Leveraging OffShore Resources in Your Staffing Model

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Leveraging Off-Shore Resourcesin Your Staffing
Model
DHS / CRIM Round Table March 19, 2002

• Jarnail Lail
• Vice President, Business Systems
• W.W. Grainger, Inc.

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Discussion Topics

• Background Company Profile
• Business Needs Strategic And Tactical
• Key Concerns And Experiences
• Critical Success Factors
• Benefits
• Summary

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Grainger MRO
Maintenance, Repair, and Operating (MRO) supplies
are indirect materials that are essential in
keeping businesses running.
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Grainger Profile

• 75 year-old company
• 2001 Revenue 4.8 billion
• 15,100 employees
• 250,000 customer contacts a
• day
• More than 2 million customers
• 580 branches
• 635 million in inventory
• Industry leader

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(No Transcript)
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Historical Perspective(Business Model Evolution)
Location . . .
Location
Customer
Customer
Branch.
Branch
Branch
Branch
Central/Regional Distribution Center
ZDC
RDC
ZDC
RDC
NDC
ZDC
Supplier
Supplier
Our core systems are changing to meet new
business directions
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New Business Model
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Historical Perspective (Legacy Systems Dont
Meet Business Needs)

• On average our systems were constructed 15-20
  years ago, when the business model was
  significantly different and slow to change
• Systems were built as specific point solutions
• As more niche systems were added, the cost and
  effort to maintain the interfaces increased
  geometrically

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Business Needs / Challenges

• Business process changes requiring new
  applications Time to market pressure
• Implement applications using emerging
  technologies Focus Areas
• Maintenance of mission critical applications
• Budget constraints
• Demand for subject matter experts (limited pool)
• Motivate internal resources to work on legacy

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Initiative Categorization
Strategic Research Initiatives
Strategic Development Initiatives
Strategic
Less Critical / Strategic Needs
Critical Non-Strategic (Y2K, Legacy)
Business Criticality
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Leveraging External Resources
Partial
Strategic Research Initiatives
Strategic Development Initiatives
Strategic
Maximum
Less Critical / Strategic Needs
Critical Non-Strategic (Y2K, Legacy)
Business Criticality
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Recent Article in Information Week

• Offshore Outsourcing Grows to Global Proportions
  by Larry Greenemeier (Feb 11)
• Offshore outsourcing demands warrant looking at
  many other countries like China, Russia,
  Philippines besides India
• India is the biggest resource for offshore
  programmers and Project Managers
• Solid education system and standards in India
  built by the British
• High level of competition for getting into the
  universities
• Growing Demand and Increased Need for Offshore
• By 2005, predicted demand for 1 million
  (Forrester)
• In 2000, average offshore spending is 8.0m (12
  of IT budget)
• In 2003, prediction is 28.0m (28 of IT budget)

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CMM Level Distribution
Per cent
Source Carnegie Mellon Software Engineering
Institute August 2001
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Key Concerns And Experiences

• Remote access to Critical Applications
• Work through high speed link
• Fully secure export processing zone
• Works the same as multiple locations within North
  America
• Cultural Differences
• Understanding of cultural differences
• Initially a concern, but later get used to it
  cost benefits are worth the effort
• Communication course / training on cultural
  differences
• Language Barriers
• Minimum issues with IT Languages COBOL, JAVA,
  C
• English speaking consultants
• Accent / Dialect Issues extra effort on
  listening
• Onsite presence for coordination make it
  non-issue
• Time zone Differences
• Advantage for application support night
  processing
• Status meetings mornings / evenings

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Key Concerns And Experiences

• Remote location of resources
• Some are located onsite
• Works the same as multiple locations within North
  America
• Telecommunications Infrastructure
• Initial delays in establishing links (1997)
• Reliable communication links (never impacted
  operations)
• Management Challenges
• Initial denial
• Employee motivation
• Relationship management - different management
  skills

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Due Diligence

• Factors/Criteria Used For Evaluation/Selection
• Recommendation from Research Company Gartner,
  Forrester
• Grainger Evaluation Criteria
• Price
• Quality (Adherence to specification)
• Performance (Track record of completing on time)
• References and Similar success stories
• Financial Stability of Vendor
• Access to Senior Executives within Vendor company
  (Escalation process)
• Availability of Methodology and flexibility in
  using / deploying to Graingers needs
• Due diligence steps
• Short listed 3 vendors based on Company profile,
  US presence, Gartner recommendation
• Met Senior executives from vendor company to
  evaluation commitment and reliability
• Evaluated Methodology briefly to understand
  maturity and repeatability of Vendors processes
• Met Account Manger assigned and evaluated
  relationship skills
• Visited Offshore facility to see development
  centers
• Assigned Engagement manager to constantly monitor
  progress/project during the first phase of the
  project (approximately 3 to 6 months)

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Critical Success Factors

• Senior executive sponsorship
• Employee communication meetings
• Cafeteria meetings
• Onsite and offshore model vs. pure offshore
• Managing speed of migration
• Understand / focus on cultural differences
• Visits to offshore facilities
• Seeing is believing
• Increases awareness and enhances working
  relationships
• Contingency plans

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Benefits

• IT Costs Management
• Leverage internal SMEs for strategic initiatives
• Upgraded internal skills
• Retention of key SMEs and internal talent
• Measurement of Service Levels
• Process improvements
• Excellent documentation - used in strategic
  initiatives as well
• Meeting the needs of the business

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Customer Interaction with Grainger
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