Worldclass IT Services in Offshoring: Example British Telecom and MBT Joerg Stimmer, MBT 2nd Part by Alex Taylor, BT Exact
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1 Worldclass IT Services in Offshoring: Example British Telecom and MBT Joerg Stimmer, MBT 2nd Part by Alex Taylor, BT Exact Pune Düsseldorf München Milton Keynes Ipswich Atlanta Denver Princeton Dubai Mumbai Singapore Melbourne
2 Agenda The main Offshore Location - India MBT s Onsite / Offshore Model Projects suitable for Offshoring Quality Management Case Study: Customer Service System at BT Trends & Issues in Offshoring by BT Exact Jörg Stimmer: Offshoring 2
3 Offshore Outsourcing the logical extension of division of labour History of division of labour: States Person Family Cities Regions Nations Global Division of Labour in General Language Writing Transit Print Telco/IT? Telecommunications and IT change our Organisational Structures: Generalist Specialist Unit Subsidiary Division of Labour in Telecom / IT External Supplier Offshore Outsourcing Telegraph/ Telefone Fax FileTransfer Transaction Processing Document Processing Telecommunication? Quelle: Prof. Hubert Österle, IWI, Uni St. Gallen Jörg Stimmer: Offshoring 3
4 MBT: Mahindra British Telecom JV between British Telecom, UK and Mahindra & Mahindra Group, India 4,000 professionals working on leading-edge technologies across the globe Maintaining the highest quality standards: SEI CMM Level 5 ISO 9001 Software Development Centers in India and UK, complemented by Centrer of Excellence in India Well-established and proven Onsite-Offshore business model Projected Revenues (FY0304) : 150 million Growth: 50 % CAGR over the last 5 years Ranked in Top 10 fastest growing Indian companies Global Presence Pune, Mumbai Düsseldorf München Milton Keynes Ipswich Denver/CO Atlanta/GA Princeton/NJ Singapore Melbourne Dubai Europe s leading India-based IT services company in the Telecommunications sector Jörg Stimmer: Offshoring 4
5 MBT`s Core Competences Telecommunications NSS OSS BSS ERP... SW Lifecycle Services Requirements Capture Application Management Extended Expertise Customer Relationship Management IT Security Selected Tools & Services (e.g. Inventory & Network Planning) Corporate Networks Enterprise Application Integration... MBT is the Expert in SW & Solutions supporting a Telecommunication Business Jörg Stimmer: Offshoring 5
6 MBT s Offshore SW Lifecycle Services Product Selection Requirements Capture Architecture Design Application Integration & SW Dev. Testing Application Management Project management and Quality Assurance etc. Plan Build/Migrate Manage Typical Customer Engagements: Solution Design & Architecture Customization, Implementation & COTS* Integration Maintenance & Support of Existing Systems Re-engineering/Migration of Legacy Systems Verification, Validation & Testing (VV&T) Application Management * Commercial Of The Shelf Jörg Stimmer: Offshoring 6
7 MBT s Onsite - Offshore Model for SW Lifecycle Services Development & Implementation Requirements Customer Acceptance Definition (Onsite) Test High-level Design Process Definition Quality Management Customer Specific SLAs Applicati on Manage ment MBT s Offshore Unit (Offshore) Detailed Design Integration / Development Validation Verification Test(VV&T) Management and Control remains at Customer (Onsite), MBT guarantees Service, Quality and manages all Interfaces Jörg Stimmer: Offshoring 7
8 The Determination of Cost (occurring later) is already determined at an early Stage Industry ITK Total cost determination Total cost occurrence Total cost * determination Total cost ** occurrence 80% 80% 60% 40% 60% 40% 50% 20% 20% 20% 9% 6% 15% 20% Design Work preparation Procurement Production Administration Requirements & Analysis Design Build & Test Operate Maintain Source: University of St. Gallen, Deutsche Bank * Estimate (System retirement costs included in Req. & Analy., Design and Build & Test) ** Based on typical project costs (Giga, 2001), and UBR (CTB-RTB-ratio, application development vs. application management costs) Jörg Stimmer: Offshoring Quelle: Prof. Walter Brenner, IWI, Uni St. Gallen 8
9 Strict Quality Management: Its less about Quality but More on continuous Optimisation % Efforts Variance Trend Estimation of Project Effort vs. later Need % Effort Variance (linear scale) 0 J-F-M' 01 M-A-M' 01 M-J-A' 01 A-S-O' 01 O-N-D' 01 D01-J-F' 02 F-M-A' 02 A-M-J' 02 J-J-A'02 A-S-O'02 O-N-D'02 Rolling Quarters % Schedule Variance Trend % Schedule Variance (linear scale) Estimation of Project Duration vs. later Need 0 J-F-M' 01 M-A-M' 01 M-J-A' 01 A-S-O' 01 O-N-D' 01 D01-J-F' 02 F-M-A' 02 A-M-J' 02 J-J-A'02 A-S-O'02 O-N-D'02 Rolling Quarters Jörg Stimmer: Offshoring 9
10 Customer Services System at BT: Starting Position Integrated Customer Care System Service und Resource Management Parts of Billing, Receipting and Accounting, Integration with Network Management The System is mission critical for BT controls over 70% of turnover (fixed lines in UK) manages over 23 Mio customer contacts support over 700 end customer services handles over 160 Mio transaction daily generates invoices per day support over new applications per day Jörg Stimmer: Offshoring 10
11 Customer Services System at BT: Motivation BT, Requirements at MBT Development and Implementation of Solutions von with extended functionality within a complex legacy systems Adaptation of the system to constantly changing requirements, e.g. number portability, legal issues Support of parallel operation of online and batch processing in order to fully exploit the time available Maintenance, Extensions and Support (Application Management) according detailed customer specifications Take over of full responsibility from requirements capture until integration test Full blown configuration management Goal: Significant Optimisation of Costs and Turnover Times concerning Development and Support Jörg Stimmer: Offshoring 11
12 Customer Services System at BT: Projektvorbereitung, Migrationskonzept 1. Due Diligence on systems to be outsourced 2. MBT takes responsibility 3. Takes over contracts with 3rd parties 4. Move work to own site ( onshore ) 5. Reduce dependencies on 3rd parties 6. Move ( fitting ) work to low cost environment ( offshore ) 7. Stabilise performance and quality 8. Continuously optimise performance and quality by increasing efficiency gain & automation System Due Diligence Q2 Q3 Q4 Transfer & Stabilise Transition to India Optimise Performance and Quality Application Support / Release Manangement Jörg Stimmer: Offshoring 12
13 Customer Services System at BT: Project Steering with fast and direct Interaction Steering ( Governance ) of the Transition by a Steering Group Regular Steering Group Meetings Clear Transition Plans Build Up of Resources and Release Plans Success of Transition and Milestones Addressing of Problems / Challenges Leistungserbringung Management der Lieferantenbeziehung Rahmenbedingungen, Potenziale, Produktvorgaben Deliveryplanung Deliverysteuerung Leistungsabnahme - strategische Zielsetzungen (Leistungen, Kosten, Qualität) - Grundregeln - Governance Management der Leistungserstellung Erstellung Delivery Quelle Kundenbedürfnissstrategie Delivery- - Ressourcen-/ Mengenplanung - Pricing-Modelle - Vertragsgestaltung - Leistungsmessung - Kosten, Termine - Qualitätsmanagement Offshore Offsite Onsite Offsite Onsite Jörg Stimmer: Offshoring Quelle Bild: Prof. Walter Brenner, IWI, Uni St. Gallen 13
14 Customer Services System at BT: Benefits for BT Highest possible Flexibility concerning Planning & Utilisation of Resources Increased Access to Resources & Competences Competent Customer Interface onsite, local business as usual (?) Faster Implementation of new Requirements concerning Performance / Products / Services Easy Extension of the System, due to no internal Barriers a dedicated Team in charge (Design & Implementation) A Team / Environment with Emphasis on Growth Biggest possible Standardisation of Performance and on the System being future-proof Option of Transfer of Staff (e.g. in the onsite Team) Jörg Stimmer: Offshoring 14
15 Customer Services System at BT: Goals and Metrics concerning Quality Management Goals Metrics Availability over 99% 100% Compliance of Delivery Schedules for Releases Variation of Costs (Estimation vs. actual) significantly below 10 % Maximum Tolerance of 10 weighted Faults per 100 Person-Days Development Continuous Increase of Productivity (over 10 % per Year for the last 3 Years) Productivity Efficiency Variation in Effort and Costs Frequency of Faults (per Month, Project and Release) Time for Correction of Faults of Priority One Migration of Quality Management to CMM Level 5 Jörg Stimmer: Offshoring 15
16 Customer Services System at BT: Economic Value Add Cost Reduction of over 40% due to: improved Productivity higher Automation and Concentration of Resources Combination of onsite and offshore Resources (30 : 70) Significant Reduction of Management Overhead Consolidation of Locations and Subsystems Faster Discharging of Trouble Tickets 50% Reduction after Transfer und Optimisation Continuous Optimisation of 10 % per Year Jörg Stimmer: Offshoring 16
17 Customer Services System at BT: Lessons learned for MBT Significant Challenges concerning Complexity over 100 Interfaces to other Systems Data Security and Integrity Amount of Orientation / Understanding of System / Architecture / Processes, partly only via old documentation Automation of formerly manual Processes via Use of new Tools caused significant Challenges of Integration in Legacy Infrastructure Continuous Support & Maintenance of mission critical Applications of a Tier 1 Telco requires profound and highly sophisticated Processes and Procedures Jörg Stimmer: Offshoring 17
18 Offshore Outsourcing: The right Mix as Key to Success Constant & competent Support onsite MBT Sales, Project Management / Delivery Well defined Contacts at Suppliers and Customers Side Local Development / Support Centres MBT Local Subcontractors (if necessary) Optional Transfer of Staff ( onsite ) Offshore Development / Support Centres Offshore Resource, guaranteed Quality Standards Flexible Resource Planning and Management Carrier Grade Infrastructure: Redundancy, Disaster Recovery Lowest possible Costs Flexible Resource Management Management across all Regions and Competences Well Targeted Development of Staff Involvement of Subcontractors and Partners Jörg Stimmer: Offshoring 18
19 Resumee "Der Offshore-Trend ist unumkehrbar, Computerwoche vom 19. September 2003 Dr. Jörg Stimmer VP Portfolio Management, MBT Europe VP European Outsourcing Association Germany e.v. Tel: (0211) Mobil: (0163) Die European Outsourcing Association Germany e.v. ist der deutsche Ableger der European Outsourcing Association UK, die es seit ca. 10 Jahren gibt hat sich den Unternehmensunabhängigen, fachlichen Austausch durch das direkte, offene Gespräch zum Ziel gesetzt lädt Sie herzlich zu unseren nächsten Workshops ein: 4. Februar 2004, Frankfurt, rechtliche Aspekte des Outsourcings hat die Webseite Jörg Stimmer: Offshoring 19
20 Agenda The main Offshore Location - India MBT s Onsite / Offshore Model Projects suitable for Offshoring Quality Management Case Study: Customer Service System at BT Trends & Issues in Offshoring by BT Exact Jörg Stimmer: Offshoring 20
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