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On Demand and IT OutsourcingThe 2004 China Outsourcing SummitSept 15-16, 2004Beijing, China IBM Global Services On Demand Business: More than Just Getting Better The Emerging On Demand Computing Model Why do GCG clients need to transform ? A client’s market - increasing customization of products and delivery lead to demand for faster innovation Globalization has intensified competition – from within and outside the region demand for cost reduction to ensure competitiveness Increased scrutiny of business practices and ethics along with regulatory issues lead to new data and integration challenges Industry consolidation lead to increasing focus on company-wide transformation Emerging technologies trigger integration across value chains Increasing reliance on information technology, but tight budgets On Demand Business Designs Deliver Significant Results Sony China PC Outsourcing What is Outsourcing? Outsourcing takes place when an organization transfers the ownership of a business process or function to a supplier. “In outsourcing, the buyer does not instruct the supplier how to perform its task but, instead, focuses on communicating what results it wants to buy. It leaves the process of accomplishing those results to the supplier.” - The Outsourcing Exchange The Impact of Outsourcing:Early analysis in the new study shows significant improvements in client profitability in a 2-3 year period after the start of the outsourcing engagement… Keys to a Successful Outsourcing Relationship A successful outsourcing relationship focuses on: Setting clear expectations for the relationship at the outset Establishing appropriate governance protocols to guide joint action that can deliver on the promise of the relationship Recognizing the need to adjust the relationship over time Shared risk and return Meeting service level expectations --not just SLAs Contract flexibility -- the ability to change the scale and content of