Pace Harmon News Feed

4 New IT Outsourcing Pricing Models Gain Popularity

Fri, 13 Apr 2012 05:00:00 GMT

Partner Steve Martin serves as an industry resource in this piece about the implications of using a variety of pricing models to elicit more value from IT service providers and produce higher margins for the vendors themselves. Sample excerpts: “'The better contracts aspire to satisfy the customer across prioritized business objectives that were either unable to be converted to traditional service level agreements or reduced to a performance specification,' says Steve Martin, partner with outsourcing consultancy Pace Harmon…Gain-sharing requires a high level of trust, an equitable distribution of risk and reward, and significant upfront investment, says Martin of Pace Harmon. ‘In practice, very often neither the vendor nor customer is willing to fund the investment without a guarantee of a payback.’…[Regarding incentive-based pricing], ‘the key is to ensure that the delivered outcome creates incremental business value for the customer,’ Pace Harmon's Martin says.”

CIO.com

3 Truths About Cloud Software SLAs

Mon, 09 Apr 2012 05:00:00 GMT

Principal Jonathan Shaw weighs in as a third-party expert in this article about the limitations of cloud software service level agreements. Sample excerpt: “Complex service level agreements (SLAs) have long been the norm for upholding performance and uptime guarantees for traditional on-premises applications and old-world hosted apps. But experts say when it comes to the shared resource world of cloud-based software, enterprise IT must rethink its tried and true notions for IT contracts…‘One of the risks of cloud-based solutions is network failure between you and the cloud provider,’ notes Jonathan Shaw, a principal with Pace Harmon, a consulting company. ‘No one is responsible--that's part of the risk.’"

InformationWeek

Planet ITO: The State of Enterprise Cloud Adoption

Thu, 05 Apr 2012 05:00:00 GMT

In this contributed article for Outsource’s “Planet ITO” feature, Principal Jonathan Shaw discusses how enterprises are currently implementing cloud implementations and where they drive the most value. Sample excerpt: “Cloud computing continues to command strong attention for its flexibility, rapid deployment and cost-reduction benefits – but is the cloud talk translating into reality? Enterprise uptake is offering-dependent but is also affected by the customer’s size, industry, existing IT infrastructure, and tolerance for cloud delivery risks. While few large companies rely exclusively on cloud providers to host mission-critical infrastructure or business applications, controlled trials and point solutions that leverage the cloud are gaining steam…Enterprises with established IT facilities, platforms and operations face fewer hurdles to deploying IT solutions internally, so a jump to cloud computing requires a compelling business case. Enterprise scale means reduced benefits from 'by the sip' cloud pricing and can provide greater budgetary flexibility to support capital investment for internal solutions…Given existing assets used to deliver legacy IT services, the cloud business case is strongest when an enterprise must upgrade or build a new platform.”

Outsource

9 IT Outsourcing RFP Response Red Flags

Thu, 15 Mar 2012 05:00:00 GMT

Partner Steve Martin offers his insights as a third-party resource in this article about ITO RFP response items that may look good on paper but turn out to be negative in the long run. Sample excerpts: “Similarly, vendors may also propose bonus or incentive payments for exceeding SLA targets. ‘In practice, however, these types of incentives are essentially tantamount to higher fees, as performance improvements typically do not translate into meaningful value in terms of reducing the customer's expenses or increasing their revenues,’ said Pace Harmon's Martin. ‘The bottom line is that a vendor's reward for exceeding service levels should be that they get to keep providing the service.’”

CIO.com

Nearshoring Fuels Mexican Manufacturing Growth

Wed, 14 Mar 2012 05:00:00 GMT

Partner David Rutchik is quoted as an expert resource in this article about the current impacts of nearshore outsourcing on Mexico’s manufacturing industry. Sample excerpt: “’Mexico's exporting structure has been based on the U.S. market where 90% of the products land. But during the recent economic downturn, in the past three years, they have reduced this number to less than 80%. Their export markets are more diverse, with Latin America growing. In fact, trade with Brazil alone has increased fivefold,’ explains David Rutchik, a partner with Pace Harmon, an outsourcing advisory services firm.”

IndustryWeek

Lessons Learned: Outsourcing Managed Network Services

Fri, 09 Mar 2012 05:00:00 GMT

This byline article, penned by Pace Harmon’s Doug Carolus, Jonathan Shaw and Evan Schladow, offers readers key advice on navigating the process of outsourcing an organization’s managed network services. Sample excerpt: “Driven by financial needs, a competitive managed services market, enhanced remote network management tools and demanding business requirements, organizations are increasingly delegating control of their network -- including carrier services and service management -- to third-party providers…The potential benefits of implementing fully outsourced managed services include reduced cost of ownership (COO), access to external expertise/intellectual property, improved operational performance and abstracted management. A holistic outsourced model can also allow organizations to better allocate internal resources on strategic projects and core business activities.

However, relinquishing end-to-end responsibility for the network infrastructure without systematically addressing the service delivery model exposes the organization to significant financial, operational and strategic risks. To mitigate these risks and maximize results, organizations should consider the following best practices…”

Network World

Wireless Finance, Engineering Teams Need to Work Together

Thu, 08 Mar 2012 05:00:00 GMT

Partner Andy Sealock presents a case for why finance and engineering teams should collaborate to realize optimal results for wireless technology sourcing initiatives. He also offers best practices for engaging both functions together productively. Sample excerpt: “While finance and engineering departments interface for normal budgeting and expense approvals, successful complex technology sourcing endeavors require a much closer partnership. These deals can involve thousands of pricing line items and different vendor approaches that make it difficult to develop a realistic total cost of ownership (TCO) model, much less perform an apples-to-apples comparison…A well-coordinated finance and engineering partnership can help navigate wireless technology complexities by developing a predictive financial model analysis to ensure that cost, scalability and technical viability are accurately modeled — and that the tradeoffs are understood.”

Wireless Week

BPO Delivery Models: Is ‘White Box’ or ‘Black Box’ Right for You?

Fri, 24 Feb 2012 05:00:00 GMT

Senior Associate David Borowski serves as a resource in this article about the service delivery options for business process outsourcing deals. Sample excerpt: “’There are characteristics of both white box and black box in a lot of BPO services, but most current BPO deals lean closer to the white box model,’ says Dave Borowski, senior associate of outsourcing advisory firm Pace Harmon. ‘That model is staff augmentation, where the client defines a specific skill and pays the provider based on the number of hours and days successfully worked. There are service levels, but you still pay by the number of hours and bodies.’”

BPOOutcomes

Pace Harmon Honored As a Premier Outsourcing Advisor with Firm-Wide and Individual Awards

Tue, 21 Feb 2012 05:00:00 GMT

VIENNA, Va., February 22, 2012 – Recognizing its industry leadership, trusted expertise and first-rate team of practitioners, Pace Harmon, a leading outsourcing advisory services firm, announced it has been named to the International Association of Outsourcing Professionals’ 2012 World’s Best Outsourcing Advisors list for the third year in a row. In addition, Supply & Demand Chain Executive magazine named Pace Harmon Senior Associates Eric Anderson and Tom Burson as 2012 Pros to Know.

Download PDF

How to Save the IT Industry in 4 (Not So Easy) Steps

Mon, 13 Feb 2012 05:00:00 GMT

Marc Tanowitz, principal, offers expert analysis in this article about how government leaders can help keep the US IT industry successful rather than pushing forth policies to limit offshoring. Sample excerpt: “The federal government must take a more active role in U.S.-based IT education and training initiatives, said Marc Tanowitz, principal for outsourcing consultancy Pace Harmon. What's needed -- from pre-k all the way through post-secondary school -- are rigorous programs to teach practical and effective IT skills for the next century, he says.”

CIO.com

Kick off the New Year with a BPO Contract Review, Part 2

Wed, 18 Jan 2012 05:00:00 GMT

Principal Marc Tanowitz offers insights on the importance of reviewing critical “active” obligations in Part 2 of this contributed article on reviewing BPO contracts. In this piece, Tanowitz covers key elements such as process and procedure documentation, audits, technology configuration, resource certifications, document and data storage/retention, business continuity/disaster recovery plan and procedures, user access, key personnel, competitors, governance cadence, and anticipated business challenges.

BPOOutcomes.com

Nearshore 2012 Outlook: Time for Industry to ‘Stand on Its Own’

Wed, 18 Jan 2012 05:00:00 GMT

Partner David Rutchik offers his take on “the single biggest challenge you think the Nearshore outsourcing industry faces in 2012” as a resource in this article. Excerpt: “For outsourcing buyers, Nearshore vendors are often a better buy because of the typically touted travel, time zone, and language benefits, not necessarily the capabilities provided. As Nearshore economies become stronger and currency arbitrage becomes a challenge, Nearshore outsourcing vendors must build out their skill sets so they can stand on their own. For ITO they need to develop a greater breadth of capabilities, and for BPO they need to improve on both the depth and breadth of capabilities.”

Nearshore Americas

2012 Outsourcing Checklist

Tue, 17 Jan 2012 05:00:00 GMT

This byline article by David Borowski, senior associate, discusses 10 practical insights for organizations that are contemplating outsourcing in 2012—whether expanding an existing outsourcing relationship or creating a new one. Following are the points covered:

Decide on “black box” vs. “white box” outsourcing.
Determine the evaluation approach upfront.
Control the agenda.
Get the provider “A” team.
Model real-world transition costs.
Encourage innovation that benefits the buyer.
Plan for a challenging transition.
Develop meaningful SLAs.
Prepare for negotiations.
Remember that the right answer might be to not outsource.

Business Finance

Kick off the New Year with a BPO Contract Review, Part 1

Wed, 11 Jan 2012 05:00:00 GMT

In Part 1 of this contributed article, Principal Marc Tanowitz advises organizations to begin the New Year with a review of BPO contracts. Sample excerpt: “Most outsourcing contracts contain provisions that are to be completed post contract execution, require periodic updates, or simply vary over time. As we kick off 2012, the time is right to take a close look at these “active” obligations, identify any elements that require service provider action, and develop a plan and timetable to ensure that your relationships are ready to succeed in 2012.” Tanowitz covers provisions including: staying current with all contractual elements, resource commitments, productivity commitments, pricing and fees, pass-through expenses, continuous improvement plans, and benchmarking.

BPOOutcomes.com

Getting the Most from SLA Performance Targets

Tue, 27 Dec 2011 05:00:00 GMT

Principal Marc Tanowitz offers key advice for achieving targeted results from service level agreements (SLAs) in this byline article, which focuses on how to obtain the most benefit from contractual performance targets, as well as examines setting performance credits and remedies and other contractual levers that BPO buyers have at their disposal. Sample excerpt: “The ‘best’ service level is not always the one with the tightest performance standards and the largest performance credits. There is little point in requiring the supplier to deliver to a performance standard that offers no incremental benefit to the business. Rather, service levels should require the level of service that the buyer’s business really needs, and no more.”

BPOOutcomes.com

Kill or Cure?

Mon, 26 Dec 2011 05:00:00 GMT

In this contributed article, Senior Associate David Borowski and Principal Marc Tanowitz emphasize the importance of establishing organizational alignment early and throughout an outsourcing engagement. Sample excerpt: “Outsourcing is a transformational change that is neither simple nor easy. Fundamentally changing a company’s delivery model is challenging enough when the business process or IT services are mature and the organisation supportive, but it becomes nearly impossible if organisational alignment is not addressed early in the initiative and measured throughout. Without proactive organisational alignment, programme management tends to rely more on “feel” than facts, and it becomes difficult to understand why certain elements of the project are working or failing…As with a medical check-up, organisations contemplating outsourcing must identify the symptoms of misalignment early in the process, diagnose the underlying cause, and prescribe the right course of action for improvement. While there is no silver bullet to guarantee organisational alignment, the most effective weapons are awareness, active communication, and a willingness to address instances of misalignment swiftly and decisively.”

Outsource Magazine

12 IT Outsourcing Predictions for 2012

Thu, 22 Dec 2011 05:00:00 GMT

Partner Steve Martin serves as an expert resource in this article about outsourcing predictions for 2012. Sample excerpts: “’2012 will see a number of companies that have relied almost exclusively on U.S.-based IT infrastructure providers continue to shift business to offshore companies,’ says Steve Martin, partner with outsourcing consultancy Pace Harmon…’Companies will evaluate, strongly consider, and even begin to architect the movement of currently outsourced services to an insourced service delivery model—only to fail to pull the trigger in the end,’ predicts Pace Harmon's Martin. ‘While the economics and potential for service improvement through assuming control of one's own destiny will appear enticing at the business case level, the tasks of building data centers, standing up help desks, and hiring hundreds of resources will prove too daunting.’"

CIO.com

It Takes More Than SLAs to Manage a Successful Outsourcing Relationship

Wed, 21 Dec 2011 05:00:00 GMT

Principal Marc Tanowitz offers analysis regarding the role of SLAs and the need to integrate other success factors to achieve outsourcing success. Sample excerpt: “Many buyers of outsourcing services spend countless hours defining, measuring, analyzing and discussing service level agreement (SLA) performance but fail to achieve the results, satisfaction and improvement expected from outsourcing. In many cases, this is because the buyer doesn't fully understand how to take advantage of all of the performance levers available through the agreement…SLAs provide a mechanism to address deficient performance while maintaining contract integrity. For most buyers, however, it is far more critical to achieve performance expectations, rather than see a reduction in fees that have already been planned and budgeted. With this in mind, it is key to include non‐financial obligations in agreements, which can potentially be more effective than service level credits to drive provider performance.”

Business Finance

Creating Meaningful and Effective Service Level Agreements

Mon, 19 Dec 2011 05:00:00 GMT

Principal Marc Tanowitz discusses how to maximize the benefits of SLAs in this byline article. Sample excerpt: “As outsourcing buyers use service levels to measure the performance of a provider, service level agreements (SLAs) are one of the buyer’s fundamental vendor-performance management activities. An SLA’s agreed-upon quantitative provider requirements establish the baseline performance levels and define the monetary credits or other remedies associated with a provider’s failure to meet the standards. The principal role of an SLA is to align buyer and provider objectives.”

BPOOutcomes.com

IT Outsourcing Year in Review, Rating Our 2011 Predictions

Wed, 14 Dec 2011 05:00:00 GMT

Partner David Rutchik offers his take on last year’s outsourcing predictions in this article. Sample excerpts: “’With constant budget pressures and CEOs and CFOs pushing to do more with less, many IT leaders are renegotiating their deals mid-term in an effort to generate incremental savings,’ adds David Rutchik, partner with outsourcing consultancy Pace Harmon…’The capabilities of Indian outsourcing providers are being built up by multinationals and they see no reason to pay a hefty premium for acquiring these companies,’ says Rutchik of Pace Harmon. ‘There may be a merger of Indian providers in the future to provide more scale to compete with the larger multinationals, but even this scenario has its hurdles as many Indian providers are still family-owned or controlled with ingrained cultures and business differences.’"

CIO.com

Taking Labor Out of BPO

Mon, 12 Dec 2011 05:00:00 GMT

Principal Marc Tanowitz and Senior Associate David Borowski offer commentary on the value of removing labor costs from BPO by utilizing automated technology solutions. Sample excerpts: “’BPO is migrating to a continuous-improvement model where technology solutions take the labor out of the cost of BPO,’ says Marc Tanowitz principal of Pace Harmon, a consulting firm specializing in outsourcing advisory services. ‘Taking labor out is a better solution than labor arbitrage.’ Tanowitz says the removal of labor costs from BPO via automated technology solutions makes the whole cost of BPO go down. ‘There is market saturation [of labor-based solutions],’ he says. “The next wave of BPO solutions will leverage technology to drive costs of BPO down.’…‘Platform-based BPO solutions create a competency- and utility-based BPO model with variable, transaction-based pricing,’ says Pace Harmon senior associate Dave Borowski. “Back-office processes are still very labor-intensive, but there is a new interest in creating an incentive for the BPO vendor based on outcome.’”

BPOOutcomes.com

10 Worst Sales Tactics of IT Outsourcing Companies

Fri, 09 Dec 2011 05:00:00 GMT

Principal Marc Tanowitz provides insights in this article regarding frustrating sales tactics among IT outsourcing providers. Sample excerpts: “’Some outsourcing sales folk have a knack for selective listening. "Customers have specific requirements, needs and objectives that they expect to accomplish through outsourcing,’ says Marc Tanowitz, prinicipal with outsourcing consultancy Pace Harmon. ‘However, we frequently see [outsourcers] packaging services based solely on their own business needs and approaches.’…Take time to listen to customer needs before launching into a standard pitch. ‘This approach enables providers to align better with what customers are actually looking for and to present solutions in the way that is most meaningful to them,’ says Tanowitz.”

CIO.com

Ethics, Language and Organizational Culture: Taking a Hard Look at 'Soft' Issues

Tue, 06 Dec 2011 05:00:00 GMT

Partner Andy Sealock advises companies to examine the “soft costs” of outsourcing in the nearshore region in this byline article. Sample excerpt: “Much has been written on the risks and rewards of outsourcing deals, including the array of reasons that large outsourcing deals fail. Ranging from cultural differences and communication problems to poor governance (e.g., vendor and contract management) and setting unrealistic or poorly understood expectations, these “soft” or change management-related reasons are often more problematic than “hard” issues such as differences in technical or operational capabilities. When dealing with outsourcing in Latin America, both in terms of outsourcing Latin American operations and offshoring functions to Latin America locations from elsewhere, proactively addressing these soft issues becomes even more important as key nuances vary from country-to-country.”

Nearshore Americas

How Data Consolidation Prep Work Has Its Own Rewards

Fri, 02 Dec 2011 05:00:00 GMT

Senior Associate Christopher Stacy emphasizes the value of taking an accurate asset inventory, regardless of how successful federal agencies are in meeting objectives of the FDCCI. Sample excerpt: “Although it has been well documented that federal agencies are struggling to meet the deadlines and objectives of the Federal Data Center Consolidation Initiative (FDCCI) launched in 2010, they should recognize that taking the first basic step of developing a thorough picture of their asset inventory could start them on the road to reaping significant benefits…The initiative's skeptics cite a low likelihood of achieving the anticipated reduction in data centers. However, the benefits of inventory management can yield quick wins for reducing costs and improving operations, regardless of the initiative's ultimate outcome.”

Federal Computer Week

Reader Forum: 5 Key Steps to Leveraging Buying Power Among Wireless Telecom Carrier Partners

Mon, 28 Nov 2011 05:00:00 GMT

Senior Associate Adam Cummins discusses the importance of utilizing wireless telecom carrier partnerships to tap into leveraged purchasing power in this byline article. Sample excerpt: “As the heat of competition among wireless carriers in the United States increases, partnerships and joint ventures continue to grow as well. Such partnerships may involve tier-one carriers partnering with disruptive market entrants (e.g., cable operators, nontraditional carriers) for the purchase of airtime and capacity for resale, in lieu of making extensive capital investments on their own. One often-overlooked benefit of such partnerships is the collective buying leverage that established carriers and disruptive entrant partners may be able to realize together. Focusing on a few key strategic sourcing and category management fundamentals can help to ensure that those benefits are realized and maximized.”

RCR Wireless News