19 Feb 2014 IS5114

IS5114 Information Technology Outsourcing

2013/2014 Semester 2

Selection of Service Providers
Dr Kwong Yuk Wah
Adjunct Associate Professor
Department of Information Systems
School of Computing
National University of Singapore
19 Feb 2014 IS5114 2
Developing the RFP (1)
Clients Roles and Responsibilities Service Providers Roles and
Responsibilities
a. Define the RFP process and project
schedule
b. Define the outsourcing project team
organisation and its role and
responsibility
c. Determine criteria for selecting members
of the project team
d. Determine strategies for information
gathering
e. Define outsourcing scope and
requirements
f. Write the RFP - Clearly establish service
definitions, service levels, expectation,
requirements and service level agreement
(SLA)
g. Develop service provider evaluation
strategy and criteria
a. Establish scope of outsourcing
b. Provide information to support client to
develop the right requirements and
service level agreement (SLA)
c. Determine if scope is within its core
competencies
d. Establish value proposition and a sales
strategy
e. Identify potential key partners and
alliances
f. Identify high-level risks
g. Determine competitive position
h. Estimate the total cost required to
support the project (during presales and
delivery)
i. Evaluate if the project should be pursued
j. Identify team members with the right
expertise to respond to the RFP, when
issued
19 Feb 2014 IS5114 3
Developing the RFP (2)
The RFP Process
Setting up the project organization
Develop the project schedule
Identifying relevant technology options and potential services providers
Estimate the project budget
Perform a cost and benefit analysis
Developing evaluation criteria
Developing the RFP
Defining strategies for service provider due diligence
Reviewing and approving the RFP for release to the service providers
Forming the Outsourcing Project team
Business operations
Information Technology
Finance and Legal
Human Resource
19 Feb 2014 IS5114 4
Developing the RFP (3)
Strategies for Information Gathering
Request for Information (RFI)
Engaging a Consultant
Definition of Outsourcing Scope and Requirements
Performance requirements
Operational requirements
Maintainability requirements
Portability requirements
Security requirements
Usability requirements
Look and feel requirements
Technology requirements
Service Provider Evaluation Strategy and Process
Evaluation framework and criteria

19 Feb 2014 IS5114 5
An Overview
Service Provider
Evaluation and Selection
Selecting Service Providers

Evaluation framework for
assessing service provider
proposals
Assessment of potential service
provider presentations
Assessment of proposals
Risk assessment
Making the selection decision

Soliciting Potential Service
Provider Proposals

Issuing the RFP
Providing information to
potential service providers
Facilitating potential service
provider due diligence checks

Source: Singapore Computer Society
Roles and Responsibilities
Proposal Solicitation Process
19 Feb 2014 IS5114 6
Client Service Provider
a. Issuing the RFP
b. Briefing potential service
providers and answering queries
c. Facilitating potential service
providers due diligence checks
a. Assembling a team with the right
expertise to respond to the RFP
b. Identifying key personnel for
project team members
c. Attending the briefing session
d. Asking relevant questions and
seeking clarifications on points of
ambiguity in the RFP
e. Looking into project sizing and
developing solutions
f. Structuring a proposal to meet
client requirements as well as
internal business objectives
Source: Singapore Computer Society
Roles and Responsibilities
Service Provider Selection Process
19 Feb 2014 IS5114 7
Source: Singapore Computer Society
Client Service Provider
a. Setting up an evaluation
framework
b. Assessing submitted
proposals
c. Interviewing the key staff
of potential service
providers
a. Making presentations of the
proposal
b. Responding to clients
queries
c. Handling client interviews
of key staff
d. Selling the merits of its
proposal throughout the
evaluation process
19 Feb 2014 IS5114 8
Some Industry Best Practice
Request for Proposal (RFP) document is also known
as Tender Specifications or Tender Document
It is a formal request for proposals by service
provider through a tendering process
Open Tender offers a fair and transparent method for
seeking proposals or tender bids from the service
providers
Request for Information (RFI) is a method for the
buyers to gather information based on initial high-
level requirement
RFI can be a pre-qualification exercise to shortlist
potential service providers before the tender exercise
19 Feb 2014 IS5114 9
Some Industry Jargons
Supplier
Service Provider
Tenderers
Successful Tenderers
Contractor
Main/Prime Contractor
Sub-Contractor

19 Feb 2014 IS5114 10
Typical RFP Document
Cover letter
RFP administration process/Instructions to Tenderers
Conditions of Contract/Terms and Conditions (T&C)
Project Overview
Scope of Work
Business/Functional Requirements
Technical Requirements
Pricing tables
Evaluation Criteria
Appendices, such as Non-Disclosure Agreement
(NDA)

19 Feb 2014 IS5114 11
Evaluation Framework
Overarching Principle : Fairness and Transparency
Define the evaluation process
Establish a set of detailed evaluation criteria for
assessing the suitability of potential service
providers proposals
Select the proposals meeting the following
requirements
Business
Technical
Legal
Financial
19 Feb 2014 IS5114 12
Governance for Evaluation
Follow the organization's corporate governance
Proper check-and-balance and segregation of duties
Financial authority, i.e. the approval limits
A typical governance structure for evaluation
Approval
Committee
Review
Committee
Evaluation
Committee
19 Feb 2014 IS5114 13
Evaluation Criteria
Objectives of outsourcing
The deliverables expected from the service provider
The acceptance criteria for those deliverables
The track record of the service providers and its
ability to deliver
Understanding of the requirements
Soundness of the proposed solution
Completeness of the proposals
Compliance to the requirements
Business
Technical
Legal

19 Feb 2014 IS5114 14
Vendor Selection
Different service providers for different outsourcing
deals, i.e. Utilities, Enhancement and
Transformational
Business drivers and the type of service providers that
can best meet the outsourcing objectives
The ability of the potential service providers solution
to meet the project objectives
The qualification of the potential service providers
and their project team
Risk
Price/Tender bids

19 Feb 2014 IS5114 15
Risk Assessment
The degree to which the service provider understands the
scope and complexity of the requirements or scope of work
Soundness of the proposed solution
Reasonableness of the project or delivery schedule
Under quote
The cost being underestimated by the service provider
The service providers ability to meet project schedules and
timelines
The adequacy of staff and other resources to be allocated for
the project
The financial stability of the service provider



19 Feb 2014 IS5114 16
Prices
Development Cost
Annual Maintenance
Performance Guarantee Period (PGP)
Warranties
Support cost
Replacement cost
Change Requests (CRs)
Total Cost of Ownership



19 Feb 2014 IS5114 17
Selection Decision
Quantitative factors - Pre-determined scoring method








Qualitative factors that involve some degree of subjective
judgment


Evaluation
Criteria
Weight Tenderer 1 .. Tenderer n
Score Weighted score Score Weighted Score
Meeting
Requirements
X1%
Cost X2%
Risk X3%
Total 100%
19 Feb 2014 IS5114 18
Cloud Computing - Jargons
IaaS Infrastructure as a Service
Compute resources, i.e. servers, network technology,
storage, and data centre space, as a service. E.g.
Amazon EC2
PaaS Platform as a Service
A software development and runtime environment as
a service. E.g. Google App Engine, Force.com
SaaS Software as a Service
Business applications as a service. E.g.
Salesforce.com, Accenture SAP Cloud



19 Feb 2014 IS5114 19
Take-Away From This Lecture

Selection of Service Provider
Reference : Singapore Computer Society, Body of
Knowledge, COMIT






19 Feb 2014 IS5114 20
Thank You
kwongyw@comp.nus.edu.sg
diskyw@nus.edu.sg