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Transcript of "Outsourcing Challenges"
1. Copyright © 2007 IAOP. All Rights Reserved.Copyright © 2007 IAOP. All Rights Reserved.www.outsourcingprofessional.orgAn Executive PerspectiveCurrent Challenges and Approaches toOutsourcing GovernanceJoann Martin, COP, PMP, DirectorStrategic Alliances PBIIAOP Summit 2007
Copyright © 2007 IAOP. All Rights Reserved.• Governance• Trends Functions Benefits Vendor Management• How to get stakeholders to engaged• Where is/What is the Value Add• How the Process Evolves A Case Study in Governance in ActionDiscussion Topics
Copyright © 2007 IAOP. All Rights Reserved.Governance Example Charter• Create /Execute/Adjust “Enterprise” Outsourcing Strategy• Advise / Coordinate/Leverage Cross-Functional Outsourcing• Advise / Approve Vendor Strategy/Execution/Consolidation• Advise / Approve Outsourcing Business Structures/CIP’s• Publish Consolidated Outsourcing Plans / Benefits/Internal Trends• Create / Enforce Outsourcing Standards / Policies /Processes/Internal SLA’s/Inter-Company Exchanges• Monitor Business Factors• Outreach to New Areas for Outsourcing Opportunities• Monitor Industry Trends
Copyright © 2007 IAOP. All Rights Reserved.Governance Effectiveness• Links to corporate and key objectives• Recognizes leadership has limited bandwidth• Learns from good corporate and financial governance• Design governance at both enterprise and LOB levels• Good governance can simultaneously empower and ensurecompliance to enterprise vision
Copyright © 2007 IAOP. All Rights Reserved.AcquisitionsGlobalCounterpartsLines ofBusinessCentralizedFunctionsOrganizationStructureGovernance Trends: Functions
Copyright © 2007 IAOP. All Rights Reserved.OutsourcingMaturityBenefitEarly BenefitCost SavingsStabilizationProductivity GainsRisk ManagementStrategicCapability ExpansionCustomer ManagementGovernance Trends: Benefits
Copyright © 2007 IAOP. All Rights Reserved.StaffAugmentationStrategicShort TermLong TermGlobalInsource/OutsourceOffshoreGlobalGovernance Trends: Vendor Management
Copyright © 2007 IAOP. All Rights Reserved.PartnerStakeholdersProcessImplementationStakeholdersExecutiveStakeholdersGrowthGlobalTrendsKPISLAsGovernance Stakeholder Involvement- Early- Business Priorities- Success Factors- Future- Business Priorities- Partner Priorities- Success Factors- Future- Implementation Factors- Escalation & ChangeManagement-Communication
Copyright © 2007 IAOP. All Rights Reserved.Governance Stakeholder InvolvementCritical to Success:MEASURE IT!Strategic Alliance/Indirect Procurements - Stakeholder Project SurveyIntroduction: As part of our continuous improvement effort to provide ever increasing service to Company,Strategic Alliances & Indirect Procurement would appreciate your comments. We are committed to administeringthis survey following significant projects to provide information on what can and should be doing better. Thefeedback received from you will allow for the identification of strengths and areas for improvement that areimportant to our customers.Your input and comments are appreciated and critical to our success. Please take a few minutes to complete thesurvey below and return it to firstname.lastname@example.org. Thank you for your assistance.Please enter the following information:Your Name:Project Number:Your Line of Business or Function:Who was your contact in Strategic Alliance for thisproject:Is this your first time working with StrategicAlliance/Indirect Procurement? If not how manyprojects have you had them engaged?Please answer the following questions:(Circle One)Strategic Alliance/Indirect Staff Not Satisfied Satisfied Highly Satisfied Knowledge of Product/Service Not Satisfied Satisfied Highly Satisfied AccessibilityNot Satisfied Satisfied Highly Satisfied Development of effective strategic sourcing planNot Satisfied Satisfied Highly Satisfied Negotiations of business terms/price Not Satisfied Satisfied Highly Satisfied Client Focus Not Satisfied Satisfied Highly SatisfiedSourcing Process Not Satisfied Satisfied Highly Satisfied Definition and Communication of sourcing Process Not Satisfied Satisfied Highly Satisfied Effectiveness of process Not Satisfied Satisfied Highly Satisfied Did the time it take to complete process meet theexpectationNot Satisfied Satisfied Highly Satisfied Do you believe that Risk was managed through projectand process?Not Satisfied Satisfied Highly SatisfiedComments:What could we improve to serve you and businessbetter? What was the most valuable part of theprocess to you?Thank You For Your Time and Comments.
Copyright © 2007 IAOP. All Rights Reserved.Governance Value AddGrowth& RiskCost SavingsCost AvoidanceLong Term &ExpansionCommitmentGlobal Trends& ChangesIts Not about PROCESSINGSustainingView
Copyright © 2007 IAOP. All Rights Reserved.– Transition - includes people and process• SLAs• Integration• Knowledge Transfer– Talent – availability and accessibility• Inadequate staffing– Quality – defects• Subcontractors• Technology change– Pricing – indispensable vendor leverage– Culture – value/risk• Misinterpretations/misunderstandings• Trustworthiness• Team productivity/esteem– Business Continuity – natural disasters– Sovereign – legislative changes• States compensating business to use US workers• Government export and import regulations (information/data/privacy risk)• Piracy• IP– Currency - fluctuationsA Risk is a potential event with negative consequences that has not happened yet.Governance Risk Management
Copyright © 2007 IAOP. All Rights Reserved.1. New Sourcing – Requirements to Contract ProcessEnsure the acquisition of third party commodities and services satisfy all PBIinternal business and strategy requirements.2. New Project w. Existing Supplier ProcessTo ensure the proper identification, capture and communication of all PBIproduct, business, and strategy requirements to an existing supplier andEnsure compliance with internal PBI business and financial controls.3. Requisition to Pay ProcessEnsure that payment is made to the supplier for services or product supplied.4. Supplier Relationship Management ProcessEnsure negotiated process efficiencies and business benefits are realized,consistently and proactively managed w. supplier through the life of contract.5. Outsourcing Steering Committee Governance ProcessProvide a formal mechanism for the review, approval and knowledge sharing ofoutsourcing activities and supplier performance across the enterprise.6. Dispute & Escalation ProcessEnsure formalized process for escalating and resolving disputes with suppliers.7. Contract Management ProcessProvide a framework to ensure contract compliance and benefits achievement.Governance ProcessesContract Management Process (Post Deal – Life of Active Contract)OutsourcingSteeringLegalEnterpriseProcurementFunction/PMOPartnerSTARTENDDocumentSource: Enterprise Procurement, Strategic AlliancesDecisionActivityLast Updated: 08 / 08 / 2005Page 1 of 1STARTHighlight RequestEvent toProcurement &LegalHighlight MissedSLA event toEnterpriseProcurementSTARTScenario – Missed SLA,Service Credit EventScenario – End ofContract LifeEventHighlight RequestEvent thru PBProcurementSTARTScenario – EarlyTerminationRequest EventScenario – Early TerminationRequest EventSTARTHighlight End ofContract Event toFunction & Legal(6 mo. Notice)Convene PBInternalStakeholdersTerminateor Extend?Start NewSourcing ProcessNewSourcingProcessAdvise / ApproveTermination /ExtensionDecisionRe-Negotiate?NegotiateExtensionAdvise onTermination StepsAdvise onExtension /NegotiationHelp DefineNegotiationIssuesNegotiateExtensionAdvise / ApproveTermination /ExtensionDecisionAwareness ofService LevelCreditCure?Review ServiceCredit perContractAttempt Cure perContractNOYESNOYESEXTENDTERMINATEProcessRefENDENDENDNotify Partner &PB EnterpriseProcurementNotify PBStakeholder ofCureExecuteExtension /Update ContractdatabaseCoordinateTermination StepsSubmit Invoicewith ServiceCreditReview Invoice toEnsure ServiceCreditDisputes & Escalation ProcessOutsourcingSteeringLegalEnterpriseProcurementFunction/PMOPartnerSource: Enterprise Procurement, Strategic AlliancesLast Updated: 08 / 08 / 2005Page 1 of 1Document STARTENDActivity DecisionProcessRefPartnerSTARTDocumentDispute to EPPartner orFunction?FunctionProvide PartnerDocumented MissScenario –Partner PaymentDisputeSTARTScenario –Function QualityDisputeSTARTScenario –ProcessExecution MissEscalate to EPDocumentDispute toPartnerDocumentProcess MissProvide FunctionDocumented MissPartnerGovernProcessPartnerCure?Review Dispute /Attempt CureENDENDNOYESPartnerGovernProcessMediate Dispute /PartnerRelationship MgtENDENDReview Dispute /Investigate with A/P and FunctionOK toPay?NOYESReq toPayProcessEscalate to EPMediate Dispute /PartnerRelationship MgtPost Deal PB GovernanceOutsourcingSteeringLegalEnterpriseProcurementFunction/PMOPartnerSource: Enterprise Procurement, Strategic AlliancesLast Updated: 08 / 08 / 2005Page 1 of 1STARTENDProcessRefDocumentActivity DecisionMaintainOutsourcingArtifacts / MetricsSTARTMaintain MetricsDashBoardMaintain PartnerCapabilitiesAssessmentSTARTSet PBIOutsourcingStrategyMaintainOutsourcingSteering CharterMaintainFinancial BenefitsRealizationMaintainGovernanceProcessesConduct PartnerRelationshipReviewsPartnerGovernanceConduct PMOMeetings withPartnerPartnerGovernanceSTARTIdentifyOutsourcing NeedNewSourcingProcessApprove NewSourcing DealsApprove CIPsApprove HighLevel Deal TermsApprove ContractTermination /ExtensionGuide VendorConsolidationGoalsMonitorGovernance &BenefitsRealizationSTARTSTARTFacilitateOutsourcingSteering MtgsParticipate inOutsourcingSteering MtgsProvide Metricsfor Rollup toDashboardSupplier Management Process (Post Deal Supplier Governance)OutsourcingSteeringLegalEnterpriseProcurementFunction/PMOPartnerSource: Enterprise Procurement, Strategic AlliancesLast Updated: 08 / 08 / 2005Page 1 of 1Decision DocumentProcessRefSTARTENDActivityYESCoordinateQuarterly PartnerRelationshipMeetingsSTART Disputes?NOMaintain IssuesListSTARTManageFunctional PMOMaintain SLADashboardFacilitate MonthlyPMO Mtgs withPartner / EPParticipate inMonthly PMOMtgsAssist Functionwith Open Issuesand MetricsParticipate inMonthly PMOMtgsParticipate inPartnerRelationship MtgsParticipate inPartnerRelationship MtgsPull TogetherMetrics, OpenIssues AcrossFunctionsPMO MetricsRollupPBGovernanceSupplierScorecardingRollupPBGovernanceENDFacilitate PartnerRelationshipMeetingsDemonstrate NewCapabilitiesForecast Demandfor OutsourcingDisputeProcessNODisputes?DisputeProcessYESUpdate PartnerCapabilitiesAssessmentProcurement Req to Pay ProcessOutsourcingSteeringLegalEnterpriseProcurementFunction/PMOPartnerSource: Enterprise Procurement, Strategic AlliancesLast Updated: 08 / 08 / 2005Page 1 of 1DocumentProcessRefActivity DecisionSTARTENDCreate ShoppingCart in B2BDisputeProcessExistingSupplier?YESSTARTNOOpen NewPurchase Order inSAPAdd Supplier toSAPOpen new PO forSOW amountServicesPerformedaccording to SOWSatisfiedwithVendor?YESNOSubmit Invoice toPB A/PPOApproved?A/P Pays InvoiceNOYES A/P: Is PO >$750?YESNOENDApprovedin B2B?SOWRequired?Ensure SOWYESMonitorApprovals /ReSubmit ifNecessaryNOA/P: OK toPay?Submit GoodsReceiptYESNONew Project w. Existing Outsourcing Partner ProcessOutsourcingSteeringLegalEnterpriseProcurementFunction/PMOPartnerSource: ADM, TechCentral ProcessesLast Updated: 08 / 08 / 2005Page 1 of 1Document STARTENDActivityProcessRefDecisionInitiate NewProjectSTARTScope NewProjectDraft Statement ofWorkAdvise on SOWFormat / ContentHelp DefineScope / EstimateResourcesCIPRequired?Req toPayProcessNegotiate SOW /PricingNegotiate SOW –EnsureConsistency w.ContractSubmit CIPCIPApprovedSubmit FinalSOW to EP &LegalSubmitRequisitionFile Final SOW –Update ContractsdatabaseYESNONOYESENDNotified of NewProject byFunction / PMOReview SOW forCommercialTermsApprove SOW forLegal ComplianceScan & File SOWNew Sourcing - Requirements to Contract ProcessFunction/PMOEnterpriseProcurementLegalOutsourcingSteeringPartnerSource: Enterprise Procurement, Strategic AlliancesLast Updated: 08 / 08 / 2005Page 1 of 1ProcessRefActivity Decision Document STARTENDInitiate NewSourcing RequestSTARTInitiate NewSourcing RequestSTARTAssist w.RequirementsDefintionAssist w. SourcingStrategy / Make-BuyPrepare forFormal RFPPerform Strategy /Make-BuyDecisionProject ManageSourcing EffortAdvise on RFPPerform VendorLandscaping - RFIIssue RFPDealDefineRequirementsDraft CIPRespond to RFI Respond to RFPEvaluateResponsesUpdate CIPNegotiateContractNegotiateContractNegotiateContractNOYESApprove SourcingStrategyAdvise onSourcingExecutionApprove DealExecuteContract / UpdateContractdatabaseSubmit Non-Disclosure ifneededDraft ContractDocumentsENDNegotiateContractConduct VendorDue DiligenceSelect Vendor
Copyright © 2007 IAOP. All Rights Reserved.• Telemarketing Space - Following aprocess for Win: Wins– RFP– QBR– Strategic ExpansionGovernance A Case Study
Copyright © 2007 IAOP. All Rights Reserved.Criteria to achieve Objective – Risk Mitigation and Capability Expansion:• Operations & Dynamics– Relevant experience & Proven ability– Training– Account Management structure and quality– Quality Assurance• Infrastructure– Reporting– Technology current and ongoing investment– Understanding of relevant technology road map and strategies• Cost/Strategic Fit– Viable agent compensation strategies– Ability to be financially flexible– ScalableGovernance A Case Study
Copyright © 2007 IAOP. All Rights Reserved.• Team:– Strategic Alliance Lead– Business– Subject Matter Experts as needed• Phase 1– Development of the detailed RFP document– Identification of 6-10 vendor candidates for RFP distribution• Phase 2– RFP response evaluation summary and scoring matrix– Narrow list to 3-5 Vendor finalist for on site oral presentations– Narrow list to 2-3 Site visits– Customer interviews for finalistsGovernance A Case Study - Process
Copyright © 2007 IAOP. All Rights Reserved.ORAL PRESENATION AGENDA Introductions - 15 minutes Open Discussion – Opportunity for vendor to expand on and further articulate theircase for being the right partner for this opportunity – 30 minutes Specific discussion on vendors applicable experience – 30 minutesOverview of Organization stricture and how team will interact and support project -30 minutes Account Management Training Quality Assurance – performance planning HR IT and Programming Describe how our program will fit within the structure and size of your organization– 15 minutes What relationship and support do you anticipate needing from Us - 10 minutesGovernance A Case Study - Process
Copyright © 2007 IAOP. All Rights Reserved.• Meet support staff– Center Director– Account management– Floor supervisors– Coaches– Training– QA– Programming– IT– Reporting• Center Tour– Rep calling area– Agent work stations– Break rooms– Security (Access to secure areas andsensitive data)– Training facilities– Location of floor supervisors andcoaches• Technology– Location of servers– Demo– Agent management tools– Agent screens & systems management• Training– Standard methodology– Testing– Physical resources (PCs, AVequipment etc.)• QA Dept.– Department structure– Process and how QA impacts repperformance– QA screens/Technology– Scoring calls and feedback loop– Supervisor’s role in QA• Reporting capabilities– Demo of reporting system• Agent interaction– Listen to live calls– RoundtableGovernance A Case Study - ProcessSite Visit Agenda
Copyright © 2007 IAOP. All Rights Reserved.• Executive Review– Current Priorities– Thoughts on pricing options– Thoughts on parallel/pilot programs• Phase 3:– Negotiations– Contracts – MSA/SOW• Phase 4:– Launch• Phase 5– Continuously Review Space and new contenders– QBRs– Expansion of capabilitiesGovernance A Case Study - Process
Copyright © 2007 IAOP. All Rights Reserved.QBR Agenda• Q1 2007 in Review• KPI Review– Program 1– Program 2• KPI Improvements / Successes• KPI Opportunities / Action Plans• Quality• Training• Staffing• Value Add / Future Activities• Open DiscussionGovernance A Case Study - Process
Copyright © 2007 IAOP. All Rights Reserved.Repeatable Process Results• Highest quality to date on outsourcing Project• Best working relationship out of the gate• Quick time to implement• Risk Mitigated• High response from stakeholders on repeatable process for futureprojectsGovernance A Case Study - Results