What Can Derail the Progression of Your Outsourcing Initiative?
What Can Derail the Progression of Your Outsourcing Initiative andThe Steps You can Take to Turn it Around? John Ferrie Vice President, Shared Services Realogy
Agenda• What Causes Outsourcing Projects to Derail?• Outsourcing Challenges• Derailment Prevention• Derailment Cures• Review
What causes outsourcing projects to derail?• Determining go-live date before planning the project• Ignoring vendor’s advice• Pushing vendor beyond its limits• Vendor’s desire to appease clients• Knowledge deficiency on vendor team Outsourcing projects derail before team members realize it
What causes outsourcing projects to derail? (cont.)• Inadequate or erroneous documentation• Inappropriate project team and/or committee staffing• Failure of committee members to engage subordinates• Poor/non-existent change management• Failing to impose mandates when appropriate Many problems can be avoided
What causes outsourcing projects to derail? (cont.)• Lack of participation by critical stakeholders• Implementing multiple systems simultaneously• Insufficient testing• Bad contract• Unforeseen events It’s amazing that any outsourcing projects are successful!
Outsourcing Challenges • Stakeholders’ needs • Company’s culture • Condition of key processes • Availability and quality of in-house documentation • The contract (limitations, service levels) • Technology integration • Communication and trainingOutsourcing projects require the synchronization of a lot of moving parts
Derailment Prevention Stakeholders and their needs • Information Technology Dept. • Senior Leadership (Execs and (vendor and in-house) Steering Committee) • Subject Matter experts (vendor • Customers and in-house) • Sales and Marketing • Operations (vendor and in- house) • Human Resources • Legal • FinanceRisk is tied to the number, diversity and engagement of stakeholders
Derailment Prevention Stakeholders and their needs (cont.)• Identify all stakeholder organizations• Establish project champions (owners) for each group• Require participation and information sharing• Conduct periodic meetings and informal monitoring sessions• Contact non-champions to ensure dissemination of information• Plan to retain teams beyond implementation (“swat teams”) A communication failures with stakeholders jeopardizes success
Derailment Prevention Company’s Culture• Characteristics of successful organizations – Centralized, top down management – Structured, disciplined, uses service levels – Flexible – recognizes opportunities afforded by change• Characteristics that require special consideration – Lacks service levels – everything is “on demand” – Rules apply to others – Inflexible and resistant – “My way is the best way” Success is tied to discipline, flexibility and communication
Derailment Prevention Processes• Understanding and document all processes – Facilitates knowledge transition – Source of info for Go-Live checklist – Source of info for Change Management plan• Determine service levels (quantity and quality) – Establish ongoing service levels – Prevents revisionist history and “professional amnesia”• Develop contingency plans for critical processesNo one ever failed from having too much process documentation
Derailment Prevention Processes • Review processes surrounding those being outsourced • Be careful of “concierge” processes – break into pieces • “Customer service” has many flavors document yours in detail • Should we be outsourcing this process? • Document future state • Stabilize processes before going for financial goalsOver-emphasize process because it is difficult to recover from bad ones
Derailment Prevention In-House Documentation Availability• Process documentation with volumes and service levels• Cost Benefit Analysis• Operations Manuals• System Documentation• Training Manuals• Detailed Design Documentation (current state and future state) Documentation is essential to effective knowledge transition
Derailment Prevention The Contract • Segregate service aspects from other contract language • Set expectations with retain team and internal customers – Syndicate current processes and service levels • Solidify ownership by retain team and internal customers – Jointly establish high-level processes and service levels with vendor • Vendor has limits and do not push to exceed themEarly, meaningful engagement of key participants leads to success
Derailment Prevention Technology Integration• Design interfaces early to have time to overcome challenges• Future technology decisions (i.e. java versions) must take vendor’s systems into considerationIntegration may not be easy and vendor’s technology is your technology
Derailment Prevention Change Management• Establish a dedicated change management team• Begin change management when the project begins• Develop communications and training plans– encourage “feedback”• Require training for key employees – Unbeknownst to them demands on employees’ have changed• Include contingency plan discussions in training Change Management prepares your organization for their new reality
Derailment Prevention Change Management (cont.) • Conduct executive information sessions to “head-off” problems • Communicate critical information directly with all stakeholders • Over communicate, do not over sell • Poor change management can cause a successful project to “fail” • Do not cut change management if over budgetIn some cases change management is as critical as processes and interfaces
Derailment Cures Actions to be taken if project derails before going live• Determine the impact of the issue on “go/no go” decision. – Is this a critical deliverable?• Identify alternatives with team and executive leadership: – Fix now and meet requirements? – Challenge requirement and implement what’s available (risky) – Devise temporary alternate approach and implement requirement later – Address issue immediate and delay/modify less critical deliverable• Be decisive and take action you have a limited timeframeThe relationship of an issue to “go/no go” determines the course of action
Derailment Cures Actions to be taken if project derails after going live• Reduce team size and focus on critical issues• Keep morale high and avoid assigning blame (blame can come later)• Activate “swat team” empowered to “make things happen” include: – Project team member from stakeholder organization – Appropriate in-house and vendor operations employees – Appropriate in-house and vendor information technology employees• Consider incremental gains even if some rework is ultimately requiredInevitably their will be challenges have contingency plans and a swat team
Derailment Cures Actions to be taken if project derails after going live (cont.)• Establish daily work sessions with key contacts in: – Customer Service, operations and information technology• Establish issues log and review with appropriate teams daily – Determine exposure associated with each issue – Assess opportunity for quick, temporary fix vs. ultimate solution – sometimes it’s better to unwind new processes and redesign them – Determine “time to market” for each solution – Prioritize solutions (balancing exposure with “time to market”) Daily interactions help keep team members focused
Derailment Cures Actions to be taken if project derails after going live (cont.) • Promptly and frequently engage executives of impacted areas – Executives tend to be more forgiving when not “blind-sided” – Present issues, solutions and proposed timing – Solicit feedback on employee communication plans – Always deliver your own bad news • Seek additional guidance/resources from vendor– they want a win • Increase customer service – a good experience can go a long wayWhen a crisis occurs control the information flow to executives and tap vendor
Review• Plan diligently and engage appropriate parties early and frequently• Do not skimp on the documentation – it is too valuable• Emphasize process – a bad foundation process makes recovery difficult• Change Management must be performed• Be decisive and take action – customer forgiveness drops over time• Deliver your own “bad” news - embrace executive stakeholders• Communicate throughout the project Go For It - Good Luck!