oNirvana. Making Outsourcing Work.

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oNirvana provides expert advice and corrective action on your outsourcing strategy and contracts, helping you to realise the full benefits of outsourcing. We are specialists in outsourcing advice and, …

oNirvana provides expert advice and corrective action on your outsourcing strategy and contracts, helping you to realise the full benefits of outsourcing. We are specialists in outsourcing advice and, unlike generalist consultants, undertake consulting projects only on outsourcing arrangements.

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  • 1. Introduction to oNirvana“Making Outsourcing Work”
  • 2. Overview of oNirvanaoNirvana (short for Outsourcing Nirvana) helps you realise the benefits of your outsourcing strategy and contracts.Outsourcing of business processes and IT, in its various forms (domestic, offshore, nearshore, captives), has thepotential to generate significant strategic and operational benefits for your business. However, outsourcingarrangements are complex to execute and, in many cases, the benefits fall short of the business case that led to theoutsourcing decision.oNirvana provides expert advice and corrective action on your outsourcing strategy and contracts, helping you torealise the full benefits of outsourcing. 2 © oNirvana
  • 3. oNirvana Services• Outsourcing Strategy: We help integrate your current and planned outsourcing arrangements in a comprehensive outsourcing strategy aligned to the overall business strategy.• Outsourcing Effectiveness: Through a structured methodology, we help you assess the performance of your current outsourcing arrangement, diagnose the issues, conduct a full assessment of your outsourcing partner(s) and make specific recommendations to help realise the benefits of the outsourcing arrangement.• Outsourcing Suitability: If you are considering outsourcing a business process, we will help you align your outsourcing strategy to business strategy, assess suitability of a single or multiple processes for outsourcing and set strategic objectives for the outsourcing arrangement(s).• Outsourcing Partner Selection: The process of identifying potential partners, issuing RFIs and RFPs, evaluating responses, partner selection and contracting requires project management and can be long and effort-intensive. We take responsibility for the entire process on your behalf and work with your business leads to select a suitable outsourcing partner for you. 3 © oNirvana
  • 4. Outsourcing Strategy : 5 Questions for aComprehensive StrategyA comprehensive outsourcing strategy needs to address a range of questions, broadlydivided into 5 categories. • Alignment of outsourcing strategy with business strategy Why • Strategic objectives of outsourcing • What functions are in scope? • Assessment of current role of outsourcing in business and sourcing strategy What • Assessment of individual processes (core competencies, capabilities, feasibility, risks) • Evaluation of outsourcing models overall and for individual processes and How functions • Evaluation of locations if global sourcing is considered suitable Where • Assessment of current service providers Who • Setting up the framework for service provider evaluation during implementation Plan & Implement 4 © oNirvana
  • 5. Outsourcing EffectivenessThere are a number of areas in which outsourcing arrangements fail to deliver. Whilespecifics vary from company to company, most of the Outsourcing Effectiveness issuesfall under the following categories:• Realisation of cost benefits• Quality of service delivery• Quality of delivery personnel (on supplier side)• Relationship between client and supplier• Absence of process transformation and innovationMost of the issues arise from some combination of the following factors:• Clarity on strategic objectives of the outsourcing arrangement• Supplier capabilities• Alignment of cost model of outsourcing arrangement with contractual terms• Misalignment of performance metrics/ SLAs with strategic objectives• Relationship between key client and supplier personnel• Management of the change process in the client organisation 5 © oNirvana
  • 6. Outsourcing SuitabilitySome processes or activities, especially those not currently outsourced, will require amore detailed assessment of suitability. oNirvana’s framework for Outsourcing Suitability Business Readiness Environment Process Readiness Readiness 6 © oNirvana
  • 7. Mapping Processes for Outsourcing Suitability The baseline information is the basis for an high-level mapping of all processes for outsourcing suitability. The process is critical to business success Sourcing company possesses a significant but there is no performance advantage Process Mapping Model performance advantage over in relative competence. Outsourcing competitors/ suppliers and the process is should be considered, especially with critical to business success. Outsourcing suppliers willing to invest in the function should be considered only if there are and willing to provide some exclusivity. Outsource future threats such as technological OR Perform changes which could change the status. Invest to internally and develop develop internally Criticality of function to business success Keep Internal Outsource or Low in criticality to business success Outsource Sourcing company possesses a significant (but must still be done well). performance advantage over Outsourcing is best for most of such competitors/ suppliers but the process is processes. not critical to business success. Outsourcing may allow sourcing Relative competence organisation to get value from its of the function competence.Adapted from ‘What is the right outsourcing strategy for your process’, Ronan McIvorEuropean Management Journal (2008) 7 © oNirvana
  • 8. Outsourcing Partner SelectionAn assessment of current and a listing of potential service providers, by function/process, is a key part of making outsourcing work.Assessment of current service providers• Collect baseline information on – Scope of support – Assessment for each process supported – Performance metrics – Contractual terms• Conduct a detailed capability assessment (see next slide) where there are issues with an existing arrangementListing of potential service providers• For each process in the roadmap, identify potential service providers and a brief profile for each – This list will most likely form the basis for an RFI process in implementation, so needs to be reasonably thorough – Most of the potential service providers would have been identified in the detailed suitability assessment conducted for the function/ process• For each function, determine the key selection criteria for service providers based on the capability model 8 © oNirvana
  • 9. Supplier Capability Model A detailed assessment of supplier capabilities may be required and should cover delivery, transformation and relationship competencies. Relationship Capabilities which determine extent to which Competency supplier is willing and able to align with client’s values, goals and needs Capabilities which Capabilities which Delivery determine extent to which determine extent to which Transformation supplier can respond to supplier can deliver radically Competency client’s requirements for improved (transformed) Competency operational services specific services in terms of quality to the outsourcing contract and costsSource: 12 Capabilities to evaluate in your Business Process Outsourcing ProviderFeeny, Lacity and Willcocks 9 © oNirvana
  • 10. Contact DetailsFor more information:www.onirvana.comE: info@onirvana.com 10 © oNirvana