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CARNEGIE MELLON LAUNCHES SYSTEM TO RATE IT-ENABLED OUTSOURCING SERVICE PROVIDERS WITH SUPPORT
19 November 2001 - Carnegie Mellon Universtity

In response to the growing need for standards to evaluate companies providing information technology enabled outsourcing services, researchers in Carnegie Mellon University's School of Computer Science have developed a methodology to rate outsourcing firms and have established a center to certify their capabilities.

In response to the growing need for standards to evaluate companies providing information technology enabled outsourcing services, researchers in Carnegie Mellon University's School of Computer Science have developed a methodology to rate outsourcing firms and have established a center to certify their capabilities.

Satyam Computer Services Ltd., one of India's largest computer-related companies and a founding partner in the university's new Information Technology Services Qualification Center, is funding development of the eServices Capability Model, as well as other models and appraisal methods. Satyam, headquartered in Hyderabad, India, and Parsipanny, N. J., will be the first company authorized to use the new Carnegie Mellon evaluation method to appraise IT outsourcing service providers for its clients in India and around the world. "Phenomenal growth is projected in the next decade for organizations to outsource IT-intensive business activities, including back-office operations, engineering design, IT-services, payroll, tele-support, and tele-marketing," said Prabhuu K. Sinha, Satyam senior vice president-quality. "These activities may range from routine and non-critical tasks, which are resource intensive and operational in nature, to strategic processes that directly affect revenues."

Accenture, a leading management and technology consulting organization and provider of outsourcing services, also has joined the effort, providing funds and placing some of its associate partners at Carnegie Mellon as visiting industrial scholars. They also will assist in the development of the outsourcing evaluation methodologies. "Client satisfaction is Accenture's top priority," said Marty Cole, head of Accenture's worldwide outsourcing unit. "That's why we are so enthusiatic about escm. We view it as a valuable tool that will allow us to further enhance the outsourcing services we provide to clients around the globe."

Over the past several years, all kinds of organizations, from manufacturing firms to banks to hospitals, have been delegating computer-intensive activities to external service providers because they lack their own in-house capabilities. But in many cases, they have not been satisfied with the results, said Jane Siegel, senior systems scientist in SCS' Institute for Software Research International, who heads the ITsqc. "The outsourcing business involves billions of dollars, but right now companies that use these services have no consistent basis for making their selection," she said. "Our goal is to give organizations a reference model to compare outsourcing providers and mitigate their risks. At the same time, the model and certification method we've developed will enable service providers to differentiate themselves and enhance and improve their operations." According to Dun and Bradstreet's "Barometer of Global Outsourcing," companies have reported that between 20 and 25 percent of all outsourcing relationships fail in any two-year period. Moreover, nearly 70 percent of survey respondents said the outsourcing supplier "didn't understand what they were supposed to do, that the cost was too high and they provided poor service." Siegel acknowledged that several models for evaluating the quality of products and processes in organizations already exist, but said that the eServices Capability Model developed at Carnegie Mellon contains important practices for outsourcing not addressed by any of the others. "Outsourcing has limited coverage in the other models," she said. "Most of them don't address pre-contractual activity, and they don't deal with post-contractual feedback-i.e., how you hand back technology, skilled employees and lessons learned from an outsourcing engagement to the client without disruption of operations. "Some of the worst failures occur because providers didn't' get the right client requirements at the beginning of an engagement, or because the work wasn't handled correctly at the end," Siegel said. "We have developed material that can be used by service providers to determine the steps they need to take to implement each practice in their organization." Carnegie Mellon researchers have been developing the escm for more than a year. They studied all available literature, interviewed companies and created and piloted their model, which underwent a rigorous technical review by quality and IT-outsourcing experts. "By early next year, we will have trained and authorized our first set of evaluators who can do certifications for IT-enabled service providers," Siegel said.

"Satyam intends to work with outsourcing service providers, independent consultants and evaluators, providing escm-related services covering consulting, evaluation, and training," said Sinha. "Although an IT-enabled outsourcing service provider may be aware of some or all of the issues impacting outsourcing relationships, it may not be able to identify those issues that are critical to establishing viable and mutually beneficial outsourcing relationships with clients. A provider may also need support to develop improvement strategies for those practices that can address these issues effectively. Clients need a way to identify critical parameters that affect the service being outsourced, so they can make meaningful comparisons of suppliers' capabilities. This information is essential for forming and developing mutually beneficial relationships between the client and the provider." The ITsqc is part of the Institute for Software Research International in Carnegie Mellon's School of Computer Science. It was established to develop capability models for three important areas of the evolving networked economy. In addition to outsourcing, ITsqc researchers are developing capability models for electronic security and for electronic commerce.

http://www.cmu.edu

About: Carnegie Mellon Universtity
The Carnegie Institution of Washington (www.carnegieinstitution.org) has been a pioneering force in basic scientific research since 1902. It is a private, nonprofit organization with six research departments throughout the U.S. Carnegie scientists are leaders in plant biology, developmental biology, astronomy, materials science, global ecology, and Earth and planetary science.

Since its founding in 1900 by industrialist and philanthropist Andrew Carnegie, Carnegie Mellon University has been a pragmatic institution, adapting rapidly to change. In fewer than 100 years it has changed its name three times--each transition marking a milestone in the institution's 20th century evolution.

Whether it was Carnegie Technical Schools, as it was in its first 12 years, Carnegie Institute of Technology, its name from 1912 to 1967, or Carnegie Mellon University, three primary purposes formed its foundation. Throughout this century, Carnegie Mellon has focused on delivering distinctive and first-quality education, fostering research, creativity and discovery, and using the new knowledge created on campus to serve our larger society.

When Arthur A. Hamerschlag served as the school's first president, Carnegie Technical Schools' 12 professors and six administrators sought to educate the sons and daughters of Pittsburgh workers for employment in the region's growing industries.

These educators served the vision of Carnegie by organizing into four faculties: the School of Science and Technology, the School of Fine and Applied Arts, the School of Apprentices and Journeymen, and the Margaret Morrison Carnegie School for Women.

In its earliest years, the institution served primarily part-time and undergraduate students. The faculty, many of whom did not have doctor's degrees, focused on teaching and curriculum development.

But research efforts began as early as 1916 when the Division of Applied Psychology of the Carnegie Institute of Technology developed rating scales for job placement. This rating system was used to classify two million men for placement in the armed forces during World War I. Research bureaus were organized in coal mining, nuclear physics, applied chemistry and metallurgy.

And by granting the nation's first undergraduate degree in drama in 1917, the institution began a tradition of leadership in the arts that spanned the century.

Through research and the education of its students during the administration of President Thomas S. Baker in the 1920s and '30s, the institution began its strong tradition of transferring knowledge and skills to industry and government.

Building on this firm foundation, the administration of President Robert E. Doherty introduced a new approach to education that would be used as a model by similar institutions around the nation. The Carnegie Plan for Professional Education, initiated in 1939-40, required engineering and science students to take a quarter of their courses in a new Humanistic and Social Relations sequence. In addition, its curriculum focused on teaching students problem-solving techniques, a hallmark of the Carnegie Mellon educational experience today.

While the Doherty administration has been credited with this educational innovation, it also oversaw growth in the institution's research capability. Between 1936 and 1950, the number of graduate students grew from 36 to more than 260. The research budget ballooned from $156,000 to $1 million.

In the 1950s, the newly formed Graduate School of Industrial Administration, endowed by William Larimer Mellon, emerged as one of the three or four best business schools in the nation. (In 2004 the school was renamed the David A. Tepper School of Business after benefactor and alumnus David Tepper (MBA '82).) Today, the school is recognized as a pioneer in the field of management science and one of the top business schools in the world.

The Warner administration oversaw the institution's burgeoning research enterprise. This period of research growth was aided by the work of the institution's Computation Center, founded in 1956 to provide computing services to the campus. A major grant from benefactor Richard K. Mellon in 1965 aided the establishment of a Computer Science Department, a department which would be the genesis of Carnegie Mellon's worldwide reputation in computer science.

By the end of the Warner administration and the start of the administration of President H. Guyford Stever in 1966, Carnegie Tech had most elements of a university. Its merger in 1967 with the Mellon Institute created Carnegie Mellon University and brought a $60 million endowment, extensive research facilities and renowned research personnel to the institution.

Five years later, President Richard M. Cyert (1972-90) began a tenure that was characterized by unparalleled growth and development. The university's research budget soared from about $12 million annually in the early 1970s to more than $110 million in the late 1980s. The work of researchers in new fields such as robotics and software engineering helped the university build on its reputation for innovative ideas and pragmatic solutions to the problems of industry and society. Carnegie Mellon began to be recognized as a truly national research university able to attract students from across the nation and around the world.

The Cyert administration stressed strategic planning and comparative advantage, pursuing opportunities in areas in which Carnegie Mellon could outdistance its competitors.

An archetypal example of this approach was the introduction of the university's "Andrew" computing network in the mid-1980s. This pioneering network, which linked all computers and workstations on campus, set the standard for educational computing and firmly established the university as a leader in the uses of technology in education and research.

Education and teaching also benefited in this period with the establishment of a University Teaching Center to improve faculty teaching and the renovation of many of the university's classrooms.

Cognizant of the university's heritage, President Robert Mehrabian (1990-97) invited alumni from the era of the institution's first president, Arthur A. Hamerschlag, to attend his inauguration in 1990. President Mehrabian emphasized Carnegie Mellon's traditional strengths in education, research and service to society while focusing on initiatives for leadership in the 21st century.

With the appointment of the university's first Vice Provost for Education, President Mehrabian placed renewed emphasis early in his administration on the quality of undergraduate education. He also moved aggressively to complete the most ambitious campus building plan since the Warner era. The University Center, which opened in August 1996, and the Purnell Center for the Arts, to be completed by the fall of 1999, are keys to enhancing the quality of life on campus, another priority of the Mehrabian administration.

Confronted by shrinking governmental support of university research, President Mehrabian diversified the university's research agenda. He stressed the need to build strong relationships with the business world, matching industry's needs with the university's areas of research strength. He also put new emphasis on productivity, improvement of administrative services and strategic management of university resources.

President Mehrabian established strong, new partnerships with the greater Pittsburgh community. He led a community-wide economic development initiative, spurred collaboration with primary and secondary schools, and worked closely with local community groups.

On April 15, 1997, Jared L. Cohon, former dean of Yale University's School of Forestry and Environmental Studies, was elected by the university's Board of Trustees to succeed President Mehrabian, who resigned to spend more time with his family in California.

"Since I was chosen, since this wonderful event has occurred, it has made me reflect on why you are choosing me," President Cohon said in his first speech to the university community. "And I've said to people since this was announced that the more I think about it, the more I realize how well I think this institution and I fit together. We'll see if that's true. I think it is.

"When I was at Johns Hopkins we used to always hold up Carnegie Mellon as an example," Cohon said. "So, for many years I've ... been jealous of what has been accomplished here across departmental lines. I celebrate that. I think it is so valuable in every aspect of this university and it will position Carnegie Mellon to be even better...."

During Cohon's presidency, Carnegie Mellon has continued its trajectory of innovation and growth. Today, President Cohon is leading implementation of a comprehensive strategic plan that aims to leverage the university's existing strengths to benefit society in the areas of biotechnology and the life sciences, information and security technology, environmental science and practices, the fine arts and humanities.

The university is also committed to broadening and enhancing undergraduate education to allow students to explore various disciplines while maintaining a core focus in their primary area of study. Realizing that today's graduates must understand international issues, Carnegie Mellon is committed to providing a global education for its students and is striving to expand its international offerings and to increase its presence on a global scale. Increasing diversity, in all aspects, and fostering the economic development of southwestern Pennsylvania, are also top priorities.

Over the years Carnegie Mellon's leaders have reflected Andrew Carnegie's original dedication and commitment to this institution. In his 1900 letter to the mayor of Pittsburgh establishing Carnegie Technical Schools, Andrew Carnegie wrote, "My heart is in the work." These words have been echoed by students, faculty and administrators throughout this century and they live on the Carnegie Mellon campus today.


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