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Benefits of Co-Managed IT Services

Tom War: Thank you for coming to our presentation. My name is Tom War, I am a regional director of sales for TEKsystems. I've been with TEKsystems for roughly 16 years, the last seven of which with our global services division. This is our first time hosting at a Gartner summit. It's our first time speaking, obviously, and we're going to speak for a few less minutes than we anticipated. We're really excited to be here and excited that you guys are going to share this session with us.

In today's session, we are going to talk about driving value through a co-managed or managed services model. But before we do that, I'm going to take just a few brief moments to introduce TEKsystems for those of you who are unfamiliar with us.

TEKsystems is an IT services company. We're headquartered out of Hanover, Md., which is just outside of Baltimore. We're privately held and an operating company of Allegis Group, which is an $8.3 billion entity founded 29 years ago in 1983.

A couple of quick facts about TEKsystems: In 2011, we hit $2.9 billion in revenue. We have over 4,000 full-time employees operating out of more than 100 locations worldwide. We have over 6,000 clients, including 82 percent of the Fortune 500, and we are the largest IT staffing provider in North America. It's not even close, we're three times the next competitor. We're proud of that as it's all organic growth and that's our heritage, but we do more than that today. We deploy over 80,000 technical professionals annually.

At TEKsystems we strongly believe that people are the core of getting IT done right. I sat in this room yesterday and listened to Linda Cohen express some of the same things. Regardless of the delivery method, regardless of the location, regardless of the technology that you need to deploy, it's still the people. Yes, of course, there are processes that make things better, but it's the people. You need to have access to the right talent and mobilize in the right way to drive the outcomes that you're looking for. That's a key tenet to what we believe is the key to getting IT done right.

At TEKsystems, we have three core service areas. The first I described a little bit is IT staff augmentation. That's what our heritage is, that's where we came from, that's what we tend to be most known for in the industry. The second of which is IT talent management expertise. This is where we provide consulting and best practices around attracting, developing and retaining that critical IT talent that you all need in your enterprise. The last of which is IT services. This is the fastest growing division within our organization and it's where we provide true project-based, outcome- and deliverable-based work either through a project or functional outsourcing.

Now I will pass it over to my esteemed colleague Roger Burns, who is going to walk through the final points of driving value through the aforementioned co-managed service model. Thank you.

Roger Burns: What I'm going to talk about today is our co-managed services model that Tom mentioned earlier and the value framework that goes with the model. There are two key points but before I get into that area, I'll set the stage a little bit for why that model is relevant to the industry.

Outsourcing has been going on since the '80s and I think we learned on Monday that outsourcing started in 1962. I've seen the industry evolve over time so there'vebeen a lot more mature models that have gained a lot of popularity; we know where to do work and how to do it now. So the industry, with all the processes and industry organizations over the last 10 to 12 years, has really matured a lot.

Outsourcing, with all its variations that we've heard a lot about this week, is and has become a very relevant business tool for today and going forward. To further that conversation I brought a quote here from a recent writing of Frank Ridder of Gartner in which he wrote, "IT services sourcing has never been more complex and fraught with ongoing accelerated change as it is now." Why is that?

I think we heard a keynote speaker earlier this week talk about how technology is changing outsourcing on a continual basis. We all know what happened in 2000: we had the economic downturn. We found that a lot of companies could not work with the current outsourcing structure. It was not flexible enough, could not guarantee lines of work, guarantee service levels, so we had issues on both sides of the contract with the customers wanting more flexibility and the service providers were still trying to figure out how to make some profit along with providing service.

And finally business changed. We're in a very dynamic business environment, which is causing change on a regular basis. So nothing's new that you've heard a lot about this week but I think it does lead into our conversation about flexibility and value. Companies today are still trying to put more emphasis on value and flexibility than they did in the past. 

If I look at some of the current, more traditional service models, staff augmentation is at one end of the service spectrum –- Tom talked about it a little bit. We do a lot of that so it's a very good service; in certain situations, it is the right service. But there are times when staff augmentation is not the right model: You might need a larger team; you need a team for longer duration; you want some knowledge management – just examples of things in which staff augmentation doesn't work.

On the other side of the spectrum you have a more strategic outsourcing model. Again, when you know how to package something up, when you know how to push goals around service models that you want to transition to your partner, again, that fits the other end of the spectrum and it's very relevant for an outsourcing setup.

So what's in the middle? There are times when staff augmentation doesn't work. When you need a large team of people; you want to contain some knowledge management; you want to get your vendor to participate with you in a risk-sharing model. That's what we find our customers want when we talk about this "middle area." Our customers also sometimes can't package up a service as it's unclear or it's core to their business –it's not something they're comfortable lifting and shifting somewhere else. It doesn't matter if it's down the street or across the world, there are certain things they want to keep in-house for various reasons. 

I guess this middle area we talked about, co-managing services, has been our fastest-growing service in the last couple of years – it's really resonating with our customers.

What is it? It's a flexible model that we participate in the management of the process. Some of the typical characteristics include resource flexibility and scalability meaning we can flex up teams, flex down teams and change skills on demand through a planned and orderly process. We can scale wide: different locations, support various organizations. It allows us to respond in an orderly, managed fashion.

As for the shared risk model, we get in the game with our customer and share responsibilities with them. As far as program oversight, they've most likely got an outsourcing governance model where knowledge management is important for these types of goals to prepare and manage risk associated with large teams of people and global delivery. So these are typical characteristics of a co-managed service model.

The potential benefits are much like an outsourcing engagement. Not to the extent, but we're providing more flexibility without perhaps as much investment as some of the outsourcing initiatives. It allows us to be more flexible. It allows us to backdoor customers and let them focus on what they want to do in some cases, like focus on their core initiatives, much like an outsourcing model may provide. It simplifies the vendor management model through one vendor that has assistance with the onboarding, recruiting, training and management of those resources within your environment.

It reduces the risk, obviously, on countless levels associated with vendors, locations, staffing and I'll talk more about reduced risk later.

Again, amongst these other things it gives you faster speed to market, continuous process improvement, which I'll talk about in our framework and how we help our customers achieve continuous improvement on these processes. And finally, it is a predictable model. We can work with our customers and plan how this model works and how it can flex up and flex down, etc.

So what goes along with this service is what we call Quality, Cost and Risk Value Framework, or QCR for short. As we enter these assignments, often times they are not fully defined. Our customers know what they want, they know they need help and they know it's a little fuzzy around the gray areas, so our QCR framework allows us to work with our customers to identify those key business drivers and key business objectives as we're engaged. We both learn as we go forward and we know it's a process in which we have a standard of work and must deliver clear and defined deliverables and SLAs for the core services that we know about. But it's a service we don't quite know a lot about yet because it's a little fuzzy around the edge, a little gray, as we talked about.

Our QCR framework is focused on delivering value above the SOW. We try and identify, as we're delivering the service, how we can improve it, how we can drastically reduce costs, improve quality or mitigate risk. This is all driven by initiatives that are measurable and targeted, much like we've talked about all week here at the different conferences.

The framework has four key objectives, which are all focused on supporting that co-managed services model and how to bring that to our customers' expectations over the term of the engagement. The first one is aligning the engagement objectives to what the customer is trying to achieve. The main idea is that we're going into an engagement and we have to understand why our customer wants to hire us and what they want from us. Our first goal is to identify what the objectives are.

Second, we need to identify real metrics and how we can add real value based upon real metrics and real targets. Thirdly, we must continually validate the engagement objectives. We need to continue to validate what we said we're going to do and change or modify as necessary.

Finally, measure and report. These are the four key objectives of our QCR model and we'll start going into a little more detail right now.

There are five sections to the framework. The first one being analyze. As I've talked about, we want to talk to our customers about, "What are your key objectives?," "How can we help you achieve what you need to do?" So that's the first thing: analyze.

Second: Solution. We must validate what we heard and what can we do to help you achieve what you need to get done. We call these QCR drivers.

Thirdly, we develop a plan with clear KPIs, clear measurements, clear targets regarding how we achieve this goal. Again, it's all designed to be really developed for everybody to see.

We then execute the plan as defined in the third phase and, finally, continue to validate that what we're doing is the right model and what we're going forward with what is going to help our customer achieve their business objectives.

I developed a little example here that's simplistic and engages this conversation without getting too involved. As an example, let's say the customer is facing speed-to-market pressures. They're looking to assemble a large technical team but they are not quite sure with what they need or how they need it, but they know they need, for example, 50 people. They may need some project managers, quality assurance people, developers, etc. As we engage with the customer we try to figure out your true goal, which is speedy delivery.

In addition to the resources, SLAs around the team onboarding, the knowledge management requirements, task management, etc., how else can we help you? We're trying to identify our QCR drivers, or one driver of many, for this assignment.

We identify a team stabilization as a key component. If a customer is bringing on a large team, we're going to invest in training, onboarding training, etc., to get them placed in positions that may be lacking in some of their employees so they can move on to more strategic initiatives. Again, we don't want any turnover. There's always some turnover, but we want to mitigate that risk.

We will customize, for example, a mentoring program, a cross-training program or a knowledge management program – all of which are geared toward keeping retention levels high, keeping people trained, and our team available to our customers. This is, like I said, a simple example. We've had examples where we've improved service request processes as part of our QCR process, saved customers hundreds of thousands of dollars and we've had situations where we've improved the process of security initiatives about access management. We view every customer and engagement differently and come up with what is the QCR driver to help them achieve their initiatives. It's a flexible environment that changes from customer to customer, service to service.

So then TEKsystems executes a QCR plan and I'll talk about the scorecard and how we did that, but that's step four, which is about reporting and measuring. And finally, we'll continue to review the plans we have in place and continue to assess to find more opportunities that deliver value to the customer.

As for the scorecard, we've identified, as a business driver, speed to market. We've identified the QCR driver as the team stabilization program, in which the KPI for that is retention rate – that’s how we measure ourselves to help our customer meet their goal. We set a goal or target of 92 percent retention rate and we show our current status. 

The simple example of the three programs or initiatives including staff mentoring, where we have KPIs including having a trained mentor staff and defined individual group touchpoints. Then our goal and target is to have 10 trained mentors by a certain date, we want four touchpoints per month and one group meeting. This is some sticking ground for what we're measuring against. It's simplistic but it's effective to make sure that we're working toward our goal.

Then we have our current status. Again this is similar to the cross-training program. How many full time employees are we trying to train? What is our target in a certain timeframe and what is our continued ongoing basis?

As for knowledge management, we look at the number of processes we've documented to be successful and the number of processes we've approved or key KPIs and the targets associated with that. Again, this is all focused on setting up initiatives to help our customers reach their goal, setting up targets and tracking those targets. These three initiatives can be replaced with countless others that are important in the engagement. As I talked about with the service request-based system, we had some initiatives to prove how the process was managed and saved the customer a lot of money. Again, security and access management, we've done all kinds of examples of what we've done with our customers.

This process is really resonating well with our customers. I like the support and the feedback about the visibility they have into what we're trying to accomplish. Some of these cases we make look at for investments for our customer. Others are just about improving our core service that essentially helps us. If we reduce retention rate, it helps us manage customer satisfaction and our costs with recruiting people. There's a dual benefit here of keeping a team in place and helping our customers. It's really a win-win situation. There are some cases where we do something to improve our service or work with a customer that may require an investment to ensure the return on investment is there to implement that QCR initiative.

It's worked out pretty well and it's a good guide to frame out this co-managed service that is sometimes not truly defined as a move-in, but it allows us to continually redefine that service and make it better throughout the process. 

Finally, I want to talk about some of the criteria that we use to evaluate this service. Program oversight is an important part of it. As we enter into these engagements we have a lot of delivery management and we have similar governance programs to outsource engagement with steering committees, scorecards and a lot of times we have SLAs built into these engagements that are still relevant but not as hard as some of the traditional outsourced engagements.

We have the resource planning and a key part of this is allowing the customer to be more flexible with resources, more scalable. We work with our customers to develop clear plans of what we expect in the resource modeling, what kind of onboarding you can do, what kind of training you can do in the backroom, task management and all of the programs associated with managing those resources going forward.

Knowledge management is key to risk mitigation. We talked about how this process helps us do our job better, learn faster, bring people in to do the jobs quicker and, in case of unplanned client turnover, we can transition over responsibly. It's a key component of our service offering and we take it very seriously.

Performance management in these engagements ranges the full spectrum of HR management, onboarding training, true task management. Oftentimes we take ownership of a full task, in case of service request management or application support areas, quality assurance, we move throughout the spectrum. But again, performance management depends on where we start and how we can continue to progress that within the organization. 

I talked a lot about flexibility and scalability and I think that's key to the program. The ability to do what they need to do, I guess would be how it is simply put, but the model does provide a lot of flexibility.

Global delivery can be done out of sight, onshore, offshore – we’ve had models for all those situations where this works successfully. It's a co-managed model so a lot times this is typically onsite.

The value framework is a key component to how this works. If we define a service and continue to get out there to improve its definition, continue to improve and redefine the service on an ongoing basis, the service gets stale and our customers say, "What are you doing for us? What have you done for me today?" Through this value framework we are able to continually redefine the service to get it better and continue to modify it to meet our customer's requirements, which is key to this "middle ground." It makes it possible, relevant and measurable and appropriate.

That's really the end of the prepared text. The QCR initiative is really part of our co-managed service; it's part of what we do as we start the engagement. A lot of times we get engaged and we know some of the parameters about the engagement in advance, sometimes not all the parameters, so once we start engaging and start learning then we're able to start identifying the potential and work with the customer to analyze their business objectives. Sometimes we hear it upfront and we don't understand it from day one, but maybe by day 15 we have a better understanding. We work on that as part of our service and our delivery governance is to develop this scorecard as part of our methodology to work with the customers to develop the QCR initiatives, QCR plans and the scorecard becomes part of our monthly reporting.

Part of the process is that five-step process – identify, analyze, solution, etc. – and the last one is to continually improve. We analyze the alignment we have: Are we truly aligning the engagement to the business objectives? Have we made some adjustments along the way that are working? So that's key to the process. Thanks very much.
As the economy continues to flicker with slow, positive growth, IT departments may be the benefactors, as the majority of IT leaders expect to see an increase in their IT budget in 2014. This represents a significant increase in optimism, compared to 2013. 

So where are IT leaders expecting to spend this money?

  • Implementing new technology
  • Investing in their IT workforce
  • Meeting business demands

The technology trends that are expected to have the biggest impact in 2014 are business intelligence (BI), security and mobility.

Although technologies may drive the future of IT, it’s the people that make it all possible. IT leaders are looking to build their IT workforce to meet long-term goals, as well as fill in gaps to meet emerging needs. 

Yet, great talent is often challenging to find. In 2014, some of the most difficult positions to fill will also by the most critical to success.

When it comes to meeting technology needs with people solutions to satisfy business demands, overall, IT leaders are more confident in 2014 in their ability to deliver results.

Fueling this confidence, IT leaders are seeing a shift in its role from just “keeping the lights on” to leveraging cutting-edge technologies and providing real value to the organization.

Due to the speed of technological advancement, it’s virtually impossible for an organization to possess all their needed IT skills in-house. IT leaders in 2014 are looking to partner with external IT support vendors to help keep pace with new technologies, accommodate spikes in workload and strategically address its workforce planning. 

Acquiring, developing and retaining the right talent will be critical for successful implementation of key projects. IT will need to be ready as the business leans on them in an era of cautious optimism.