Global Sourcing Initiative (GSI)
Global Broadband, Media and Internet Company
Business Challenge
One of the client’s core IT objectives is to increase capacity to support business projects amidst cost reductions. To achieve this goal the client sought to tap the less expensive labor costs of offshore companies by creating a Global Sourcing Initiative (GSI). The revenue systems group, a pioneer group which was to pilot the program, wanted to build the appropriate infrastructure to support the “offshoring” of their billing platform but did not have previous experience with the offshore delivery model. Specifically, the client wanted to ensure that they had a continuous and clear view into the progress of the offshore team, appropriate quality controls, effective measures of success and failure, and consequences associated with SLA violations. Acumen Solutions was hired to create a flexible contract structure, performance measures and Service Level Agreements (SLAs) for the pilot engagement. In addition, Acumen Solutions proposed creating a Delivery Operations Model ( DOM ) that would clearly define the “rules of engagement” between the client and offshore teams at the outset of the project.
Solution
Acumen Solutions created a tiered contract structure with each tier addressing a different level of detail about the agreement between the client and the offshore company. The team created four tiers to the contract: Professional Services Agreement ( PSA ), Statement of Work (SOW), Work Order (WO) and Project Estimate (PE). The PSA re-used the client’s existing generic contractor rules relating to adherence to US law, software licensing and other items applicable to all contractors. The SOW framed the relationship between the client and the consultant addressing: core objectives, a governance structure, generic SDLC deliverables, communications, the bid process and more. A Work Order level addressed specific system platforms or larger corporate initiatives, specific objectives of the work, descriptions of the platform, specific resource needs and more. Lastly, Project Estimates were attached to WOs to describe the specific scope of a unit of work on a given platform, the timeframe and cost estimates and any specific deviations from the other contract rules.
Acumen Solutions built a suite of performance measures and SLA thresholds to define clear success criteria, escalation triggers and remedies. The team focused on a few key areas: timeline management, cost management and quality management. For example, an “Earn versus Burn” measure was created to measure projected costs against actual costs over the delivery lifecycle. Then, the team set thresholds against that burn ratio to trigger escalations if costs got significantly off track during the project. If total actual burn exceeded the threshold of 10% of the estimate, the offshore would have to reduce rates to complete the work. In addition a series of basic staffing rules were created to ensure that substitutions and attrition would have minimal impact on the client.
Lastly, the team reviewed the client’s standard SDLC and met with process owners to determine that a number of SDLC tasks would change including responsibilities and ownership. To adapt processes to the offshore model, Acumen Solutions created a Delivery Operations Model. This model defined all the critical roles and responsibilities for both the client and the offshore company. It then tied the roles to various process steps for project management and the SDLC. For each process, the team identified owners, participants, deliverable inputs and outputs as well as any management tools and deliverable templates that would be used to perform the process correctly.
Throughout the development of these documents, Acumen Solutions worked with the client to verify that all the risks and challenges were being adequately covered and that the proposed solutions were not only in line with their expectations, but that the subsequent performance measures and SLAs were relevant, realistic, measurable and effective towards building a collaborative environment between the client and the offshore company.
Return on Investment
Acumen Solutions enabled this client to commence their Global Sourcing Initiative months earlier than expected by quickly equipping the company with a flexible contract structure. Furthermore, by identifying a comprehensive and manageable set of performance measures and SLAs, the client was able to effectively measure the true cost savings of offshoring as well as track and enforce performance against project milestones. Furthermore, the DOM provided clarifications as to roles, process, deliverable templates and management tools enabling both the client to avoid confusion and cost during the start-up of the program. The solution set provided by Acumen Solutions provided the client with all the critical tools to achieve their cost savings, not just by tapping the cheaper labor market, but by simultaneously controlling scope, schedule and quality.