Managed Services

Breakout Session # 1406

Linda Y. Cureton, Chief Information Officer, NASA Goddard Space Flight Center Robert J. Guerra, Executive Vice President, Guerra Kiviat, Inc. Rehana L. Thomas, Analyst, Acquisition Solutions, Inc.

Tuesday, April 15, 2008 3:20pm-4:20pm

Agenda
Introduction of Panel Members Overview of Managed Services Panel Discussion Rehana Thomas Rehana Thomas 3:20pm-3:25pm 3:25pm-3:30pm

Linda Y. Cureton & 3:30pm-3:50pm Robert J. Guerra All presenters and 3:50pm-4:20pm audience

Open Discussion

Defining Managed Services

Managed Services Generally: Delivery of a function as a service
Examples: facilities maintenance, transportation, physical and cyber security, call center services

IT: A mechanism that enables industry to perform a function in support of customers information technology operations1

IT: Network Managed Services: sourced management and operation of IT infrastructure and applications through a centralized network operation center (NOC)
Typical elements: monitoring change management and configuration software management 2
1 Acquisition Solutions Advisory, Managed Services: Solution-Based Information Technology Acquisitions, May 2006 2 Gartner Research Services, 2008

Varying Interpretations of Managed Services

Managed Services
Narrowly Defined (IT Telecom Voice Remote Support) Ownership End User Location End User Management Vendor Contract Duration Short
Outsourced Ownership Vendor Location Vendor Management Vendor Hosted Ownership End User Location Vendor Management Vendor
Source: Gartner Research Services; Acquisition Solutions, Inc.

Managed Services Broadly Defined

Ownership End User/Vendor

Location End User/Vendor Management Vendor Contract Duration: Long

Categories of Managed Services

DISASTER RECOVERY
Application Development & Maintenance

DATA STORAGE

Server Management
SYSTEMS & DATA CENTER SUPPORT

NETWORK OPERATIONS REMOTE ACCESS, TELEWORKING

Security & Privacy Operations

Hardware Deployment & Support

Messaging Services

Help Desk Services

Call Center Services

Advantages of Managed Services

Better use of staff: allows agencies to focus human resources on strategic planning and core mission support Cost savings: choose not to build and support IT and network infrastructure available in the commercial sector; use limited capital to purchase needed service levels and reduce total cost of ownership Ability to use optimal technologies: adjust types and mix of hardware, software, skilled labor, capital investment and technology to support changes in mission needs Rapid response to mission changes: supplier is measured by ability to produce solutions

Open Discussion Topics

Performance Based Acquisition : Major Themes Lessons Learned from Managed Services Acquisitions
Identifying the Functional Need Focus on Outcomes (Metrics and Measures) Alignment with Objectives and Mission
The right approach to SLAs and OLAs; Pros and Cons

Communications (Visibility, Transparency, Trust)

Panel Discussion
Linda Y. Cureton, Chief Information Officer, NASA Goddard Space Flight Center Robert J. Guerra, Executive Vice President, Guerra Kiviat, Inc.

Managed Services Are Hard To Define and Even Harder To Do

Range of Definitions Spans Broad Scope
AKO Phase I Product Lease and T&M Labor Seat Management IT Infrastructure Outsourcing Is NOT Leasing

We Cant Achieve What We Cant Define

Vendor and Customer Have to Agree On Mission Need Market Research and Due Diligence are at the Heart of it All

Look to Private Sector Approaches

Outsource The Infrastructure Shared Goals & Accountability Measure What We Need Not What We Always Did

Must Base Managed Service On TRUST & Common Goals

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Adapt leading practices to the constraints and context of the organization to maximize value
Vendor Owns the Infrastructure
Government History is to BUY the IT Moore's Law is True So is J. Paul Gettys If it Appreciates Buy It If It Depreciates Lease It Just Dont own It

Customer Owns the Mission and Solution

Its The Customers Assets Receivables Personnel IT Supports the Mission - It Is Not THE Mission Successful Groups Measure What They Need Not Want

There Are Success Stories On Large Scale

Public Sector DoD Private Sector Managed Services Is a Standard Large and Small Companies Succeed

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Lets Measure What We Need Not What We Want

Private Sector
Reduced Costs of O&M Improved Efficiency Improved Productivity Improved Morale Reduced Turnover Improved Service Delivery Improved NOP

Public Sector
Business Needs are The Same Mission Is Different VHA HUD PBS Examples

But Measure
Timeliness of Delivery Compliance with Standards Small Business Content ISO/CMM/SEI Certifications CDRLs On Time Illusory Evaluated Price

They Measure These Things

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Making SLAs and OLAs Work

Service Level Agreements and Operating Level Agreements should:
be developed with contractor be measurable and achievable align with the deal align with the organizations goals (relevant measures and metrics) have effective incentives and disincentives to drive desired behavior should be consistent with your strategic objectives

Effectiveness -- functional alignment with mission, committed delivery of service to stakeholders, leverages diversity in the marketplace, complies with regulatory mandates, and delivers outcome/impact within applicable constraints) Enhancement process and productivity improvement (claims processed, personnel productivity Transformation Business performance improvement (revenue growth, market growth) Efficiency -- Cost improvement and cost control Availability, response, resolution

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There Are Successes To Assess and Duplicate

Xerox Corporation
Worldwide Operations and Manufacturing Multiple Divisions and Mission Goals Highly Integrated Design, Development and Manufacturing Integration

General Motors
One of Worlds Largest Employers Major Divisions Appealing to Varied Market Segments Worldwide Acquisition Design Development and Communications Needs

US Navy NCDOCS Program

CERT Style Program Vendors Own The Technology and Support Government Owns The Mission POC Is: Captain Steven Carder Commander, NCDOC See Video http://www.sas.com/apps/webnet/custSuccess1

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Looking at some instructive examples . . .

Department of Anarchy Jurassic Park Easy Bake Oven, Inc.

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Due Diligence and Market Research - Critical Leading Practices

What due diligence and market research should be all about
The courtship starts (Vendors need to listen, ask probing questions, and demonstrate a genuine interest in identifying needs) Whatever time you think you need, double it, at least! Partnership begins for understanding requirements Leverage market knowledge to help shape requirements

Potholes to avoid while conducting due diligence and market research

Telling the service provider how to do the work Due Diligence is not a marketing opportunity Not focusing on business outcomes Lack of service leadership Service provider traditional level of effort orientation Managing PBC should be a government core competency

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How Did We Get To Where We Are?

Brooks Act Procurement Reform Functional specs Performance Based

Prescribe our technology Wire the spec and low price

Define Needed Outcomes Prove Your ability to deliver results

Speeds and feeds

Government Bears The Total Risk

Move to equitable risk allocation

Industry Bears IT Risk

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The Philosophical Change We Need Brooks Act Strategy Performance Based Acquisition

Minimum Tech Compliance

Low Price Bid

Government SOO

Industry SOW & WBS Changing the Culture: Solutions & Objectives Are Hard

Technology/ Pricing Is Easy

Engineering Change Mgt

Reprice for Profit

Incentives & Disincentives

Pertinent Measures and Metrics

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What We Need To Change

Analysis
1.) Establish an integrated solutions team 2.) Describe the problem that needs solving 3.) Examine private and public sector solutions

Planning
4.) Develop a PWS or SOO 5.) Decide how to measure and manage performance

Execution
6.) Select the right contractor 7.) Manage performance

Program Office

What result do we want to create? Defining end state or desired outcome. Conducting market research to see who else has solved that problem, met that need.

Defining outcomes in writing is hard work.

Define how we measure performance to meet the desired outcome Does the SOO sufficiently describe the desired outcomes? Will the contracting method provide enough competition? Is the contract type commensurate with risk? Think in terms of outcomes! Continually measure relevance of metrics to evolving missions Make sure my definition of success the same as the customers!

Continually assess relevance of metrics Maintain open lines of communication open

Contract Office

Define the desired outcome well enough to structure an enforceable contract. What contracting method will we likely use? Which contract type?

Use effective QASP procedures to self assess quality as well as contractor quality Base incentives and disincentives on clear relevant metrics that everyone understands Foster clear and consistent Executive and Programmatic communication with the government Manage team or sub-contractor partners and manufacturers on customer goals and metrics

Prime Contractor

Can we deliver the optimal outcome based on what we do best? Great opportunity to reach informal understanding agreement on feasible outcomes.

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