Innovation through Outsourcing

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1 Innovation through Outsourcing Timothy Gehrig David Moore

2 Agenda Expectations CedarCrestone Introduction Market Direction Outsourcing Solutions Case Studies Innovation through Outsourcing Wrap-Up

3 Expectations Provide a high level assessment of the market and challenges business and technology departments are facing Discuss outsourcing options, including where they fit well and don t Highlight innovation and where we see it occurring (with success) and ignored Explain how outsourcing really is a component of innovation strategies today Please ask Questions!

4 About your Presenters Timothy Gehrig Vice President, Technical Solutions Previous CedarCrestone roles Associate Vice President, Technology and Datacenter Services Director, Information Technology Contact Information (866) David Moore Director, E-Business Solutions Contact Information: (877)

5 About CedarCrestone Oracle E-Business Suite, Oracle Database, Fusion Middleware/Service Oriented Architecture (SOA) and PeopleSoft services Global delivery capabilities US, Canada, Europe, and India Delivery center in India an integral part of all verticals and technologies 650 employees Consultants average 15 years of experience One-stop shop for complete project lifecycle Recognized leader in Enterprise Solutions; see Gartner s ERP Magic Quadrant Financially healthy and stable

6 CedarCrestone Oracle Achievements 6

7 CedarCrestone Portfolio of Services Applications Consulting Preview Implementation Upgrade Training Managed Services Host Manage Maintain Upgrade Lab Remote development Fusion Middleware Service-Oriented Architecture (SOA) Suite Services and Solutions SOA Suite Composite Application Development SOA Suite Training IDM Business Intelligence Management Consulting Strategy and Vendor Selection Services Business Case Development/ROI Analysis Business Process Improvement Change Management Workforce Metrics and Analytics Assessment Workforce Technology Assessment and Strategy Technical Solutions Database Administration Installation and Configuration Integration Technologies and Development Technology Assessment Technical Upgrades PIA Administration

8 CedarCrestone Managed Services Statistics Environment 140+ Customers 42 Hosted Clients, 100+ Upgrades 600+ Hosted Oracle ERP Application Environments 85 Production Environments Hosted 26 HCM / Campus Solutions 27 Financials & SCM 32 Other Oracle Apps: BI, CRM, ELM, EPM, Portal, SOA Infrastructure From (10-10,000) Concurrent Users Manage 400+ Terabytes of SAN storage 250+ UNIX Servers & 600+ Windows VMware instances Well over 99.95% Uptime in last 12 months for Hosted Clients People 130+ Dedicated Managed Services Employees Over 90K Service Requests & Over 57K Resolution Hours annually Less than 15 minutes average response time

9 Agenda Expectations CedarCrestone Introduction Market Direction Outsourcing Solutions Case Studies Innovation through Outsourcing Wrap-Up

10 Market Direction (what we see) Migration to the Cloud (however you define it) SaaS: Software Delivery PaaS: Integration and Service Delivery IaaS: Infrastructure Delivery Fewer Technology Vendors in the Enterprise Oracle, IBM, EMC, Cisco and Microsoft Competition through value versus price Fewer Barriers to Entry for software vendors Oracle Fusion Applications Salesforce.com Workday Many others Integration technologies are no longer vaporware FMW is now a key strategic technology

11 Market Direction (how it affects you) Traditional ERP Applications are NOT cloud Many not built with cloud compatible security models Integration technologies are not synonymous with ERP Heavy labor and hardware commitments around patching and upgrades Scaling application typically requires significant pre-planning The significant IT effort for supporting these applications is quickly losing visibility due to the lack of tangible front end delivery improvements More and more budget dollars are going towards maintaining and upgrading traditional ERP applications, such as EBS Labor Resources are becoming more expensive as markets improve and there is migration towards newer technologies Legislative requirements are driving more frequent patching and investment due to security and information protection concerns Hardware replacement cycles are occurring more frequently as newer applications are certified on a more limited infrastructure base

12 Market Direction (how it affects you) cont. Business Users are demanding more More real time access to information More functionality that enables them to be more efficient More applications that augment traditional ERP, which require yet more integration

13 Market Direction (how to adapt) Transition some control to the Business With SaaS based applications, many business departments are making decisions without IT anyway embrace it. Business users will have a good sense of what it is going to take to retain Competitive Advantage, listen to them Think innovation over maintenance Find ways to reduce your in house maintenance footprint Consider new hardware platforms that are more favorable to software licensing model Consider new architectures with mature maintenance models (optimized for patching and reduced downtime) Consolidate software package use where possible Negotiate software support contracts where possible Invest where your critical risk points are and accept some reduced service levels in other areas of the business

14 Market Direction (how to adapt) cont. Outsource the non-strategic application maintenance items to a partner organization Patches and Fixes Upgrades Development (non-strategic or strategic) Running and Managing Services Database and Application Administration

15 Agenda Expectations CedarCrestone Introduction Market Direction Outsourcing Solutions Case Studies Innovation through Outsourcing Wrap-Up

16 Different Users / Different Needs Business Users Application is available when they need it Fast performance Support is available when they have questions IT Administrators New challenges More Change Control CIOs Application Security Access to the latest technologies CFOs Stable Budget projections Lower costs Risk mitigation

17 Outsourcing Solutions Manage Service Levels, NOT Resources Service Desk Support Application Hosting Application Management Services Onshore/Offshore (Global) Delivery Models Application Upgrade Services Brings the Cloud to ERP Services On Demand resources Access to new technology Pay for usage (concurrent user models for host) AMS Hosting Operations Support Application Support Systems Infrastructure SLA

18 Host Solutions Service Benefits Host Services Included Dedicated Client Service Manager Expert Technical Support Functional Support Assistance Critical Patch Updates and Updates Review Current Non- Production Systems Service Desk Support Application Support Operational Support Performance Metrics Turnkey Solution Description of Included Services If we fail to perform to the terms of your contract, we will port your systems back to the location of your choosing. The port-back costs are paid by CedarCrestone. We provide application and infrastructure support responsibilities via our expert hosting service center and a user friendly web or phone based ticket system. Expert guidance and assistance to help clients solve functional issues and needs by engaging staff for recommendations, helping with vendor support, or engaging our functional support consultants. Keep client systems up to date with CPUs and periodically review systems for patches/updates and apply as requested One or more clones/refreshes per quarter to each of the clients non-production systems to keep current. Provide a 24-by-7 Service Desk, staffed by application experts, with guaranteed response and resolution times. We provide all second level (Level-2) support, including patches, fixes, updates, and technology upgrades. We provide all database, network and systems administration, including the maintenance and tuning of all components and databases. Performance monitoring is available to our client s real time through a portal via the Internet. Our application hosting covers all costs related to maintaining the ERP systems infrastructure.

19 Host Solutions The SLA Our Service Level Agreement ( SLA ) is regarded as one of the most comprehensive in the industry and is backed by a port-back guarantee SLA Guarantee Port-Back Guarantee System Availability Security Disaster Recovery Performance Issue Response Resolution Time SLA Metrics and Penalties If we fail to perform to the terms of your contract, we will port your systems back to the location of your choosing. The port-back costs are paid by CedarCrestone. Your systems availability will be 99.8% or higher. If lower than 99.5%, then your next month s hosting fee is free. If a security breach occurs due to CedarCrestone failure to follow published procedures and best practices, then your next month s hosting fee is free. If after a Disaster, Production operations are not recovered and restored within 4 hours, then your next month s hosting fee is free. We will commit to setting system performance goals, then ensure OLTP performance remains within defined benchmark levels throughout the course of the agreement with penalties of 2% for each percentage point below 98%. We respond to any issue or trouble ticket in 15 minutes or less and resolve tickets and issues within 4 hours for high priority Production issues. If we don t, then you receive increasing percentage credits.

20 Managed Solutions Staff Augment Strategically or Tactically Development Application Support (Level 1, 2 or 3) Core Infrastructure Support Technology Support (BI, SOA, IDM, etc) Flexible Staffing Models Remote and Local Delivery Onshore and Offshore Capabilities Increase staffing at peak times, drop levels for slower periods Multiple Contracting Options Dedicated or Shared resources Hybrid (blended) rate structures Blocks of Hours Packages and Solutions will be very customized

21 Managed Solutions - Global Utilizing Offshore resources is becoming more accepted in organizations and just makes good business sense Service Levels (from CedarCrestone) Same skillsets as available in the U.S. Same service quality Same delivery commitment Same efficiencies Challenges Communication Response Time (fewer overlapping hours during the business day) Additional Documentation But from every problem, there is a solution Global Delivery models set expectations correctly up front and manage the typical concerns and challenges

22 Managed Solutions - Upgrade Lab or Remote Services Lab uses CedarCrestone hardware Remote uses Customer hardware Significantly Higher Quality and Lower Cost Streamlined processes and procedures mean less time for execution Use part time resources instead of dedicated team members Lower rates for remote resources Dedicated Lab project managers managing communication and execution Key Point: Upgrade activities are not strategic. Why train someone to do something only executed once every few years?

23 Agenda Expectations CedarCrestone Introduction Market Direction Outsourcing Solutions Case Studies Innovation through Outsourcing Wrap-Up

24 KCTCS Applications HCM/Campus Solutions, Financials, EPM, OBIEE Achievements Reduced spend on non-core activities Have built resource skill sets around BI and content delivery Flexibility to quickly and easily change their architecture for OBIEE from a Unix to a Windows platform Have almost no maintenance costs for PeopleSoft applications outside of the very consistent host pricing

25 ASU Applications HCM/Campus Solutions, CRM, Portal, EPM, SOA Achievements Rapid Implementation (flexibility) Almost no spend on non-core activities Have built resource skill sets around BI and SOA technology Have created impressive student content delivery portals out of SOA and java technology that tie into Oracle ERP applications Able to reduce budget and spending with hosting as budgets became tight

26 Medical College of Wisconsin Applications SOA Achievements Able to quickly and easily deploy new SOA technology, without ramping up their staff

27 SCI Applications HCM Achievements Allowing CCI to administer new technology allowed SCI to focus on process and service Rapid deployment of new environments Enterprise class scalability, availability, and disaster recovery from day one

28 Scott & White Applications HCM, Financials, SOA Achievements Consolidation of multiple systems Streamlined upgrade of existing applications, including expansion of system capabilities Rapidly designing and deploying ERP/SOA integrations

29 Agenda Expectations CedarCrestone Introduction Market Direction Outsourcing Solutions Case Studies Innovation through Outsourcing Wrap-Up

30 Innovation Improving Competitive Advantage through Information Technology New Business Products Improved Integration Leading to Better and more Timely Information Human Workflow Automation creating more efficiencies and allowing resources to focus energy on value add business objectives Engaging employees, customers and communities through new mobile and internet mediums using standards based Oracle technology Is your organization contributing to Competitive Advantage? How does outsourcing enable innovation?

31 Innovation through Outsourcing Lower Costs Through Savings and/or Avoidance Delay of avoid large capital investments Put off hiring or training existing staff on existing applications Reduced risk in terms of staff and storage Eliminate Licensing Support Costs Moderate Datacenter Costs Avoid vendor cost increases for legacy applications Focus on Opportunity Costs Implement solutions that have been sitting on the shelf Optimize staff to value add projects Spend more time with the Business understanding where their pain points are and attack them like a laser Redeploy existing infrastructure for other applications

32 Innovation through Outsourcing (cont.) Strategically Invest Focus on New Technologies Train staff on how to develop and deploy cutting edge Oracle Fusion applications Invest in additional software that is strategic to business growth Establish new partnerships creating a larger business ecosystem Increase Service Levels Outsource providers allow for greater performance and availability guarantees Faster development times Capitalize on wider exposure to business and technology processes which other organizations have developed Limit Audit and Compliance requirements Key Point: Reduce exposure to complex legislative regulations and audit requirements Risk transfer for insecure ERP applications

33 Agenda Expectations CedarCrestone Introduction Market Direction Outsourcing Solutions Case Studies Innovation through Outsourcing Wrap-Up

34 What to do next? Understand your Current and Pending Costs Software License Costs and Maintenance Fees Server Costs (Web, App, Database, File Servers) Network Costs (Firewalls, Load Balancers, IDP) Storage Costs (Tier 1, Tier 2) Datacenter Costs (Environment Costs, Power, Racks, KVMs) Backup and Recovery Costs Disaster Recovery Services Management Overhead IT Administrators (Unix, Windows, Network, Storage) Application Administrators Help Desk Services and Administrators Hardware and Technology Upgrades Application Upgrades

35 What to do next? Analyze what is Strategic to the Business Now is the time to analyze where funds are being allocated Contact a strategic partner to provide guidance around Outsourcing Options Don t do this until you understand your cost structure and what is strategic to the business As mentioned earlier, one size does not fit all with regards to outsourcing services so comparing vendors is not always an easy exercise to engage in Conduct an ROI Analysis Compare what your cost structure is for the next 3 to 5 years with that of an Outsourcing Solution Select a partner and start focusing on Innovation again

36 Questions and Answers Timothy Gehrig (866) David Moore (877)

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