BlakeHanna-Partner,AccentureOutsourcingDealDevelopmentSourcingInterestGroup,NYCJanuary23,2002Metrics&IncentivesinOutsourcing:DrivingPeakPerformance2©Accenture2001AllRightsReservedOutline•Introduction•Acknowledgements–SourcingInterestGroup–AccentureInstituteforStrategicChange•JaneLinder,JosephSawyer&AliceHartley•SpotlightonMetrics&Incentives(30minutes)•Q&A(20minutes)3©Accenture2001AllRightsReservedSpeed,Scale,ComplexityBlake:•Wantthesetolooklike‘mininewspaperheadlines’withaninterestingbackground(seeattachedSample…butdon’tincludethesample)Blake:•Wantthesetolooklike‘mininewspaperheadlines’withaninterestingbackground(seeattachedSample…butdon’tincludethesample)USAIRFORCELIFTSOFFF.A.S.T…isbeingawardeda$7.4billionindefinite-delivery/indefinite-quantitycontractwithmultiplepricingarrangementstoprovidefortheFlexibleAcquisitionandSustainmentTool(FAST)Program.NTLOPTSFORSTRATEGICOUTSOURCINGBritishcablegroupNTL,hassignedastrategicoutsourcingcontractwithapotentialvalueinexcessofUS$2billion.WINDOWORAISLE?SABREHASANEWSEAT-MATESabrehasawardeda10-year,$2.2billionservicecontracttomanageSabre’sITsystems.Inaddition,thecompanieshaveagreedtojointlymarketITsolutionsandservicestothetravelandtransportationindustry.“MABELL”OUTSOURCESTOTRANSFORM…todayannouncedaninnovative,multi-billion-dollaragreementinwhichthefirmswillteamtotransformAT&TConsumer’slongdistancesalesandcustomercareoperation.The“co-sourcing”agreement,whichcallsforAT&Ttospendabout$2.6billionoverfiveyears.4©Accenture2001AllRightsReservedHypothesis•Manyexamplesfromthenewbreedofoutsourcingrelationshipsaredesignedusingexistingandestablishedincentive&metricsframeworks•Managingnewtypesofoutsourcingrelationshipsrequiresnewincentiveandmetricsframeworkstorealizethevalueinthearrangements5©Accenture2001AllRightsReservedKeyFindingsBlake:•Doa“buildup”forthisslide…show1numberedpointeachtimethemouseispushedBlake:•Doa“buildup”forthisslide…show1numberedpointeachtimethemouseispushed1.Broadspectrumofoutsourcingrelationshipsavailabletoorganizationstoday2.Needtoaligntypeofoutsourcingrelationshipwithorganizations’objectives3.Needtoalignappropriateincentivesandmetricswithtypeofoutsourcingrelationship6©Accenture2001AllRightsReservedTypesOfOutsourcingRelationshipsBlake:•DeletetheHeadingonthegraphic(i.e.Exhibit1)•Needtoredothegraphicsonthispagetomakethemreadable•Doa“buildup”forthisslide…showtheLeftMarginTextandthendoa“build”,adding1columneachclickofthemouse.Startbyincludingcolumn1(“Conventional”)whenyoudisplacetheLeftMarginText•YoumayhavetoshrinkeachcolumnafterithasbeendisplayedinordertomakethetextofthenextcolumnbeingdisplayedreadableBlake:•DeletetheHeadingonthegraphic(i.e.Exhibit1)•Needtoredothegraphicsonthispagetomakethemreadable•Doa“buildup”forthisslide…showtheLeftMarginTextandthendoa“build”,adding1columneachclickofthemouse.Startbyincludingcolumn1(“Conventional”)whenyoudisplacetheLeftMarginText•YoumayhavetoshrinkeachcolumnafterithasbeendisplayedinordertomakethetextofthenextcolumnbeingdisplayedreadableApproachPurposeExampleIncentivesExampleMetricsKeyGovernanceMechanismsBenefitCONVENTIONALContractual:Motivateoutsourcertohitspecific,measureableoutputtargetsTogetwhatyouaskfor•Cashbonusforhittingtarget•Penaltypaymentforunderperforming•Systemavailability•Costreductiontarget•Contract•Regularoperat...
