SIAC Vendor Management Office

Robert DursoDirector - Vendor Management OfficeOctober 8th 2002

Mission

Expand and improve the use of third party vendors throughout the NYSE and SIAC

To improve time to market capabilities

To augment technical and domain competencies

To improve operational efficiencies and reduce costs

Vendor Management Office

Maintain Master Services Agreements (MSA) with Preferred VendorsMaintain Vendor Relationship & Qualify additional VendorsMaintain Program & Project Measurement MetricsProvide training workshops for Project ManagersAssist Project Managers in:

the evaluation and selection of projects,developing and evaluating proposals, statements of work, service level agreements and other support documents,monitoring vendor performance

Critical Success Factors

Careful Selection and Planning of Projects

Competencies of Preferred Vendors

Strong Support Mechanism for Project Managers

Well planned Knowledge Acquisition Phase

Close monitoring of Vendor Performance

Well Defined Outsourcing Infrastructure

Vendor and Project Selection

Selection Criteria

Vendor Selection CriteriaCorporate Profile – Revenue, number of employees, listingEnterprise Competencies or Boutique TechnologyDomain ExpertiseQuality Initiatives (CMM Level 3 or higher)HR PoliciesOffshore Development Center ExperiencesOffshore Contingency Plan and InfrastructureFlexibility, Reliability and Peer Organization References

Selection Criteria

Project Selection CriteriaProjects with resource constraintsProjects with clearly defined requirementsConversion ProjectsMaintenance and Enhancement ProjectsSupport Projects

Setting the stage for a successful launch

Offshore Feasibility Assessment

PROJECT EXECUTIONPREPARATIONKNOWLEDGE ACQUISITION

QUALITY ASSURANCE

USER ACCEPTANCE

PARALLEL RUNNING(PRODUCTION SUPPORT ONLY)

NEW DEVELOPMENTMAINTENANCETECHNICAL UPGRADES

An assessment should be performed prior to launch

Competitive Bidding Verification

Competitive Bidding - RFP's will be sent to preferred vendors as is stated by SIAC Procurement and the Competitive Bidding Procedure.

Phased Bids - It is recommended that each project is broken down into smaller phases. Each bid response should include all associated fees for each phase. This will give us the ability to evaluate each Vendor's phased bid response.

Internal Verification of Effort*Cost - the VMO and the project managers will work together to calculate and verify bids by estimating effort and multiplying by Fees within the MSA (Exhibit F - "Fees".).

Project Management Workshops

Course is a scaled down version of a 3-semester hour graduate level software engineering class offered by SMU.

It builds on the best practices from both Government and Industry to provide Project Managers with essential information needed to either solicit bids for a development project or to respond to a request for proposal (RFP) for a development project.

It introduces the Project Managers to the most common legal issues that are encountered in a software acquisition.

Managing the Metrics

Five Views For Managing The Program

• Measuring Organizational Commitment

• Measuring Project Status

• Measuring Time-to-Market

• Measuring Skills Augmentation

• Measuring Costs

Measuring Organizational Commitment

Project Name Assessment Score Projected Start Date Vendor(s) Bidding

In Pipeline

Active Projects

Pro

ject

Siz

e

5

10

15

20

25

30

35

40

45

50 Off-Shore

Onsite

Vendor Data

Vendor A:• No of Projects:• $$ of Projects:

Vendor B: • No of Projects:• $$ of Projects:

Vendor C:• No of Projects:• $$ of Projects:

Vendor D:• No of Projects:• $$ of Projects:

Portfolio Data

No. of Engagements =

Type of Projects• Development =• Maintenance =• Technical Upgrades/Conversions =• Other =

Total FTEs Under Program• On-Site = • Off-Shore =

Total $$ Committed to Projects =

Total $$ in Local Equivalent =

Total $$ VMO =

% Offshore $$ to IT Budget =

Project Name

Project Name

Project Name

Project Name

Project Name

Project Name

Project Name

Project TypeVendorProject Phase

TOTAL

Measuring Project Status

Project Type:

Technologies:

Project Phase:

Scheduling Variance:

Resource Variance:

Vendor Costs To Date:

Original Vendor Budget:

Revised Vendor Budget:

Major Achievements

Aug- {Replace with Major Achievements either for current month or previous months.

Sep – {This section is indented for 7 characters.

Outstanding Issues:

{Replace With Outstanding Issues}

{Insert Major Statement Regarding Project For Current Month}

Project Name/Vendor NameProject Description: {Replace with Brief Project Description}

Business Objective: {Replace with Cost Savings, Revenue Generation, Compliance, Governance, Quality}

0%

0%

$50,000

$100,000

$400,000

Project Type

Technology Type

Project Phase

0

2

4

6

8

10

12

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Pro

ject

Siz

e

Onsite Off-Shore

Actions To Accelerate Throughput And Measuring Their Impact

• Re-engineer Delivery Process

• Adopt a “Service-Based” Requirements/Design Model

• Employ Parallel Development Process (24x7)

• Add additional resources, I.e. Skills/Staff Augmentation

Actions Measurement

• Backlog Size

• Backlog Duration

• Average Elapse Time for Work-Unit, e.g. Function Point

• Elapse Times against Fixed Delivery Time-frames

Measuring Time-to-Market

Measuring Skills Augmentation

• Local Staff Augmentation versus Offshore Staff By:

• Environment Work (Mainframe, Internet, Client/Server, Other)

• Project Type (Development, Maintenance, Upgrade, Conversion, Other)

• Skills Mix (SAP, COBOL, Websphere, C/C++, Other)

• Functional Area (Administration, Trade Support, Q/A, Other)

Offshore Functional Area

Other7%

Upgrades13%

Maintenance27%

Development53%

Local Staff Augmentation Project Type

Trade Support26%

Q/A10%

Other7%

Administration57%

Example for Measuring Cost

[T & M]Gross Billing Savings = (Local Equivalent Rate x #Man Days/Hours) – (Vendor Rate x #Man Days/Hours)

[Fixed Price]Gross Billing Savings = (Local Equivalent Rate x #Man Days/Hours) – (Contracted SOW)

$1,000,000

$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Cost $2,600,000 -$300,000 -$750,000 $1,550,000

Gross Billing Savings VMO Costs Other Costs Net Savings*

Outsourcing Status

Offshore Status

6 Active projects at the NYSE with 3 Off-Shore VendorsMaster Service Agreement negotiated with several Off-Shore VendorsMSA Supporting Documents Available

Request For Proposal TemplateStatement Of Work TemplateSOW Change Request DocumentService Level Agreement Template

Project Evaluation & Cost Analysis Template developedVendor Management Office Intranet Site

Speed to Market 2 time-zone prototyping Strong Project Management coupled with CMM Level 5 company Active defect containment measures

Skills Augmentation Ramped-up 25 skilled developers in 6 weeks

Resulting Time and Cost Savings18 modules, with significant process re-design 10 monthsApproximately 50% Gross Billing Savings (excluding transition, communication and other overhead costs)

Measuring our Mission1 Project - Requirements through Implementation

Measuring our Mission1 Project - Requirements through Implementation

VMO Lessons LearnedVMO Lessons Learned

Senior Level SponsorshipDefine a Clear MissionCommunicate and Educate Early and OftenDefine VMO Infrastructure Early (Even before first pilot)Continuous Process ImprovementEstablish Achievable GoalsDefine Program/Project Metrics earlySolid Risk Management StrategyPlan Transition in/Transition Out for all projectsVMO ease of use is as important as a delivery model

SIAC Vendor Management Office