Risk Advisory Services

Transcription

1 Risk Advisory Services Strategic Operations Outsourcing IT OFFSHORE OUTSOURCING SURVEY German view St. Petersburg, Monday, June 07, 2004

2 Introduction to Ernst & Young General statements / information Major conclusions Threats and recommendations 2

3 Business activities Ernst & Young Overview Auditing Tax accountancy Auditing Consulting Tax accountancy Corporate Finance Real Estate E&Y Solutions Consulting Legal advice Corporate Finance/ Transaction Services Real Estate Legal advice 3

4 Ernst & Young worldwide We are one of the world s leading auditing and consulting firms. The Ernst & Young universe comprises ten regions of the world: Central Europe America Oceania Netherlands Continental Western Europe United Kingdom Far East Italy Nordic Switzerland In more than 130 countries with more than 100,000 employees The region-based organisational structure provides diverse benefits: Standardisation of auditing and consultancy services Speed of operation by dismantling organisational barriers Optimal deployment of personnel Transboundary knowledge management 4

5 Ernst & Young European Area New Central European Area: seamless service in the heart of Europe Germany Austria Croatia Slovakia Slovenia Czech Republic Hungary Poland Baltic States Russia More than 9,000 employees in the Central European Area The area-based organisational structure provides diverse benefits: Standardisation of auditing and consultancy services Speed of operation by dismantling organisational barriers Optimal deployment of personnel Transboundary knowledge management 5

6 Ernst & Young - References Selected German & international accounts ABB Apple Bilfinger Berger Bosch BP British Airways Coca Cola DaimlerChrysler Deutsche Telekom Elf HeidelbergCement Hewlett-Packard Metro AG Michelin Porsche Renault Toshiba UBS 6

7 Our proposal for offshore software development Management advice project management / project coaching project risk & quality management design of test case, procedure & acceptance criteria independent support of acceptance tests & procedures Legal advice Provement of the legal and regulatory requirements, e.g. Data Protection, Labor Law, Import/Export regulation Performance of the legal Due Diligence Legal advice during the RfP phase Draftment and negotiation of the Outsourcing Agreement and SLAs Establishement of New Companies or Joint Ventures Coordination and negotiation with the supervisory bodies & workers` council Registration of rights to software and other intellectual property objects, in Russia and abroad Enhancement of financial flows, tax and customs payment schemes Evaluation of and accounting for intellectual property objects 7

8 Technology & Security Risk Services CIS Team 8 In the CIS, Ernst & Young has a team of about 40 technology professionals who help clients solve comprehensive information technology issues to support business growth. Key core competencies include: Moscow "Ethical Hacking" Lab and IT Security team with the tools and skills needed to conduct computer security assessments of corporate networks. Proven skills and methodologies for providing advisory services in Information Security Strategy, Organization and Policy & Procedure Development, Business Continuity & Disaster Recovery Planning, Incident Response. Market leadership position in the provision of CyberProcess Certification services, a "seal of quality" on a company's website that builds stakeholders' confidence in the integrity, security, privacy, availability and maintainability of its business systems and on-line transactions. A dedicated ERP advisory team with the tools, proven methodology, experience and ERP skills needed to provide independent assurance and risk management associated with for Enterprise Resource Planning Systems (SAP, Oracle) around data integrity, process integrity, application integrity, and infrastructure & interface integrity. An IT Audit team with the tools and skills need to perform IT due diligence and general information technology audits.

9 Contact TSRS in Moscow Michelle Moore Partner Technology & Security Risk Services Ernst & Young (CIS) Ltd. Telefon

10 General statements / information There is just no way to beat the cost model. We save 50 cents on a dollar. CIO of an American insurance company 10

11 General statements / information Whoever claims to save 50 percent by offshore outsourcing lies. Philippe De Geyter, CIO of Deutsche Leasing, January

12 General statements / information Outsourcing as a part of IT strategy All respondents 246 companies codify especially offshore outsourcing 20,0% codify outsourcing in strategy 52,0% 28,0% no consideration 12

13 General statements / information Outsourcing as a part of IT strategy offshore experienced offshore inexperienced No 20,0% 31,0% especially offshore outsourcing No 9,0% especially offshore outsourcing 36,0% 49,0% 55,0% codify outsourcing in strategy codify outsourcing in strategy 13

14 Major conclusions 1. Offshore outsourcing is an economical and political factor currently 60 % of companies plan an outsourcing project abroad follow up projects already have higher budgets (average amount up to 1 Mio EUR) as a trend jobs will be transferred abroad 14

15 Major conclusions 2. Profitability is deciding 15 decisive argument for offshore outsourcing projects is potential in saving costs level of satisfaction depends on price and on compliance with budget although it has been decided that communication and reliability during the project is insufficient, around 67 % of the companies are satisfied with offshore as the price is reasonable; 70 % are satisfied because the project budget is in compliance with time and money spent

16 Major conclusions 3. Eastern Europe nearer than Asia more offshore outsourcing projects are with countries in Eastern Europe companies are more satisfied with outsourcing to Eastern Europe than to Asia as the conflict situation is believed to be higher in Asia (e.g. language, culture) 16

17 Major conclusions Eastern Europe is ahead of Asia very rather rather very satisfied dissatisfied Eastern Europe very rather rather very satisfied dissatisfied Asia 17

18 Major conclusions 4. Blue-eyed contract agreements only 53 % of companies have agreed upon German court of jurisdiction only one third have fixed conditional penalties in contracts safety mechanism should be used in order to minimize risks in offshore outsourcing as budgets range between 1m and 40m Euro 18

19 Major conclusions 5. Risk of communication 55 % of the companies judge the highest risk to be communication problems as a result the IT-competence of outsourcing provider is evaluated favorably better than project management and risk management methods investment in training and development is necessary 19

20 Major conclusions 6. Smaller and bigger companies take the role of pioneer most companies practicing offshore outsourcing have: -turnover around 25m EUR -turnover above 1b EUR middle class companies are coming soon and actually already 56 % of them are currently planning an offshore outsourcing project 20

21 Major conclusions 7. Tasks for IT offshore outsourcing 75 % of the companies state that the development of software is main priority 47 % of companies state the software maintenance (assumption: software maintenance as a second phase of the currently new developed software?) already 33 % realized the parameterization and the customizing of their standard software through offshore outsourcing 21

22 Major conclusions Development of Software 75 Continuous software maintenance 47 Migration of data /data entry 41 Adaptation/parameterization of software 33 Test and systems integration 30 Migration of software packages 23 Business processes Consulting services Other significant contract details Source: CIO 2004

23 Offshore Threats non- user* offshore user * communication problems 2,4 2,1 qualitative concerns 2,7 2,6 strategic concerns 2,9 2,5 delayed settlement of projects 3,0 2,7 legal concerns/ contract design 3,3 2,4 security concerns 3,2 2,6 compliance with resources 3,3 2,9 average 3,0 2,5 * average of allocated points 23

24 Offshore Threats Communication (offshore-user: 2,4 non-user: 2,1)* lack of reach ability of the outsourcing-team lack of presence of the project manager on site long response times linguistic barriers * average of allocated points 24

25 Recommendations Communication install project office on site (incl. project call center) adapt onsite-part to project requirements pay attention to the time zones of the offshore-partner offer language courses for project team * average of allocated points 25

26 Offshore Threats Quality (offshore-user: 2,7 non-user: 2,6)* lack of understanding of the assignment non-compliance with international standards insufficient testing or general lack of reliability * average of allocated points 26

27 Recommendations Quality prepare detailed requirement specifications (incl. a list of functions and test scenarios) develop acceptance concept and process (not only acceptance of functions) choose suitable project method (review the waterfall-method) 27

28 Offshore Threats Strategy (offshore-user: 2,9 non-user: 2,5)* cultural differences between contract partners lack of economic stability by the outsourcer lack of project prioritisation by the outsourcer lack of acceptance by company-own employees * average of allocated points 28

29 Recommendations Strategy define project break points, not only the mile stones do not tie know-how to persons the project sponsor has to have the employees standing behind him 29

30 Contact Diplom-Mathematiker Oleg Brodski Senior Manager Risk Advisory Services Ernst & Young AG Wirtschaftsprüfungsgesellschaft Uerdingerstraße Düsseldorf Telefon +49 (211) Telefax +49 (211) Mobil +49 (160)