both HP and Dell. For HP, which has a light software unit compared to companies like Oracle and IBM, this fills a distinct gap. For Dell, this would help form the core of a stronger software

NEWS FEED component as that company builds out its solution. Both see this technology and company as a must-have, driving them in this bidding war.

PIVOTAL IMPACT

This may be a pivotal fight for both companies. For Dell, it is the true beginning of what might become a software competence in an area strategic to its future. For HP, it’s a critical part of its war against a field of increasingly softwareheavy competitors such as Oracle and IBM. It’s Michael Dell’s way of his company from the image of a badly-aging PC maker to a cutting-edge cloud provider. This makes 3PAR far more pivotal than just a software acquisition because it is key to the successful future vision of both companies.

In less than two weeks, the bidding war for gridstorage vendor 3PAR has nearly doubled from $1.15B to $2B with Hewlett-Packard’s latest tit-for-tat bid against Dell. The two technology behemoths have been fighting for what is arguably the last independent vendor of e nt e r pr i s e - c l a s s data storage on the market. But when do the bids become too outrageous?

3PAR, an 11-year-old company that sells a high-end, highly scalable storage platform, earned about $200M last year, so the latest bid represents tenfold the revenue 3PAR generates. In the leap-frog battle for 3PAR, HP has been more aggressive. Dell began the public process with its $1.15-B bid—or $18 per share—on August 16, which was topped by a $1.6-B offer—or $24 a share—

by HP. Dell’s retort? Just a bit more, and an offer of $24.30 per share. HP quickly shot back again with an offer of $27 per share, which Dell matched the very next day. HP’s response was a whopping $2B, or $30 per share. If 3PAR were to accept an HP offer, it would have to pay Dell, the original bidder,

a $72-M termination fee—a small price to pay after receiving more than $2B from the winning bidder. Scott Archibald, who once worked for HP and was responsible for the IT integration between HP and Compaq, said while 3PAR is a great technology company, it’s far overvalued. “You’ve got to wonder how much of this is emotionally driven versus a good business decision,” said Archibald, who is also an analyst for Bender Consulting. “You’ve got to scratch your head as to why they’re paying such a high premium for this company.”

HP SEES DELL AS A THREAT

In an SEC filing regarding the 3PAR merger, HP answered a list of frequently asked questions, the first of which was how much HP was willing to pay. In an

answer reminiscent of the vague style of New England Patriots football coach Bill Belichick’s, HP wrote: “We are focused on today’s new offer, which we believe is superior to Dell’s existing proposal.” In essence, it was not an answer at all. Bender said HP will win the bidding war with Dell not just because it has deeper pockets but also because it can do more with 3PAR than Dell can. Clearly, both HP and Dell believe they can scale 3PAR’s business fast enough to reap the margin benefits to justify the expense. This reminds us of EMC’s battle to buy the deduplication vendor against rival NetApp. EMC wound up paying $2.1B. HP does not have its own

enterprise-class storage array. Instead, like Oracle/Sun, it resells Hitachi Data Systems’ Universal Storage Platform (USP). Dell has no high-end storage technology and resells EMC’s entry-level and midrange products. It has also been acquiring storage companies for the past two years. It bought iSCSI storage company EqualLogic in 2008, network-attached storage provider Exanet in February and data-compression vendor Ocarina Networks last month as part of a strategy to gather best-in-class storage products. So HP sees Dell as a threat in the enterprise data center marketplace. 3PAR’s cloud-based storage architecture would give it a significant leg up in that space.

THE BATTLE’S OVER—FOR NOW

On September 2, Dell issued a release indicating that it will not increase its most recent $2-B proposal to acquire 3PAR, and that the company has ended acquisition talks for the data-storage company. Dell is entitled to receive a $72-M break-up fee from 3PAR upon the termination of its merger agreement. 3PAR has accepted HP’s bid. Analysts believe that despite losing for 3PAR, Dell can get into a better deal with potential data-storage firms like CommVault Systems, Compellent Technologies, Pillar Data Systems and DataDirect Networks at relatively low prices. These data-storage firms are niche industry players and their stocks have shown healthier growth in the share market. Is this a pyrrhic victory for HP? Pyrrhic victory is one in which the cost of the win likely exceeds the reasonable cost of the loss. HP can certainly afford 3PAR, but there are many folks who are concerned about the number of people HP has lost since the Palm acquisition. With HP’s industry-low employee-satisfaction scores, a software company that is mostly valued by its people is an incredibly risky

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NEWS FEED buy in a competitive market because the loser can often recruit the core talent out of the company at a fraction of the price. It’s interesting to note that in a company like 3PAR, there are about 40

core employees, and at an estimated $5M each for litigation costs and penalties paid to HP, Dell could likely get them for about $200M—or a fraction of what they would have paid for the entire company. Granted,

the intellectual property would remain with HP, but this would turn 3PAR into a shell that HP paid $2.7B for and create a foundation for a “Dell wins and HP loses” story.

WIPRO SECURES AGREEMENT WITH ARCELORMITTAL www.outsourcing-alert.com

Wipro Technologies, the global IT-services business of Wipro Limited, announced that it has entered into a five-year agreement with ArcelorMittal, the world’s leading steel company, to consolidate and migrate its messaging systems to

the Microsoft Exchange 2010 messaging platform. Wipro will host the new global messaging system on its hardware, hosted at six ArcelorMittal data centers spanning across North America, Latin America, East and West Europe and Asia. As a

CARLSON DITCHES IBM, SUES FOR FRAUD www.informationweek.com

Hospitality giant Carlson has terminated its multimillion-dollar outsourcing deal with IBM and slapped Big Blue with fraud and breach-of-contract charges. The owner of Radisson Hotels, T.G.I. Friday’s restaurants and Carlson Wagonlit Travel claims IBM violated terms of the deal signed in 2005 under which Carlson handed off IT and back-office operations to the tech vendor.

The agreement was originally set to run through 2015. Carlson’s lawsuit was filed under seal last week in U.S. District Court in Minneapolis, where Carlson is headquartered.

With most of the court record redacted or sealed, the exact nature of Carlson’s complaints could not immediately be ascertained. As supporting evidence, the

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GlobalizationToday September 2010

company filed a section of the outsourcing contract that covers confidentiality—a possible indication Carlson believes IBM misused its proprietary information.

Carlson officials declined to discuss the case.

For its part, IBM said Carlson’s charges are meritless and that its former customer is simply looking to dodge rightfully owed payments. Carlson’s 2005 decision to outsource to IBM was internally contentious. CIO Steve Brown was against the move but was overruled by then-CEO Marilyn Carlson Nelson. The deal saw the company cut more than 500 IT and finance workers. Many of the positions were outsourced to IBM facilities in India, Canada and other parts of the U.S.

critical component of this engagement, Wipro will secure ArcelorMittal’s global messaging system using state-of-theart anti-virus, anti-spam and archival solutions. Wipro will also manage ArcelorMittal’s systems for the entire period of the contract. This engagement will help transform ArcelorMittal’s messaging environment and curtail their global messaging expenses. Wipro will use its Next Generation Global Command Center (GCC) for rendering the global messaging-management services. The deal win reiterates Wipro’s leadership position in the infrastructure-management services sector. The Technology Infrastructure Services (TIS) division contributes about 21% of revenues to Wipro Technologies.

Few of the major offerings and solutions of this unit include Managed Services, Transformation Consulting and Global System Integration, Unified Communications, Virtualization and Consolidation.

NEWS FEED

NORTHGATEARINSO TO PROVIDE HR SUPPORT TO BASF IT SERVICES www.informationweek.com

NorthgateArinso, a leading humanresources (HR) software and services provider, has signed a global five-year contract with BASF IT Services. The BASF Group offers business solutions and managed services to BASF and third-party customers.

NorthgateArinso will provide maintenance and consultancy services to BASF IT Services, plus technical support for the maintenance of the global SAP HCM applications and functional support for the country-specific HR solutions. It will also provide consulting services to BASF based on a global HR delivery model with country-specific functionalities, as well as help all BASF offices in several countries to migrate to the global BASF HR platform.

“The agreement underscores our

global-delivery capabilities. By relying on our country-specific knowledge, global presence and our attractive offering of nearshore and in-country delivery,

BASF IT Services will benefit from improved efficiency and reduced costs,” says Olivier Poot, managing director at NorthgateArinso Belgium.

SENATORS QUESTION POTENTIAL SPRINT-HUAWEI DEAL www.fiercewireless.com

A group of Republican senators has asked the Obama administration to take a closer look at whether a potential deal between Sprint Nextel and Chinese vendor Huawei will compromise national security.

“We are concerned that Huawei’s position as a supplier of Sprint Nextel could create a substantial risk for U.S. companies and possibly undermine

national security,” wrote Senators John Kyl of Arizona, Christopher S. Bond of Missouri, Richard C. Shelby and Jeff Sessions of Alabama, James M. Inhofe of Oklahoma, Jim Bunning of Kentucky, Richard M. Burr of North Carolina and Susan Collins of Maine in a letter. The senators brought up concerns about the vendor’s ties to the Iranian government

and the Chinese military, which it has strongly denied. Huawei spokeswoman Jannie Nguyen told FierceWireless that Huawei “abides by and respects thirdparty intellectual property rights (IPR) and strives for continuous innovation to maintain our leadership position.”

Recent reports have indicated that both the U.S. government and Huawei are trying to figure out the best approach to take if the latter decides to become further enmeshed in the U.S. market. According to a recent report in The Wall Street Journal, Huawei hired a raft of U.S. advisers to help it overcome security concerns. The report said Huawei tapped several law firms that specialize in telecommunications, mergers and winning federal approval for sensitive international deals. In July, Financial Times reported that Huawei is bidding on a significant wireless contract with Sprint. The report, citing unnamed sources familiar with the matter, did not say what kind of equipment was under discussion; nor did it say if or when a decision regarding the contract would be made.

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BLOG BEAT

NEWS AND COMMENTARY FROM BLOGGERS AROUND THE WORLD ENSURING COLLABORATION, NOT MEDIOCRITY www.globalservicesmedia.com

by Kathleen Goolsby

Win-win approach. Collaborative relationship. These buzz words are tossed out frequently as a hallmark when executives describe their outsourcing relationships. But the terms are apt to be misused. I’ve had some interesting conversations about winning and collaborating in outsourcing relationships.

One executive summarized an event in his company’s relationship this way: “When we identified the root cause of the issue, we collaborated to determine the solution that would meet our needs and be a win-win.”

Despite the fact that a lot of companies use the buzz words and label this kind of situation as a win-win approach and as collaborating, it’s really just compromising. When moving forward depends on having one’s needs met or when both parties have to give up something important to them so they can make the best of a situation and meet in the middle, no one really feels that they’re winning. Here’s another description where an executive mentioned a collaborative relationship: “Our supplier came to us and said they had some new software that would benefit us and they wanted to show us a demo and have a collaborative discussion on whether to implement it.”

That seems more like an effort in the provider’s sales cycle. Sure, the implementation could very well result in mutual benefits. But this is not a collaborative discussion; it’s one company trying to gain buy-in from the other. A

true win-win approach drives the creativity of both parties, causes them to listen to each other’s ideas and challenge and enhance them. It enables collaboration.

And that drives greater mutually beneficial value-creation in a relationship.

Here’s an example of what such a relationship looks like. This relationship didn’t start out to be transformational, but it shifted that direction two years into the deal. The executive described the origins of the transformational initiative as follows: “We wanted to transform our CRM system. We didn’t know if we would outsource it to our existing service provider or not and we didn’t know if we wanted to buy a packaged solution. We just knew we wanted some enhanced functionalities in the system, and that they had some capabilities we might want to leverage for more efficiencies for both of us. We had a very collaborativecentric discussion with our provider, from a whiteboard approach, about the possibilities to see if there would be a win-win opportunity around this.”

A highly successful outsourcing relationship of a multinational manufacturer and a Tier-1 service provider, which had large-scale global complexities and a short timeline for some of their year-one objectives, actually accomplished those objectives ahead of schedule. They attributed their success to collaboration and partnering. But successful collaborative relationships don’t just happen. They must be planned and nurtured, and they depend on a win-win approach.

GUIDELINES ON BUSINESS-PROCESS MANAGEMENT blog.sourcinginnovation.com

by Sudy Bharadwaj

I don’t get it. I have been involved in numerous business process-improvement projects over the past 20 years and in several meetings about business-process management (BPM). I’ve read white papers and looked at discussion groups. In way too many cases, very early in the conversation, a discussion gets down and dirty into integration processes, XML and other related technologies. At a certain point, a technology discussion becomes necessary and important, but not early in a BPM initiative. Here is my vote: don’t get techie in a business-process discussion.

The point is to review, understand and diagram your business process.

Here are some quick guidelines I have pieced together over the years for various business-process improvement initiatives: • Engage in a discussion. With respect to Global 2000 executives in particular, discuss your business process internally before you engage an outside vendor, be it a consulting or technology company. Use a white board and markers first. After a thorough understanding of the process, only then should modern technology be used, and even then the first piece of technology employed should only be used to capture the process flow. In other words, start with something like PowerPoint or Visio. If the organization is large and/ or distributed, you might also leverage social networking and collaborative tools such as Wikis to engage a larger team and obtain input into what your business process actually looks like. Social networking is a great tool to garner input and gain consensus, since the challenges of including a large, extended and distributed team is greatly simplified.

• Don’t get myopic. Many business processes are cross-functional and extend beyond the walls of your own enterprise. Don’t let those boundaries affect the improvement initiative. Many times, a business process is only as good as

its inputs (garbage in/garbage out). Make sure you understand your inputs/ outputs. In some cases, it is not wrong to extend beyond your own scope of control to better understand and diagram the process. This can be a delicate method that may not be for everyone, but if you can engage externally and collaboratively, your results can improve.

• Use common phrases and definitions. One way to get team members to understand and define the process better is not to use internal acronyms.

Try using industry terms and/or those you would use to explain a concept at a party. If this is a customer-facing business process, explain it in terms of benefits to your customers; if a supplier-facing initiative, benefits to suppliers.

By struggling to obtain new phrases and definitions, you will gain insight and, more importantly, challenge the establishment (“Now that I say it that way, why do we do it that way?”)—a great first step in developing the improvement plan.

To summarize, engage your team, both core and extended, in defining your process. Put it on paper (or electronic form) and have everyone agree that it is at least close. I have seen organizations engaging technology vendors about a business process realize that they did not truly understand it. It can get very amusing to watch executives learn about their own business and get insight from putting the process on the table.

Want to get creative? One business-improvement initiative I was involved in actually fined members of the team for using technology acronyms and even internal names. We fined them $1 each. I donated $2 myself and the pot got as high as $14—that got us an appetizer at dinner that evening! globalizationtoday.com

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THOUGHT LEADER

REAPING THE BENEFITS

By Bryan Doerr

Governance is integral in ensuring enterprises obtain full benefits from cloud computing The economic downturn has seen organisations who have traditionally managed their IT in-house radically reassess their approach to IT management. Many have realised that a managed infrastructure model can reduce capital expenditure and costs whilst also increasing business flexibility. With this in mind, the significance of governance is suggested to guarantee that businesses gain the benefits of cloud computing to its maximum.

While the use of cloud computing continues to increase, IT-solutions provider Savvis Inc. has found that many organisations are hesitant to jump into mass market cloud offerings. Concerns—often focusing on the privacy and security of data and performance of cloud-based applications—have only recently been addressed with the arrival of enterprise-class cloud options.

In order to move toward the cloud successfully, IT organisations need to carefully plan the transition. Enterprises evaluating cloud services must understand the policy-implementation mode they are buying into and the need to have a detailed understanding of decision-making policies across resources, applications and operations, and then make sure that cloud helps them optimise.

In particular, cloud computing raises important policy and governance issues that must be well understood if the cloud is to provide the benefits it promises.

BEYOND VIRTUALISATION

While virtualisation is a critical part of a transition to cloud and certainly opens up exciting possibilities for resource allocation, the policy decisions concerning resource allocation are vital. This element of cloud deployment is often overlooked.

Clouds actually introduce some new challenges related to IT-policy definition and automation. To be complete, any transition to cloud deployment should maximise resource-allocation efficiency and avoid damaging application performance and compounding the impact of outages.

MULTI-LEVEL POLICIES

When operating in the cloud, policies that focus on resources, application

and operations should be considered: • Resource-level policies are concerned with the allocation of CPU capacity, RAM and bandwidth.

• Application-level policies pertain to availability, transaction latency and other application-performance metrics.

• Operations-level policies manage the entire data centre, taking into account dependencies amongst applications and include decision aids for relative prioritisation spanning multiple applications.

Where policies are absent or fail to cover both levels, trouble can ensue, especially when automation is concerned. For example, applications A and B may feature similar resource-level policies that trigger additional demands at the same time, causing application C to perform unacceptably.

What if application C is mission-critical or A depends on C for input?

Such complex relationships are in legion in virtualised environments and must be governed by policies.

POLICY MODELS

Cloud policies can be based on a number of models. For instance, a tightly coupled policy model comes out of the box with certain platform implementations, operating automatically based on deterministic factors.

A load balancer that selects from several predefined load-balancing policies is a good example of this type of policy.

There’s also a programmable model system in which managers have a range of customisable options within an existing framework.

Another option called an orchestrated model is typically reserved for situations too complex to fully automate. Decision-making is based on broad contextual awareness, advanced instrumentation and human intuition.

STAYING ON TOP OF YOUR CLOUD

There are important interlinked issues in cloud-deployment decisionmaking that extend beyond mere virtualisation. To be effective, policies not only need to exist—they need to be automated. Managed well at all levels, policy automation dramatically increases the benefits of cloud deployment. Without proper policy automation, the complexity of a cloud can lead to poor performance.

It’s important to purchase cloud services from a service provider that understands policy needs and either assists with or removes the burden of defining and automating. In many cases, it will also be important for enterprises to understand default policies as implemented by the service provider.

Think about how much awareness, planning and real-time control are needed at the resource, application and operational levels—and then make sure they’re available. When it comes to clouds, virtualisation is only the beginning.

RESOURCE BOX

Bryan Doerr Chief technology officer at Savvis Inc.

Bryan Doerr is chief technology officer at Savvis Inc., providing technology leadership for infrastructure, systems and software development, M&A support and next-generation platform evaluation.

He earned MA degrees in Electrical Engineering from Johns Hopkins University in Baltimore, Maryland and in Information Management from Washington University in St. Louis, Missouri.

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CLOUD COMPUTING

The All-Powerful Cloud Is cloud computing really the future or just the latest IT fad?

By Arijit Sengupta, Elliott Ichimura, JP Balakrishnan, Charles Sutherland and Shantanu Ghosh Cloud computing has been hyped and construed into a panacea for all manner of business and IT challenges. Gartner recently noted that the topic is the “No. 1 search term on gartner.com” and forecasted that between 2009 and 2014, the worldwide market for cloud services will grow from $58.6B to $148.8B, with business-process services comprising 77% of that market. But definitions and forecasts vary widely. Indeed, models professing to explain cloud computing abound—from the authoritative but technology-focused model (currently in its 15th iteration) developed by the National Institute of Standards Technologies, to hybrid business-

Business Process as a Service

technology models from Gartner, Forrester, Saugatuck Technology and the like. For sure, a unified, authoritative vision of cloud computing remains elusive.

The Cloud Computing chapter of the International Association of Outsourcing Professionals (IAOP) was chartered to assess the potential impact of cloud computing on the outsourcing ecosystem and explore how consumers, providers and advisors may leverage the cloud either to enhance existing business benefits or develop new sources of benefit. In the first seven months of 2010, the chapter leadership interacted with more than 300 executives in the

outsourcing ecosystem to evaluate opportunities and challenges presented by cloud computing. To avoid fixation on technologies, we focused on a broad business question: How can we best leverage cloud computing to generate a tangible business impact?

Based on these discussions, we developed a new business-value framework for how consumers and providers of outsourcing can best leverage cloud computing.

This framework consists of four key layers.

In increasing order of potential impact, these are Technology as a Service (TaaS), Execution as a Service (EaaS), Coordination as a Service (CaaS) and

Work product of the IAOP Cloud Computing chapter

The IAOP’s TechnologyExecution-CoordinationInnovation (TECI) Framework for Cloud Computing

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CLOUD COMPUTING TECHNOLOGY AS A SERVICE (TAAS)

When you think of cloud computing, do you think of Gmail, Windows Live or a hosted e-mail service offering for your enterprise? Perhaps you think of a payroll or marketing application accessed over the Internet and subscribed to like a utility? In each case, you are thinking of a TaaS solution.

This layer consists primarily of software applications that can be delivered ondemand in a scalable and elastic manner over a network while leveraging shared pools of resources such as servers.

Since these applications come packaged with enabling technology platforms and infrastructures, we refer to these elements collectively as “technology” in the interest of definitional simplicity.

Until recently, corporate budgets invariably included capital expenditure items for data centers, servers and so on, with these physical resources often replicated in each region in which a company operated. Today, with standard office applications like e-mail, calendaring, secure personal storage and remote print servers all available on a subscription basis, companies are able to initiate operations in farflung regions using virtual resources that deliver a common identity and

infrastructure. Thus, companies are actively moving non-mission-critical but absolutely essential business services like messaging to cloud-based service providers. Top executives understand and realize today that their scarce time need not be consumed discussing the costs of maintaining, upgrading, relocating and servicing their e-mail and calendaring infrastructures. Rather, they should leverage organizations that see providing e-mail services as their core competence to manage these infrastructures and provide guaranteed service levels.

Some concerns remain along the lines of security, data privacy and such.

However, the range of public and private cloud technologies available today already address most of these concerns and ensure seamless operations with reduced headaches at a fraction of selfhosted expense. Broadly, a provider whose whole business depends on maintaining a high level of security and data privacy is likely to pay more attention to and spend more resources on security than typical enterprises.

The primary benefit that cloud computing brings to this layer is cost reduction from better technology

resource utilization, capital expense reduction, and options for usagebased pricing. Other benefits include the potential for greater reliability due to improved scalability and reduced risk of downtime. However, the focus of this layer remains tactical and is best characterized by the mantra “Standardize my mess and run for less.”

between the business process and the technology often begin to blur. For example, in an invoice data-entry function, a group of operators may enter invoices in multiple systems. Each system may have been created by and may now be maintained by multiple in-house teams and outsourcing partners.

Due to historic merger and acquisition activity or fragmented technology purchases, many client organizations end up with duplicate/redundant systems for the same function that are linked together with complex webs of integration and datasynchronization solutions.

HANDLING SEASONAL SPIKES VIA THE CLOUD

Infosys helped a retailer expand their Web infrastructure to the cloud to handle dynamic loads that would result from seasonal shopping cycles or periodic events like specific marketing campaigns. This additional on-demand support helped to manage spikes up to 10 times the normal transaction volume with no appreciable impact to end users, all at a fraction of the cost of hosting additional servers in-house. The integration effort involved in extending the inhouse hosted Web servers to the cloud lasted just a few weeks, including all cycles of various levels of testing.

In this TaaS example, the company earned significant reduction in overall cost of operations by leveraging cloud services to extend capacity when it was needed most and not by “hosting the most all the time.”

EXECUTION AS A SERVICE (EAAS)

The EaaS layer focuses on both the technology and the people who interact with that technology to execute a single step such as invoice data entry in an end-to-end business process such as Procure to Pay in a cloud environment.

In the world of outsourcing, the lines

Work product of the IAOP Cloud Computing chapter

Moving a single step in an end-to-end business process to the cloud

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ADVERTORIAL

Industrialize and innovate

By Jo G. DeBlaere, chief operating officer—Accenture and Jeffrey D. Osborne, chief performance officer—BPO Industrialization: It isn’t a pretty word, especially when spoken in the same breath as “services,” a word that carries connotations of customization and a personal touch. After all, “industrialization” shows up for work not in a business suit but in a pair of overalls. But then, when applied to the outsourcing of services and business processes, that’s precisely the source of its value.

The industrialization of any activity represents a relentless drive to discover the essence of how that activity is optimally done, and then to do it in exactly the same way every time. It breaks a task or capability into smaller components, optimizes them, eliminates redundancies, automates and standardizes wherever possible, and then drives the work itself to the most costeffective and competent workforce available.

The result is that companies get to mitigate the biggest threat to a business: the unknown.

Outsourcing has succeeded because of its ability to reduce risk, drive standardization, increase productivity, and improve reliability and predictability within the domains it touches. In other words, where outsourcing has been successful, it has been so because of its ability to industrialize assets, capabilities, functions and tasks.

Not just standard work, but the right work Industrialization is often thought of as a way to standardize production or processes. That’s part of the picture, but only one part. Using standardized production methods, a company could make the very best concrete lifejacket in the world—faster, cheaper, and better—but it obviously wouldn’t have any practical value.

In much the same way, a company can standardize IT infrastructure and applications using a one-to-many platform or through rationalized technologies. But unless standard technologies are aligned with the correct business processes, the standardization does not produce sufficient business value. True industrialization goes closer to the heart of the matter—taking a company beyond “standard” work to efficient and effective work.

But just how does industrialization work exactly? The companies that have been most successful in driving business value through industrialized outsourcing of business processes have leveraged the following principles.

Apply lean and Six Sigma principles to the services environment The majority of companies do not spend the time or money to look in detail at the efficiency of their non-core business processes. An outsourcing provider, however, can give these kinds of processes an end-to-end review and apply so-called “lean” principles and Six Sigma approaches to drive time and waste out of all the handoffs, and to eliminate needless variations when they occur.

To innovate, get the noise out of the system In an outsourcing environment, innovation is actually rooted in industrialization. The inefficiencies in processes and functions— redundancies, delays, performance issues, multiple operating models, and the like— constitute “noise” that has to be eliminated if the voice of innovation is to be heard. If a company can get the operating environment stabilized and running optimally, it can look beyond today’s urgencies toward the innovations of tomorrow. It will also have savings generated by those efficiencies that can be plowed back into making new ideas actionable.

Focus on what’s common, not only what’s different Often, the biggest sticking point that companies face internally as they move to adopt advanced industrialization principles is the belief that their operations are somehow different from the norm. The key is not letting pockets of uniqueness get in the way of improving those parts of the business that really can benefit from solutions and approaches that have been tested in the fires of experience with multiple companies.

Industrialization lets a company use common approaches where those are workable, and particular ones where those are appropriate.

Measure outcomes, not inputs Challenging though it may be, executives often need to change their management mindsets when working with an outsourcing provider.

If they try to stay “down in the weeds” and manage the inputs—every detail of how the process is delivered—they may simply add more noise to the system and disrupt an otherwise smoothly flowing industrialized process.

The answer to the problem of managing inputs is simply stated but sometimes difficult to achieve: trust. The establishment of trust is essential to driving greater value from industrialization.

Trust the process, not only the people What a company relying on an outsourcing provider really needs to do, in short, is put faith in the reputation and qualifications of the provider’s industrialized model, not simply the personalities who designed or are implementing the model – trust the process, in other words, not just the people.

Conclusion Many business activities and processes now being industrialized within contemporary outsourcing solutions were once considered out of the reach of effective management.

But industrialization is enabling executives to look with more penetrating insight into their operations and processes, and freeing their organizations to think and act in more innovative ways.

That which can be made repeatable and predictable needs to be made so, leaving the considerable space that remains as the foundation from which to innovate and grow.

This article is based on ‘Industrialize and Innovate,’ which originally appeared in the January, 2010 issue of Outlook, an Accenture publication. Used with permission.

You can read the full article at: www.accenture.com/ industrializeandinnovate

Š2010 Accenture. All rights reserved.

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CLOUD COMPUTING Continued from page 17 »

USING THE CLOUD TO IMPROVE CUSTOMER SERVICE WHILE ENHANCING CASH FLOW

The leasing division of a major supplier of office equipment was looking for ways to make their company “easy to do business with” and improve customer satisfaction while reducing operating cost in their invoice-to-cash process.

They looked at ways to achieve that objective by using cloud-computing technologies combined with best-in-class processes. By using Genpact’s Web-based Electronic Invoice Presentment and Payment (EIPP) solution (an example of EaaS) for interacting with customers, they have been able to reduce operating costs while improving customer satisfaction and accelerating cash flow: • The client was experiencing inefficiencies because of the number of legacy systems that didn’t talk to each other. By using EIPP to consolidate all legacy billing systems, they were able to reduce the number of invoices by 20% and significantly decrease the cost associated with processing the invoices.

• Customer self-service enablement. This simple feature drove a reduction in their operational cost by 20% and their call-center volume by 35%. Further, customers utilizing EIPP paid 20 days faster, thus accelerating cash flow and driving Days Sales Outstanding (DSO) down.

• Providing customers the ability to dispute a portion of the bill but pay the majority of it. Using the online payment and dispute capabilities of EIPP, our client was able to receive payment within a single bill cycle versus the multiple bill cycles often required when resolving disputes through phone and e-mail.

• The line level function enabled the customer to electronically indicate how cash is to be applied during the payment process. This significantly reduced the errors often seen in cash application when done manually.

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MANAGING PROCESS INFLEXIBILITY

These fragmented systems inevitably lead to operator confusion and errors that may or may not be caught and remediated. However, the true risk is even more insidious. Complex webs of integration make it extremely difficult to modify business processes in response to market and/or regulatory changes because each change requires timeconsuming remapping of the fragmented infrastructure to determine the true impact of the proposed change. The resultant process inflexibility can be a critical competitive disadvantage in markets characterized by rapid change.

Executives we spoke with often point out that this problem is nothing new and has nothing to do with cloud computing.

They are right about the problem not being new. However, some of the leading cloud-computing solutions focused on enterprise customers make it simpler than ever before to finally break through this process-inflexibility trap.

In a cloud-computing environment, a In a rapidly changing environment, process flexibility is a key contributor to success

Work product of the IAOP Cloud Computing chapter

new user interface (UI) that consolidates and rationalizes processes can be developed in days or weeks, leveraging built-in standards-compliant UI design capabilities. As necessary, that new UI can be linked to existing legacy systems by flexible standards-compliant integration solutions. Once developed, these hybrid cloud solutions make it much easier to make ongoing changes to the business process and corresponding user interfaces, thereby enabling process flexibility and its associated business benefits.

Thus, the immediate tactical benefits for the EaaS layer come from reduced support costs, training expenses and consequences of human error, while the longer-term strategic benefits come from ongoing process flexibility. Because of the focus on consolidating similar but essentially duplicate systems and business processes that may be run by different divisions of a firm, this layer is best characterized by the mantra “Consolidate systems, eliminate borders.”

CLOUD COMPUTING

COORDINATION AS A SERVICE (CAAS)

An end-to-end business process such as Procure-to-Pay or claims processing may consist of multiple steps such as invoice data entry or claims adjudication. While the EaaS

layer focuses on shifting each of these individual steps to the cloud, the CaaS layer focuses on leveraging the cloud to optimize the complete end-to-end process.

Work product of the IAOP Cloud Computing chapter

Moving an end-to-end process or the coordinating logic of the process to the cloud

THE $80-M DATA-ENTRY QUALITY PROBLEM

At a leading health insurance provider, the end-to-end claims business process consisted of claims data entry, adjudication, payment and reconciliation. Parts of each of these steps were outsourced to multiple BPO providers while parts were maintained in-house. The IT systems used in each of these steps were also highly fragmented, with certain systems being maintained by outsourcing providers on their premises while others are maintained by the client with in-house users accessing the systems over the intranet and outsourcing providers accessing the same systems over a virtual private network. Due to the fragmented pointto-point coordination of each step of

the end-to-end process, a given claim could be data-entered by one of many providers, adjudicated at one of multiple centers, paid via multiple processors and then any reconciliation requests handled by multiple international call centers. The corporate COO knew that errors in claims data entry were forcing manual adjudication rather than automatic, causing incorrect payments and triggering expensive reconciliation calls and even provider audits. He conservatively estimated that dataentry errors in a single upstream step of the process were costing more than $80M annually in the other downstream steps of the process. However, due to the fragmented point-to-point coordination

of the claims process, it was extremely difficult to track root causes across the steps and optimize the global process rather than each constituent local step.

Once again this is not a new problem, and leading cloud platforms are making it easier than ever before to solve this.

These cloud solutions simplify businessprocess coordination by providing flexible process-mapping and execution capabilities backed by standardscompliant integration with existing steps and systems. This simplifies an evolution towards point-to-process coordination where existing systems and process steps are integrated with an overarching process executed on the cloud.

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CLOUD COMPUTING Continued from page 21 »

COORDINATING CONTRACTS ON THE CLOUD

A leading global automotive manufacturing giant with customers across continents had experienced challenges in handling contract administration using a manual “Excel sheets and paper contracts” process.

Genpact deployed a hosted workflow-based solution to provide CaaS across multi-input, tracking and processing of contracts by digitizing documents and using a business processmanagement solution for on-time shipment of parts and invoicing. Additional benefits included: • Controlled work distribution among processors and online-status visibility to all stakeholders across the organization • Optimized inventory levels owing to better tracking of shipments at part number level using standards-based interfaces • Optical character recognition and workflows were used to increase automation levels of contract management that resulted in productivity gains of up to 50% • Improved billing resulting from better ontime delivery performance

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LEVERAGING THE CLOUD TO COORDINATE A COMPLEX, FRAGMENTED PROCESS AT A CONTACT CENTER

In the enterprise contact-center space, the process of resolving customerservice inquiries often requires both synchronous and asynchronous coordination between the customer, disparate enterprise systems and customer-service agents into a continuous end-to-end customer experience. For SpeechCycle, a leader in Customer Experience Management solutions, CaaS starts with recognizing customer intent via true naturallanguage understanding and then translating that understanding into sequences of execution activities that form an end-to-end business process.

For example, a customer of an Internet broadband service provider contacts their vendor because their e-mail does not work. The contact is initiated via phone. SpeechCycle’s natural-language system answers and prompts the customer to speak the reason of their call. While processing the customer’s concern, say, e-mail is not working, it simultaneously initiates requests to multiple systems. These include a Customer Relationship Management (CRM) system to extract the customer account specifics, a database for the customer contact history, a diagnostic system to determine the status of the customer modem and an outage database to determine if there is service disruption.

If the result is that the e-mail does not work because the modem is offline, the system then is able to respond to the customer saying, “Your e-mail does not

work because your modem is offline” and begins a new process to resolve the problem through a series of repair actions. If the action is successful, there is an e-mail follow-up for a customer survey. Otherwise, the customer is directed to a live agent who has a complete interaction history and is able to schedule a trouble ticket for an onsite repair call.

SpeechCycle deploys their RPA Express offering on Microsoft’s Windows Azure platform to help client organizations stitch together onpremise, enterprise and third-party tools around a carefully choreographed series of required interactions, all with the goal of achieving a superior customer experience. The cloud-based model allows SpeechCycle to rapidly modify and extend business processes to accommodate changes in customerservice offerings, problem-resolution protocols, upgrades to various systems and integrations with downstream processes executed by other service providers to the client organization.

The CaaS layer thus enables improved visibility into and operational control of the end-to-end process and offers more impactful process flexibility than can be achieved via the EaaS layer alone. This layer fundamentally allows enterprises to deliver on the mantra “Seek a global optimum rather than local optima.”

As every process engineer knows, local efficiencies can easily hide global inefficiencies and thus a global optimum can deliver far greater business benefits.

CLOUD COMPUTING INNOVATION AS A SERVICE (INAAS)

The previous layers map relatively cleanly into the cloud-computing diagrams created by Gartner and others.

The IAOP Cloud Computing chapter has defined another layer beyond those suggested by most commentators in this space, and some of us believe this

InaaS layer holds great promise for nextlevel business performance and impact.

This layer consists of third-party or outsourcing-provider solutions that can generate significant business value by leveraging or improving cloud-enabled business processes.

Work product of the IAOP Cloud Computing chapter

Shifting “start from scratch innovation” to “built on platform innovation”

ENABLING ADD-ON INNOVATION

In the enterprise applications space, established products from companies like SAP, Oracle and Microsoft expose business data in well-defined formats and through standard interfaces, enabling an ecosystem of third-party applications.

For example, a third-party regulatory compliance solution like Virsa (later acquired by SAP) could be designed to be complementary to mySAP ERP, such that users of this product could easily add on Virsa without spending inordinate amounts of time and money on integrating the two software products.

What enterprise applications providers did to enable standardized interfaces to business data, cloud computing can easily do for business processes. Consider a world where any business process executed on a cloud-computing platform like Azure could be enhanced by the addition of third-party solutions designed to seamlessly work with processes implemented on that platform in a standards-compliant manner. You don’t really have to stretch your imagination, as this world is close to reality.

In a recent proof of concept (POC),

Accenture and BeyondCore were able to seamlessly use BeyondCore Insight’s advanced-analytics capabilities to rapidly improve the quality of an invoice dataentry step within a much larger end-toend process outsourced by Microsoft to Accenture. The InaaS analytics solution had been pre-tested to work on Microsoft Azure while Accenture created an EaaS invoice data-entry capability based on the Azure platform for the POC. Moving the entire end-to-end process to the cloud was not within the scope of the POC but that would have been a perfect example of CaaS. The InaaS solution was able to accept the output of the invoice dataentry system built on Azure, analyze the data to produce actionable insights and deliver the resultant reports via a Microsoft Office Live workspace without requiring any customization or custom integration. The total time required to make the two solutions work together was just a couple of hours.

Of course, it is important to note that an InaaS solution produces “actionable” insight, but innovation does not occur until the insights are acted upon.

Continued to page 28 »

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Outsourcing Insights Increasing a multi-line insurer's debt recoveries by 30 percent while reducing the time taken for settlement of claims by 40 percent This client is a leading provider of insurance products in Europe with substantial business entities and units located around the world.

In the highly competitive insurance business where the bottom line has become a singular focus and customers are less loyal than ever, our client's challenge was to efficiently manage and improve its debt recoveries collections, while enhancing the customer experience.

In 2004, the company recognized that, by outsourcing the entire motor claims recovery and dispute management operations to a third party provider, it will be able to tap into a team of trained insurance specialists and leverage proven tools, methodologies and quality assurance processes. This would in turn, allow management and staff to increase its focus on its core business.

In the scope for transformation included key processes within the client's general insurance business debt recoveries collections and dispute management of claims.

The WNS Solution WNS focused on transforming the key processes of the client's motor claims recovery business to eliminate system inefficiencies and reduce the claim lifecycle. By re-engineering the delivery teams to include insurance specialists, creating activity-based teams, implementing distributed workflow processes, introducing Six Sigma initiatives establishing effective communication frameworks and designing efficient tracking systems, WNS was able to minimize costs and increase revenue, while improving quality and efficiency.

Key features of the WNS solution Realigning processes by type and complexity, thus increasing efficiency and reducing claim processing time

Restructuring the team for maximum effectiveness by appointing specialist groups according to skill-sets Introducing a new customer ownership model wherein WNS implemented a communications model whereby a single team member was responsible for customer communications Maximizing productivity per resource by implementing LEAN Six Sigma programs to ensure real time inputs and motivate the teams to achieve established targets

Reducing claims cycle time by implementing a process to ensure that claims were automatically sent to the WNS team within three days of initiation, thus not only reducing elapsed time, but also avoiding loss of claims in the system Implementing a daily dashboard whereby key metrics related to claims were farmed daily in order to accurately capture data and report it in real time Restructuring and re-engineering processes supporting claims tagged for litigation to ensure that their lifecycle was reduced. The speed at which a claim was sent to legal counsel was increased by 90 percent.

Extending Your Enterprise The WNS team significantly increased daily collections for its client and reduced claim lifecycle time resulting in greatly elevated customer satisfaction levels. Moreover, WNS was able to add value by generating additional business through increased collections per year, significantly impacting the business unit's bottom line.

Benefits delivered by the WNS team

Increasing daily collections by 30 percent within the first year resulting in significant financial advantages for business Reducing claims settlement time by almost 40 percent from 212 days to less than 130 days, resulting in higher customer satisfaction Increasing the speed at which claims were sent to legal counsel by 90 percent from over 25 days to less than two days immediately after transition Generating additional business of 5 percent amounting to GBP 3.6 million in collections per year by identifying revenue leakages caused by claims that were not being registered in the system.

About WNS WNS is a leading global business process outsourcing company. Deep industry and business process knowledge, a partnership approach, comprehensive service offering and a proven track record enables WNS to deliver business value to the world’s leading companies. WNS is passionate about building a market leading company valued by our clients, employees, business partners, investors and communities.

To learn how we can help extend your enterprise, write to us at info@wns.com

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CLOUD COMPUTING Continued from page 25 » TRANSFORMING HR MANAGEMENT LEVERAGING THE CLOUD

BY

An engineering projects company had experienced rapid organic and acquisition-based growth over a four-year period, resulting in an organization of 20,000+ employees spread over 15 countries. The group comprised three different corporate entities with overlapping offices and disparate systems that gave rise to challenges with their HR management processes.

As part of the solution, Genpact deployed a unified HRO platform on an enterprise-wide private cloud infrastructure that incorporated best practice work flows and standardized their usage across the organization. Some specific issues addressed were as follows: ••Workforce Planning Tool that helped them link projects in the pipeline to available skill sets.

This resulted in lower hiring costs and attrition because people working on projects nearing completion could easily be redeployed to the next project. This helped the organization reduce external hiring needs and also helped curb attrition upon project decommissioning.

••Improved people cost reporting and controls ••Enabled Workforce Analytics to help management make fact-based talent decisions ••Implemented a Leave & Exit Management system across group companies to control payroll leakages and ensure accurate headcount reporting In this specific situation, a cloud-enabled BPO solution was used for: ••Rapid deployment of end-to-end processes across all relevant functional areas (recruitment, learning and development, workforce administration, compensation and benefits, performance management system, payroll, help desk, human-resources analytics) ••Fast time-to-market and drastic reduction in deployment cost ••Improved controls and business insight through precise analytics that provided required information for workforce planning and deployment

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Work product of the IAOP Cloud Computing chapter

The InaaS layer builds on top of the other layers such as EaaS to help improve them

THE WORLD OF IDEAS ALWAYS BEATS YOUR BEST IDEAS

When a business process is locked up in legacy systems, only your own employees and some trusted providers can create innovative solutions for the process.

However, if there are standards-compliant interfaces to the business process, then innovators around the world can create solutions that can be applied on-demand without customization to add hitherto unimagined benefits to the process.

Examples such as Facebook-MySpace and Windows-Apple demonstrate that a platform allowing innovators from around the world to easily add value to it will always beat one that is insulated from outside innovation. Thus, the mantra of this layer is “The world of ideas always beats your best ideas.” The InaaS layer enables predictable and rapid totalcost-of-ownership reduction through innovation as a systematic, reliable and automated service which enhances traditional consulting and makes it more effective and efficient. InaaS solutions exhibit the following characteristics: •Produce actionable insights that either create additional business value such as product pricing optimization or help improve the underlying business

process such as quality improvement •Have standards-compliant inputs and outputs which allow the InaaS solutions to interact with the underlying process or allow InaaS solutions to build on top of other InaaS solutions like Lego blocks •Do not require customization. The InaaS solutions should leverage techniques like examining XML input data to automatically configure internal data structures, ensuring flexibility and minimizing the need for customization.

•Require minimal or no integration effort. The InaaS solutions should have standards-compliant open interfaces that work effortlessly like a standardized plug and socket.

While the InaaS layer in this example was interacting with an EaaS solution, it could have easily been leveraged by a CaaS layer as in the SpeechCycle case.

Here, exposing the business processes to public innovation is the game-changing concept enabled by cloud-computing technologies. The key value-creator is not the cloud technology itself but the open collaboration and innovation that it enables.

CLOUD COMPUTING Work product of the IAOP Cloud Computing chapter RAPID INNOVATION VIA THE CLOUD

The Microsoft-Accenture-BeyondCore example was a form of InaaS because it met each of these required characteristics

PUTTING IT ALL TOGETHER

The greatest impact of cloud computing in the medium term may be its potential for catalyzing process-innovation and flexibility as exemplified in the MicrosoftAccenture-BeyondCore proof of concept.

Here, the invoice data-entry screen was designed in a flexible manner using Azure’s associated design tools and could be changed easily. The standardscompliant integration with a flexible data repository also simplified the task of making changes to the business process and the associated user interface. The invoices entered via this EaaS solution

were stored in a TaaS data repository.

As noted earlier, the whole end-to-end process could have been moved to the cloud, in which case this would have just been a step in a broader CaaS solution.

Samples of invoices were extracted from the data repository and transferred via standard interfaces to BeyondCore Insight, an InaaS solution.

The InaaS solution analyzed the data to identify operator- and field-level error rates as well as underlying error patterns.

In this specific POC, automated analysis revealed that a specific percentage of

Infosys helped one of its leading insurance provider clients modernize their legacy policycreation infrastructure by leveraging a flexible cloud-computing environment. A key focus of the initial POC was how the BeyondCore Insight InaaS solution could enable rapid processinnovation and optimization.

Even without any prior knowledge of the client process and data structures, the InaaS solution was able to interact with the client’s policy data and produce actionable insights in minutes.

The complete “integration” of the EaaS policy system and the InaaS solution took less than two hours from start to finish and did not require traditional integration efforts. The resultant actionable information enabling rapid processimprovement included: ••Error rates for each operator ••Unique error patterns for each operator, thus enabling insight-driven operator-specific training ••Analysis of which policy fields were most likely to have errors, thus enabling targeted process and user-interface improvement efforts. For example, just three out of 30 fields counted for 37% of overall errors. the errors in invoice amount were from negative amounts being entered as positive and that these errors were always caused by a specific group of operators. In a production environment, such a pattern may imply that these specific operators were confusing debits and credits while the other operators were not.

FROM ACTIONABLE INSIGHT TO ACTION

Such a pattern report could be fed back to Accenture and leveraged by them to improve the quality of operations and bring further innovation to the end-toend process. For example, they might use these insights to provide operator-specific training. In addition, to further refine the process or user interfaces to minimize the risk of such errors in the future, they might add a check to see if the debit/credit information matches whether the invoice amount is negative or positive. Due to the relative ease of changing a user interface designed on top of a cloud-computing

platform like Azure, such changes could be implemented in days, not weeks. They might also change the process such that credits are processed in a different way or by different operators to avoid the debit/ credit confusion. Some of the latest cloudcomputing technologies vastly, simply process redesign by exposing graphical interfaces that generate the relevant code changes as appropriate.

The process could be re-evaluated after the operator retraining and process or user interface redesign to quantify the business impact of the changes and

reveal new actionable patterns of errors.

The “always current and continuously upgraded” nature of cloud applications significantly simplifies the challenge of continuously improving the business process to maximize the impact it can deliver.

The key here is that a complete cycle of testing an operator and revealing actionable insights specific to that operator may require just minutes. The cycle from testing to actionable insights, to operator retraining, to user interface or businessContinued to page 31 »

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Because Errors Have Consequences guaranteed@beyondcore.com | www.beyondcore.com | 1.408.786.5119

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10% quality improvement in just two weeks.

CLOUD COMPUTING Continued from page 29 »

Work product of the IAOP Cloud Computing chapter

Rapid cycles of continuous process-improvement enabled by the cloud

process redesign may also require just days or weeks. Such rapid cycles of iterative improvement have been demonstrated to be vastly superior to traditional methods in domains ranging from product design to software programming. For example, in software programming, the iterative agile programming approach reduced

development costs while reducing timeto-market as well as project risk. It is not often that a methodology breaks the traditional tradeoff relationship between cost-time-risk and allows improved results on all three metrics. Appropriate use of cloud-computing technologies can similarly transform the way we achieve

business-process innovation.

The complete story described above remains theoretical today, but the critical building blocks of the vision have already been tested out in separate production or proof-of-concept engagements. Theory will become practice in the very near future.

scalable manner. This focus is perfectly complementary to cloud-computing technologies and together, these trends naturally lead to true business-process utilities or BPaaS. We can’t predict exactly how cloud computing will reshape the outsourcing ecosystem, but we can be confident that existing players and entrepreneurs from both disciplines

will challenge us with innovative and transformative solutions that span both spaces. Those who adopt these new approaches are likely to emerge as tomorrow’s market leaders, while those who still see outsourcing through the lens of labor arbitrage alone may well fade into irrelevance. Indeed, the next few years will be interesting.

FINAL THOUGHTS

So what will be the true impact of cloud computing on the outsourcing ecosystem? It is clear that Business Process as a Service (BPaaS) will be a massive new market. Some of the largest outsourcing providers have already built advanced business-process platforms where they are working to serve multiple clients in a consistent and

Ben Pring, et al. “Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014” (Gartner 6/2/2010 ID: G00200833) The original framework was authored by Arijit Sengupta from BeyondCore. The current revision includes significant contributions from Elliott Ichimura from Microsoft, James Harris from Accenture, JP Balakrishnan from Infosys, Shantanu Ghosh from Genpact and executives from leading outsourcing customers and providers. i

ii

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OUTSOURCING TO EUROPE

Central/Eastern Europe: How to Get Ahead in Global Outsourcing New research bares the strengths and weaknesses of the world’s safest outsourcing spot Central/Eastern Europe is the world’s In the last issue, we showed how outsourcing professionals. safest and most secure outsourcing wages and available workforce are two TO KNOW THE region in the world. This is based on of the underlying weaknesses of the U.S. GETTING a 2010 survey conducted by the Black outsourcing community when viewed RESPONDENTS Book of Outsourcing on 3100 corporate against the global scale. Let’s see if Central/ leaders, including around 400 outsourcing Eastern Europe fares any different and how Demographics are presented in five customers. Cost efficiency is also one of much by taking a look at the perception ways to give a clear picture of the survey its strongest points, based on the same of the main players in the business: the participants. survey. Clearly, the region is emerging as one of the Primary Industry strongest global sourcing spots in the world.

1.67% What is it about Central/ Construction/Architecture/Engineering Eastern Europe that Education/Non-Profit 3.00% gives outsourcing clients 1.00% confidence to partner with Entertainment/Media regional providers in the Financial Services 11.67% high-risk business?

Healthcare/Medical/Pharmaceutical/Bio-Tech 5.33% To answer this question, 0.33% Globalization Today, in Hospitality conjunction with the Information Technology (Including: Hardware/Software/Services) 33.67% International Association of 1.33% Outsourcing Professionals Government (IAOP), carried out a new Manufacturing 3.00% proprietary research, this 1.67% time measuring four key Media (Including: Advertising/PR) factors about the Central/ Professional Services (i.e. Accounting, Consulting, Insurance, Legal, 17.67% Eastern European global Real Estate) sourcing market: positive 3.00% versus negative favorability, Retail (Including: Wholesaler/Distributor/Consumer Goods) awareness level, top- Telecom 5.00% of-mind awareness and Transportation/Utilities 1.33% perceived strengths and Other 10.00% weaknesses.

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GlobalizationToday September 2010

OUTSOURCING TO EUROPE

Role Customer Provider Advisor Analyst/Press/Academic

20.33% 46.00% 27.00% 6.33%

Total Annual Revenues Less than $10 million $10 million but less than $100 million $100 million but less than $500 million $500 million but less than $1 billion $1 billion but less than $5 billion $5 billion or Greater

23.33% 15.00% 10.67% 5.33% 14.33% 31.00%

Number of Employees Less than 100 100-500 501-1.000 1.001-5.000 5.001-10.000 10.001-20.000 20.001-30.000 30.001-40.000 Over 40.000

22.33% 8.67% 5.00% 12.67% 7.00% 7.67% 4.67% 3.00% 28.67%

Projected Annual Outsourcing Spending Up to $1 million $1 million up to $10 million $10 million up to $50 million $50 million up to $100 million $100 million up to $500 million $500 million up to $1 billion $1billion or more

39.67% 15.67% 13.67% 9.67% 11.67% 3.67% 5.67% Continued to page 37 Âť

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NEWS FEED

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OUTSOURCING TO EUROPE Continued from page 33 »

65.22%

Perception is considered a valuable indicator in measuring the performance of Central/Eastern Europe as an outsourcing provider. Two factors related to perception are measured: regional perception and regional awareness.

Respondents were asked, “Rate [Central/Eastern Europe] based on your perception of their outsourcing performance.” They were given the option to answer “Do not know” if they are completely unfamiliar with the region.

Regional awareness is merely defined

TOP-OF-MIND AWARENESS: WHICH CENTRAL/EASTERN EUROPEAN OUTSOURCING COMPANIES HAVE HAD THE MOST SUCCESS IN BRANDING?

We asked respondents, “When you think of [Central/Eastern Europe], which outsourcing companies do you think of?”

The companies mentioned are as follows, with the larger names representing those mentioned most frequently:

are actually aware of the region as an outsourcing spot?

Based on the study, 77.60% of the respondents are aware of Eastern/Central Europe as an outsourcing destination.

Around 23 in every 100 respondents are unaware of the region’s outsourcing performance.

Familiarity of the Eastern/Central European outsourcing market is high but still leaves a lot to be desired. If current customer satisfaction is to be taken into account, the region holds a lot of promise. Companies should explore more avenues to make the region known as a global sourcing destination to potential partners.

IBM Capgemini Accenture HP TCS CSC

12.07% 12.07% 9.84% 8.19% 2.59% 2.59%

Services

Any region relies on the awareness of outsourcers of it as a potential outsourcing partner. If a client is unaware of Central/Eastern Europe as an outsourcing destination, by default, it will not be included among the client’s list of possible outsourcing providers. In turn, the region is unable to obtain the business.

While respondents who are familiar with Central/Eastern Europe harbor a favorable perception of the region, how many of the total number of respondents

5.31%

77.60%

THE AWARENESS INDEX: HAS CENTRAL/EASTERN EUROPE SCRATCHED THE SURFACE YET?

by those who have at least the vaguest idea of Central/Eastern Europe’s outsourcing performance. The level of familiarity has no bearing. Regional perception, on the other hand, delves a little deeper into the outlook of the respondents toward the region. Those “feelings” are quantified and presented in a sliding scale between strongly unfavorable and strongly favorable.

This is an illustration of how perception of the Central/Eastern European region leans heavily towards the favorable.

Respondents who perceive the region unfavorably are far outnumbered by those who perceive it favorably.

EPAM

CENTRAL/EASTERN EUROPE IN THE EYES OF OUTSOURCING CLIENTS

IKON

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OUTSOURCING TO EUROPE GETTING PERSONAL: WHAT PEOPLE LIKE YOU THINK OF CENTRAL/EASTERN EUROPE

By seeing how individual groups that come from a number of industries answered the question, we can get results from an entirely different perspective. The graph that follows illustrates how each of the 41 demographic subsets we tracked responded with regard to their awareness and feelings toward Central/Eastern Europe as an outsourcing region.

Construction/Architecture/Engineering Education/Non-Profit Entertainment/Media Financial Services Healthcare/Medical/Pharmaceutical/Bio-Tech Hospitality Information Technology (Including: Hardware/Software/ Services) Government Manufacturing Media (Including: Advertising/PR) Professional Services (i.e. Accounting, Consulting, Insurance, Legal, Real Estate) Retail (Including: Wholesaler/Distributor/Consumer Goods) Telecom Transportation/Utilities (i.e. Energy/Water) Other

strengths and weaknesses.

The following chart shows Central/ Eastern Europe’s “positive” and “negative” scores in relation to key outsourcing buying factors. Starting from far left to far right, the key buying factors are ordered from the biggest strength (cultural compatibility) to the biggest weakness (wages).

The graph shows that perceived strengths exceed perceived weaknesses in five out of 12 categories. And in all seven categories showing a net positive score, the

PERCEIVED STRENGTHS AND WEAKNESSES: WAGES, AVAILABILITY TROUBLES HAMPER CENTRAL/ EASTERN EUROPEAN SUCCESS

Every region has its own strengths and weaknesses, and Central/Eastern Europe is no exception. Strong and weak points may be relative to various factors such as the need for specific applications, among others. Respondents were asked about what they think are the region’s biggest

40.0% 17.5%

36.7%

33.0%

13.1%

32.0%

11.8%

UNDERSTANDING BETTER: PERCEPTION OF CENTRAL/EASTERN EUROPE STRENGTHS AND WEAKNESSES BY SEGMENT

The chart on the next page gives us a clear picture as to the outlook of 41 surveyed demographic groups on the strengths and weaknesses of Central/Eastern Europe,

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GlobalizationToday September 2010

Unfavorable Index

Primary Industry

26.9%

13.5%

10.9%

26.5% 27.9%

66.67% 60.00% 33.33% 47.62% 63.64% 0.00% 74.36%

60.00% 55.56% 100.00% 61.76% 73.33% 0.00% 80.41%

25.00% 0.00% 0.00% 2.86%

50.00% 62.50% 33.33% 68.57%

100.00% 80.00% 60.00% 66.04%

0.00%

40.00%

71.43%

0.00% 0.00% 5.00%

66.67% 50.00% 65.00%

60.00% 50.00% 68.97%

differential was in double digits.

Problematic areas were seen under available workforce, innovation, language, regulation and incentives and wages, wherein respondents’ unfavorable perceptions outweighed the favorable. The biggest weakness of the Central/Eastern Europe outsourcing community is mostly on the lack of available staff and high wages compared to other destinations. In that sense, it faces almost the same problems as the United States.

38.0% 15.8%

taking into consideration vital buying factors. The biggest strength is labeled 1; the second labeled 2 and so on all the way down to the region’s biggest weakness at 11.

It is clear that when it comes to the quality of the workforce, safety and education, outsourcers would not think twice about going to Central/

Awareness Index

0.00% 0.00% 0.00% 14.29% 0.00% 0.00% 6.41%

35.8% 16.3%

Favorable Index

11.4%

15.4%

33.2% 14.8%

8.84%

20.9%

Eastern European companies. Cultural compatibility and geographic proximity do not present major problems either.

However, such as in the case with the United States, wages and available workforce remain important determinants of the competitiveness of an outsourcing region. Outsourcing leaders such as India have great advantage in these areas.

OUTSOURCING TO EUROPE Time Zone

Wages

5 7 4 6

1 7 1 4

10 7 9 9

7 1 10 8 11 3 9 7 7 3 9

5 4 6 8 8 3 6 7 2 3 1

1 4 5 3 4 1 5 2 6 1 3

10 10 11 3 4 9 10 2 10 10 9

6 3 2 4

10 9 9 11

5 6 6 6

3 5 3 3

7 11 11 6

6 7 7 5 8 7

2 2 3 4 6 3

10 10 10 8 8 8

7 5 2 5 5 6

3 6 3 2 2 3

11 11 9 11 11 9

5 9 5 7 7 8 9 6 10

4 8 11 8 9 5 1 3 7

2 1 1 5 5 4 8 6 4

9 10 10 10 11 8 6 6 8

6 6 8 6 8 5 1 3 6

3 7 1 2 3 7 1 2 3

10 11 5 9 10 10 10 6 9

5 1 1 2

8 8 9 7

7 5 8 11

2 1 6 5

11 11 7 9

6 4 4 6

2 6 2 4

10 10 10 7

1 5 2

9 11 8

4 3 3

7 1 3

8 7 8

6 7 5

5 7 5

10 3 11

Available Workforce

Cultural Compatibility

Education

Geographic Proximity

Innovation

Language

Quality of Workforce

Regulation and Incentives

Safety

5 10 4 11

8 4 11 1

1 1 9 3

8 4 4 2

1 4 4 8

5 2 1 7

1 2 4 4

10 11 1 10

11 3 9 3 2 3 11 7 11 3 7

3 10 1 2 7 11 4 2 2 1 2

4 1 4 1 2 3 2 6 4 3 3

1 4 2 8 1 1 2 2 7 3 6

7 4 7 8 10 9 8 10 7 3 11

7 4 7 3 8 3 7 1 4 10 7

6 4 2 3 4 3 1 11 1 3 5

11 10 10 6

1 2 3 4

3 4 1 2

2 1 5 1

8 8 8 6

8 7 7 6

9 9 11 9 8 11

4 3 3 1 4 1

1 1 3 5 2 5

5 4 1 2 1 2

7 8 8 9 7 9

10 4 8 11 6 11 11 11 11

8 3 1 1 3 2 5 6 1

1 2 4 3 2 3 6 3 5

7 5 5 3 1 1 1 1 2

8 9 11 10

2 7 2 1

1 3 4 3

11 10 8

2 2 1

2 5 7

Primary Industry Construction/Architecture/Engineering Education/Non-Profit Entertainment/Media Financial Services Healthcare/Medical/Pharmaceutical/ Hospitality Information Technology Government Manufacturing Media (Including: Advertising/PR) Professional Services Retail (Wholesaler/Distributor/) Telecom Transportation/Utilities Other

Role Customer Provider Advisor Analyst/Press/Academic

Total Annual Revenues Less than $10 million $10 million but less than $100 million $100 million but less than $500 million $500 million but less than $1 billion $1 billion but less than $5 billion $5 billion or Greater

Number of Employees Less than 100 100-500 501-1,000 1,001-5,000 5,001-10,000 10,001-20,000 20,001-30,000 30,001-40,000 Over 40,000

Annual Outsourcing Spending Up to $1 million $1 million up to $10 million $10 million up to $50 million $50 million up to $100 million $100 million up to $500 million $500 million up to $1 billion $1billion or more

*1 = biggest strength; 11 = biggest weakness globalizationtoday.com

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THOUGHT LEADER

SHIFTING ROLES IN A CLOUDY WORLD

By Joseph Hanna

The new role of VARs and channels in the rise of the cloud and SaaS models A recently published AMI Partners research concluded that 200,000 to 250,000 jobs in the business channels will be lost over the next decade as cloud computing takes hold. A number of Software as a Service (SaaS) and cloud-industry experts argue that the channels add limited to no value in the cloud and SaaS delivery models. Is it really time for value-added resellers (VARs) and channels to close shop? How much of a threat is the cloud and SaaS trend to the middlemen of technology?

Without upsetting too many cloud purists, it is safe to say that Infrastructure as a Service (Iaas) is a large component of the trend.

SaaS and IaaS are fundamentally close cousins. SaaS preceded the term “cloud” by a few years and the debate on the channel value in that software delivery model is about five years old. Lessons learned from the SaaS toddler years are applicable to today’s infant cloud.

SPOTTING THE DIFFERENCE

What we learned from SaaS over the past few years is that its ecosystem is fundamentally different from its counterparts in the traditional software delivery models. In an SaaS model, partners don’t take title to the product; there is no inventory or logistics; there is limited contractual activity or billing management and they provide limited, if any, software maintenance or patching services. The real value a channel can add is to provide software-portfolio selection and optimization, business-focused implementation and training and integration and quality-control services to the business users who are the real customers of any technology.

Applying the same framework to the cloud/IaaS world, the channel has no inventory of infrastructure components to manage.

In most cases, they will not manage billing or SLAs nor will they be providing maintenance, patching or upgrades to these systems. And in all likelihood, they will never lay an eye or a hand on the actual infrastructure they are representing and reselling.

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GlobalizationToday September 2010

THE CLOUD IN FOCUS

To quantify the magnitude of the cloud impact to how much hardware is moving through the system, we will use Salesforce.com as an example.

Salesforce provides their flagship sales automation solution to over 75,000 companies using only 2500 servers (according to Salesforce. com CEO Marc Benioff, in a recent presentation to European industry analysts). Contrast this to the traditional model if each company ran their own instance of the software on their own hardware and there would have been at least 75,000 servers moving through the system with all the associated complexities of ordering, customizing, shipping, billing, etc. The statistics from Amazon’s AWS are not much different.

These two examples may represent the extreme side of the spectrum, but even if 25% of such components leverage, the impact is still significant.

As the cloud matures and as the major adoption roadblocks around security and data privacy are eliminated, large VARs who built sophisticated global supply chain networks to move hardware components from vendors to end users will have to reinvent themselves and find different uses for these capabilities.

The diagram above depicts a somewhat traditional inverted pyramid for the technology value chain. Technology is only as valuable as its potential business use and channels are only as valuable as their ability to contribute to that transformation. Computing power and software delivered through the cloud or SaaS still needs to be harnessed through configuration, optimization, integration and testing to be of value to the business users.

THOUGHT LEADER

WHAT’S GOOD TO KNOW

••Darwin had it right all along: it is not the strongest of the species nor the most intelligent that survives, it is the one that is the most adaptable to change. Middlemen with no value-add through original intellectual property are at risk of being squeezed out of the ecosystem.

••Pure-play traditional resellers will need to refocus and climb the value pyramid closer to the business. Channels are only as valuable as their ability to contribute to transforming technology to a business tool.

••Resources currently dedicated to tactical tasks and infrastructure management will need to be redeployed to innovation and intellectual-property creation.

••Cloud channels compensation models will be a contentious issue between vendors and channels. This topic will require proper attention and creativity from both parties.

••The channels will need to adapt and to redefine the “VA” in the “VAR” designation to be successful in a global, cloud-based, commoditized and SaaS-rich technology ecosystem.

DISCOVERING THE CLOUD FORMULA

Since cloud channel-partner margins are determined by their value add, those who are solely focused on the lower end of the pyramid have very limited to no contribution in the new model and their margins will reflect that. Channel partners will be forced to move up the pyramid and closer to the business or to run the risk of becoming extinct in a world where there is no margin in pure distribution and where most of the tactical tasks will be automated by the cloud vendor. Active SaaS blogger Joel York uses a simple formula to conceptualize the idea:

sales force, but that’s a different topic for a different discussion.

Some of the SaaS pioneers including Salesforce.com and Netsuite have introduced successful partner and reseller programs with somewhat attractive compensation structures that other cloud vendors need to examine. Microsoft’s SPLA licensing model, although not true cloud or SaaS by the purists definition, is also a good step in the right direction.

SaaS channel money = SaaS channel value-add x SaaS application customers

Joseph Hanna is vice president of sales and business development at OneNeck IT Services Corporation. Before joining OneNeck, he established and led the North America Oracle Outsourcing division for CSC. With 20 years of experience in technology, consulting and outsourcing, he also spent five years with Oracle Corporation, managing various large implementation projects and has held key technical and management positions with a number of Global 1000 firms across North Africa, the Mediterranean and Asia. Hanna holds a Bachelor of Science degree in Software Engineering and Robotics from Alexandria University, Egypt and an MBA from Duke University.

What is the value add of a traditional pure license or hardware reseller in a cloud model? You guessed it right, almost none.

Hence, the compensation will be nonexistent for these kinds of middlemen in the new world. Partners who do not have a valueadd solution for integration, for specific vertical, for specific local market or the like will be flushed out of the system.

Another hard lesson that was learned from SaaS and will be applicable to cloud/IaaS is that compensating the channels is not as straightforward as it is in the traditional delivery models. Many SaaS vendors are struggling in attracting partners and distribution channels because of this very concern. To complicate the issue further, the vast majority of them are having difficulty designing equitable and attractive compensation packages for their own

RESOURCE BOX

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Special Event - Exclusive to GlobalizationToday

$50,000-a-day BUSINESS BREAKTHROUGH SUPER CONSULTANT JAY ABRAHAM PROVIDES A NEW SLANT ON OUTSOURCING!

Marketing legend Jay Abraham, now turning his sights on outsourcing.

Outsourcing is rapidly becoming one of the most strategically critical areas of a company’s operations. But, if every company does the same thing the same way – even outsourcing, guess what?

Your short term advantages all get minimalized and marginalized.

We decided to try a bold, daring (and some would say audacious) experiment for our readers and the companies you represent.

We contacted famed business growth expert Jay Abraham and asked him to put his highly innovative mind behind coming up with some breakthrough, non-traditional (highly inventive), ways companies could outsource different elements of the business than most of you focus on now.

Why Jay? Well first, NOT because he’s an expert at outsourcing. He is not!

But what Jay IS world-class “masterful” at doing is taking approaches, concepts, strategies, and success processes from the over 465 different industries (Jay has successfully worked for) – and engineering wildly profitable and staggeringly fresh breakthrough concepts that make or save his client companies millions (or multiples thereof).

Also, Jay has personally advised nearly 200 of the world’s top consultants, experts and business authorities. None came to Jay for help with their methodology. They all wanted Jay to help them command greater prices, superior positioning or preeminent market perception.

For example, he’s helped the Deming organization and the world’s leading

1,000 Globalization Today readers will be admitted to a 90 minute tour-de-force re-examination of outsourcing processes, functions, activities and elements in your company.

Register your seat below. (First come, first served.) multi-variable testing company, and the world’s largest litigation strategic consulting company, and top technology companies, manufacturing and on and on. Bottom line? We asked him to look at untapped areas, overlooked opportunities, undervalued possibilities that a traditional minded outsourcing professional may not think about.

If his 25 year track record is any indication, those in attendance will witness some utterly (and unimaginably valuable) new things you can do for your company that will be highly unconventional (and mostly street-smart “entrepreneurial,” not corporate).

Jay’s doing this partially as a challenge.

Partially in hopes he’ll come up with some appealing possibilities your company will want his help engineering.

Either way, it might be the absolutely most fascinating (certainly most unusual) 90 minutes you spend on a conference call this year.

“Probably the finest marketing mind around today.”

~ Success Magazine

“Jay Abraham is the real thing.”

~ Forbes Magazine

“One of the best business minds I’ve met.”

~ Stephen Covey, Author, 7 Habits of Highly Effective People

“Jay knows how to get maximum results from minimum efforts.” ~ Investor Business Daily

“Jay’s innovative and dynamic approaches are the most powerful and practical I have ever seen.”

FrEE SPEcIAl BONuS: All event registrants will receive FrEE Digital copy of Jay’s Best Selling Business Book containing Hundreds of Examples of How His Non-linear Mind Works www.ProfitonPerformance.com/Outsource

~ Brian Tracy

WHAT’S HAPPENING AT THE IAOP WELCOME NEW IAOP MEMBERS The IAOP is pleased to welcome new and renewing corporate and professional members from Acotax; Allstate Insurance; Allyn International Services; ASTRA; Capgemini Consulting; Chubb; Columbia University; CtoJ GmbH; Deluxe Corporation; EquaSiis/EquaTerra; Everest Group; Harleysville Insurance; International Monetary Fund; KelTrust Systems; KPMG; Lender Processing Services; LongerDays. com, LLC Virtual Assistance; Microsoft; Morrison & Foerster; MSF Latin America; Mumbai College/University; N.TEFAC International; NCR Corp.; Neusoft Corporation; NEXEN SPA; Nordea Life & Pensions; Novartis Pharmaceuticals; Pillsbury Winthrop Shaw Pittman; Qantas Airlines; Quiksilver; Richards, Cardinal, Tutzer, Zabala & Zaefferer; Ryerson University; Sears Holdings; Symantec Corporation; The Capital Group of Companies; University of Wales; Williams Lea and Xchanging.

For information on IAOP membership, e-mail sales@IAOP.org.

TAKING THE RIGHT TURN The IAOP heads to the right direction with the newest: a judging panel for the GEO award and a standardized proficiency test for service-delivery professionals, plus more RECENT IAOP ANNOUNCEMENTS

STANDARDIZED TEST SHOWS SIZE AND STRENGTH OF OUTSOURCING REGIONS

The International Association of Outsourcing Professionals (IAOP) launched a new professional certification family for outsourcing service-delivery professionals to demonstrate their proficiency—the new Certified Outsourcing Specialist (COS) designation.

The first to be introduced in this new family is the COS Transaction Processing (COS-TP) certification, with others now being developed for human resources and finance and accounting.

To gain this certification, operators demonstrate their productivity in data entry-oriented tasks common to outsourcing positions through a standardized Web-based test powered by

globalizationtoday.com

47

The 2011 Outsourcing World Summit® Renaissance Esmeralda • Indian Wells, California

February 21-23, 2011

NETWORKING • LATEST TRENDS • NEW STRATEGIES • CASE STUDIES • BEST PRACTICES • IINNOVATION

Embracing Change: How Outsourcing Professionals Can Lead their Companies to Success in this New Outsourcing Landscape Join IAOP and hundreds of outsourcing professionals from around the globe and learn how outsourcing can help create change, enable growth and add value to your organization.

Register at www.IAOP.org

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The global standard-setting organization and advocate for the outsourcing profession.

WHAT’S HAPPENING AT THE IAOP

CUSTOMER CORPORATE MEMBERSHIP Organizations that are currently outsourcing or are considering one or more outsourcing initiatives should become customer corporate members of the IAOP. This membership provides organization-wide access to the association’s research, training, certification and networking programs, all designed to help companies achieve better business results through outsourcing.

PROVIDER/ADVISOR CORPORATE MEMBERSHIP Outsourcing service providers and advisory firms should join the IAOP as provider/advisor corporate members. This membership provides the same organization-wide access to the IAOP’s research, training, certification and networking programs as customer corporate membership, but also includes members-only sponsorship opportunities that serve the marketing and business-development needs of these companies.

PROFESSIONAL MEMBERSHIP Professional membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers or advisors. In addition, it provides these professionals with direct, personal access to association services.

STUDENT MEMBERSHIP Student membership is available to all full- and part-time students actively enrolled in a college or university. Student membership provides direct access to IAOP services and includes full use of the association’s online knowledge center, Firmbuilder.com.

For information on IAOP membership, e-mail sales@IAOP.org.

CALENDAR OF EVENTS

ATTEND AN UPCOMING CHAPTER MEETING Through its active and expansive chapter network, IAOP members can share their expertise and find knowledge on best practices for specific industry segments, topics and geographic areas within outsourcing.

•

SEPT 9

BANGALORE CHAPTER MEETING

•

SEPT 14

ITALY CHAPTER MEETING ON THE LEGAL ASPECTS OF OUTSOURCING TRANSACTIONS AND (SLAS)

•

SEPT 14

LEGAL PROCESS OUTSOURCING CHAPTER WEBINAR

•

SEPT 16

WASHINGTON DC CHAPTER MEETING

•

SEPT 22

MIDWEST CHAPTER MEETING

•

SEPT 23

TRANSBOUNDARY SOURCING CHAPTER MEETING

•

OCT 21

CHICAGO CHAPTER MEETING

•

OCT 25

OUTSOURCING TOOLS SYMPOSIUM

Gain knowledge, network and earn COP credits! Sign up for a chapter meeting today at www.IAOP.org.

BeyondCore.

The COS-TP checks an operator’s speed and accuracy on test transactions that reflect the most common transactionprocessing scenarios and frequent error patterns. Based on the results, operators can receive COS certifications at three levels: gold, silver and bronze.

Previously known as the OperatorEvaluator exam, the scores and ratings will be the same for the new COS-TP test.

The functions, availability and pricing also have not changed.

Any prior IAOP OperatorEvaluator scores and ratings will

NEW! COMPLIMENTARY WEBINAR ON COP FAMILY OF CERTIFICATIONS Looking for more information on the IAOP’s de facto certification? The next COP Webinar, featuring information about the IAOPs newest certifications launching this summer, is taking place on Wednesday, September 8, at 12 PM EDT. Go to www.

IAOP.org or e-mail courtney.coon@IAOP.org to register for this complimentary 60-minute primer and find out what it takes to become a COP. ONLINE COP MASTER CLASS SUMMER SPECIAL: $500 OFF

Stay up-to-date with outsourcing’s most sought-after topics all summer long. The Online COP Master Class is available at your convenience and can be accessed from your own computer anywhere in the world at any time of day! Register at www.

IAOP-cop.com by September 30, 2010 and receive $500 off the original price. When registering, enter promotional code pojs500 to avail the discount.

2010 COP MASTER CLASSES AND WORKSHOPS

The COP Master Class is an integral part of the COP program, as well as a requirement of the new aCOP certification. It provides outsourcing professionals—whether working as customers, providers or advisors—with an intensive learning experience on the state-of-the-art, end-to-end process for outsourcing success. Individuals who complete the course will not only earn 75 points toward their COP designation or fulfill the aCOP training requirement, but also will immediately be able to improve outsourcing outcomes at the organizations with which they work.

The Outsourcing Governance Workshop is a one-day intensive designed to gain comprehensive cutting-edge knowledge on all aspects of creating and sustaining successful relationships with your outsourcing partners. On top of earning 15 points toward the COP designation, participants also learn to understand the stages of growth in governance and assess where their organization is positioned and how it can move further along the growth curve.

• SEPTEMBER 13-15. COP Master Class* in Chapel Hill, North Carolina, USA • SEPTEMBER 16. Governance Workshop in Chapel Hill, NC • SEPTEMBER 13-16. COP Master Class bundle in Chapel Hill, NC* (bundle includes Master Class, Governance Workshop and online COP exam prep) • SEPTEMBER 20-22. COP Master Class in Hong Kong. To register, please contact Winnie Chow at winniechow@hbc.hk.

• OCTOBER 12-15. COP Master Class in Rome, Italy • NOVEMBER 1-3. COP Master Class in La Jolla, CA, USA • NOVEMBER 4. Governance Workshop in La Jolla, CA, USA • NOVEMBER 1-4. COP Master Class Bundle in La Jolla, CA* • NOVEMBER 25-28. COP Master Class in Kuala Lumpur, Malaysia. To register, please contact Bobby Varanasi at bobby@matryzel.com.

*Register for any North American Master Class or COP Master Class Bundle by October 30, 2010 and save $500 Unless otherwise noted, please register for the above classes and workshops at www.IAOP.org.

THE IAOP AWARDS

Buyers: Nominate Your Team for GEO The Global Excellence in Outsourcing (GEO) award distinguishes outsourcing professional teams at customer organizations who have advanced the field’s best practices, created innovative solutions and delivered great results for their companies. Nominations are open to all customer teams globally. For more information, visit www.IAOP.org and click on the Award Programs main navigation link.

Coming Soon: The Global Outsourcing 100 and the World’s Best Outsourcing Advisors The 2011 Global Outsourcing 100 and the World’s Best Outsourcing Advisors rankings will begin taking new applications on September 1, 2010. Service providers or advisory companies that have applied previously should go to www. globaloutsoucing100.com after September 1 and login to their company account to create a new application for 2011. Companies new to the rankings should select “Apply” to open a new account and application.

Continued to page 53 » globalizationtoday.com

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IAOP membership 85% of IAOP members credit IAOP for improved outsourcing outcomes at their organizations

MEMBER SERVICES FIRMBUILDER.COM

The industry’s premier repository of outsourcing information, housing more than 1,000 articles, studies, white papers, reports, and conference proceedings.

CHAPTERS

Through IAOP’s chapter network, members share their expertise and gain knowledge on best practices for specific industry segments, topics and geographic areas.

VA L U E H E A LT H C H E C K S U R V E Y

A diagnostic tool to assist buyers and providers in rapidly identifying opportunities to enhance business value obtained from their outsourcing relationships.

W W W. B E S T O U T S O U R C I N G J O B S . C O M Helping customers source and hire the most qualified outsourcing professionals and provide outsourcing professionals with the best job opportunities in their respective fields.

G L O B A L I Z AT I O N T O D AY

The official publication of IAOP for the growing ranks of outsourcing professionals.

IMPROVING OUTSOURCING OUTCOMES

BY CONNECTING YOU TO THE RESOURCES YOU NEED.

IAOP® is the global, standard-setting organization and advocate for the outsourcing profession.

With more than 110,000 members and affiliates worldwide, IAOP is the leading professional association for organizations and individuals involved in transforming the world of business through outsourcing, offshoring, and shared services.

A Global Community IAOP has members in nearly 50 countries. Each member has direct, online access to each other and to IAOP’s entire portfolio of services, including its vast chapter network, regional-level events, and corporate and professional development programs.

MEMBERSHIP Customer Corporate Membership provides organization-wide access to the association’s research, training, certification and networking programs — all designed to help companies

International Association of Outsourcing Professionals® (IAOP®)

Tel +1.845.452.0600

Fax +1.845.452.6988

achieve better business results through outsourcing.

Provider/Advisor Corporate Membership provides the same organization-wide benefits of Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and business development needs of these companies.

Professional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers or advisors. In addition, it provides these professionals with direct, personal access to association services.

To learn more about IAOP membership or to become a member, visit www.IAOP.org.

w w w . I A O P. o r g

WHAT’S HAPPENING AT THE IAOP

THE IAOP WEBINAR SERIES

Companies seeking the best talent for outsourcing jobs as well as professionals looking for employment opportunities can benefit from this IAOP member service provided through BestOutsourcingJobs.com (BOJ).

Topic: BestOutsourcingJobs.com Date: September 21, 2010 at 11 AM EDT Presenter: John Roescher, BestOutsourcingJobs.com Sign up: Contact memberservices@IAOP.org ATTEND ONE OF THE FOLLOWING PRE-RECORDED SESSIONS BY CONTACTING MEMBERSERVICES@IAOP.ORG:

Certified Outsourcing Professional (COP) recertification The 2011 Global Outsourcing 100 BestOutsourcingJobs.com Value Health Check Survey IAOP corporate membership IAOP professional membership THE 2011 OUTSOURCING WORLD SUMMIT

The IAOP presents the 14th edition of its world-renowned conference—The Outsourcing World Summit—on February 21-23, 2011 at the Renaissance Esmeralda, Indian Wells, California. Join your colleagues in exploring how you can lead your company to success in the new outsourcing landscape. Find out how to: • Implement an outsourcing initiative • Streamline operations • Improve bottom line through outsourcing • Find the perfect provider partner or introduce your services to potential clients Learn from the best in the business on how to improve your outsourcing outcomes, as more than 50 industry leaders and visionaries will delve into topics critical to your success, including globalization, rural sourcing, corporate social responsibility (CSR), cloud computing, managing risk through sourcing strategy: multi-service provider environment, best of breed and offshore, knowledge process outsourcing (KPO), today’s outsourcing tools, vendor management, outsourcing as a procurement discipline, transition and governance, exploring new geographies and transboundary and government outsourcing.

This three-day event delivers programs designed to enhance your knowledge, skills and experience in outsourcing, while enabling you and your organization to network with industry leaders and fellow customers as you learn about industry-best practices and key trends. Attendees will come from organizations like Accenture, Aetna, Allstate, AstraZeneca, Bank of America, Booz & Company, Capgemini, Cassidy Turley, CB Richard Ellis, Citi, Coca-Cola, Colliers International, Duke University Fuqua School of Business, Eastman Kodak, Estee Lauder, Infosys, Johnson & Johnson, Kellogg, Kirkland & Ellis, Liberty Mutual, London School of Economics & Political Science, Mayer Brown, Morrison & Foerster, Neo Advisory & Neo Group, Nokia, Orange Business Services, PepsiCo, PETCO, PricewaterhouseCoopers, Procter & Gamble, Rural Sourcing, SAP AG, Wellpoint and more.

Act Now! Register by September 15, 2010 at www.IAOP.org/Summit and you’ll not only save $350, you will also get a free room for a night!

SPONSORSHIP OPPORTUNITIES FOR THE 2011 OUTSOURCING WORLD SUMMIT

By sponsoring the Summit, service providers and advisors gain a proven, unparalleled opportunity for brand awareness and influence on the thinking and decision-making of client executives worldwide. Supporting the Outsourcing World Summit directly demonstrates the commitment your firm has made to leadership and excellence in outsourcing. If your company is interested, please hurry! Many slots have already been filled.

Download the Sponsorship Prospectus at www.IAOP.org or contact Renee Preston at renee.preston@IAOP.org to learn how your firm can play a role in this exciting event.

52

GlobalizationToday September 2010

Jag Dalal, managing director of thought leadership, heads a theater-in-the-round pra

automatically become an identical IAOP COS-TP score and rating.

“The Certified Outsourcing Specialist designation lets individuals validate their skills using a standardized test recognized across the industry and helps organizations make better hiring decisions and get higher-quality results from their workforce,” said IAOP chairman Michael Corbett.

It will also enable outsourcing destinations around the world to quantify the size and quality of their labor pool to attract customers and promote growth in local outsourcing industries.

As the global standard-setting organization and advocate for the industry, the IAOP will publish results on the numbers of certified workers in top outsourcing destinations using the results.

The COS certification is the newest in a group of expanded certification programs launched by the IAOP under the Outsourcing Professional Certification Framework (OPCF), with a full range of certifications for individuals from entrylevel to C-suite positions. The COS tests are available at www.

IAOP-cos.com.

WHAT’S HAPPENING AT THE IAOP

THE IAOP’S NEW ONLINE BOOKSTORE OPENS

Visit http://www.iaopbookshop.com to view and purchase publications from the association, including the OPBOK and more. Members who order through the site get 15% off IAOP books as well as those published

by VanHaren.

CSR FALL SECTION IN FORTUNE

The IAOP is joining with media alliance partner Fortune magazine to create a November 15, 2010 special section on corporate social responsibility in outsourcing.

If your company internds to participate and advertise, download the prospectus or contact Vic Asselin at vicas2@southcoast-ca.com for more information.

play a leadership role in educating and certifying millions of outsourcing enthusiasts and these new certifications will catalyze the process.”

THE IAOP NAMES EVALUATION PANEL FOR THE GEO AWARD

acticum at the 2010 Outsourcing World Summit BEYONDCORE TECHNOLOGY

The COS-TP tests are powered by technology from BeyondCore Inc. (www.beyondcore.com), acknowledged by Fortune 500, S&P 500 companies and as one of the top 10 BPO service providers in four continents.

The testing is based on advanced methodologies pioneered by BeyondCore, as well as student research conducted at the Harvard Business School and Stanford University. Some of the upcoming COS tests will be co-developed with Global Talent Track.

“A typical job candidate is tested by 10 prospective employers before receiving a job offer, while a typical outsourcing provider tests six candidates before offering them a job. The inefficiency of this process is astounding. The IAOP COS standardized tests will help candidates demonstrate their talents and enable prospective employers to hire the best, leading to a far more efficient hiring process,” said Arijit Sengupta, CEO of BeyondCore.

Global Talent Track CEO Uma Ganesh said, “With the rapid advance of global sourcing in the new world, the IAOP must

The IAOP named a 12-member evaluation panel of recognized industry leaders and academia to select the world’s top outsourcing teams in best practices and innovation. The independent judges will use a rigorous and objective process to evaluate applications submitted by leading customer outsourcing teams for the inaugural Global Excellence in Outsourcing (GEO) award.

“Many of these qualified panelists have extensive experience in selecting companies based on requests for proposals (RFPs), while others work directly with outsourcing professionals and firms that strive for excellence,” said IAOP chairman Michael Corbett.

Chaired by Bill Hall, founding partner of Pretium Partners, Inc., the GEO judging panel includes the following: Christopher Long, COP, CEO, StayWell Health Management; Jean-Francois Poisson, COP, vice president, operation, Groupe Ameublement Focus Inc.; Kelly Sawyer, COP, CEO, AKGT, Inc.; Arie Y. Lewin, director, Duke University, Fuqua School of Business; Beena George, faculty, University of St. Thomas, Houston; Joe Greco, professor, director, Cal State Fullerton; Keith Womer, dean, University of Missouri–St. Louis; Mary C. Lacity, professor, University of Missouri; Torben Pedersen, professor, Copenhagen Business School; Ron Babin, associate director, Ted Rogers School of IT Management, Ryerson University and Leslie P. Willcocks, professor, London School of Economics & Political Science.

The GEO award is the first and only award program recognizing outsourcing professional teams for their innovation and best practices. Customer teams that win this prestigious award will be first announced at the annual 2011 Outsourcing World Summit on February 21-23 at Renaissance Esmeralda Resort in Indian Wells, California and will have the unique opportunity to share their leading-edge outsourcing approaches through multiple thought-leadership activities led by the IAOP.

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53

SCRAPBOOK

The Outsourcing World Summit

Delegates networking at the Global Services Mall

Professionals’ For 14 years, the International Association of Outsourcing ized as the recogn been has it Summ World (IAOP) Outsourcing advisors from premier gathering place for customers, providers and ms designed around the world. This three-day event delivers progra rcing, while outsou in ence experi and skills edge, knowl ce enhan to industry with rk netwo to s zation enabling professionals and organi t practices ry-bes indust learn they as ers custom fellow and leaders and key trends. tunity to Join your colleagues and peers for an unparalleled oppor ries visiona and minds best ry’s learn from and network with the indust the at 2011 21-23, ry Februa on it Summ rcing at the 2011 Outsou es explor it Summ This nia.

Renaissance Esmeralda, Indian Wells, Califor s succes to nies compa their lead can sionals how outsourcing profes ation, visit www. in the new outsourcing landscape. For more inform

IAOP.org. it held on See snapshots of the 13th edition of the annual Summ ntion Conve Club Beach & Yacht ’s February 15-17, 2010 at Disney emerge to rcing outsou using with , Florida vista, Buena Lake Center in as a leader in the new global economy as its theme:

Nearly 600 outsourcing professionals showed up to

listen to the Summit’s keynotes.

tineau with Fasken Mar e, also a partner on.

Ab he a nc Lis , lu air se ch ca o nt e chapter show th The IAOP’s Toro at n io vis eir shares th DuMoullin LLP,

The IAOP honors Hall of Fame award recipie nts (from left to right) A. Loschinin, president Dmitry and CEO, Luxoft; Jos hua R. Jewett, senior president—IT and Pro vice curement and CIO, Fam ily Dollar Stores, Inc. Dewang Mehta, forme and r president, NASSCOM (aw ard Natarajan, immediate accepted by Dr. Ganesh past chairman, NASSC OM).

Director of Corporate and Professional Development Pam O’Dell discusses the IAOP’s family of certifications.

GEO

Get Recognition For Your Team!

IAOP’s Global Excellence in Outsourcing Award

IAOP recognizes outsourcing professional teams at customer organizations that are leading the effort to better serve their customers and make their companies more successful through outsourcing. GEO Awards are given in two categories: · The GEO Award for Best Practices · The GEO Award for Innovation

Enhance awareness — both inside and outside your company — of your team’s accomplishments.

There is no fee for applying. Teams selfnominate through an online application at www.IAOP.org/GEO.

For more information and to apply, visit www.IAOP.org/GEO.

ADVERTISER INDEX PAGE #

COMPANY NAME

URL

18, 19

Accenture

www.accenture.com

0

Avasant, LLC Barrack Law Firm, P.C. BCS BeyondCore Diebold International Association of Outsourcing Professionals (IAOP) InvestChile ITSqc, LLC Jay Abraham Kelly Outsourcing & Consulting Group (KellyOCG) Riverwood Solutions SENCOR Sloan Solutions LLC WNS Global Services

www.avasant.com www.barrack.net www.bcs.org/opportunity www.beyondcore.com www.diebold.com www.IAOP.org

4 14 30 22, 23 48; 50, 51; 55 44, 45

6 46 40, 41 2

34, 35 12 26, 27

www.investchile.com www.itsqc.org www.profitonperformance.com/outsource www.kellyocg.com www.rwsops.com www.sencor.net www.sloansolutionsllc.com www.wns.com