© 2017 Av asant LLC. All Rights Reserv ed.Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means,

including information storage and retriev al dev ices or systems, without prior written permission from Av asant LLC.

Tuesday, March 7, 2017

Moving from Cost Optimization to

Value Realization through

Managed Governance Services

Case Study:

Empowering Beyond

Summit 2017

2

JIM LEE

Director

Avasant MGS

Global Practice

Leader

ANTHONY CILLA

Associate Director

Avasant MGS Client

Delivery Manager

for Freddie Mac

#EmpoweringBeyond

@Jim_Lee_SC @Cilla_Anthony

Presenters

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Agenda

About Freddie Mac

Drivers, Challenges, and Objectives

Managed Governance Services

Benefits and Results

4

About Freddie Mac

Federal Home Loan Mortgage

Corporation (Freddie Mac): a mortgage securitization firm

IT organization supporting business

areas through a diverse managed services ecosystem: mainframe; network and telecom; disaster

recovery; AD/M and testing

IT Managed Service (ITMS)

governance organization established to maximize value realization of managed services IT contracts

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Drivers, Challenges, and Objectives

Enable ITMS

Tools and Automation

Value Realization

Capability, Maturity, Analytics

ITMS Mission: To be an industry leader in the use of managed services to help Freddie Mac excel in a future competitive market

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Best practices, industry knowledge and insights, and tools to enable vendor value realization

Freddie Mac Managed Governance Services Solution

Role Based Dashboards

and Reporting

Workflow Processes

Contract, Performance,

Financial, and Risk

Management

Advanced Data Analytics

And Forecasting

Enabled CapabilitiesClient Vendor Management Capabilities

Managed Governance Services Delivery

ManagedGovernanceServices

Conduct Discovery & Planning

Establish ITMS Alignment

Implement MGS Environment

Launch MGS Services

Observe & Optimize MGS Service

Manage MGS Steady State Operations

Standard Modularized BestPractice Processes

Cont ract

M anagement

Financial

M anagement

Performance

M anagement

Relat ionship

M anagement

AvaSense™Op

timize

Co

nfig

ure

De

live

r

Continuous Improvement

7

Enabling Value Realization through Managed Governance Services

• Better demand forecasting• Testing Services

• Mainframe Services

• Performance and SLA

refinements

• Alignment with Outcomes

• Improved provider relationships

• Governance

• Deliverables & Obligations

Service Providers

• Risk management• Value leakage recovery

• Auditability

• Strategic partner to business

• Gap & risk analyses

• Demand management• Trusted advisor

• Operational Efficiencies• Metrics

• Process optimization

• Collaboration

ITMS

• Best practice processes and SME insights

• Innovation

• Continuous improvement

• Consistency, maturity

• Analytics

• Digital governance• Workflow

• Automation

• Library

MGS

Not only has Freddie Mac been able to realize greater value from their IT managed services

contracts, they have also been able to realize greater value from ITMS shared services as well

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Benefits: Freddie Mac ITMS Governance Outcomes and Successes

~9%Typical industry

average cost of

Vendor

Governance

~4%Current Freddie

Mac ITMS cost of

Vendor

Governance

>$6MValue leakage

recovered since

inception of ITMS

5Key ITMS

processes aligned

with industry best

practice

processes and

automated

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Governance is best operationalized and orchestrated during contract implementation

Process and organizational change is not easy; contract management <> supplier governance

ITMS engaged as a strategic business partner in the sourcing process has saved $$$

Lessons Learned

ITMS is now the model for managed services governance across the enterprise

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Managed Governance Services Outcomes and Results

Outcomes

• ~ $6M Value Leakage Recovered

• ITMS Strategic Enablement

• Transfer of risk; levers/SLAs

• Analytics Design & Implementation

• Value Leakage Management Analytics

• Performance Governance Analytics

• Demand & Consumption Analytics

• Service Delivery Refinements

• Updated Service Catalog

• Service Delivery Approach

• Resourcing

• Process & Tool Enhancements

Results

17 contracts with an aggregate annual

contract value of nearly $100M are now under

MGS at a total cost of governance of less than

4.5% of spend

Freddie Mac ITMS shared services organization

is positioned to expand enterprise-wide

Freddie Mac continues to realize the managed

services governance outcomes they expected

as well as significant added value from its

partnership with Avasant

“Avasant…identified significant savings opportunities through improved governance,

increased consistency of IT support for key business groups, and improved alignment with

managed services providers. Avasant has enabled Freddie Mac to focus its internal

resources on its core business and strategic direction” - John Borgelt, Sr. Director, ITMS

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Current

▪ Providers

▪ IT outcomes (SLAs, KPIs)

▪ Cost optimization

▪ Compliance

▪ Reactive, ad Hoc, passive

▪ Risk mitigation

▪ Reporting

Future

▪ Strategic business partners

▪ Business outcomes ($$$, NPS, time)

▪ Value realization

▪ Enablement

▪ Proactive, disciplined, actionable

▪ Shared risk management

▪ Analytics

Value Realization is Driving Governance Transformation

Every step brings the vendor relationships closer to realizing its full potential value

© 2017 Av asant LLC. All Rights Reserv ed.Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means,

including information storage and retriev al dev ices or systems, without prior written permission from Av asant LLC.

Tuesday, March 7, 2017

Moving from Cost Optimization to

Value Realization through

Managed Governance Services

Case Study:

Empowering Beyond

Summit 2017