Vested Outsourcing And Spot Brief August 2011
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Vested Outsourcing And Spot Brief August 2011

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Provides quick overview of how SPOT Consulting LLC uses the Vested Outsourcing methodology to help our clients.

Provides quick overview of how SPOT Consulting LLC uses the Vested Outsourcing methodology to help our clients.

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Vested Outsourcing And Spot Brief August 2011 Vested Outsourcing And Spot Brief August 2011 Presentation Transcript

  •  Vested  Outsourcing  TM  Alton  Mar*n,  Founder  and  Chief  Execu*ve  Officer   Copyright © 2010 SPOT Consulting LLC
  • Alton Martin - Background•  Program  Faculty  for  the  University  of  Tennessee   Center  for  Execu*ve  Educa*on   –  designated  subject  maEer  expert  on  using  Vested   Outsourcing  methodology  in  contact  center  and  BPO   opera*ons  •  Founder  of  both  SPOT  Consul*ng  LLC  and  COPC  Inc  •  Involved  in  the  contact  center  industry  since  1993  •  Worked  in  over  30  countries  and  with  dozens  of   major  firms  in  scores  of  industries  •  Note:  Vested  Outsourcing is  a  trademarked  term    TM   and  is  used  with  permission   Copyright © 2010 SPOT Consulting LLC 2
  • Keep This in Mind……Vested Outsourcing Makes You Think!“The significantproblems we face cannotbe solved at the samelevel of thinking we wereat when we createdthem.” Copyright © 2010 SPOT Consulting LLC 3
  • Genesis of the Idea•  USAF  hired  University  of  Tennessee  Center  for  Execu*ve   Educa*on  to  study  services  procurement  in  logis*cs  and   maintenance   –  Over  50%  of  the  USAF  spend  is  on  services;  logis*cs  was  one  of   the  top  5  spend  areas   –  Concern  was  “is  there  a  beEer  way  to  buy  services?”   •  Dissa*sfied  end  users  complained  about  poor  service   •  Vendors  complained  the  contracts  were  unprofitable  or  low  margin   •  USAF  not  convinced  they  were  ge^ng  the  best  pricing  •  UT  researchers  studied  more  than  20  government  “deals”     –  What  are  the  drivers  that  lead  to  success?   –  Is  there  a  process  for  buying  services  that  can  be  replicated?   –  How  could  the  USAF  ensure  they  were  ge^ng  “best  value”   Copyright © 2010 SPOT Consulting LLC 4
  • Genesis, con’t.•  USAF  wanted  to  ensure  they  were  compe**ve  with  private   industry,  so  they  extended  the  study   –  Added  another  30  private  sector  outsourcing  deals   –  Expanded  the  study  to  other  service  areas  •  The  SAME  best  prac*ces  were  found;  researchers  codified  the   “Best  Prac*ces”  into  a  defined  methodology     –  USAF  calls  it  “Performance  Based  Services  Acquisi*on”   –  UT  researchers  coined  the  approach  “Vested  Outsourcing”  •  UT  faculty  created  courseware  now  taught  by  the  Defense   Acquisi*on  University  •  UT  and  faculty  launched  a  formal  agreement  that  encourages  faculty   members  to  consult  with  companies  and  help  ins*tu*onalize  the  Vested   Outsourcing  concept     Copyright © 2010 SPOT Consulting LLC 5
  • Vested Outsourcing Research RevealsBad Process is why Outsourcing Fails The top 5 reasons outsourcing fails are not due to a bad supplier – but due to bad outsourcing processBuyers multi-supplier environment 3 Poor cultural fit 5 Poor performance 8 Not mutually beneficial 11 Poor communication 11 Poor governance 13 Misaligned interest over time 15 Unclear expectations 23 Note: 11% in “Other” 0 5 10 15 20 25 Percent of Respondents * Source: Outsourcing Center Survey. Outsourcing Center Copyright © 2010 SPOT Consulting LLC 6
  • What is Vested Outsourcing?•  A  game  changing  approach  to  outsourcing  that   –  Is  a  hybrid  business  model  for  buying  services   –  Leverages  “win-­‐win”  thinking  associated  with  Game  Theory  /  Behavioral   Economics   –  Is  centered  around  buying  results  instead  of  tasks  and/or  ac:vi:es  with  the   conscious  effort  to  use  incen*ves  to  drive  process  innova*on,  which  prevents   many  perverse  incen*ves  of  conven*onal  outsourcing   –  Creates  a  contract  that  follows  “Five  Rules”   –  Uses  incen:ves  to  transform  the  work  to  achieve  “trade-­‐ups”  versus   conven*onal  cost/service  tradeoffs  •  Transforma:onal  when  applied   –  Endorsed  by  the  Outsourcing  Ins*tute,    Sourcing  Interest  Group,  Center  for   Outsourcing  Research,  and  the  Interna*onal  Associa*on  for  Contract  and   Commercial  Management   –  Regarded  as  the  “business  concept  of  the  decade”  similar  to  Lean  and  Six   Sigma   Copyright © 2010 SPOT Consulting LLC 7
  • Commercial Companies Benchmarked1 Vested Outsourcing is Research Based and Fact Driven Logistics / Property / Admin/ Other Supply Chain Facility Mgmt Advisory/BPOCompanies •  Dell •  Microsoft •  Microsoft •  McDonald’sOutsourcing •  JetBlue •  Edward •  Oracle • Johnson •  Southwest Jones •  Honeywell Diversey Airlines •  H&R Block •  Boeing • Dept of Energy •  Lockheed Martin •  Philips • Minn Dept of •  Boeing •  P&G Transportation •  UPS •  JaquarService •  InSource •  Grubb & Ellis •  Xerox •  CH2M HillProviders •  Caterpillar •  Jones Lang •  AFMS •  Flatiron-Manson Logistics LaSalle •  Accenture •  Wipro •  CEVA •  Colliers •  UnipartConsultants •  Expense Management Solutions 1. Partial list; over 50 contracts studied Copyright © 2010 SPOT Consulting LLC 8
  • Vested Outsourcing’s 5 Key Rules © 2010 Vested Outsourcing Copyright © 2010 SPOT Consulting LLC 9
  • Based on Game Theory …Cooperative Games Win!•  In non-zero-sum games, a gain by one player does not necessarily Command Cooperate correspond with a loss by another•  Win-win game theory emphasizes the importance of cooperation, sharing and over-all group success Lose Much- Cooperate Win-Win in contrast to domination and Win Much personal gain•  All players are treated as equally important and valuable Win Much- Command Lose-Lose Lose Much•  When both parties cooperate they both win! When they don’t, they end up with less or both lose! VO gets both Parties to the Win-Win Quadrant“The best result will come from everyone in the group doing what is good for himselfand the group. It is the only way we all win” John Forbes Nash-Nobel Prize Winner 10
  • Vested OutsourcingA Hybrid Business Model Approach•  The  core  purpose  of   outsourcing  is  to  enable   the  most  efficient  delivery   of  business  outcomes  •  Vested  Outsourcing     –  focus  a1en2on  on   outcomes  and  not   transac+ons   –  encourage  the  service   provider  to  innovate   –  ensure  that  the  selected   business  model  rewards   posi2ve  outcomes   –  carefully  crag  collabora2ve   agreements  •  Share  Value   Copyright © 2010 SPOT Consulting LLC 11
  • Overview of Outsourcing ModelsSourcing Relationship Focus Interaction Characterized by Transaction Based Business Model Standard Terms, Simple Transaction Cost and Efficiency Abundant and easy to resource, no need Fixed Pricing, Provider for a relationship, no trust Automated Procurement Blanket Agreement Managed by category locally and cross Economies of Scale, Approved Provider Ease of transactions Negotiated Terms business sector, bundled for economies of Pricing Agreements scale, common terms Contract with SLAs Integral supply across business units, Capability, Capacity and Pricing Agreement/Discounts delivering added value and capability, not Preferred Provider Technology Possible Gain Sharing so abundant, a pain to re-source, limited Simplified Transactions Longer Term Contract trust Outcome Based Business Model SRM Governance Longer term relationship, integrated Performance-Based Performance Performance Incentives communication, metrics focused, Relationship Fees at Risk cooperative relationship Vested Governance Interdependent outcomes, aligned goals Vested Outsourcing Framework, Mutual Gain, and objectives, mutual gain, managed Performance Incentives Relationship Shared Outcomes performance, long term relationship, Win- Margin Matching Win relationship Vested Agreement Investment Based Business Model Joint Venture Legally bound, formal strategic Equity Partner Equity Sharing Asset Based partnerships, mergers and acquisitions, Governance Framework asset sharing/ holding
  • Benefits of a Vested OutsourcingApproach•  BeEer  compe**on:  not  just  suppliers,  but  solu*ons   –  Supplier  buy-­‐in  and  shared  interests   –  Variety  of  solu*ons  from  which  to  choose   –  Supplier  flexibility  in  proposing  solu*ons  •  Focus  on  intended  results,  not  ac*vi*es   –  Increased  likelihood  of  mee*ng  corporate  goals  and   objec*ves   –  Mutually  beneficial,  shared  incen*ves  drive  innova*on  and   cost  effec*veness   –  Par*es  have  a  vested  interest  in  other’s  success;  shared   risk  and  reward   Copyright © 2010 SPOT Consulting LLC 13
  • SPOT and Vested Outsourcing•  SPOT  is  the  designated  Center  of  Excellence  firm  for   using  the  Vested  Methodology  for  contact  center  and   BPO  opera*ons  •  Offerings  include   –  Deal  Review.    Assess  current  “deals”  against  the  Vested   Outsourcing  criteria  and  provide  detailed  gap  analysis   –  Cer2fied  Deal  Architects.    Assist  a  buying  organiza*on  on   how  to  structure  a  Vested  deal  with  one  or  more  suppliers   –  Training.    Provide  seminars,  speeches,  and  structured   classes  to  teach  the  methodology  and  expand  awareness   Copyright © 2010 SPOT Consulting LLC 14
  • For  addi*onal  informa*on     info@spotconsul*ng.biz  or  go  to  our  web  site  –  www.spotconsul*ng.biz   Copyright © 2010 SPOT Consulting LLC 15