systems in motion iaop presentation
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Designing a globally competitive, cost efficient US IT Services model
Presented by:
Debashish SinhaChief Marketing Officer
Colin ChapmanVP and GM, Michigan DC
June 24, 2010Copyright © 2010 Systems In Motion. All rights reserved.
Introducing Systems In Motion
• Launched in 2009 by leaders in global technology services
• Backed by Cervin Ventures with ~$17 million in available capital
• Leading the way in services focused on business technology transformation programs
• Pioneering the ‘Inshore’ service model - an agile, integrated, cost-optimized US service delivery capability
• Based on standards and best practices of remote service delivery, with strong focus on workforce training and development
• Deep expertise in Media, Telecom, Retail and Manufacturing
• Two current service centers − Silicon Valley (Innovation Hub)− Ann Arbor (Delivery Center)
• Clients include F-500 (Thomson Reuters, Best Buy) mid-sized enterprises (Leap Frog, Matson) and high-performing growth companies (Chegg, Zephyr)
Page 2Copyright © 2010 Systems In Motion. All rights reserved.
Leadership team with deep experience in global services industry
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New technology trends are forcing business transformation
Significant potential for disruption in the competitive landscapeExcellence in customer experience will be the hallmark of future industry leaders
Page 4Copyright © 2010 Systems In Motion. All rights reserved.
Business Environment
IT Applications
IT Infrastructure
Sourcing
Traditional models Industry evolution
• Buy, install and run yourself• License, maintenance and upgrade extra• On-premise with multiple versions
• Rented applications • Pay-go model with automatic upgrades• Platform based architecture (PaaS, SaaS)
• Traditional Datacenters• Capital intensive• Difficult to implement and scale
• Cloud infrastructure• No capex and low cost of ownership• On-demand scaling with agile deployment
• Predictable, repeatable business cycle• Brick & mortar + web interface• Customer interaction management
• Highly dynamic business cycles• Multi-channel (web, social, mobile, etc.)• Customer engagement management
(personalization, participation and control
• Labor intensive engagements• Standardized processes• Effort and SLA driven contracts
• Expertise intensive engagement• Flexible, agile service delivery• Outcome and value driven
Le
Solution frameworks to accelerate technology
deployment
Focus on outcomes and strategic value of new technology initiatives
New technology transformation
Cost effective operations
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Driving the need for a different kind of service partnership
Leadership and experience in understanding business
requirements
Agile teams tightly integrated with
customer
Global service delivery models fail to drive value in these relationships
Enterprises make significant investments to bridge the “value gap” in the global delivery model. This is likely to increase in the future.
Page 6Copyright © 2010 Systems In Motion. All rights reserved.
Global Delivery Challenges
• Domain and process knowledge
• Technical competence
• Resource productivity
• Communication challenges
• Lack of interaction/integration
• Flexibility/agility of teams
• Program management and governance
• Infrastructure cost
• Risk management
‘Inshore’ model can provide an alternative to global delivery for a significant part of enterprise services sourcing strategy
Inshoring fills a white space between in-house and offshore engagements that is currently sub-optimally filled by supplemental staffing, boutique firms or large onshore staff of offshore vendors
Page 7Copyright © 2010 Systems In Motion. All rights reserved.
Three strategic pillars of the Systems In Motion service model
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The new service paradigm combines deep domain leadership with an ecosystem of IP assets and an operating model that can create agile and integrated delivery teams
Typical Resource Profile
Program Leads
Technical/Functional Experts
Developers, Test and Support Engineers
Optim
ized
Pyra
mid
Mod
el
Dedicated centers of excellence pyramid structure for service delivery builds scale and efficiency
• Over 12 years of business-IT experience• Program management, technical, solutions architecture
and/or leadership skills• Experience in operating models incl. global delivery• Strong focus on methodology and IT processes• Specialist in business or technology domain
• Over 5 years of IT experience• Process, technical, architecture skills• Strong implementation and support experience• Understanding of business or technology domain
• Educational background in IT• Process, technical skills• Strong fundamentals in primary area of expertise• Knowledge of IT lifecycle
* Pyramid structure and skills will vary based on stage of project, type of work (dev vs. support), and program duration
Page 9Copyright © 2010 Systems In Motion. All rights reserved.
Page 10Copyright © 2010 Systems In Motion. All rights reserved.
Tightly integrated service operation through ‘Inshore’ centers of expertise
‘Inshore’ center of expertise is a US based domestic service delivery model, combining cost-efficient remote service delivery with strong local workforce development and management
US resources have a competitive advantage over India in supporting this transformation in technology services
Quality India US# of Institutions 1800 350
# of Graduates 450K 70K
Tier 1 1% 15%
Tier 2 15% 70%
Tier 3 84% 15%
Productivity India USLecture: Lab 3:1 3:1
Supervised: Unsupervised 3:1 1:3
Lecture: Group Work 2.3:1 1:3
Total hrs/week on major 40 50
Total hrs/week on other 3 15
Summer Internships 10% 100%
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Research by Rafiq Dossani, Director, Center for South Asia, Stanford University
While India produces a larger number of engineers, the US has
higher level engineering resources. India produces 84% of their
engineers from Tier 3 schools.
US engineers get a significantly more intensive education, are more self-directed and can lead/work in
teams
Strong partnership among business, education and government to create the right environment
Page 12Copyright © 2010 Systems In Motion. All rights reserved.
Systems In Motion partners with government to provide
the right incentive and infrastructure investments
• Quality and relevant education in engineering, science, math and management• Drive greater business participation in
coursework, especially in associate degree apprenticeship programs (EMU)• Provide the hub for business connect (U of M
and EMU)• Support business with infrastructure and
processes for training and development
Systems In Motion partners with universities to provide
talent, training and workforce development support
Universities Government/Economic Dev Agencies
• Vertical integration of Local and State institutions (MEGA, Michigan Works, SPARK)• Invest in training, talent development and
workforce management• Invest in incentive programs (tax incentives
and OJT training reimbursements)• Co-invest in marketing and PR initiatives to
drive location attractiveness
• Partner in building SIM University (EMU)
• Business development support with local enterprises
True cost of service delivery Inshore vs. Offshore
Offshore Rate$17.28
Hou
rly tr
ue c
ost o
f ser
vice
s de
liver
ed(A
pp D
ev/B
I Exa
mpl
e)
Global Delivery Model Inshore Delivery Model
Onsite Rate$21.84
Transition* $6.73
PMO$2.25
Travel&1.17
Inshore Center Blended Charge
Rates$50.00
Transition $2.00
72%@$24.00
75% of $17.28
15% of $44.88
5% of $44.88
4 trips a year
Travel Costs are negligible
Program Management costs are negligible
Productivity Factor is 25% lower in offshore model
Transition Costs are 30% due to faster transition process, higher overall productivity
Inshore Center charge rate combines offshore, onsite and infrastructure costs
5
4
2
3
1
$52/hr
Productivity$5.76
28%@$78.00
$55/hr (with transition)$48/hr (in steady state)
Significant wage difference equals a negligible cost of service difference
Page 13Copyright © 2010 Systems In Motion. All rights reserved. * Offshore transition amortized over a 3-year contract
Key Takeaways
• New technology trends are transforming the business environment
• Enterprises need service partners with deeper domain expertise, and tighter alignment with internal IT and business stakeholders
• Global delivery models will need higher caliber resources, and even greater program management and governance investments to meet the future needs of US enterprises
• A well-structured Inshore operations center can be very competitive
• Requires strong collaboration among business, education and government to develop the appropriate level of expertise and structure of the workforce
• Investments must continue in developing the foundation for service delivery and innovation, through broadband deployment, tax policy, etc.
Page 14Copyright © 2010 Systems In Motion. All rights reserved.
Questions
Debashish SinhaChief Marketing Officer
Systems In MotionEmail: dsinha@systemsinmotion.com
Direct: (650) 704-8843www.systemsinmotion.com
Page 15Copyright © 2010 Systems In Motion. All rights reserved.
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