Transcript Gentran Integration Suite

B2B/EDI Outsourcing
Today’s Agenda
Hosting/Outsourcing Market Trends
How to find new opportunities to improve
efficiencies and reduce business process costs
Workshop – 15 -20 minutes – Functional Areas
Presentations – 15 Minutes – Recommendations
from Functional Areas
Dick Bort – VP Sales ABC Outsourcers
Closing Comments/Q&A
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Outsourcing Definition
Outsourcing -The procuring of services or products, such as the parts used
in manufacturing a motor vehicle, from an outside supplier or
manufacturer in order to cut costs.
Offshore Outsourcing -An arrangement in which one company contracts with service
providers located outside the country for services.
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Business Process Outsourcing
Business Process Outsourcing (BPO) occurs when an
organization turns over the management and optimization of a
business function to a third party that conducts the activity based
on a set of predetermined performance metrics. A BPO vendor
manages people and processes, while traditional outsourcers
focus on life cycle management and hardware uptime.
IBM Gets 1.1 Billion Gap Service Contract to operate part of its
Information technology infrastructure
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Business Process Outsourcing
Business process outsourcing (BPO) is the act of giving a thirdparty the responsibility of running what would otherwise be an
internal system or service. An example is managing a companies
order management, billing, logistics management, supplier
collaboration, production planning/forecasting, inventory
management, and electronic payments.
Typically, companies that are looking at business process
outsourcing are hoping to achieve cost savings by handing the
work to a third-party that can take advantage of economies of
scale by doing the same work for many companies. Or perhaps
the cost savings can be achieved because labor costs are lower
due to different costs of living in different countries.
Payroll – HR – Travel Management – Expense Reporting – Accounts Payable
Call Center – Freight Invoice Processing – Collections – Internal Audit –
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Trends
Although the main objective of outsourcing is often cost reduction, many
companies fail to realize any cost benefits. In particular, Gartner is
predicting that by 2007, 80% of organizations that outsource customer
service projects with the primary goal of cutting costs, will fail in that
attempt.
Part of the reasoning behind this statistic is the high staff attrition rates at
outsourcing companies, sometimes as high as 80% to 100%. Combine
this added cost from attrition along with the hidden costs of client loss
due to increased frustration and it's clear that an outsourcing
engagement, if not careful monitored, can easily fail.
8 out of 10 UK companies to boost outsourcing:bloomberg Monday,
August 08, 2005
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Business Operation Service Considerations
when using Off- Shore Support
Language and proximity differences
Cultural differences: In some cultures, admitting to a lack of knowledge or
understanding is a mark of shame, leading to the "nodding head" syndrome when frank
discussion and questioning is required. This, too, has a potentially huge and negative impact on
the vaunted cost savings of offshore work
The enormous time zone difference: From the center of India
to the center of America, the time difference is about 12 hours, a perfect offset. This means that
there is no time when we share the same work day, forcing communication to be channeled
primarily into email and other written forms. But these have a notoriously low "bandwidth",
exacerbating the other problems of outsourcing. .
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Reasons on why companies are outsourcing
Managing B2B/EDI is not our core competency
We don’t have the resources to implement new transactions
and/or trading partners
We are thinking about outsourcing all or part of our IT
Applications and Infrastructure
We need improved visibility and data tracking
We have our customers connected but all other functional areas
are paper based
It’s getting more difficult to manage all of the communication
protocols (AS2, FTP, VAN)
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Your B2B Project Sourcing Options
No Sourcing
•
•
Run your own B2B projects
You are your own “VAN”
Wholly Outsourced
•
•
Leverage Systems Integrators
100% custom B2B project
100%
Outsourced
Hosted Solutions
•
Leverage hosted integration services:


•
Integration service providers
Business process networks
Hybrid Sourcing
•
•
Selectively outsource projects
Run some of your own projects
15% - 50% customization
Variable%
Outsourced
Source – Gartner Group – Hosted Integration Services
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Decision Framework: When to (Not)
Use Hosted Integration Services
First — answer these B2B project questions:
Is this B2B project a required core competency?
• Hint: not all core competencies are required
Do you have internal B2B skills and infrastructure?
Will this B2B project be complex?
Is the project urgent?
Is a viable, regional ISP readily available?
Source – Gartner Group – Hosted Integration Services
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Decision Framework: When to (Not) Use H
Second – based on your answers choose which scenario best
describes your project
B2B Project Scenarios
Is this B2B project a
required core competency?
Do you have internal B2B
skills and infrastructure?
Will this B2B project be
complex?
Is the project urgent?
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Scenario 5
Scenario 6
No
No
No
Yes
Yes
Yes
No
Yes
Yes
No
No
Yes
yes or no
No
Yes
yes or no
yes or no
yes or no
yes or no
yes or no
yes or no
No
Yes
yes or no
consider
consider
consider
consider
do it yourself
do it yourself outsourcing do it yourself outsourcing
Recommendation:
outsource
Is a viable service provider
readily available? If YES then…
outsource
outsource is
an option
consider
outsourcing
outsource is
an option
consider
outsourcing
Is a viable service provider
readily available? If NO then…
you must
do it yourself
definitely
do it yourself
do it yourself
is an option
definitely
do it yourself
do it yourself
Source – Gartner Group – Hosted Integration Services
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
What to be looking for?
LOGISTICS
ACCOUNTS
RECEIVABLE
Projects that are targeted
At Business Process
Automation
Lets explore opportunities within
RSC Products
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
RSC Products
500 million manufacturer of Consumer Products
FY 2005 – Lost 25 million
Gross Margin % is 13 percent, competition is at 20 %
Market Share – Lost 5 percent in 2005
1200 customers consisting of large retailers and
distributors
100 Suppliers
Days cost of goods sold in inventory is 114 days
DSO – 65 Days, Industry is 45 days
ERP – Just completed migration to SAP (Way over budget)
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Current B2B Environment
Documents in Production – Purchase Order,
Invoice, ASN
Trading Partners – Large Big Box Retailers
Average monthly order volume – 100,000 of
which 50% are electronic
Issues with ASN’s resulting in Penalties and
charge backs
Challenges – Their largest retailer customer
wants to convert to AS2 and is requiring UCC-Net
compliance
Copyright 2003 Sterling Commerce, Inc. All rights reserved.
Board Room Conversation
CEO wants to know what can be done to reduce
operating expenses in all functional areas.
Considering a proposal from ABC to offshore all
IT applications and Business Processes
CEO wants to know what CFO and CIO are doing
to reduce risks associated with Sarbanes Oxley
CEO wants to know what can be done to recapture market share and stop losing customers
who find it difficult to do business with RSC
Products
Copyright 2003 Sterling Commerce, Inc. All rights reserved.