Portfolio Analysis. Sizing Up the Outsourcing Opportunity. Michael Zeigler IT Director, Micron Technology, Inc Michael Serghiou Sr.

Transcription

1 Portfolio Analysis Sizing Up the Outsourcing Opportunity Michael Zeigler IT Director, Micron Technology, Inc Michael Serghiou Sr. Director, neoit

2 Agenda About neoit About Micron Technology, Inc Process Overview Portfolio Analysis The Micron Experience Lessons Learned, Wrap-Up Q&A

3 Micron World-Wide To be the most innovative and lowest-cost provider of memory-based solutions Oregon California Idaho Minnesota Illinois New Hampshire Utah New York Virginia Texas North Carolina Puerto Rico Norway Finland Scotland Sweden Ireland England Germany Austria France Italy India S. Korea Japan China Taiwan Singapore Micron is one of the world's leading providers of advanced semiconductor solutions. Micron s DRAM and Flash components are used in today s most advanced computing, networking, and communications products, including computers, workstations, servers, cell phones, wireless devices, digital cameras, and gaming systems. Micron also provides CMOS image sensor solutions to the handset camera, digital still camera, and PC video camera markets.

4 Process Overview Michael Serghiou Sr. Director, neoit

5 Service Globalization Life-Cycle Management Transition Sourcing 10 Steady State Governance Value Realization Assessment Business Driver Awareness IT Portfolio Assessment Location Assessment Architecture Globalization Strategy Negotiations and Contracts 5 Sourcing (Captive / 3 rd Party) 6 7 Migration to Global Team Knowledge Transfer 8 9 Steady State Globalization Life Cycle Current Scope

6 Assessment and Architecture (IS) Assessment Architecture Total IS Portfolio Applications & Infrastructure A Applications S Services R Roles E Employees Globalization Scope (Applications, Infrastructure, Services, Roles & Employees) Operating Model Migration Roadmap Location Assessment Business Case Readiness Insights Risk Flags Cross linkages among applications, services, roles & employees

7 IS Portfolio Analysis Framework Globalization Assessment Ease of Globalization (EoG) Distributed Environment Skills Availability Financial Benefits Risk Flags Transition Readiness Technology Skills Micron s Priorities Operational Ease Non Technology Skills Remote Operability Formal Training Business Impact

8 Multi-Dimensional Analysis Distributed Environment Transition Readiness Applications, Services, Roles, Employees Operational Ease Ease of Globalization Globalization Score Remote Operability Business Impact Skills Availability Benefits Cluster Analysis Wave Strategy

9 The Micron Experience Michael Zeigler IT Director, Micron Technology, Inc

10 Agenda Background on Micron IS Objectives of Outsourcing Micron IS Understand what you want from outsourcing Establish your ground rules General Approach Lessons Learned

11 And for those who still don t believe

12 Be Careful 10 Steps to Successful Outsourcing 9 Tips for Outsource-Proofing Your IT Organization Best Practice Process for Creating an IT Services Sourcing Strategy Ten Steps to Master Outsourcing Challenges to Articulating a Holistic Sourcing Strategy

13 Background Micron IS Approximately 1,100 team members Primary global locations US (Boise, Texas, California, Utah, and Virginia) Italy Singapore Japan IT spend is approximately ~3.5% of revenue Less than 1% outsourcing Micron s SG&A cost structure was not competitive

14 IT is Still Important! Information Technology may not be a core competency in a manufacturing company like Micron but is there anyone at Micron who doesn t understand that IT is at the core of every competency? - Ed Mahoney, VP of IS, Micron Technology, Inc

15 Why? We need to do our part to make Micron competitive. Business as usual is not an option, and our new service model must be: Agile. We must develop a service model that allows IS service levels to be easily dialed up or down to support Micron's strategy, business plan, and fluctuating revenue. Cost-Effective. We need to make aggressive changes to our cost structure in order to meet or exceed what our competition has attained. We need to work to make Micron the benchmark. Enduring. We need to make changes that are sustainable over time. Even after the new service model is in place, we must continually seek opportunities for improvement.

16 Dedicated Team Program/Project Manager Communication Data Analyst Data Analyst Data Analyst Met daily Outline work Review action items Discuss communication Met weekly with steering team Involved about people for data collection Subject matter experts Managers/leads

17 The Approach Investigated outsourcing before (2003) Extensively benchmark cost, performance, and technology. Wanted some outside help (objective opinion and experience) We had a very aggressive timeline Risk of driving incorrect assumptions/decisions Needed to leverage a disciplined decision-making process (Kempner- Tregoe) Triangulation became our strategy!

18 Triangulation Approach Globalization Consultants (neoit) KT Analysis Sourcing Plan Data and Experience Financial Targets

19 Guiding Principles Retain elements of IT that enable competitive advantages for Micron Differentiating applications High-customer interaction roles High-level domain knowledge Service provider relationship management Outsource elements of IT that can be performed well by a service provider Non-differentiating applications Industry-standard applications Industry-standard development and support

20 KT Decision Analysis

21 neoit Objectivity! Extensive experience of processes and industry VERY detailed templates to facilitate necessary data collection Team member skills and experience Multi-dimensional assessment Transition Readiness Remote Operability Business Impact Activities

22 Data Collection (example)

23 Micron Priorities PARAMETERS Speed Flexible Capacity Cost Savings Weightage Speed Equal Low Low 0.26 Flexible Capacity High Equal High 0.41 Cost Savings High Low Equal 0.33

24 Micron Priorities PARAMETERS Speed Flexible Capacity Cost Savings Weightage Speed Equal Low Low 0.26 Flexible Capacity High Equal High 0.41 Cost Savings High Low Equal 0.33

25 IS Portfolio Assessment $$$$ Labor Cost 1,357 Applications 346 Services 64 Roles 1,121 Employees Applications Services Roles Employees Multi Dimensional Analysis 153 Application Buckets 40 Services Buckets Outsourceable Portfolio 43 Application Clusters 12 Services Clusters Total Portfolio

26 Recommendations Michael Zeigler IT Director, Micron Technology, Inc

27 Recommendations Portfolio Assessment in 6 to 8 weeks? Viewer Warning!!! Don t try this at home

28 Recommendations To make it happen, you need: Dedicated (full-time) team members Disciplined project management Clear expectations of the effort Document/data control

29 Recommendations Communication role is very critical Develop a communication strategy Timely but accurate Substantive but flexible Sensitive Be up-front with everyone about what you are doing Stay honest with your team Communicate to the business!

30 Recommendations Communication role is very critical Techniques used: Weekly updates Monthly newsletters ALL supervisor/manager meetings Sharepoint sites (project sites, IS News) FAQ s Presentations for VP and Directors to share (face-to-face) with customer teams Use consistent messages and themes throughout

31 Recommendations Don t under-estimate the time commitment This is a full-time job You still have a business to run! Start early on key items Impact to team members and how to communicate to them Design, approval, and implementation of retention programs, severance packages, WARN notice Treat your team members with respect and dignity This is difficult for everyone

32 Recommendations Standardize on the process and data collection templates Dates, Steps, Roles Field lock-down where possible Standard definitions Revision control

33 Recommendations ITIL adoption can help significantly CMDB Service Catalog Well-defined processes like incident, change, and problem management IT strategy must be more than just outsourcing Service management Demand management Enterprise Architecture

34 Outsourcing Alone is Not Enough! Program Timeline July 07 through January 08 Cost Reduction January 08 through August 08 Management Sourcing Transition 10 Steady State Governance Globalized Services and Sourcing Assessment Business Processes/Application Portfolio Assessment Business Driver Awareness Location Assessment Architecture Globalization Strategy Negotiations and Contracts 5 Sourcing (Captive / 3 rd Party) 6 7 Migration to Global Team Knowledge Transfer 8 9 Steady State Consolidated Technologies & Apps Demand and Portfolio Management Operational Excellence

35 Future

36 Questions & Answers

37 Contact Information Mike Zeigler Michael Serghiou

38 About neoit Silicon Valley Bangalore Manila Mumbai New York Since 1999, pioneers in advising F1000 clients on leveraging global talent to achieve business objectives Address business issues, not just sourcing issues Blend strategy with practical execution Deep expertise across geographies, ITO, BPO & KPO Provide objective expertise and advice across the globalization lifecycle Strategy Development Capability Sourcing & Transition Management Governance & Globalization Model Optimization Black Book of Outsourcing Top Corporate Globalization Advisor