Pace Harmon News Feed

7 More Lessons from Offshoring Pioneers

Mon, 22 Apr 2013 05:00:00 GMT

In part two of a two-article historical perspective on offshoring, principal Craig Wright explains that more mature outsourcing customers are looking to managed services for data center and storage services and that a good offshore deal is never done. Sample excerpt: “Service-level agreements--and the behaviors and performance trends they drive, will require regular tune-ups."

CIO.com

7 Lessons of the Offshoring Pioneers

Fri, 19 Apr 2013 05:00:00 GMT

Principal Craig Wright offers his expert analysis in a historical look at offshoring including that often a single provider is not enough. Sample excerpt: “Today many organizations have revisited the mega-deal structures, selectively pulling services and functions into an onshore or even insourced delivery model.’”

CIO.com

10 Tips for Making Outcome-Based Outsourcing Work

Tue, 16 Apr 2013 05:00:00 GMT

Principal Steven Kirz describes the strategies and challenges of outcome-based outsourcing work. Sample excerpt: “Kirz says outcome-based models tend to work best with suppliers that have already made significant investments in their people, processes and technology. ‘Where we’ve seen it work well is where suppliers have a lot of industry experience and feel comfortable with it.’”

Global Delivery Report

NY State Reaches Force-Placed Insurance Settlement

Wed, 03 Apr 2013 05:00:00 GMT

Eric Anderson, senior associate, offers his take on the New York State force-placed insurance settlement. Sample excerpts: “Eric Anderson a senior associate at consulting firm Pace Harmon told Total Mortgage, ‘As the housing bubble burst and the economy worsened, the volume of force-placed insurance increased dramatically as more and more homeowners became delinquent on their mortgages, allowed their homeowners insurance policies to lapse, and were subjected to force-placed insurance policies. Since homeowners generally foot the bill for these force-placed policies, the high premium costs are a contributing factor to homeowners not being able to be current on their mortgages. If the homeowner cannot pay for the force-placed policy, the investor – usually Fannie Mae and Freddie Mac – pay the premium, an expense that is ultimately paid by taxpayers. Some of the reforms being discussed by regulators and consumer groups could lower these force-placed premiums by around 30%, a savings that could make a huge difference for many struggling homeowners. It would also save taxpayers hundreds of million per year.’”

Total Mortgage Services

Keys to Driving Supply Chain Outsourcing Success

Mon, 01 Apr 2013 05:00:00 GMT

Principal Marc Tanowitz addresses best practices of supply chain outsourcing in this contributed feature article. Sample excerpt: “Companies have outsourced supply chain operations for decades to glean more efficient labour-based processes and improved asset leverage/utilization while simultaneously focusing their internal operations on core competencies. As the need for competitiveness is as urgent as ever in today’s economy, companies are continuing to explore this alternative. As they pursue this assessment and possible migration of operations from in-house to a third-party outsourcer, companies need to be aware of the full spectrum of benefits afforded through supply chain outsourcing with respect to business functions and geographies served. They must also evaluate the unique cost drivers of their specific operation, the nature of the supply chain outsourcing marketplace, and the actions that will help drive a successful business partnership.”

Outsource Magazine

Optimizing Force-Placed Insurance

Wed, 27 Mar 2013 05:00:00 GMT

The recent decision by the Federal Housing Finance Agency (FHFA) not to move forward with Fannie Mae’s proposed Force-Placed Insurance (FPI) program presents several opportunities and challenges for mortgage servicers (“Servicers”) as they consider how to manage FPI going forward. While the decision amounts to a lost opportunity to immediately lower FPI costs for homeowners and taxpayers on a broad scale, the Fannie Mae proposal highlighted issues in the current FPI marketplace and brought awareness and focus to the currently overpriced FPI insurance premiums. As these cost issues are likely to face continued scrutiny, forward thinking Servicers have an opportunity to proactively address the high FPI insurance premiums, thereby creating differentiated value propositions vis-à-vis those of their competitors. Achieving the lower rates, however, may require Servicers to consider new approaches to how FPI is priced and managed.

Client Memorandum - Download PDF

Pace Harmon Calls on Mortgage Servicers to Consider Pricing Pressures In New “Optimizing ...

Wed, 27 Mar 2013 05:00:00 GMT

VIENNA, Va., March 27, 2013 – As a result of regulators’ recent focus on lender placed insurance, Pace Harmon, a leading outsourcing advisory firm, has released a report detailing strategies that mortgage servicers can employ to best position themselves in this new environment. Commissions and non value-added services are under intense scrutiny by Congress, federal and state regulators, and public interest groups, and mortgage servicers should proactively deal with high force-placed insurance premiums now to have better market leverage when their contracts renew.

Download PDF

Banks & Insurers on Opposite Sides of NY Settlement

Thu, 21 Mar 2013 05:00:00 GMT

Principal Marc Tanowitz’s commentary is featured in this article about force-placed insurance and Assurant agreeing to New York State’s demand to stop paying bank partners for their business. Sample excerpts: "'Assurant and QBE did a great job of making it easy for the servicers to make money on this,’ says Marc Tanowitz, a consultant for Pace Harmon who has pitched banks on force-placed market changes. ‘That gravy train is gone...The approach taken by New York will be just as costly for banks, but much easier on insurers. Although it will lower the rates Assurant can charge, the company will recoup some or all of that money in savings on commissions or other payments...Assurant stepped out of the way and let the servicers [banks] take the brunt of the harm,’ Tanowitz says.”

American Banker

Explore the Tale of Tier 2 Cities for IT Outsourcing Options

Fri, 15 Mar 2013 05:00:00 GMT

Senior Associate Rakesh Bhatia offers his expertise in this article about second-tier locations for IT service providers. Sample excerpts: “Large financial services companies are establishing IT help desks, contact centers, and business process operations in cities like Jacksonville, Tampa, and San Antonio, for example, which offer onshore benefits at lower costs than big cities. Springfield, Ill., and Sioux Falls, S.D. have access to a strong pool of local graduates at a 20 to 25 percent discount over IT professionals in Chicago,' says Rakesh Bhatia, senior associate with outsourcing consultancy Pace Harmon…'Smaller cities, of course, also have smaller talent pools, so scaling up can be a challenge. Companies needing a broader range of services from their provider should stay with the primary locations, as the tier-2 locations are still largely focused on providing specific services, with most other centers of excellence still located at the primary locations,’ says Bhatia.”

CIO.com

Q&A: The Role of Active Provider Governance

Mon, 11 Mar 2013 05:00:00 GMT

In this Q&A article, Principal Dave Borowski discusses why proactive provider governance is critical for BPO buyers and the steps needed to ensure proactive provider governance. Sample excerpt: “Once a BPO implementation is complete, many organizations think the heavy lifting is behind them; however, the key to creating, sustaining, and enhancing outsourcing value is establishing provider governance as a core component of your outsourcing strategy and tactics. The lessons from the sourcing and contracting stages need to be carried forward and put into practice through active relationship management, as failure to establish an effective governance model often leads to suboptimal service and deteriorating outsourcing value.”

BPO Outcomes

5 Ways to Beat IT Services Hybrid Pricing Challenges

Fri, 08 Mar 2013 05:00:00 GMT

Principal Steven Kirz offers his expert analysis in this article about implementing a hybrid pricing model for IT services. Sample excerpts: "'Because clients typically have various requirements across and within services, hybrid pricing models are quite prevalent and are growing in usage,’ says Steven Kirz, a principal for outsourcing advisory firm Pace Harmon. ‘This is driven by dissatisfaction with traditional models on the part of both the customers and the providers, including customer disappointment with traditional rate-per-hour models that deliver poor results, and the commoditization of technology resources that reduces provider margins,’ Kirz says.”

CIO.com

Is It Now Crazy to Offshore IT to China?

Fri, 22 Feb 2013 05:00:00 GMT

In this article about the effects of the Mandiant report on companies’ outsourcing strategies and decisions pertaining to China, Partner Andy Sealock offers commentary for the industry. Sample excerpts: “Andy Sealock, a partner at consulting firm Pace Harmon, said the concerns about the security risks of outsourcing to China are already ‘priced into’ and considered in the decision making process of U.S. companies. The latest revelations add more evidence to ‘what many people already assumed was happening,’ he said…Sealock said the U.S. may feel pressure ‘to make a public response to the threats and institute policies and sanctions that will make it more difficult to do business with China.’"

Computerworld.com

Pace Harmon Named to IAOP 2013 World’s Best Outsourcing Advisors List for Fourth Consecutive Year

Tue, 19 Feb 2013 05:00:00 GMT

Honored for consistently delivering innovative and first-rate advisory services, Pace Harmon, a leading outsourcing advisory services firm, announced it has been named to the International Association of Outsourcing Professionals’ 2013 World’s Best Outsourcing Advisors list for the fourth year in a row. In addition, Supply & Demand Chain Executive magazine individually recognized Pace Harmon Senior Associates Brad Lillis and Chris Stacy as 2013 Pros to Know for demonstrated leadership in helping clients advance and transform their organizations through strategic initiatives.

Download PDF

Dell’s Future: 3 Wild Cards CIOs Should Understand

Wed, 13 Feb 2013 05:00:00 GMT

Partner David Rutchik discusses the impacts of Dell’s privatization announcement in this contributed article, exploring the impacts on customers and the marketplace. Sample excerpt: “When Dell's board of directors recently approved a $24 billion bid led by CEO and founder Michael Dell and private equity firm Silver Lake Partners to take the company private, it marked the largest leveraged buyout since the financial crisis. Another twist to the deal is Microsoft, which will provide $2 billion to support the ‘long-term success of the PC ecosystem.’…For CIOs considering buying in to Dell's ITO vision, the transaction (assuming it's approved by shareholders) will have ramifications in three main areas: The benefits and risks of going private. On the positive side, now that every dollar invested doesn't need to move the near-term earnings needle, Dell will be able to make longer-term investments to grow and enhance its services business without sweating market scrutiny and quarterly earnings pressures. The company can also focus management attention and resources on unifying its string of acquisitions into an integrated software, hardware, and services platform. As Dell's CFO Brian Gladden recently commented, 'Without having the scrutiny that is associated with a publicly traded stock, we can make the necessary investment and stick to plan, [and] in some cases be more aggressive than we can today…'”

InformationWeek.com

Dell Business Transformation: Is the CIO the Glue or Change Agent?

Mon, 11 Feb 2013 05:00:00 GMT

David Rutchik provides commentary in this article about Dell’s privatization announcement and the CIO-focused impacts. Sample excerpt: “'If Dell moves forward as a private company, Karaboutis will be under tremendous pressure to cut costs,' said David Rutchik, a partner at Pace Harmon, an outsourcing consulting firm that advises Fortune 500 companies on the complex outsourcing deals that are often part and parcel of business transformation. ‘Despite the fact that Dell is an IT business, there will be a lot of pressure on the CIO to be as efficient and cost-effective as possible because of the debt service. Leveraged buyouts, by definition, put a lot of debt on the company - in this case $17 billion, including a hefty chunk of Michael Dell's fortune and a $2 billion loan from Microsoft. As long as the cash flow is sufficient to service the debt, everything is fine, but it adds incremental pressure to the system and incremental risk,’ Rutchik said. 'There's no reason Dell can't make the business transformation from hardware to hardware/software/services company - IBM being the poster child for this type of turnaround – but Dell has to make those investments,’ he said. ‘The challenge is usually [that] the CIO is so consumed by all the internal issues around cost and productivity that it's hard to break out of that.’"

SearchCIO

What the New Dell Means for IT Outsourcing Customers

Tue, 05 Feb 2013 05:00:00 GMT

Partner David Rutchik provides expert analysis in this article about the IT outsourcing impacts of Dell’s decision to go private. Sample excerpts: "'On the positive side, Dell will no longer be driven by quarterly earnings pressures and the need to put more resources behind the largest part of their business-PCs [rather than] outsourcing,’ says David Rutchik, partner with outsourcing consultancy Pace Harmon….'By getting away from public scrutiny, they will be freed up to make investments in tools and in other areas to better compete in the IT outsourcing space, even if they won't move the earning needle overall in the near term,’ Rutchik says…‘IT outsourcing customers should challenge Dell's commitment to the IT outsourcing space, as well as its ability to contribute free cash flow to innovation, technology and process improvement when they have a large debt to service,’ says Rutchik of Pace Harmon. ‘It's certainly [not] inconceivable that the IT outsourcing business [could be] spun off or sold in the future to reduce financial leverage and drive increased focus on what is still very much the core business of hardware.’”

CIO.com

Alternate Outsourcing Models Gain Popularity

Tue, 05 Feb 2013 05:00:00 GMT

In this article about the shift toward companies pursuing alternate outsourcing models due to the evolving state of the industry and benefits, Rakesh Bhatia, senior associate, delves into options such as increasing onsite work, insourcing, selective multisourcing and captive offshore centers. Sample excerpt: “With today’s business climate becoming more competitive, outsourcing has become a key consideration for companies looking to save money and improve their profit margins. The attractiveness of offshore outsourcing has continued to increase, and more than 75 percent of the top 2,000 global companies now use some type of offshore outsourcing. Offshoring has become a big-ticket spend item, with offshore IT outsourcing contracts typically consuming more than 20 percent of an organization’s total IT vendor spend. And while cost reduction is usually cited as the primary reason for offshoring, the actual savings have been as low as 15 percent, and are often short of the targeted savings that originally drove the business case.”

CIO Insight

Why Some US Companies Are Giving Up On Outsourcing

Wed, 16 Jan 2013 05:00:00 GMT

Partner Andy Sealock and Senior Associate Chris Stacy discuss the rising trend of insourcing and when it makes sense for organizations to repatriate some parts of their business. Sample excerpt: “General Motors created a stir when it announced its intention to insource a majority of its IT operations to delivery centers in the U.S. GM is not the only company to pull back at least a portion of its previously outsourced offshore IT operations. Why are many companies more seriously evaluating in-house solutions? Outsourcing is the right approach for some companies – particularly those that take the time to properly structure an agreement that drives cost reduction, takes advantage of outsource provider best practices, clearly defines scope and service levels that meet the company’s needs, and allows the company to focus on its core competencies. When well planned and executed, outsourcing relationships provide substantial benefits to an organization. However, some companies are making the decision to repatriate their outsourced IT services. This is happening for a variety of reasons, including: failure to meet expectations…desire for in-house expertise…marketplace pressures…financial segmentation…contractual flexibility…visible and modular service delivery…[and] highly skilled retained organization."

Forbes.com

Assessing Your IT Outsourcing Framework in the New Year

Mon, 14 Jan 2013 05:00:00 GMT

Senior Associate Chris Stacy offers key insights in this contributed article about the importance of IT departments evaluating their outsourcing and in-house capabilities to ensure there is alignment with corporate objectives and budgets. Sample excerpt: “As we enter 2013, IT departments are once again determining how to meet new budget demands and better align with corporate objectives. IT outsourcing contract performance and ratios of in-house/outsourced and onshore/offshore IT capabilities come into focus as IT departments assess how their current costs and strategies are affecting the business. As part of this evaluation, IT groups should determine whether previous outsourcing decision criteria have changed and whether supplier performance is meeting the standards anticipated at contract signature. The results of this assessment will help determine whether and how to take action - from driving improvements through existing contractual relationships to more drastic alternatives such as repatriating services in-house from a current outsourced arrangement.”

Global Services

Governing the Corporate Jewels

Fri, 28 Dec 2012 05:00:00 GMT

In this article about rising interest in corporate governance among companies like Sony Mobile and Avis Budget, Principal Steve Keegan discusses his perspectives as a third-party industry expert. Sample excerpt: “'As seems to be human nature, companies frequently manage their governance issues reactively,’ says Steve Keegan, a principal who runs the IT governance practice at management consultancy Pace Harmon.”

Baseline

9 IT Outsourcing Trends to Watch in 2013

Tue, 18 Dec 2012 05:00:00 GMT

In this article about IT outsourcing predictions for 2013, Partner Steve Martin shares his projections for the coming year. "Due to a variety of factors, chief among them the realization that some services are better entrusted to employees rather than 'outsiders,' dissatisfaction with vendor performance, and continued erosion of offshore/onshore rate arbitrage benefits, companies will repatriate currently outsourced infrastructure and in some cases, application development services, at a greater pace," predicted Martin.

CIO.com

IT Outsourcing Year in Review: Grading Our Predictions

Fri, 14 Dec 2012 05:00:00 GMT

Partner David Rutchik grades previously projected 2012 IT outsourcing predictions. Excerpts include: "Addressing IT service buyers look beyond labor arbitrage, he said, 'They too often fell back on replicating the same activities and service while using lower cost labor as the fundamental value proposition.' Referencing IT outsourcing deals getting smaller, Rutchik said, 'The increasing importance of profit margin cannot be overstated.' Additionally, 'chasing topline is a thing of the past and the deals themselves in many instances are in fact smaller, or at least separated into more individual parts, with customers managing a multi-provider environment with internal tools, process and governance.'"

CIO.com

How IT Departments Can Prepare for a Software License Audit

Fri, 07 Dec 2012 05:00:00 GMT

Principal Jonathan Shaw’s commentary is included in this article regarding steps a corporate IT organization can take before auditors arrive to maintain compliance and limit potential damage. "The difficult economy and resultant ongoing enterprise IT budget constraints means that large software deals are becoming less common," said Shaw. Additionally, “software providers' reaction to infrastructure advances had led to a proliferation of abstract and potentially confusing licensing metrics in contemporary agreements, which have made entitlement tracking considerably more difficult with a risk that simple technology refreshes and environment optimizations will cause an enterprise to fall out of compliance," added Shaw. "An enterprise with robust desktop asset management and configuration discovery capabilities may find it straightforward to manage a per-device or per-named-user licensing scheme," said Shaw. "Conversely, if the enterprise doesn't have its distributed environment under control, such a licensing scheme could be disastrous, and a per-processor or per-processor core scheme might be a better option."

CIO.com

Pace Harmon Shares Best Practices for Protecting the Enterprise Against Software Audits

Wed, 05 Dec 2012 05:00:00 GMT

VIENNA, Va., December 5, 2012 – While software license compliance is a common challenge among enterprises with dynamic business environments and evolving infrastructure technologies, enterprises are experiencing an uptick in provider-driven software audits. This is a direct result of a weaker economy and decreasing new license revenue and has exposed enterprises to significant cost and operational risks. To help mitigate the impacts of software audits, Pace Harmon, a leading outsourcing advisory services firm, has released a complimentary pair of reports on “Software Compliance: Protecting the Enterprise from Audits.”

Download PDF

9 Ways to Sell Your IT Outsourcing Plan to the CFO

Tue, 04 Dec 2012 05:00:00 GMT

In this article, Steve Martin, partner, provides insight on how to successfully bring outsourcing cases to finance. Sample excerpts: "'While CFOs are not typically interested in your transition plan for moving to single sign-on, virtualizing your enterprise servers or incorporating cloud computing into your future environment, they will pay close attention to the expected total cost of the deal over the next five years, the extent to which those costs are classified as capital or expense, how the projection compares to the current state, and how the anticipated financial performance compares with alternative models,’ said Martin. ‘The make versus buy assessment [should] not only include the total cost of ownership analysis, but should also take into account other considerations that are critical to the CFO. These include implications to current personnel, impact on business risk, and operational performance -- all of which have financial implications.’"

CIO.com