From the NASSCOM India The 21st Century Employee Global Services LIVE!

Leadership Forum 2011 Pg22 Incentive Program Pg24 Case studies Pg26

globalservicesmedia.com

February 2011

NEXT & BEST

PRACTICES IN
GLOBAL SOURCING
Thought-leading Practitioners’ Viewpoint
The State of the Outsourcing Industry .............. Pg 8
Key Imperatives in Global Sourcing ................. Pg 11
Collaborative Sourcing................................. Pg 13
Supply Risk Monitoring ................................ Pg 16
Cloud and its Implications on Service Delivery ... Pg 18
Business Process Integration In The Cloud......... Pg 18
Accelerating Transformation through BPO.......... Pg 19
 GLOBAL SERVICES A CYBERMEDIA PUBLICATION
An integrated media platform which connects the
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business processing services industry ecosystem. Chairman & Managing Director
Cyber Media (India) Ltd.
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Editor
A regular digest of key industry happenings.
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 February 2011

FEATURES

8
NEXT & BEST PRACTICES IN
GLOBAL SOURCING
Taking the VMO from Endangered to Empowered 8
Rewriting the Rules of the Outsourcing Industry 11
Negotiating a transformational Deal 13
How to Manage Supplier Risks 16
Managing an Outsourcing Relationship 18
Assessing and Understanding Cloud-based Models 19

22
FROM THE NASSCOM INDIA 24 xperts
LEADERSHIP FORUM
By Sruthi Ramakrishnan & Smriti Sharma DESIGNING THE 21ST CENTURY
INCENTIVE PROGRAM TO DRIVE
EMPLOYEE ENGAGEMENT
26 By Allan Schweyer,
GLOBAL SERVICES LIVE! Center for Human Capital Innovation
Where and even whether incentives and rewards programs have
NEW IT & APPS PLATFORM 27 a place in the modern workforce is being questioned, because
Client: Verso Paper Corp Provider: Dell Services skeptics believe the program outcomes and impacts are becom-
ing increasingly more difficult to measure, manage, and control

SOX COMPLIANCE 28
Client: Unilever Provider: Capgemini

GLOBAL SERVICES DIGITAL MAGAZINE

G
Next Issue:
N
The Truth about the Contact Center Rebound
T
,V
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here to stay? What is behind the rebound- pent up demand or
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new growth areas? Which will be the market sweetspots for
tthis industry?
F
Find out these and other contact center truths and trends in this
March special story.
M


 





 

 
  

 
 



  

  
  
EDITOR’S NOTE
The Tale of Two
Conferences
I attended Nasscom’s annual India Leadership Forum, NILF 2011, after a
gap of six years; years that were quite eventful in shaping the outsourc-
ing industry.
The event continues to be one of the best business conferences in the
country. I have three measures for a good conference: how physically tired
I get, the net number of business cards I exchange, and the number of
pages I fill in my notebook. The NILF 2011 scored very high at least on
the first two and I did take back some good notes.
Six years later, the Indian outsourcing industry’s optimism and enthu-
siasm seems intact. The mood was certainly upbeat with global companies
like Accenture and CapGemini also joining the celebrations. It has always

ED NAIR has been Nasscom’s intention to get the leaders of the Indian industry
come together to celebrate the success of Indian outsourcing. Nothing
Editor wrong with that, but the industry could do well with a bit more intro-
ed@cybermedia.co.in spection and roadmapping for the future.
In the intervening years, I got to see the global dynamics of the indus-
try evolving and got a closer look at the buy-side perspectives. Looking
through that lens, India’s optimism needs to tempered. There is the need
Client priorities are to understand that not all answers lie here nor do all opportunities.
shifting and there McKinsey’s Noshir Kaka was dead right in pointing out that there is
is no consistent no cause for ‘India Shining’ anymore. He cautioned that client priorities
are shifting and that there is no consistent correlation of the benefits of
correlation of outsourcing to business impact. He added that we have been focusing on
the benefits of areas like SLAs, price, and cost that do not seem to matter and ignoring
outsourcing to areas like outcome, innovation, and customer satisfaction that we do
need to care about. In summary, it is time to have the right priorities, the
business impact. This right incentives, and the right metrics.
is the opportunity for This is not to say that India’s future is bleak or its days numbered.
India to reinvent and Rather this is the opportunity for India to reinvent and innovate once
again.
innovate once again. Cut to another conference that happened late January in New York.
This one had a buy-side focus. The predominant flavor here was the need
to look for transformational benefits from global sourcing, the need to
manage supplier risk, the need to scan continuously for new offshore
locations, and the need to measure and manage vendor performance on
far more sophisticated metrics beyond cost and SLAs.
It is for anyone to check the match between the two sides of the story
and decide the priorities. .GS
 Key Imperatives in Global Sourcing

Taking the VMO

from Endangered to
Empowered
Building an empowered VMO (vendor management office) is
becoming a key imperative in the global sourcing of services

V
endor management capabilities play a big part 1. Identifying and reducing maverick
in ensuring a successful sourcing relationship. spend
Satisfaction with a vendor is generally much This requires some introspection on the client side- ‘Who
more aligned with the buyers’ ability to govern are my vendors? How much am I spending with each? Are
that relationship than with the vendor, the contract signed there inconsistencies in pricing across business units? Are
or the way the contract was negotiated. Thus building an there opportunities to consolidate? What percentage of
empowered vendor management office is becoming a key spend does not map to an order, an invoice, or a contract?’
imperative in the global sourcing of services. “Ability to Vendor consolidation research by Forrester shows there is a
succeed in new (business) models has a lot more to do with lot of low hanging fruit– paying maintenance on hardware
your governance than with some of the other things that the client does not own anymore, several vendors doing
we may be starting to think about,” says Christine Ferrusi the same project– especially in large complex organizations
Ross, VP & Research Director, Forrester Research. that use a lot of services.
But vendor managers– the crucial cogs in the vendor
management machinery of a buyer organization– are now
becoming an ‘endangered’ lot, according to her. She cites “If all you are to
three reasons for this. Firstly, vendor managers are now
fewer in number. Multi- billion dollar vendor manage- the supplier is
ment organizations today have only 2- 10 vendor manag-
ers on an average, leaving too few people to handle too
a contract, and
many sourcing projects. Secondly, new business models that’s all they
like cloud and SaaS (Software as a Service) are making
sourcing portfolios smaller and smaller, thereby increas-
are to you, then
ing the number and changing the type of suppliers to be you’ll be won-
dealt with. Finally, post- recession, everyone is saying that
the VMO will become more powerful within a sourcing
dering if it (the
organization. But business units, the sourcing group- when relationship) is
it is sometimes different from vendor management- and IT
are all putting hurdles in the way of this relationship. “So,
even worth improving,”
though a lot has been done, we are not out of the woods
yet. There are some structural and organizational issues
which still remain,” Ross says. Christine Ferrusi Ross
Shifting the VMO from the ‘endangered’ to ‘empow- VP & Research Director,
ered’ category is not very difficult. All it requires is some
clear and focused thinking on the clients’ part. Ross gives Forrester Research
a three- point formula for this:

8 GlobalServices www.globalservicesmedia.com February 2011


Another very important question is– ‘How are you
tracking against your savings goals?’ One tool which could
help in tracking this is procurement software specifically
with the ability to manage services procurement.
2. Tiering (grading) vendors based on
performance and based on risk-
Most buyers have a model to track vendors, financial
viability, etc. It can be used to track things beyond finan-
cials, like relationship and service, and innovation. The
latter being a variable concept, it can be tracked through a
scorecard with questions like-
Q Does the vendor participate in strategic planning ses-
sions? This is more about whether the client wants
them there in the first place, and whether they added
value when they were part of these sessions.
Q Does the vendor make innovative and actionable
recommendations?
Q How well does the vendor bring industry-specific
expertise to bear? Offshore vendors are not considered
to bring industry-specific expertise, as compared to
traditional global multinationals. Also, a lot of provid-
ers are getting good at this, but buyers need to under-
stand what is it that they want when they demand
industry-specific expertise from their vendors- is it a
technology capability that the industry uses a lot, or is
it some business value?
Q How well does the vendor drive collaboration
across your company to streamline processes and/or
Fig1. Types of Vendor Risk Data Required for Vendor Tiering
Source: Forthcoming, “Supplier Performance Management Trends, 2010 To 2011” Forrester report
9 GlobalServices www.globalservicesmedia.com
Key Imperatives in Global Sourcing
technology solutions? More importantly, do the buy-
ers let them do so?
Here too software can help measure the performance of the
vendor, but falls short on risk analysis, like measuring the
financial stability of the provider and what criteria should
be used for it. These are things that the buyers have to do
themselves as the software is not there, and the data is not
available in a cohesive way yet.
Risk can be a very amorphous concept; there are spe-
cific kinds of risks. Data is required in certain specific cat-
egories to understand the risks associated with the supplier,
and the risks he might put the client at.
3. Streamlining the contract management
process
CLM (Contract life-cycle management) software is a good
way of offsetting cycle-time bottlenecks. It is a big part
of ensuring compliance, because the buyer can measure
the vendor’s compliance against a contract. “Teaching
everybody who comes in contact with the vendor consist-
ently on vendor governance practices is really important;
because a lot of times, it is really just a matter of people not
knowing what to ask for,” says Ricci.
Sometimes, it is possible for contract life-cycle manage-
ment to actually be an inhibiting factor. Typically, that’s
when:
Q There is no CLM tool in place.
Q Paper-based processes dominate in the organization.
February 2011

Q Limited standards, templates, and best practices are in
place.
Getting Innovation from (Existing) Service
Providers
Once the above mentioned VMO backbone is in place,
focus should be on building relationships with the ven-
dors, and the specificities therein. Especially where the
buyer does not have the luxury of starting over with a new
provider, rebuilding relationships to include innovation
should be a priority.
1. Refocus the relationship on mutual needs-
Rather than being simply contract- based, the cli-
ent- provider relationship should be based on mutual
needs, more personal than coldly business- like. “If
all you are to the supplier is a contract, and that’s all
they are to you, then automatically you are two arms
lengths away from each other. Then you’ll be wonder-
ing if it is even worth improving,” says Ricci.
Once both the parties are clear about each others’ needs,
it is fairly easy to align them. What the vendor wants
is to be profitable and to have a big relationship (large
contract) with the client; what the latter wants is to be
able to have fewer providers. “It is really about mini-
mizing those areas where you are different and maxi-
mizing the areas where you are the same,” says Ricci.
For this, articulating your expectations, especially when
it comes to innovation is imperative. Once the provider
is clear about what the client thinks innovation is, how
the business is going to measure innovation, then they
can have a much more productive conversation.
2. Meet your compliance requirements-
Prevention is the new wave of protection, considering
its easier to upgrade to current compliance and secu-
rity requirements, than to lose money and business
efficiency due to compliance or security failure.
Security is everyone’s responsibility, just like gov-
ernance. Right from making sure that the con-
tractor doesn’t bring in a sub- contractor without
informing, the sub-contractors face the same security
requirements as internal employees, making sure that
employees know what they can and cannot discuss
with the provider- security is everyone’s responsibility,
particularly when it comes to information and data
security.
To keep up with compliance requirements, it is
necessary to be on good terms with certain entities,
like regulators, internal and external auditors, and
corporate and information security. This would also
be helpful for clients to judge how fast their suppli-
ers can keep up with changing regulatory compliance
requirements.
10 GlobalServices www.globalservicesmedia.com
Key Imperatives in Global Sourcing
BUILDING AN EMPOWERED VMO
Q Focus on improving supplier master data.
Q Measure vendor innovation.
Q Selectively use tools and 3rd party data
for risk management.
Q Create a next-generation playbook.
BUILDING VENDOR RELATIONSHIPS FOR
INNOVATION
Q &DOO\RXU¿YHPRVWVWUDWHJLFYHQGRUVDQGDVNWKHP
what you can personally do to make them more
successful at your company.
Q ,GHQWLI\\RXU¿YHULVNLHVWYHQGRUVDQGYDOLGDWHWKDW
their latest security assessment was completed within
the past 12 months.
Q 5HYLHZWKHSHUIRUPDQFHUHSRUWVRIWKH¿YHYHQGRUV
with the biggest footprint and ensure the information
tells you the true story of what those vendors are
doing for your company.
3. Set performance metrics together-
Expectations from both sides should be realistic. Only
those aspects which are mission-critical should be
measured and tracked. Vendor managers can be really
helpful in deciding which these aspects are.
Also, making buyer- vendor objectives shared will
make both sides want to succeed. “Making them (ven-
dors) want to help you (clients) succeed has got a lot
to do with helping them be proud of the great things
they did, getting them recognition internally for that.
But ensure they address failure as well,” says Ricci.
Verbal appreciation can help boost vendor morale too.
“Everyone wants to be valued. Saying ‘that’s what I
paid you for’ isn’t the most motivating thing”.
Bringing the VMO from ‘endangered’ to ‘empow-
ered’ needs focus not just on a vendor, or the VMO,
but on the whole sourcing ecosystem. “When you (the
buyer) think about innovation, think about the new
opportunities you want to take advantage of. Think of
the whole ecosystem, think of the program of vendor
management, of the way you negotiate with vendors
on a day to day basis, of the portfolio of suppliers
you work with. Putting this whole ecosystem together
will help you innovate and take advantage of the new
opportunities,” advises Ricci GS
Excerpted by Sruthi Ramakrishnan from the
2011 Global Services Conference session “Key
Imperatives in Global Sourcing of Services for the
Next Decade”
February 2011

Rewriting the
Rules of the
Outsourcing
Industry
When the rules change, the game often gets
more exciting and rewarding. So it is with the
global outsourcing industry. Excerpts from
Global Services Conference 2011 keynote by Atul
Vashistha, Founder and Chairman, NeoGroup.
A
fter years of rapid growth, the economic reces-
sion brought in many changes to the outsourc-
ing industry. Constrained budgets for technol-
ogy led to careful spending on discretionary
areas and reduced scope for new projects. Deal sizes started
to shrink, buyers started to ask for more with less, and
vendor line-ups started getting rationalized. New rules
started getting written. It is for both the service providers
and buyers to understand these to make global sourcing a
lever for business value.
Changes in Supplier Dynamics
During 2009 and 2010, most suppliers had a significant
reduction in the pace of revenue growth; from 25 – 30
percent annual growth to just about 5 percent or therea-
bouts. However, their profits went up significantly. This
means that for the first time in industry, suppliers, espe-
cially offshore-driven, learnt how to better manage their
business. When they were gaining 25 percent revenue they
paid no attention to their operations, in the last few years
the economic downturn forced them to tighten their focus
on operations. They became more efficient, their bench is
highly utilized compared to previous years. Thus, the sup-
pliers are in better position today.
This transformation that was visible in 2009 and
2010 is not over. Last two months of 2011 have seen a
11 GlobalServices www.globalservicesmedia.com
The State of the Outsourcing Industry
significant change. In the key markets- like Brazil, India,
China- the inflation is close to 8 to 10 percent. In 2009
and 2010, the raises for employee was near 5 percent or
below and in 2011 they are expected to be near 12 to 15%.
The cost structure is changing quickly for these suppliers.
One of the key points to be noted is that outsourcing is no
longer being done by functional groups.
The New Uses of Outsourcing
A year back, the CIO of Applied Materials was asked to
lead a program called Future Apply; his job was to leverage
the knowledge of IT outsourcing and apply it across the
company. The goal was to look at ways in which is how
can you significantly transform the way business is done
or function is done using outsourcing.
In Procter & Gamble, the role of CIO is that of Chief
Business Officer, the goal is how can you leverage out-
sourcing to change the way business is done. The CIO is
also Chief Procurement Officer.
When Electronic Arts did outsourcing, the number
one reason was not to reduce cost, but to take opera-
tions in 20 countries operations and create one single
finance function; they felt outsourcing was the best way to
do it.
In 2004, when everyone was against outsourcing, E
Loan - a company based out of California- gave their
February 2011

customers an option: process their loan in US at cost X
and estimated time of 60 days; or get it processed off-
shore for cost less by a quarter and time of less than 60
days. Over 70 percent of the customers chose the offshore
option. E- Loan thus found a different way to compete.
What Buyers Want?
Santy Sharma, IT Services Lead- Strategic Sourcing, Cargill
Inc articulated, “Simple factors for us whilst outsourcing
i.e. cost optimization is not at the top; cost optimization is
built-in. The first focus is flexibility with resources, moving
away these resources from day-to-day work and putting
them to work in the area of our core competency. Second
focus is getting a free access - without investing or chasing
the technology - to best practices and best methodology.
Third and most important factor is business innovation.
Definitely, cost optimization plays a role, but these three
top our charts as in why we want to go outsourcing.”
More than 50 percent of new products launched by
Johnson & Johnson consumer products are developed with
partners. Highlighting on what J&J looks for in a partner,
Julia V. Santos, Head of Global Business Optimization
& Contracting, Johnson & Johnson Group shared, “The
way we look at our partners is slightly different. We know
that we cannot do business alone, we look at our partners
as our extension. Several years ago, sourcing was all about
reducing cost. We quickly comprehended that this not
what keeps one in business. It is quality that comes first,
followed by efficiency and speed and if the job is done
right, cost comes naturally. We look at our partners for
innovation above all, because through innovation we have
that upper edge over our competitors. If our partners don’t
come to the table with an innovative product or process
to do things better, faster and within the quality stand-
ards, then they don’t sit at the table. They also need to be
innovative, they need to bring in quality, speed, and when
negotiating if cost comes out lower, it is great—but cost is
not the primarily focus..”
The Changing Rules of the Industry
Atul Vashistha Founder & Chairman, Neo Group stated
some upcoming market dynamics:
1. IT-BPO convergence is for real, it means is a funda-
mental transformation in way services are handled. If
you are thinking of transforming your HR function or
finance function, it is hard to do that if IT is not playing
a role. As per Horses for Sources research conducted in
2010, 45 percent have some interest in bundled BPO-
IT opportunities, 37 percent are evaluating BPO-IT
opportunities separately and remaining 18 percent are
evaluating bundled BPO-IT opportunities extensively.
12 GlobalServices www.globalservicesmedia.com
The State of the Outsourcing Industry
2. Accenture has 72000 people in India, IBM has over
100,000. Similar scales have started to emerge for
companies in Mexico and even in Colombia. It is
starting to see scale happen where gravity is shifting.
3. There is renewed interest in domestic locations, this
doesn’t mean offshore is dead but many companies
where culturally offshore may be a challenge, are
starting to find low-cost locations. Locations like
Jonesboro, Ann Arbor etc. are becoming more attrac-
tive supplementary centers.
4. The biggest change happening in the outsource world
about which most people haven’t thought about but
most are struggling with is to manage the transition
from fixed price to managed services, which is con-
tracting for services instead of contracting for bodies.
From staff augmentation to managed services, the
focus is on SLAs and not resources. The focus is on
performance. The significant change that happens
when this is done is that people are no longer manag-
ing the resources on a project. They are focusing on
outcome and to focus on outcome one has to focus on
the drivers for that outcome. However, the customers
have made the switch to managed services, but govern-
ance models have not evolved. Suppliers have to think
of how can they help the client to transfer to managed
services because it is good for the client. But if you’re
the client, then how do you manage this model? One
of the best models is ‘balanced scorecard’, it has 2
kinds of measures— one is the leading indicator and
the other is the lagging indicator. Quality problem
indicates a lagging indicator and high attrition is a
leading indicator that quality problems might happen
in future.
5. Clients are acknowledging the importance of retained
organization. In the last few years, clients found that
as they outsource they were forced to give more
and more to the suppliers and in many cases they
gave too much and now they are having a hard time
improving productivity. Definitely, the cost has gone
down but they’ve started to face challenges and are
not being able to improve the productivity because
they lost the domain expertise. More companies are
re-evaluating their decision on what resources they
should retain
6. Suppliers need to allow career movement from their
side to the client side. Then clients will once again
domain expertise on their side. GS
Excerpted by Smriti Sharma from the Global
Services Conference 2011 session “The State of
the Outsourcing Industry”
February 2011

Negotiating a
Transformational Deal
A transformational outsourcing deal is vastly different from accounts
or payroll outsourcing, so is the negotiation process for the two.
I
n the post- recession time, a lot of companies are
looking for something radical to pull them out of
the recessionary inertia and set them on the growth
path again. And many of them are looking at negoti-
ating transformational deals towards meeting this end.
Choosing the right provider for implementing a trans-
formational process is very important, negotiating the
right deal is even more so. Going ahead with a transforma-
tional outsourcing deal is vastly different from outsourcing
your accounts or payroll function, so is the negotiation
process for the two.
Requirements for negotiating
Firstly, in a transformational transaction, vendors require-
ments are ‘softer’, or more specialized. “In such a transac-
tion, vendor requirements will be ‘softer’, if you will,” says
David Jackson, Partner, Baker and Mckenzie. “You are
going to need someone with expertise in your vertical. Like
for Oracle or SAP implementation, you are going to need
someone who’s done that for your vertical because there
are regulatory issues which people in your vertical may
definitely have to deal with, other practical considerations
which might run through your vertical.”
Such transactions also require communication skills for
communicating both from the client side to the vendor
side, as well as internally on the vendor side to get the
implementation done correctly.
High level project management skills are essential.
“Project management is definitely important, especially
during the transition stage. But its even more important
when you are doing a transformational deal, because
the sophistication level of the project management skills
required is higher,” says Jackson.
Requirements in a transformational transaction will
keep on changing, even after the RFP has been put togeth-
er and a lot of information has exchanged hands between
the vendor and customer. This is true for all outsourcing
contracts, but the degree to which they change is greater in
transformational deals.
13 GlobalServices www.globalservicesmedia.com
Collaborative Sourcing
The Real Deal: the Negotiation Process
While negotiating, both the vendor and client teams
should make use of internal and external expertise. The
vendor’s team, especially the sales team, should have
technical expertise in the transformational aspect that the
client is trying to implement.
On the client side, subject matter experts (SMEs) in the
organization should be brought to the table, as part of the
team, right from the pre- RFP process. Similarly, the nego-
tating teams should be part of the business strategy meet-
ings of their respective organizations. This will prevent the
contract from falling short at crucial points, and also make
expectations of each side clear to the other.
When it comes to discussing the finer details of a
contract, vendors especially, would rather finish with it
sooner than later, says William A Tanenbaum, Chairman
- Technology, Intellectual Property & Outsourcing Group,
Kaye Scholer. Quoting a TPI survey, he says that at least
with respect to large vendors, they would rather have the
whole large contract in the RFP, because they would prefer
to answer the questions once. “They would look at the
MSA (Master Service Agreement) and figure out what you
really want, rather than have a discussion and a general
RFP, have some answers and then do it all over again in
the MSA,” he says.
The most important thing in the negotiation process is
to be flexible, says Jackson. “The objective of this process is
to find the value maximization point, and to minimize the
external factors that can shift the value curve in the wrong
direction,” he says.
From the clients’ side, its not advisable to have a nar-
row vision, he says. They’ll be cheating themselves by not
engaging with the vendors, who have a world of knowledge
and expertise within and outside the client’s vertical. GS
Excerpted by Sruthi Ramakrishnan from the 2011
Global Services Conference session “Collaborative
Sourcing”
February 2011

How to Manage
Supplier Risks
Multiple vendors and globally distributed delivery makes managing
supply risk critical. Read on to know how to capture relevant risks
across various levels and how to manage them.
T
he after-effects of global recession tell us that
most organizations react to the risks unprepared.
Instead of dealing with risks, minus any home-
work, it is essential to be geared with a strategy
beforehand. A robust risk management strategy is founded
on the basic framework to monitor and manage various risk
elements. So, the first step is to create the framework.
Framework to Monitor the Vendor Risks
One of the speakers at the Global Services Conference 2011
who is a senior risk and compliance management profes-
sional with a global bank shared her insights on how to
create a framework to monitor risks. She said, “Strategy is
very much at the front center of our framework. Having a
good strategy makes one much more agile when it comes to
reacting to threats. In addition to having a strategy, having
the right resources is important. In my case, 200+ senior
managers over VP and above have the authority to make
decision on risk. They are responsible for execution. Another
thing, is having a governance that consists of co-head of
operations risk, head of business continuity, head of infor-
mation security, head of corporate security. Since these are
the people who are in the know, they are well versed with
the regulations and what to be concerned about.”
“Other standard, but significant measures are commu-
nication and awareness. A website which is very content
rich - in terms of what a process needs to be, what are some
of their requirements, who are the people they should be
talking to, where are they in their risk manage assessment
process and where they go next- should be available, as this
gives busy executives a direction. Also, training and aware-
ness are a big deal for us. We had to plug in some training
programs across the companies so that people were up to
speed with their responsibilities,” she added.
The other point to be kept in mind, while crafting risk
management framework is touching each and every seg-
ment of the business. Legal and procurement are the key
ones. Contracts are fundamental to ensuring one has the
16 GlobalServices www.globalservicesmedia.com
Supply Risk Monitoring
right perspective and right controls put in place from a
service delivery perspective. The procurement depart-
ment is the area one needs to be in total partnership
with. Information such as what are the processes they
are employing to get out to the market, what depth
of information they need to look for when evaluating
the potential risk from vendors and others need to be
tracked and made available to the stakeholders.
Getting the Right Framework
Charlie R. Miller, VP - Vendor Risk Management, Bank
of Tokyo - Mitsubishi shared the seven criterias they use
to get the right framework.
i) Financial Check on vendors to make sure they are
financially stable. We do facts check and other regula-
tory requirements in that nature,
ii) Information Protection- What kind of informa-
tion/ data are the vendors going to have access to and
what is the level of criticality of that particular service
from recovery prospects.
“We monitor
different regula-
tory requirements
across businesses
and vendor risk is
obviously one of
those. ”
Charlie R. Miller, VP - Vendor Risk
Management, Bank of Tokyo
February 2011

iii) Reference Check: A background check to find out
what is their specific delivery capability, which country
are they from, what does their client base look like, and
whether or not there is any issue with the vendor in terms
of regulatory service delivery,
iv) Annual Spend: What is their annual spend
v) Sub Contract: If the vendor is using a sub-contractor,
that’s a key thing to know of.
vi) Country and City Risk: What is the location and
where is the actual service being delivered from, how politi-
cally stable is the country, what are the social risks in the
country, what are the economic risks posed by the country,
what are the geographical and environmental risks, what are
the risks associated with supply of talent, etc.
vii) Finances: How much money are we spending,
whether or not there would be any financial risk to the bank
if this vendor would have some kind of operational issue.
De-scoping some of the services is also helpful. Take the
example of correspondent banking. There are very tough
regulatory guidances around this service. There are parts of
business that did the initial vetting, thus in this case ongo-
ing monitoring resulted in no added value. De-scoping
such areas that are well-managed or perhaps are low risk
to the organization helps one focus on the areas where you
can add value. Having a documentation to support that for
posterity is also very important.
Making Your Framework More Robust
In order to make your framework more robust, apart from
providing the complete risk portfolio to executives certain
tools such as ‘Balanced Scorecard’ can also be employed.
Source: Neo Group
17 GlobalServices www.globalservicesmedia.com
Supply Risk Monitoring
Balanced Scorecard helps keep track of the execution of
activities by staff within their control and monitoring the
consequences arising from these actions. Also, it helps
find out whether you have a recurring theme of poor
controls in certain places, so that they can be taken care
of accordingly.
Tracking Regulatory and Compliance risk
Miller articulated, “ In my organization, regulatory and
compliance risk is very high on everyone’s mind. In order
to make sure we are in compliance with almost everything,
we monitor different regulatory requirements across busi-
nesses and vendor risk is obviously one of those. We align
with different things that are happening in different indus-
try sectors, eg PCI, healthcare and some of the things that’s
happening in US. We also keep a close watch on things
that are happening externally especially around privacy
and recoverability requirements.”
Supply Risk Model
Speaking about NeoGroup’s Supply Risk Model, Sandeep
Suresh, Head of Research, NeoGroup said, “We have devel-
oped a model that tracks risk based on various parameters.
If we look at a country level, we will track macro-economic
risks and geopolitical risks. In geopolitical, we study the
potential for natural disasters and the political scenario in
that country; they have an impact on daily business opera-
tions. However, they are not in vendor’s control. Financial
risks and industry risks are studied similarly at city level and
then provider level. This is how we track risks. This program
is customized as there’s the ability for clients to pick and
choose a particular city or a particular
country or a particular provider.”
“We have risk rating on a scale of 1
to 10, one being the least risky and 10
being the most risky. From over 200
parameters in each of risk categories-
where we collect data on every quar-
ter- we come up with a final rating.
That’s the rating score for a particular
location, particular service provider. It
helps clients compare different loca-
tions. If a client subscribes, then they
get a score,” Suresh added.GS
Excerpted by Smriti Sharma
from the Global Services
Conference 2011 session
“Supply Risk Monitoring”
February 2011
 Accelerating Transformation through BPO

Managing an
Outsourcing Relationship
Jim Bechtold, Senior Vice President Reimbursement and
Government Affairs of Biomet Trauma and Biomet Spine, Biomet
shares his experience in managing an outsourcing relationship that
helped transform the collections process at Biomet. Some useful
pointers on how it was done.

C
hoice of vendor: We really concentrated on
who we were going to choose based on how
they were going to approach the business. It
wasn’t just about saving on labor costs. We
were really looking at who could develop the domain
knowledge that didn’t exist outside the US; someone who
would partner with us from a gain- share perspective. A lot
of the financials were also tied to gain sharing, as related to
the efficiency of our collection process improvement.
Approach: We decided not to go inexpensive and
cheap on the technologies supporting the infrastructure.
Because it could add costs and unforeseen overheads later
on and also impact efficiency. We didn’t want to change
people, processes and policies all at once.
Managing the transition: We intentionally extended
the transition time. We occasionally had issues with attri-
tion and we learnt how to manage that. When we do get a
complaint or issue, we go back and watch the video to see
whether it was a training issue, or someone just wanted to
complain. We are constantly working with our (outsourc-
ing) team on the ground, they are pretty well integrated,
we are pretty frank with each other.
Working the mechanics of the
relationship:
We’ve kept subject matter experts (SMEs) onshore, they
remain our employees. They have their teams overseas,
and we work collectively. We also have one of the vendor’s
agents embedded in our group. So in that respect, we are
joined at the hip. There is no real IP; it’s really a process,
domain knowledge, expertise that we’ve and have shared
with our vendor. It’s an area the vendor wanted to get into
seriously, there is mutual benefit in that respect.
Beating the recession: We had started our (outsourc-
ing) process prior to the downturn and certainly had the
“Do not cut corners. To do
transformational outsourcing
and to do it correctly, you have
to put some capital in it”
Jim Bechtold
Senior Vice President
Reimbursement and Government
Affairs of Biomet Trauma and
Biomet Spine
benefits of the labor savings. But we also had much higher
collection rates. So we were able to have that internal ben-
efit, and still do. Companies might have faced the problem
of capex spend during the recession. Many capex budgets
have had to be ratcheted down. Because to do this (trans-
formational outsourcing) and to do this correctly, you can’t
cut corners. Companies that are in it for the long term,
they have to put some capital in it. You are going to have
some below the line cost depending on what kind of tran-
sition you do. It is not insignificant, and they may be
considering that as we come out of the recession.GS
Excerpted by Sruthi Ramakrishnan from the 2011
Global Services Conference session “Accelerating
Transformation through BPO”

18 GlobalServices www.globalservicesmedia.com February 2011

 Understanding Cloud

Assessing and
Understanding Cloud-
based Models
Gartner Research tells us that cloud-based service revenue is pro-
jected to touch $148.8B by 2014. Yet, not many people-apart from
the consultants- understand what the cloud is and what are its
implications?

C
loud is a business and technology model that hybrid world- where you are dealing with cloud as well
lives on the Internet. So, cloud-based models as on-premise. It becomes difficult to make this useful, as
basically look at ways to dis-aggregate central- cloud by itself is just an island of information and there has
ized data, centralized labor, centralized man- to be a way to integrate between the on-premise world and
agement and distribute it across multiple geographies and the cloud world and even cloud-to-cloud. The integration
it is distributed via the Internet. Thus, one of the biggest gets a lot more difficult when you take into considera-
constraints for cloud is that it cannot go to a place that tion cloud-on-the-premise, as now you are talking about
does not have Internet, so Internet comes first and cloud information that is residing in different locations. You are
comes second. dealing with that issue, you are spanning firewalls, you are
not necessarily in total control of your applications and
The Sourcing Aspect of Cloud downtime can come into play and you are not in control
Does the cloud model imply that the service is outsourced? of when that application is down.
Does it imply that it is offshored? Jerry Luftman, Executive
Director, Stevens Institute of Technology said, “My argu- Problematic ‘Integration’ Aspect of Cloud
ment is it does not matter -you can have a cloud that’s What makes people shy away from the cloud? According
in-sourced, you can have a cloud that’s outsourced – based to one study, obviously, security tops the list, many people
on where it is located. Although, there is a
lot ongoing discussion on whether a cloud
should be centralized, in my opinion, it is not
necessary. When considering cloud, the point
of time to look at it is the initial stages of the
life-cycle of sourcing. At the beginning of cre-
ating IT strategy or IT portfolio, it should be
clear whether you will outsource or insource
your cloud.”
With the adoption of cloud, people are
adding software-as-a-service (SaaS) applica-
tions. They are moving to public clouds or
even private clouds. But, we cannot forget
that most of what is being run today is on-
premise, so it is packaged applications and
home-grown
Source: Neo Group applications. This is creating a

19 GlobalServices www.globalservicesmedia.com February 2011

 Understanding Cloud

see this issue with the cloud and are concerned towards
making the move towards it. The second one is integrat-
ing enterprise applications. Integration comes thrice in
the study. So, it actually comes on top above security, as
the top reason why people are worried about moving to
cloud.
Another study by Gartner highlights that integration
is the number one reason making people unhappy using
the cloud. Forrester’s study tells 67 percent of CIOs were
concerned with integration and that is why they were shy-
ing away from cloud.
Luftman adds, “Clearly, the potential pitfall with cloud
is integration. Especially, if you go to multiple clouds, how “At the beginning of creating
do you ensure you are integrating your data. This is where
we in IT get our biggest benefits from integrating across
IT strategy or IT portfolio, it
different business units. Cloud should learn from the mis- should be clear whether you
takes of ASP, the need for open cloud that’s clear for every
part of the world.”
will outsource or insource your
cloud.”
Learning from BPO
Cloud is not new; rather it has been here even before the
name ‘cloud’ was coined. BPOs like ADP have been in Jerry Luftman
cloud business for many years. BPOs are dealing or have
been dealing with the same problems that now people Executive Director,
are dealing with adding applications in the cloud. It’s Stevens Institute of Technology
important to look at how BPOs have been addressing this
problem.
For instance: For payroll, you need to get data from the
company itself. Typically that resides on the on-premise to be able to access data very quickly from the clients, real-
application behind the firewalls. In majority of the cases time and easily, make changes as they have changes to the
flat files are used. BPOs give specifications to the company business process, and what are those changes to the cus-
they are doing business with, stating what information is tomer side with the applications that they are using. IBM
required and in what format. And they send the informa- has been focused on the integration problem, trying to
tion. So, you are relying on the companies that have the bring a cloud solution to this problem. So, being able to
resources to extract the data to provide to the BPO. provide a real-time way to be able to integrate applications
The issue that comes here is that when BPOs are in the clouds to other clouds and as well on premise.”GS
specificating; no matter how good the specification is,
there is always an issue with interpretation. At times,
they end up getting data that may not be exactly Excerpted by Smriti Sharma from the 2011 Global
right. They do not necessarily find that out in the testing, Services Conference sessions “Cloud and its
they might find out in the fifth or seventh run. Implications on Service Delivery” and “Business
Another way they are dealing with this is custom code, Process Integration In The Cloud”
just like the cloud. Having a code created that they put on
the clients’ side, to be able to do the extraction for them,
and send that data over to the BPO, so that they have
access to the required data. In that case, they can make it
more real-time, over flat files to be able to have the data
they need to do the business process.
Jeff Miller, VP, Strategic Accounts & Global Partners,
Cast Iron Systems, an IBM Company told, “At IBM, what
we found is the exact area where cloud comes into play.
Using a cloud platform provides integration, allows BPO

20 GlobalServices www.globalservicesmedia.com February 2011


 

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Emerging Economies,
Mindset Change to Lead Economic Healing
T
he IT growth in the emerging economies, combined
with a changed mindset, is what will sustain the
global economic recovery
The keynote session at NILF 2011 focused on under-
standing the changing world order and India’s role in it. The
panel moderated by Kris Gopalakrishnan, CEO, Infosys
Technologies brought out perspectives from the varied lens
of a global academic and policy advisor, an Indian business
leader, and an economic analyst.
The post- recession recovery has been steady, albeit slow
and fragile. But the emerging world order will be nothing
like the existing one. For starters, the traditional industries
will no longer be able to support the world economy, shift-
ing the growth impetus to the IT sector.
Besides, the risks which recession had given birth to con-
tinue to exist, like the housing and unemployment issues in
the hitherto biggest outsourcing market, the United States .
State, local and national governments continue to be under
pressure to cut costs. This has already slowed growth in the
developed world, said Raghuram G Rajan, Eric J Gleacher
Distinguished Service Professor of Finance, University of
Chicago.
Partnership Redefined
T
he IT growth in the emerging economies, combined
with a changed mindset, is what will sustain the
global economic recovery. The age-old mantra about
the vendor being a partner to the customer got a better spin
at the Nasscom India Leadership Forum 2011.
Matt Idle, Credit Operations Director, British Gas
opined, “Today, it’s about strategic flexibility. A vendor has
to understand his client’s value creation chain and also real-
ize that he is not a mere part provider; he should be willing
to take risks and deliver outcomes.
“Services buyers would want to sit on the table with
a vendor that has the appetite, ability and the capability
to comprehend its value creation cycle and also drive that
value. Service providers need to understand the needs of
the customer’s customer and drive value towards meeting
those needs.
Clarifying the service provider’s ideas on partnership,
Rajesh Nambiar, GM Services Integration Hub-East, IBM
listed out the following :
22 GlobalServices www.globalservicesmedia.com
Nasscom India Leadership Forum
Thus growth will come from emerging economies. For
corporates to be able to cash in on these opportunities, they
need to be flexible. And the greatest flexibility will have to
be in terms of mindset.
Emerging markets like India, Africa and Latin America
need to focus less on the West and more on each other.
That’s where growth will come from. “The winners here will
be firms which move closer to demand (that is, emerging
markets), decentralize and customize for local markets,” he
holds.
Technology has the potential to bring about the econom-
ic transformation sorely required now, said KV Kamath,
Non- Executive Chairman, ICICI Bank. “Nowhere has eco-
nomic transformation happened in the presence of ignoring
technological change,” he said. Technology which was not
there ten years ago, when the transformation of the Chinese
and Asian ‘tiger’ economies took place, are available now, he
pointed out.
Commenting on the changed global scenario, Kris
Gopalakrishnan said, “There is a lot of optimism and oppor-
tunities. Several initiatives are already underway. These need
to be scaled up and sustained.”
1. Increasing prominence of emerging markets as the key
driver of growth demands frugal innovation.
2. Reduction in financial leverage makes operational per-
formance more crucial.
3. Increased and prolonged uncertainty in the global
economic environment requires more nimble operating
models.
Citing the new levers of value creation, Nambiar added
the following conditions for partnership to exist:
1. Companies need to share their models with their vendors
and not keep their know-how in locks.
2. Strategic flexibility , rather than economies of scale, is
the key for managing uncertainties of global economic
environment.
3. Resource productivity than resource possession is the key
for delivering value through operational performance.
Nambiar ended, “Vendors should collaborate with cus-
tomers in strategic decision making. For them, flow of more
work spells sharing of business risk in value creation.”
February 2011

License to Innovate:
Worrying About Things that Matter
I
T acts as a unique differentiator for business. And
while providers claim that client requirements and
minutely specific SLAs leave them with little room for
innovation, clients would beg to differ. “If you get your
basics like cost, risk, etc. right, you suddenly get the license
to innovate,” says David Awcock, Group Head, Group
Technology and Operations, Standard Chartered Bank.
Speaking at the NASSCOM track discussion on
Strategic Sourcing, panelists held forth on what defines
customer satisfaction. While providers are doing what
they think is right, in terms of meeting customer satisfac-
tion, customer priorities are shifting, said Noshir Kaka,
Director, McKinsey & Company. So while providers have
been offshoring in the quest for reduced overall costs, they
are missing out on what counts most for their custom-
ers- business impact. Thus, service providers need to align
their priorities, and their SLAs, in keeping with customer
satisfaction.
At the same time, he cautioned clients to be concerned
about things that matter the most, like management attri-
tion, which affects customer satisfaction. Also, where there
Success Mantra for M&As: Put People First
O
n the second day of Nasscom India Leadership
Forum 2011, business leaders from the Indian
outsourcing industry got together to share their
insights on how to make M&As work.
Beyond financial due diligence and strategic fit, people
are the key to a successful integration. CP Gurnani, CEO,
Mahindra Satyam said, “You not only need the balance
sheet of the company you are going after, you need the
people as well.” M&As do not work out if the leadership
does not understand the people and take them into con-
fidence, he said.
Emphasizing the need for cultural and emotional align-
ment of the target company people with the culture and
environment of the acquirer, Aparup Sengupta, Managing
Director, Global CEO, Aegis said that at the heart of
M&A lies how you do the integration. A veteran of 16
acquisitions, Aparup believes in connecting with the core
23 GlobalServices www.globalservicesmedia.com
Nasscom India Leadership Forum
NILF
is a single point of ownership, there is more customer
satisfaction. He said that clients themselves agree that
“when we have a larger wing span, we have more customer
satisfaction.”
Customer satisfaction is definitely something that
companies should be concerned about, given the fragile
condition of the economic recovery. But the recovery has
also provided a good opportunity to innovate, said KAI
Beckmann, CIO, Merck KgaA. “Tough times call make
for some really inspirational innovation,” he held. The
recession has also forced providers to look beyond their
traditional markets. For countries like India, this means
turning to the domestic market. This, in turn, provides an
opportunity for innovation, as local clients give a greater
push to innovation than the traditional MNC clients.
Finally, listening to the customer is what is going to
drive efficiency, and hence customer satisfaction. “60- 70
percent of what is done by the provider is not used by the
client,” says Awcock. So if you can figure out what that 70
percent is, that is the key to efficiency.
emotions of the target company people. “At Aegis, we talk
of right practice, not best practice,” he said.
Talking about his experience in integrating
TechMahindra with erstwhile Satyam, Gurnani said the
best weapon in such a situation and in fact, in any acquisi-
tion, is a great HR department that realizes the complexity
of the process and their vital role in the transition.
Another vital factor is the understanding of each
other’s motivations, aspirations, and internal structures.
Several M&As that started ambitiously failed due to
lack of understanding of each other’s structure, culture,
and the global market operations, said moderator Kumar
R Parakala, COO, KPMG Advisory. At the end of the
day, an acquisition requires an understanding of why it is
being done, and what will be the outcome. “M&A is the
outcome of a strategy. You have to envision the purpose of
company you are forming,” said Sengupta.
by Sruthi Ramakrishnan & Smriti Sharma
February 2011
 xperts By Allan Schweyer, Center for Human Capital Innovation
Designing the 21st Century Incentive
Program to Drive Employee Engagement
Where and even whether incentives and rewards programs
have a place in the modern workforce is being questioned,
because skeptics believe the program outcomes and impacts
are becoming increasingly more difficult to measure, manage,
and control
“Almost certainly…some kinds of outcomes you can incen-
tivize and others are much harder to influence through
incentives. I don’t think anyone would argue that we can
operate without incentives, but what are they going to be
in order to be effective for each situation, task and person?
The right question is ‘how do we artfully and wisely design
these programs.”
Dr. Laurie Bassi
Interview with the Author, September, 2010
24 GlobalServices www.globalservicesmedia.com
I
t is generally accepted that
employee engagement and
performance can be driven by
the right mix of incentives and
rewards. Until recently, few ques-
tioned the use of incentives in encour-
aging behavior change and higher
performance. Research conducted by
the Incentive Research Foundation
(IRF) and others over the past twenty
years has established the usage and
performance improvement aspects of
incentives in business.
Yet today, where and even whether
incentives and rewards programs have
a place in the modern workforce
is being questioned, not necessarily
because skeptics believe they do not
motivate workers, but because they
believe the program outcomes and
impacts are becoming increasingly
more difficult to measure, manage,
and control. In new research con-
ducted and released in February 2011
by the Incentive Research Foundation
(IRF), the challenges around 21st
Century Incentive Plan Design were
studied.
According to our research and
the opinions of most of the experts
consulted, the greater complexities
of motivating creative, non-routine
workers using incentives and rewards,
has led to a higher frequency of poorly
designed or misdirected programs.
February 2011

Poorly designed rewards, incentives
and recognition programs can pro-
duce negative results, lack motiva-
tional appeal, or cause unintended
consequences. When this happens, it
is likely to cost the organization a sig-
nificant amount of wasted time and
money and perhaps lead to a cynical,
disengaged workforce, organizational
damage, and, in some extreme cases,
societal harm.
Our research (building on that
of many others) leaves little doubt
that incentive program design and
implementation, including measure-
ment and ROI, is critically important
in today’s workplace environment –
considerably more so than in the past.
And while the incentive plan designer
must consider the overall context,
including the type of worker or team
they are attempting to motivate, it is
far from agreed that in designing an
effective rewards program – even for
knowledge workers – that one or the
other of intrinsic or extrinsic, contin-
gent rewards must be used.
We are seeing the evolution of an
effective blend of both, or a more
inclusive approach of any appropriate
reinforcer that is contingent, valued,
and top of mind. What is clear from
our research, including the opinions
of the great majority of our experts,
is that incentive, reward and recogni-
tion programs must be more tailored
today than in the past. Careful design
must make allowance for the many
different ways in which workers are
motivated.
Yet there are also consistencies
and best practices to guide designers.
Knowledge workers, for example are
more likely to be driven and engaged
by recognition (now/that type
rewards) than contingent incentives
(if/then rewards). Where incentives
are used with creative workers they
should be designed to drive desired
outcomes rather than to encourage
specific behaviors. And any design
25 GlobalServices
“Extrinsic, contin-
gent rewards should
be tied to perform-
ance goals rather
than task comple-
tion, solving prob-
lems, or hitting
specific quantifiable
targets,”
must incorporate measurement to
determine its effectiveness.
Extrinsic, contingent rewards
should be tied to performance goals
rather than task completion, solving
problems, or hitting specific quantifi-
able targets.
In general, designers should bal-
ance the best use of extrinsic incen-
tives versus intrinsic rewards and rec-
ognition depending on the type of
worker, the assignment, the work
environment, the desired outcome
and the duration of the program
amongst other factors. In every case,
designers should build in the appro-
priate levels of measurement, in many
cases including ROI analysis.
In summary, incentive and reward
program designers should:
1. Take advantage of the PIBI
Model (see research paper reference
www.globalservicesmedia.com
Advisory
at end) by using it as a checklist of
key questions that need answers. Also
consider Dan Pink’s flowchart (see
research paper reference at end) and
the guidelines we propose in Figure
1 and Appendix D of the research
paper.
2. Articulate and consider what
is the program trying to achieve or
address? More sales? Lower absentee-
ism? Quality? Safety?
3. Think about the program con-
text, including which workers the
program is targeted to - Factory floor?
Administrative? Sales? Researchers?
Executives?
(And whether they are primarily
creative or task oriented).
4. Think about the unintended
consequences and potential adverse
impact of the
program. Will the outcomes it
aims to drive impact other parts of the
organization? Is the program suscepti-
ble to “gaming”? Will it encourage
undesirable behaviors?
5. Consider whether the program
is in balance with other key drivers of
performance and employee
engagement.
6. Include communications, well-
planned implementation and on-go-
ing monitoring and refinement.
7. Build in metrics and ROI meas-
ures from the beginning so that you
can credibly evaluate the program and
make adjustments throughout.
To download the full research
paper, please visit: www.the-irf.org/
research. GS
Allan Schweyer is Principal, Center for
Human Capital Innovation; Chairman,
Enterprise Engagement Alliance
February 2011
 Platinum Sponsors

22 GlobalServices www.globalservicesmedia.com January 2011

 VERSO PAPER CORP MANUFACTURING

New IT & Apps Platforms

Dell customized and applied its well-established transition
methodologies for Verso Paper Corp

The Client: IT solutions to the business. At A Glance

Based in Memphis, Tennessee, Verso
Paper Corp. is a leading North
American producer of coated and spe-
cialty papers used in magazines,
catalogs, and commercial printing
applications.
Verso Paper Corp. was spun off by its
multinational parent in 2006. As part
of the divestiture, the parent company
agreed to provide IT services for one
year. The former parent would provide
only very limited transition support.
Situational Analysis:
Verso’s challenge was to establish an
entire IT infrastructure and all applica-
tions in just 12 months or face severe
financial penalties from the parent
company for continued support.
As a $1.6 billion “startup” company,
Verso conducted a rigorous review
process with three primary objectives
for the review process:
� An on-schedule separation from
the former parent.
� A high-value solution over the
term of the contract.
� A tightly integrated team in which
Verso IT and the services provider
would collaborate to deliver new
� After the RFP process, only 4½
months remained to complete the
project, which would serve rough-
ly 3,000 employees dispersed
among facilities in 11 U.S. states.
Solution:
Dell Services applied its well-estab-
lished transition methodologies,
which were then customized to meet
Verso’s specific requirements. Project
teams were quickly formed recruiting
the most knowledgeable leadership
from across both companies. Dell
personnel included dedicated on-site
team members and leveraged exper-
tise from delivery centers in the U.S.,
India, and Mexico.
The creation of a single, integrated
program management office proved
to be a key element for the project’s
ultimate success. This office provided
highly structured oversight of multi-
ple concurrent projects. Success
required constant focus on the pro-
ject schedule, reprioritization of work
as required, risk management, rapid
escalation of issues, and clean
cutovers of critical services during the
transition period.
CLIENT
Verso Paper Corp
SERVICE PROVIDER
Dell Services
INDUSTRY
Manufacturing
SERVICE PROVIDED
New IT & Applications Platforms
SOLUTION
An integrated program manage-
ment office for the transition project
SUCCESS METRICS
� Avoided financial penalties. Verso
was not assessed substantial fees
that would have been imposed for
continued support from the for-
mer parent company.
� Cost identification at a service-unit
level. Allows better utilization and
total cost of ownership management
to reduce overall expenses for IT.
� Improved engineering control
technical infrastructure. Better
definition for levels of redundancy,
failover, virtualization, and disaster
recovery.
� Incremental savings opportuni-
ties. Dell Services has identified
efficiencies that are expected to
generate $600,000 in additional

“
savings annually.
“Dell Services and Verso IT work so closely
and seamlessly together that to our end-
user community, IT services are seen as coming For more information on how Dell can help
from a single organization. There is no ‘us and your organization, please contact
Sujata_Rakhra@Dell.com or
them’ – it is just the IT team.” Savitha_Lakshman@Dell.com. Please also visit
dell.com/services for more information on their
capabilities.
BEN HINCHMAN, VP AND CIO, VERSO PAPER CORP

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27 GlobalServices
GlobalServices www.globalservicesmedia.com
www.globalservicesmedia.com December 2010
February 2011
CONSUMER PACKAGED GOODS
SOX Compliance
Capgemini transformed SOX compliance from project to
process for Unilever
The Client:
Unilever deals in 400 brands span-
ning 14 categories of home, personal
care and foods products. Every day,
150 million people choose the
brands of Unilever such as OMO,
AXE, Dove, Lux, Knorr, Lipton, Walls
and Ben & Jerry’s. Unilever employ
over 174 000 people in around 100
countries worldwide. Unilever man-
ages a number of strategic partner-
ships globally which includes
TESCO, Carrefour, Ahold and Wal
Mart. They have strong brand pres-
ence in home care, personal care,
foods and ice creams.
Situational Analysis:
Unilever was concerned about its
SOX compliance processes. With
yearly turnover of over €5B
($6.65B), Unilever’s US operations
were organized into four units with
some corporate functions (such as
treasury, tax, employee benefits, risk
and insurance management) central-
ized at HQ and provided as a shared
service. The units were not co-locat-
ed and many business processes were
not homogeneous. In addition, they
had their own manufacturing plants
and distribution centers that were
common in only a few instances. The
challenge for the CFO was to initiate
a comprehensive service compliance
program which would be both cost-
effective and annually sustainable
from the outset.
28
17 GlobalServices www.globalservicesmedia.com
UNILEVER
Solution:
The entire process mapping, docu-
mentation and management attesta-
tion process were outsourced to
Capgemini’s Management Assurance
Services (MAS), a service line within
Capgemini’s Business Process
Outsourcing practice. The MAS
SOX framework serves not only as a
cost-effective compliance method
but also incorporates process remedi-
al work, and through Business
Insight drives continuous improve-
ment and best practice. In 2006,
Capgemini worked in close collabo-
ration with Unilever to put together
a comprehensive, adaptive program
for the management of the SOX com-
pliance requirements, accommodating
the specific needs of the client’s envi-
ronment while exploiting the benefits
of Capgemini’s proven SOX compli-
ance framework. In 2007 and 2008,
thanks to the established SOX frame-
work and by gradually shifting process
support to an on-site/offshore delivery
model, Capgemini was able to drive
down the client’s costs of compliance
and concurrently increase quality and
timeliness. Today, Capgemini’s solu-
tion is an integral part of the client’s
SOX compliance program, yet the
client retains overall program gover-
nance and control.
For more information on this service from
Capgemini, write to Jean Christophe Ravaux,
Global Sales Officer, Capgemini BPO at jean-
christophe.ravaux@capgemini.com
www.globalservicesmedia.com
At A Glance
CLIENT
Unilever
SERVICE PROVIDER
Capgemini
INDUSTRY
Consumer Packaged Goods
SERVICE PROVIDED
Management Assurance Services
SOLUTION
Put together a comprehensive,
adaptive program for management
of SOX compliance requirements
SUCCESS METRICS
The Capgemini MAS team leveraged
onsite/offshore delivery that operates at
offshore rates along with their
Compliance Center of Excellence net-
work to drive client savings of over 40%.
These cost savings resulted from reduc-
tions in labor costs and from the central-
ized delivery method that successfully
strips out project management overhead.
In short, an annual project was industri-
alized into a repeatable and sustainable
process. The SOX compliance frame-
work program provided the following
sustainable benefits:
� Overall improvement in the control
environment
� Readily available process documen-
tation and standard operating proce-
dures for business units with a view
to harmonizing processes across the
units
� Reduced effort and freeing up of
internal resources
� Cost advantage of offshoring of over
a third of the program
February 2010
December 2011