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DevlpngGlobal_BK.pmd 1 6/5/2007, 4:31 PM

 TABLE OF CONTENTS

DEVELOPING CAPTIVE UNITS 03

DEVELOPING A FINANCIAL BASE CASE 06

DEVELOPING THE SCOPE OF WORK 10

DEVELOPING SERVICE LEVEL DOCUMENTATION 14

DEVELOPING A GLOBAL SOURCING RFP 17

01

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Executive Summary
Creating a “captive unit” or
international subsidiary to
leverage offshore labor rates can
be effective for companies with
sufficient experience and scale.
However, leveraging offshore
labor is fundamentally different
from managing an international
business unit, and most captive
unit failures are caused by a lack
of appreciation of this vital
difference.
Offshore labor effectiveness is
dependant on integrated project
work among development centers.
Development efforts must be
coordinated with clean handoffs
and exchanges. If an IT
organization lacks or fails to follow
defined processes, its work will
02
DevlpngGlobal_BK.pmd 3 6/5/2007, 4:31 PM
Developing
Captive
not be synchronized,
communication gaps will occur,
rework will be required, and even
the benefits of offshore labor will
be partially or completely nullified.
Dysfunctional captive units can be
improved by implementing and
operating with strong processes.
Cost savings is not the only reason
for companies to create offshore
captive units. Business leaders
may want to expand opportunities
in an overseas region, enable
localization work, or build
relationships with government
officials. Evaluation of global
sourcing must not be confused
with business development
investment choices.
 Captive units are an attractive option for
large corporations like Fortune 500
companies. The obstacles to creating
global delivery centers are immense for
smaller firms. Creating a global delivery
center requires establishing a legal
entity, hiring local executives, staffing
the delivery center, and establishing
operating procedures. These activities
are complicated by varying legal and
cultural norms.
Executives must be prepared for the
financial cost of creating new facilities,
which vary widely, and for training new
executives on company operations. Travel
expenses will also be high as people
traverse the globe to establish cultural
bridges and proper operational capabilities.
It is easy to create a captive unit if the
company already has operating units in the
targeted country. Establishing a business
in a new location is usually facilitated by
a consulting firm that specializes in
arranging legal recognition, employment
licenses, physical facilities and executive
recruitment. Usually, such firms have
connections that can ease government
approvals. They can also advise on matters
ranging from strategic issues such as
intellectual property protection to tactical
concerns such as setting up utilities, which
differs from Western countries.
The first critical step is to hire and train
local executives on the corporate culture.
Several trips will be required to interview
candidates and hire an executive team. These
executives will require weeks, if not months,
of travel to the company headquarters and
other regional offices to understand the
company culture and operating procedures.
The new executives will then be prepared to
hire local teams and fly in resources to help
design operational procedures and ensure
cultural and functional compatibility within
the enterprise. Despite best efforts and
intentions, most companies experience a
04
DevlpngGlobal_BK.pmd 4 6/5/2007, 4:31 PM
The new executives
will then be prepared
to hire local teams
and fly in resources to
help design
operational
procedures and
ensure cultural and
functional
compatibility within
the enterprise
Global-Sourcing-in-Action
A large manufacturer and distributor
of heavy-duty equipment wanted to
leverage global resources for its
extensive application portfolio. The
company chose to establish a captive
unit in India to avoid the complexities
and uncertainties of outsourcing. The
firm hired approximately 200 people
and ramped up operations. Two years
later the company was disappointed
because utilization of the offshore
team averaged about 40% rather than
the 80+% desired. Internal project
teams were aware of the offshore
teams, but lacked the knowledge or
reasons needed to include offshore
resources into project plans.
high level of turnover of local executives
during the first 2-3 years. Assessment Checklist
Even when set up properly, many captive
units fail to realize full potential because In potential countries, does the
their internal operating procedures remain
unchanged. Global sourcing is not just about
company have the management
skills or resources “on the ground”
having resources in offshore locations.
Successful global sourcing requires
to provide global delivery?
Does the company have shared
changes within the company, even if the
delivery center is a subsidiary. Global business objectives to expand in
the same region?
delivery is a methodology by which work is
distributed across resources so that offshore Is the company willing to make a
and onsite teams work effectively, both
individually and collectively. Operational
long-term investment, or is it
looking for quick return on
processes must change to standardize the
work flow and streamline handoffs between
investment or quick cost savings?
domestic and offshore teams. Corporate and
regional sourcing centers must develop
service catalogs and routine processes to
define deliverables, handoffs and exchanges,
Common Mistakes
and to manage expectations.
While many companies establish
Creating a captive unit without
altering operational processes,
captive units, only a few implement the leading to global delivery centers
global delivery methodology, resulting that are under-utilized.
in unbalanced resource utilization and Focusing on headcount or staffing
additional expenses that add little value
at global delivery centers without
to the enterprise. Companies that succeed
in global delivery create offshore resources evaluating the global delivery
methodology and the ways to
and then implement and enforce a
reallocate work.
methodology to ensure that work is divided,
accomplished, and combined into a cohesive
Underestimating the financial cost
final solution. Without rigor, global delivery and the management focus required
centers are often under-used, leaving
to establish a global delivery center.
offshore teams without sufficient work load
and onsite teams that are over-loaded. This Assuming that the internally
leads both to wonder why the global employed staff will provide greater
sourcing model has failed. security for company assets and
Process frameworks such as the Capability intellectual property than a service
Maturity Model (CMM) and ITIL help provider.
establish the definition and rigor required
Attempting to create a captive unit
to make a captive unit efficient. Companies
without having any knowledge of
that embark on a captive unit strategy
without respect for process modeling, or expertise in the region.
analysis, and change are taking on a large
risk with little potential for reward.
05

Executive Summary
The financial base case includes
a baseline cost model against
which outsourcing can be
compared. The base case usually
comprises the current budget for
work to be sent offshore, a count
of the FTEs involved, and
sometimes allocated percentages
of management and
infrastructure costs. The
management sets targets for cost
savings based on this baseline.
Collecting information from across
the IT organization and synthesizing
it into an accurate profile of
operations is a difficult task for
most companies. Divisions maintain
different statistics, measure
performance differently, allocate
DevlpngGlobal_BK.pmd 5 6/5/2007, 4:31 PM
Developing a
Financial
Base Case
budgets across different metrics, or
sometimes, don’t track the needed
data at all.
Companies must ensure complete
comparisons, as seemingly minor
details often sway financial
conclusions. Financial reviews
must consider hidden costs such
as software amortization or asset
depreciation, costs for knowledge
transfer, documentation for legacy
applications, software leases that
cannot be terminated, and real
estate that cannot be redeployed.
In addition, organizations must
carefully compare internal
“budgets” against vendor fees to
ensure accurate comparison.
The financial base case will become the
primary report card for the global sourcing The first challenge of
agreement during the first year. While
other metrics for performance and
relationships will eventually become any outsourcing
important, the financial metrics will receive
the first round of focus. The financial arrangement is aligning
base case becomes the baseline
assumption against which savings and
efficiency will be compared. It is critical
the client’s budget
that the data gathered is accurate and
correctly aligned with the services structure with the
proposed. Compounding this critical
exercise is the complexity of gathering the
information, which is often scattered
scope of work to
across the company among various
be provided
business units and organizations and in
inconsistent formats.
The first challenge of any outsourcing
arrangement is aligning the client’s budget Global-Sourcing-in-Action
structure with the scope of work to be
provided. Every company manages its An insurance company wanted to
budgets uniquely. Some are centralized, relocate its insurance agent call
others decentralized; all are different. When centers to an offshore location to
a service provider gives an estimate for reduce costs. It managed five call
a project, it is a natural reaction to centers that handled several
compare the proposal to a single budget. thousand agents. The company
Usually, however, the proposal crosses calculated that a provider should be
a number of different internal budgets. able to immediately reduce the cost
It is similar to a Venn diagram in which only of calls by 50%. After further
a part of the circles intersect. analysis, the service provider
discovered that each of the call
For example, in designing and implementing
centers used different call tracking
an enterprise ERP system, development
tools and had ill-defined operational
funds may originally be granted by the CEO
processes. The vendor was
from an investment pool, while the IT
completely unwilling to accept the
organization may pay for integrating the
client’s statements about the
system with existing applications. The
quantity and type of calls from such
deployment of the application onto desktops
may be funded by the individual business a disparate and poorly organized
units that pay a “per user” fee for collection of systems.
installation. The various sources of funds
must be understood so that money can be
07
 properly allocated and savings accurately
demonstrated after project completion.
It is necessary to understand the services
that are in the scope and how they compare
to the internal budgets. Similarly, before
engaging in outsourcing, the company
should gather data about the services it
intends to outsource. This data must
include service definitions, financial
metrics including costs that may be
outside the scope of the individual
organization, performance and
efficiency comparisons, and employee
counts. It is common for this information
to be scattered throughout the organization,
and parts to be measured differently in
different business units, forcing the
evaluation team to conduct further
discovery to reconcile different data sets.
Adding to the complexity of the financial base
case are costs that are often buried into the
company financial models and not affected
by global sourcing agreements, for example,
software amortization and asset depreciation
costs. In many companies, these costs are
not detailed routinely, and management is not
fully aware of their impact. Such costs must
be recognized as items that will not go away
in most outsourcing relationships; they can
undermine the expected impact of global
sourcing.
Similarly, employees must be assessed
carefully. Most employees may find other
positions in the company, but some must be
retained to provide vendor governance. If
employee positions cannot be eliminated, the
financial base case should account for people
who must be retained. The financial base
case is not an advanced financial project,
but it is a project with myriad details,
many of which are overlooked by
companies not experienced in global
sourcing.
06
08
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SAMPLE FINANCIAL BASE CASE CHART
Assessment Checklist
Does the company have financial
information about the current
operations that will be in scope of
the global sourcing agreement?
Do business units track performance
information using the same metrics
so that they can be accurately
aggregated?
Has the company used Activity-
Based Costing in process analysis?
Does the company have a history of
project-based budgeting that relates
back to the general ledger accounts?
Does the company have a costed
(and may be priced) service catalog
for IT services?
Common Mistakes
Aggregating metrics that are not
measured consistently, resulting in
incorrect snapshots of the
organization’s current performance.
Estimating a high percentage of
financial metrics rather than going
through the exercise of gathering
and compiling actual financials.
Assuming that documenting savings
from outsourcing is unimportant
when executives state that financial
metrics are not important, and hence
failing to gather and measure
baseline financial metrics.
Using assumptions that do not have
a basis in reality and cannot be
adjusted parametrically to develop
alternative as-is scenarios.
09

Executive Summary
Some applications are more
impacted by global sourcing than
others. Companies should
evaluate applications objectively
rather than skew the strategy
toward the political power
structure or pet projects. It is
necessary to create an application
portfolio to evaluate (1)
application complexity, (2)
business integration, and (3) the
potential return on investment.
Application complexity evaluates the
language, degree of documentation,
integration with other applications,
frequency of updates applied,
stability of the application in
production, etc. Applications with
discrete boundaries and stable
operations are better candidates for
global sourcing.
Business integration examines how
frequently the application must
DevlpngGlobal_BK.pmd 7 6/5/2007, 4:31 PM
Developing
the Scope
of Work
change with the business needs,
how much intellectual property is
built into the application, how
quickly the business is evolving,
etc. Return on investment
examines cost of the staff that
works on the application and the
feasibility of having a similar team
working in a global sourcing model
rather than onsite.
After the initial scope is
determined, various business units
or disparate projects may become
interested and may want to build
new functionalities or capabilities
into the project. While the service
provider is usually able and willing
to incorporate these changes into
the scope, the IT organization must
be careful to manage both the
incremental costs and schedule
changes.
Deciding on the services that can and must
be transferred offshore is a difficult problem. In the global
In the early days of global sourcing, project
managers or management teams made the sourcing model, it
decision. In the current market, companies
struggle to make more systematic decisions.
A business process analysis framework is is highly desirable
possible but it focuses on the IT organization
and application services. Applications must
be assessed on three dimensions:
to have less
application complexity, alignment with
business, and return on investment. This
frequent changes
combination yields scatter diagrams that help
discriminate high-potential opportunities from to business
those with high risks or low benefits.
IT organizations begin by assessing requirements.
application complexity in the context of
global sourcing. The assessment looks at
Global ofsourcing
the implications moving differs
the designfrom Global-Sourcing-in-Action
internally developed and
or development teams offsite/offshore. operated
services. Global sourcing requires A large chemical company wanted
It determines whether the business
working with third-party
requirements are well defined and to evaluate which applications
documentedorganizations
and whether the that operate in
development would most benefit from offshore
different cultural norms, and labor. The company categorized its
work is standard or requires significant
often, at a different applications into portfolios based on
institutional knowledge. It also considers
organizational level. All these common support requirements. It
technical issues, for instance, whether the
complexities must be managed in focused on assumed benefits
application developed is in a standard
ways consistent with business provided by offshore—the ability to
environment like Java, .NET, ABAP, or if it
objectives. The relationship provide routine application
requires specialized skills. The application
requires greater communication maintenance and off-hours quality
assessment analyzes this information to
and a thorough requirements testing. Applications that aligned
determine when, how, and whether global
definition. The complexity of with these requirements were
sourcing provides a viable technical
communication, travel, and considered higher candidates for
alternative.governance increases when the
using offshore. Applications that
Assessing the alignment
third party is with businesslocation.
in a distant units required closer alignment with
is another critical dimension. In addition to business objectives were considered
While many companies still
assessing the structure of the requirements less likely to benefit from offshore.
consider global sourcing for cost
definitions, the IT organization must evaluate The analysis guided decisions about
savings, they are discovering
the frequency at which business units require the scope of work and the skill sets
unexpected benefits such as
changes to projects. In the global sourcing required of the vendor.
innovation, transformation,
model, it is highly desirable to have less
partnerships, and
frequent changes to business
requirements.
11
 Constant changes in business requirements
will significantly undermine the benefits of
global sourcing.
Based on the assumptions and discovery
work of application complexity and business
alignment, IT managers can assess the labor
savings that can be realized through global
sourcing. Most companies reduce this to a
pure ‘cost of labor’ comparison, since
comprehensive models for comparing global
to internal sourcing are cumbersome to
develop. However, such comparisons will
provide little additional insight into broader
strategic decision-making.
The labor analysis can be done quickly and
easily based on the current FTEs either
working or planned for the project. Compare
the labor rate required for onsite work
with the cost of similar skills offshore.
Although everyone recognizes that the
difference in labor rates will not be the
projected cost savings for moving a project
offshore, this approach helps identify the
internal projects that would realize the
greatest savings, all other things being equal.
For companies making enterprise global
sourcing decisions, the portfolio method
provides a framework against which
decisions can be evaluated. However, even
after this effort, IT organizations must be
prepared for chaos later in the process. After
a vendor is selected and the transition period
begins, projects can still experience scope
creep as business units create additional
requirements and other projects look for
better integration. IT organizations usually
have greater success with global sourcing
when they freeze the expansion of a project
for the first 3-6 months, until the relationship
is stabile and the project on track.
12
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EVALUATING APPLICATIONS FOR OUTSOURCING
Assessment Checklist
Does the IT organization have clear
visibility into the variety of projects
and the effectiveness of project
managers across the enterprise?
Does the company have an inventory
of projects, including risk profiles,
financial concerns, and an
assessment of cooperation and
involvement from the business units?
Does the company use a PMO to
manage multiple projects or
implementation streams within a
large project?
Is there an established company
practice to accommodate scope
changes in the context of objective
criteria?
Common Mistakes
Making global sourcing decisions to
“outsource the problem” such as
driving individual political agendas, or
outsourcing projects that align with
problematic business units.
Issuing executive mandates that
every project MUST adopt global
sourcing rather than encouraging
solution-oriented behavior and leaving
final decisions to project managers.
Allowing stubborn behavior from
business units to disrupt or alter
business requirements.
Believing that global sourcing
providers can offer only obsolete or
established technologies rather than
cutting-edge business and technology
solutions.
Assuming that labor differences
between the United States and
offshore centers is equivalent to the
cost savings that a company will
realize from global sourcing.
13

Executive Summary
Gathering internal information for
an RFP is a difficult task for most
companies. The data must give a
sufficiently accurate picture of
internal operations so as to support
the provider’s efforts in providing
complete bids. Similarly, projects
must be designed with enough
detail to enable vendors to
understand the work requirements.
Within most companies, gathering
operational and financial data
requires an executive champion to
rally support from disparate
organizations. The data
requirements must be specified
with as much detail as possible,
including related service levels. This
allows independent verification and
DevlpngGlobal_BK.pmd 9 6/5/2007, 4:31 PM
helps avoid egregious errors.
Though most companies do not
align financial and operational data,
the two must be gathered and
reconciled for outsourcing
purposes.
Invariably, some information will
be unavailable. Estimates should
be based on industry standards
(e.g., servers managed per FTE).
Service providers know that
companies must estimate data and
will analyze statistics and ratios
against industry standards.
Through this process, the client
and the vendor arrive at a set of
services at a price that is mutually
advantageous.
Performance data is usually scattered across
the company. Information about the IT
organization can be tracked across different
business units, geographies, and technology
silos. Administrative business groups such as
human resources or finance may not track
process management efficiencies. Gathering
and synthesizing performance information is
a prerequisite for global sourcing. To issue
an effective RFP, the client must be
prepared with accurate information
about the scope of work, the current
levels of performance and process
transformation, and the outcomes
desired by the company.
A good example of the performance data
collection process is outsourcing of internal
help desks or support centers. The client,
for instance, must provide information about
the number and nature of calls received by
the help desk over a period. This number
must be validated against industry averages,
and must include information related to self-
help approaches and the volume of routine
activities such as password resets.
The average help desk receives 1.25 calls
per month per user. Adding self-help
systems like websites and password reset
tools raises the total “touches” to an average
of five per month per user. If the internal
help desk’s call volume differs from the
average, the global sourcing vendor will
speculate on the causes of variation from
industry norms. Service providers often find
previously dissatisfied end-users calling after
they take over and improve a help desk. Call
volumes can easily double in such scenarios,
placing the unwary provider in financial
jeopardy.
Most large companies operate with more
than one help desk. The RFP must document
the tools that each help desk uses to handle
trouble tickets, the languages it supports,
location and staffing issues for each, and
the diversity of issues handled, e.g.,
problems with hardware, password resets,
desktop software, and enterprise
applications. Since nearly one-third of the
calls are requests from end-users to reset
passwords, vendors will need to know
whether this is included.
Global-Sourcing-in-Action
A metals company was acquired
by a private equity firm and
significant focus was placed on
eliminating costs. Global sourcing
was introduced as a strategy to
reduce expenses. The investors
estimated cost reduction
opportunities using an “average”
30% reduction. While the company
had clearly defined processes for
infrastructure management and
could benefit significantly from
moving these offshore, the
investors were not interested in
“cutting edge” solutions. The
company immediately outsourced
internal IT support, without
measuring current performance
levels. The vendor struggled to
provide more cost-effective
support, and the investor’s
expectations were misguided by
over 25%.
15
 The provider will also need a profile of call
volumes for issues amenable to self-help Assessment Checklist
(again, password resets are the most
common), those requiring remote desktop
or site visits, the number requiring second- Does the company have an IT
level or third-level support, and the services catalog or process
percentage of issues resolved in the first architecture for IT services?
contact. These statistics indicate how Does the company have an
efficiently calls are handled, which can be authoritative source for IT
indicative of the quality of scripts used by development and delivery metrics?
the help desk, the depth of expertise of
personnel handling calls, or even the Has the company conducted a cost
complexity of calls coming into the center. or performance benchmark for IT
services?
A provider is concerned with the service
levels of help desk calls. Statistics such as Are the employees experienced
call wait times and call abandonment rates with ITIL, COBIT, or the Capability
are critical. A provider’s estimates for Maturity Model?
staffing will change if the average call
requires 25 rather than 3 minutes.
Additional items such as root-cause analysis
Executive Summary
Global sourcing differs from
internally developed and operated
services. Global sourcing requires A large chemical company
to diagnose common problems and
Common Mistakes working with third-party wanted to evaluate which
preventative measures like training and In many ways,that a global sourcing applications or business processes,
organizations operate in applications would most benefit
upgrading overloaded servers or networks Assuming that internal performance RFP is much like other outsourcing andfrom
an indication of the volatilityThe
different cultural norms, and offshore labor.
can significantly impact call volumes and and service levels are industry- RFPs. The
often, at document lists asset
a different or stability
company of business requirements. its
categorized
satisfaction levels. leading standards. inventories, service
organizational level.levels, project
All these Theseapplications into portfolios
qualitative attributes based
indicate
While the help desk example indicates the Failing to fully disclose performance complexities
definitions,must be managed
business in
objectives, on common support
the environment in which the work
complexity and nature of data to be ways consistent
personnel, with business
key milestones, and cost
collected, a similar set of statistics can be
problems and the persistent will requirements.
be performed. It focused on
challenges in IT development and objectives.
levels. GlobalThe relationship
sourcing RFPs require assumed benefits provided by
described for human resources, finance and delivery excellence. requires greater communication Clients can enhanceability
offshore—the the quality of
to provide
additional information to get
accounting, procurement, application and a thorough requirements routine application maintenance
bids by including information about
development, or any other process or Seeking a quick fix for inadequate accurate and informed bids.
definition. The complexity of the and off-hours
company, its viewquality testing.
or tolerance
function that is a candidate for global service levels without properly Global sourcing RFPs
communication, must include
travel, and
sourcing. Companies find it challenging diagnosing the organization’s for managing risk, the preferredwith
Applications that aligned
governance
information increases
about thewhen the
client’s these requirements were
to collect and organize information, shortcomings. third party isenvironment,
in a distantincluding
location.its structure for pricing (per FTE, per
operating considered higher candidates for
especially when parts of the business Developing a statement of work project,
usingor otherwise),
offshore. and anythat
Applications
CMM many
While operating level, gap between
companies still
track and measure performance with that does not recognize the soft other financial
required closeror alignment
operationalwith
the current operating
consider global sourcing levels
forand
costthe
unique metrics or methodologies. costs and user-borne costs within business important
constraints objectives to thewere
desired they
savings, levelare of performance,
discovering
the total cost of ownership (TCO) considered less likely
project’s transition and success. to benefit
unexpected
integration benefits such with
requirements as
for IT assets and processes. from offshore. The analysis
innovation, transformation,
guided decisions about the scope
partnerships, and
Related Documents of work and the skill sets required
5-4: Governing Service Levels of the vendor.

16

DevlpngGlobal_BK.pmd 10 6/5/2007, 4:31 PM

 A request for proposal (RFP) is the most
common instrument used to initiate
discussions between the company and
service providers. An RFP details the
scope of services required, along with
service levels, project timelines, and
sometimes, estimated cost of the work.
The greater the detail provided in the RFP,
the more accurate are the price estimates
provided by the supplier.
While government organizations must follow
RFP procedures strictly, private companies
vary widely – from close adherence to slight
adherence regarding results. Periodically,
companies avoid the cost and time of an RFP
process and sole-source work to a preferred
provider.
An RFP can be a simple document,
sometimes with only 8-10 pages. Some
companies combine the RFP with a sample
master services agreement (MSA) which
lengthens the agreement significantly. The
contents of an RFP should include a short
overview of the business objectives toward
which the services contribute. This helps
providers balance short-term metrics with
long-term goals.
The RFP must detail the desired scope of
work, including specifics about current
operations within the company. Since
service providers give a price estimate based
on this information, it is always desirable
to provide great detail, including the list of
assets that must be addressed in the
agreement, e.g., servers, storage devices,
buildings, and employees. It must clarify
whether assets will be a part of the work,
managed in the course of providing the services
or transferred to the service provider.
18
DevlpngGlobal_BK.pmd 11
The RFP must detail
the desired scope of
work, including
specifics about
current operations
within the company.
Global-Sourcing-in-Action
A large manufacturing company
created an RFP to outsource its
entire application portfolio. While
it accurately captured the current
operating environment, including
staff and performance levels, it
failed to assess the operational
changes that would be required
to realize benefits from labor
changes. By resisting
transformation in process or
methodology, the client limited the
ability to change or reengineer
solutions that would allow cost
reductions to materialize. The RFP
gathered information about the
client’s environment, but
neglected to affirm details about
operations that could provide a fair
assessment of its environment and
objectives for change.
Many clients use global sourcing as a
catalyst to drive reengineering through the
organization. The documentation must
provide information regarding the kinds of
changes required from the current state of
operations and the role that the vendor needs
to play. In some cases, clients manage the
transition and the vendor’s presence
facilitates change; in other cases, the service
provider is expected to bring intellectual
property and industry expertise to help create
a vision and drive change through the
company.
The RFP also includes details about
current internal services performance
levels. In the case of application
development work, it should describe
the organization’s operations level on
the Capability Maturity Model. Other
information on the work environment,
including the relationship between the IT
organization and business units, executive
perspectives on in-scope services, growth
rate of the business units affected, and
information about the client’s industry, can
assist service providers.
Most clients use an assessment committee
that includes legal, procurement, financial,
and subject-matter experts from HR, IT, etc.
to evaluate proposals. In the current global
sourcing industry, most providers
differentiate based on capabilities beyond
core technical attributes, making it important
that the RFP asks deeper questions about
the service provider and that the committee
evaluates responses more thoroughly than
simply asking about process model
certifications or the provider’s Six Sigma
black-belts. They can evaluate the provider’s
response to hypothetical questions about
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Assessment Checklist
Does the company have an
inventory of current operational
metrics?
Has the company decided on a
specific scope of work or is the
RFP “exploratory” and better
suited to a request for
information (RFI)?
Has the company managed a
large, strategic procurement for
IT services internally, or will a
third-party consultant be
necessary to keep the RFP
process objective and on-track?
Is every level of management in
the company prepared to deliver
accurate data for the RFP and
the subsequent amendments
necessary to properly evaluate
prospective global sourcing
providers?
scenarios that would place the provider in a
difficult situation. Qualitative responses
are difficult to quantify, but they usually
give better insights into the provider’s
culture and approach to problem-solving
than numbers.
Final recommendations must be submitted
to company executives before informing
service providers. Clients should expect
providers who do not win the business to
request interviews as they research the
buying process and find why the winner was
chosen. This kind of “Win-Loss Program”
is commonly conducted, especially with
accounts deemed “strategic.”
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 Common Mistakes
Estimating performance data rather
than gathering and providing actual
performance levels in the Request
for Proposals.
Describing the services that the
company wants to experience
rather than current dysfunctional
or substandard capabilities.
Ignoring anomalies such as obsolete
networks, operating systems, and
equipments, even when such items
must be managed by the service
provider.
Allocating insufficient resources for
the vendor selection process,
compelling the management to do
the evaluation along with normal
workloads.
Excluding human resources and
public relations personnel from the
project committee, thereby
preventing them from addressing
relevant issues in these areas.

Related Documents
4-2: Developing a Financial Base Case
4-3: Developing the Scope of Work
4-4: Developing Service Level Documentation

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