The document discusses HCL Technologies' total IT outsourcing engagement with one of the world's leading music companies. The engagement had three objectives: 1) cost reduction through optimization, 2) boosting operational excellence, and 3) increasing flexibility and agility. HCL consolidated operations across regions, streamlined processes, and implemented a managed services model to reduce costs by 25-30% while also driving innovation initiatives to help the client adapt to a changing industry. Initial outcomes included significant cost savings, operational efficiencies, and enhanced revenue through new digital channels.

1. Let’s change the business:
TOTAL IT OUTSOURCING
enables strategic TRANSFORMATION
and business focused INNOVATION
for the WORLD’S LEADING
MUSIC COMPANY
CLIENT BACKGROUND
The client is one of the world’s leading music companies and is home to some of
the most successful and best known recording artists. It is the fourth largest
recorded music business globally. Its business primarily focuses on monetizing its
extensive catalogue, discovery and development of artists, and related
marketing, distribution and licensing of recorded music produced by such artists.
Through its companies and network of licensees, it is able to serve artists,
consumers and partners all over the world. It owns some of the best-known
record labels in the world. It represents a diverse roster of artists from almost
every musical genre and owns a globally successful compilation brand.
Headquartered in London, it also owns two iconic recording studios. The
company’s strategic vision is to deliver successful outcomes for artists in
every available channel and evolve into a Global Rights Management
company.

2. BUSINESS CHALLENGE
World over, the music industry is faced with a “virtual annihilation”, with physical
CD sales plunging and traditional ways of consuming music biting the dust. A
business focused on the sale of physical albums and digital downloads is
doomed. The industry must refocus the business model on finding value wherever
and however music is consumed and manage and successfully monetize the
entire asset and artist eco-system. Therefore, moving from a “traditional music
company” to a successful rights management company is critical in this
scenario.
To achieve this objective, the company needed to focus upon strategic priorities
like, new artist discovery, providing end-to-end artist management, maximizing
outcomes, building capabilities to maximize new channels, and differentiating
through new strengthened core offerings. It aimed at working in partnership
with artists across as many channels and revenue streams as possible to
maximize their outcomes, creating “Life Time Value for Artists”.
For this, it is working towards two core competencies: Discovery – acquiring
rights to music only where they believe they can dramatically broaden their reach
and Connection - developing and deploying a unique set of capabilities to create
demand for music amongst fans.
To enable these strategic objectives they needed to make core changes to their
business and aligned IT systems. They needed to work on critical issues such
as enhanced visibility, supply chain optimization and gain better insights, but
at the same time also optimize existing processes, and reduce Opex, as due
to flat IT budgets this was essential to be ploughed back into business for
fostering innovation.
ENGAGEMENT MANDATES
HCL understood and worked with the client towards its strategic objective –
to create an optimized model for music distribution and revenue creation
through successful talent discovery and artist management.
The engagement had three core mandates/ objectives:
• The first was around cost reduction - minimization of Opex: The client had
separate teams for support and change. They were not able to consolidate and
leverage resources to their optimum capacity – including setting up the right
onsite-offshore mix and managing ramp up/ ramp down. They were not able to
therefore reduce YoY IT cost through productivity gains, which was essential
to ensure cost savings for technology innovation projects.
• Secondly, they were looking to bolster operational excellence by
streamlining current application/ incident/ process and SLA management.
Applications were predominantly regional or local, supported by IT teams
locally, which were not operating collaboratively. Also, SLAs were not linked to
criticality, tool usage was low and fragmented, and there was an overall lack of
process documentation.
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3. • Thirdly, they wanted to streamline their existing IT systems for superior
flexibility and agility. The Demand Management processes needed
streamlining. Also, there was a need for optimized release management. IT
SLAs needed to be aligned to business cycle times, and re-classification of
applications according to business criticality was the need of hour.
Additionally, there was a need to deal with excess capacity in PMO roles. HCL
worked to address the mandates/ core objectives of cost optimization, agility, and
business value and also fostered innovation (in change the business) in a fixed
price model. This was done by effectively deploying the Opex savings achieved in
Run the Business (RTB) to Change the Business (CTB) and building a market
leading “Transformation group” within IT from HCL’s solutions team. This
high-end IT “Transformation group” within HCL comprised of the best of breed
SMEs with extensive domain expertise, who delivered projects across many
consumer segments such as digital supply chain, archiving, multi-channel, etc.
This strengthened HCL’s position as a “Trusted Innovation Partner”,
consistently and continuously driving innovation, closely aligned to their
strategic objectives.
AREAS OF ENGAGEMENT
This engagement was extremely unique, as it involved HCL as the client’s
committed innovation partner.
HCL not only provided the benefits and cost optimization associated with a
Managed Services implementation, but also built an innovation construct within
the Change the Business part of the contract. HCL and the client entered into a
total IT Outsourcing Managed Services implementation. This included
application and infrastructure services, with 300 FTEs working on more than 350
applications and over 30 technologies and platforms.
The engagement spread across all major territories except France & Japan,
delivered through a Globally Integrated Delivery Model with teams deployed
across locations such as: Noida (India), London, New York, Los Angeles, Cologne
and Krakow.
HCL proposed to focus on two critical aspects in one contract:
Run the Business
• Run without change (operations support including defect fixes) to Run the
Business (Globally Integrated Operations).
• The scope included application development and enhancements, support (L1,
L2, L3) and maintenance services for approximately 400 applications.
• Infrastructure support across Multi-lingual Service Desk, Remote Desktop
Support, Data Center, Webmaster, Networks and Desk side Services.
Change the Business
• Innovation and business change (development) to Change the Business
(transformation).
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4. • HCL was involved in transformation led consulting initiatives in collaboration
with the client’s transformation team in the following areas: Supply Chain,
Royalties, Master Data and Rights, Finance, Artist Launch and Insight Work
Streams. This was done to help them bring about transformation in the IT
landscape to support the implementation of new business strategy.
• HCL is also engaged in leading certain key transformation programs to
support Global Rights Management strategy, which include:
- Automation of digital supply chain to reduce time to market from 4 weeks to
4 days.
- Consolidation of processes and systems to store and interpret the artist’s
contracts.
- Automation of assets’ digitization and archiving to improve catalogue
exploitation.
ENGAGEMENT OUTCOMES
As part of the extended relationship, HCL has been working across RTB and CTB
initiatives for the client.
Even though the engagement is relatively new - commenced only six months ago,
HCL has strived to achieve the following key benefits for the client in line with their
core objectives.
Cost reduction and enhanced revenue creation:
• Opex savings to the tune of 25-30% through HCL’s Managed Services
Operations: 57.5% FTE and productivity gains over a 5 year deal term. The
resource cost could be effectively minimized as the contract was drawn on the
basis of an APO exercise, which helped outline the FTE requirement
accurately, ensuring alignment with business criticality.
• Maximizing through put for the same spend by deploying a small core projects
team onsite, leading a larger offshore development pool to deliver on the
client’s CAPEX program.
• Enhanced revenue through new channels such as Sync licensing.
Operational excellence: HCL’s solutions deliver efficiency of 18% over a 5
year term.
• This was done through the implementation of a Target Operating Model for
consolidating various operations across geographies and providing managed
services, while ensuring a seamless engagement between the two teams with
clearly defined roles, responsibilities and minimum oversight.
• Establishing uniform processes and SLAs.
• Operational efficiency achieved through co-located offshore team.
Boosting business agility and flexibility by:
• Avoiding overstaffing and enabling quick and efficient ramp up/ ramp down as
per business requirement.
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5. • Customized Agile development process for all changes.
• Better alignment of territories to map business P&Ls/ leads.
• Focus on key functional areas.
HCL worked hand-in-hand with the client to achieve transformation
collaboratively and rapidly.
HCL DIFFERENCE
• Executive commitment:
- CIO alignment: HCL worked with the President of procurement (of the
client) to reinstate the CIO’s role with someone who had past experience of
running a similar large outsourcing program.
- CEO approval: HCL peered off with the client’s CEO as well as COO to
build trust & confidence on their personal sponsorship.
• Compelling commercial and contractual case:
HCL created a very flexible and customer friendly contract so that the client
could seek their board’s approvals easily.
• HCL’s strong M&E practice:
- Over 13 years of experience, with more than 6,000 people and deep domain
competencies to help customers leverage the latest industry insights and
trends.
- Strong co-creation model with key customers and vertical partners.
- Innovation in outsourcing through customizable business models, delivery
approaches, service standards, processes and methodologies for effective
cost optimization.
- Product development expertise across mobility, consumer electronics,
telecom, broadcasting and digital marketing.
- Technology centers of excellence, which include application development
and application support CoEs.
- Key partnerships with Microsoft, Oracle, Cisco, EMC, Tibco and a host of
micro-vertical focused partnerships.
• Innovation led new services: Through the digital media and publishing lab,
utilizing key solutions such as Content on Demand, Digital Rights
Management, Digital Asset Management, Artist Management, Social Media,
etc.
• Excellence in implementing Full Services Co-Sourcing through Enterprise
Shared Services, Global Governance, and Process Target Operating Model.
• HCL’s strong SAP capability, which was strengthened through the acquisition
of Axon, and leveraged to implement Enterprise Services.
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6. KEY SUCCESS FACTORS
Some key points that have worked well for this relationship are:
• HCL implemented a seamless zero business disruption transition, leveraging
HCL’s state of the art transition framework (ASSeT) as part of the Managed
Services Model MaSCoT™.
This resulted in the following benefits for the client:
- Reduced IT intensity.
- Achieved cost predictability through application-based pricing - based on
industry standard estimation methodologies for application development.
- Gained access to the best of breed tools at a reduced cost.
- Freed up management bandwidth to focus on the core business.
- Enabled improvement in processes by leveraging the mature processes
(CMMi/ITIL) of the partner.
- Enabled creation of a Knowledge Management framework.
- Gained from productivity levers (YoY improvements).
- Delivered to agreed SLAs and OLAs.
• HCL successfully implemented Managed Services with minimal oversight
and ensured a seamless engagement between the two teams by using its
Target Operating Model. HCL provided a “Well balanced”, “Realistic” and
optimized solution, which avoided the risks of an overtly aggressive “light-on”
only operations and an expensive, heavily staffed operating model.
This was done on the basis of a prior APO exercise, which helped outline the
FTE requirement accurately, ensuring alignment with business criticality.
• HCL’s superior understanding of the client’s business objectives/ process
knowledge and operationalizing the same through the I-BAIM – Integrated
Business Aligned Incident Management Process.
• Core team enabling transformation: HCL provided a core project team of
SMEs and Business Analysts to enable transformation for the client. A total of
22 SMEs were deeply involved in initiating and proposing innovation projects
for them.
HCL not only delivered and achieved its productivity and cost optimization
goals, but also worked collaboratively with the client’s team on several
innovation projects which were closely aligned to business objectives through
streamlined approval process.
• HCL’s Agile Based Methodology enabled a flexible and quick ramp up/ ramp
down and enabled business to see results quickly through “Sprint” based
development cycles.
• HCL’s core delivery and performance metrics have been defined for the
engagement. These help to measure and ensure quality, process compliance,
and schedule management. These metrics work towards improving process
and people efficiencies, measuring and tracking goals and ultimately in
defining a Managed Services Model.
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7. • Multi-governance model: HCL set up a structured communications and
reporting approach for the client with project level governance, operational
reviews and regular Steering Committee meetings.
• Tools and technology leadership for business advantage:
- Innovation dashboard - An analytics and dashboard framework that allows
leaders to assess the health of the project and potential areas of
implementation.implementation.
- ProcessWatch - HCL’s framework to visualize the business process down to
application and infrastructure, outline constraints, bottleneck and
redundancies for improveme BusinessWare - A systematic business case
development framework to determine the cost benefit analysis of new
digital/ IT initiatives and draw several “what-if” analyses.
- Process compliance: A comprehensive process compliance framework
(PCI) for ensuring quality assurance across all service lines.
} Process management tools: HCL PMSmart for integrated project
management (including task management, risk, issues tracking, defect
management).
} Microsoft Project for project plans (part of PMSmart).
} Team Track for project state management.
} TFS - Code and defect management.
} GDR - document repository.
Key Success factors from the client’s side : that led to success include HCL’s
excellent relationship with the account. HCL built this relationship by working
closely with the CIO, who also became a key sponsor of this new engagement.
HCL received tremendous support from the senior leadership (of the client)
to build these bridges and establish cxo relationship with stakeholders.
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8. Hello, I’m from HCL! We work behind the scenes, helping our customers to shift
paradigms and start revolutions. We use digital engineering to build superhuman
capabilities. We make sure that the rate of progress far exceeds the price. And right now,
90,000 of us bright sparks are busy developing solutions for 500 customers in 31
countries across the world. How can I help you?
www.hcltech.com