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Outsourcing Use Case


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Outsourcing Use Case

  1. 1. The 2009Outsourcing World Summit®Approach to Strategic Sourcing: A Case StudyJoann Martin, PMP, COPDirector Strategic Alliances, Pitney BowesAndrew KokesVice President, Sitel
  2. 2. The 2009Outsourcing World Summit®Joann Martin, PMP, COPDirector Strategic Alliances, Pitney BowesJoann leads the Global Strategic Outsourcing Sourcing teamat PBI which is responsible for BPO Vendor Management. Shereceived her BS in CS Engineering from Uconn and her MBAfrom Capella. Joann is COP, PMP certified, and a Green Belt.She is an Adjunct Professor at UB with 2 patents.In 2005 Pitney Bowes, made the executive-level decision toundertake a strategic, cross-functional initiative to useoutsourcing to cut operating costs, limit capital investment,and improve operating flexibility. Joann Martin, Director ofStrategic Alliances for Pitney Bowes, led the development ofthe outsourcing agenda and selection of global partners. Keylearnings shared are: How to lead a strategic outsourcinginitiative in a heavily decentralized organization; theadvantgaes of selecting best-of-breed partners; and how tosell the internal organization and then deliver the valuepromised.
  3. 3. The 2009Outsourcing World Summit®Andrew KokesVice President, SitelAndrew Kokes is responsible for Sitel’s business intelligence,strategic planning, product line management and corporatemarketing for the America’s region. In this role, hisresponsibilities include supplying business-to-businessmarket intelligence to drive vertically targeted growthplanning, for building awareness that drives the Sitel brandinto desired industry and geographic markets, and forsupporting frontline operations with the development andimplementation of products and services that meet Sitels450+ customer requirements.Andrew has been with Sitel since 1997 in BPO solutions rolesfocused on functional sourcing as well as global sourcing toLatin America, the Philippines and India. Andrew wasinstrumental in the Greenfield launch of Sitels Philippineoperation. Andrew is an alumni of Hastings College inHastings, Nebraska.
  4. 4. &Copyright © 2009 IAOP. All Rights Reserved.Approach to Strategic Sourcing:A Case Study• Who– Pitney Bowes & Sitel• What– Strategic outsourcing in a decentralized organization– Selection of best of breed global partners prior to involving individualsilo-ed business units– How to measure with the internal organization and achieve theexpected value and ensure internal governance– Building a governance model with selected partners to addressongoing cost challenges and ensure long term success
  5. 5. Copyright © 2009 IAOP. All Rights Reserved.Strategic Outsourcingin a Decentralized OrganizationGlobalRequirements• Keys to Success:– Top-down decision from executiveleadership to align costs to today’sbusiness• Reduce operating cost, limit capitalinvestments and improve operatingflexibility– A champion for the cause(Strategic Alliances), plus acommittee accountable for internalstakeholder adoption• Created a cross functional plan toadopt outsourcing as a strategicinitiative• Selected global BPO partnersChiefExecutivesLines ofBusinessBUsBUsBUsBUsBUsBUsStrategicAlliancesFEEDBACK
  6. 6. Copyright © 2009 IAOP. All Rights Reserved.Building a Governance Model• Define Business Project Requirements• Manage Vendor to Project Requirements• Provide Functional PMO: metrics, issues, project status• Track Functional SLA’s / SLO’s• Conduct Monthly Operations Reviews with Vendors• Provide Strategic Alliances with Dashboard Rollups• Create / Enforce Outsourcing Standards /Policies• Monitor PB Business Factors (Ex.Acquisitions)• Outreach to New Areas for OutsourcingOpportunities• Monitor Industry Trends• Risk Assessment• Execute Enterprise Outsourcing Strategy• Monitor Outsourcing Performance /Benefits• Approve Cross-Functional Outsourcing• Approve Vendor Consolidation• Approve Outsourcing Business StructuresFunctional PMO(s) GovernanceOutsourcing Steering Committee FrameworkProject PMO GovernanceOutsourcing Steering Committee Governance
  7. 7. Copyright © 2009 IAOP. All Rights Reserved.Building a Governance Model• Outsourcing Steering Committee Charter– To serve as the governing body for outsourcing activity across the PBIenterprise.– Execute governance per outlined processes with active roles in theapproval of:• Outsourcing strategy• Vendor selection• Vendor consolidation• Business structuring• Outsourcing standards• Monitoring of benefit realization
  8. 8. Copyright © 2009 IAOP. All Rights Reserved.Mature Outsourcing ProcessesThe following are the documented processes covering Outsourcing: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 and ensurecompliance 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.Contract 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
  9. 9. Copyright © 2009 IAOP. All Rights Reserved.Selection ofBest of Breed Global Partners• Prior to involvingindividual silo-edbusiness units– Build “Outsourcing SteeringCommittee”– Prioritization– Forecasted Impact– BU Business Cases– Selected Global Experts– Built MSA Structure withstandard SOW attachmentsfor new LOBsITADMProjectContract/ConsultingCall CenterProduct SupportCustomer SupportCollectionsBack OfficeTaxHRFinanceSoftware/ProductDevelopmentProductDevelopmentContract/ConsultingGlobal BPO Partner Matrix
  10. 10. • Global Delivery Model– Alignment to PB footprint– Broad range of capabilities– Scalable– Labor Arbitrage– Commercially competitive• Adaptable IT Infrastructure– Customized to PB specs– Virtual extension of PB– Limited up front investment• Focused Relationship Management– Senior level focus– Commitment to Strategic Business Reviews– Global coordinationCopyright © 2009 IAOP. All Rights Reserved.Pitney Bowes partnered withSitel for Call CenterITADMProjectContract/ConsultingCall CenterBack OfficeTaxHRFinanceSoftware/ProductDevelopmentProductDevelopmentContract/ConsultingGlobal BPO Partner MatrixWhat’s differentafter 3-years?
  11. 11. Copyright © 2009 IAOP. All Rights Reserved.How to sell the internal organizationand achieve the expected valueManaged Risk• Political• Legal• Security• Financial• TechnicalCost• Labor• Infrastructure (telecom)• Internal (travel,managed)• HiddenExpanded Capabilityand Speed• Language• Global• Single Customer ViewRiskCostCapabilityThe core driver forpartnering with Sitel is…
  12. 12. Copyright © 2009 IAOP. All Rights Reserved.What is Measured• Same on shore andoffshore– For product support• Service level• Abandonment• Average handle time• Occupancy• First call resolution– For transaction work• Service level• Handle time• Accuracy• Benchmarking of captiveand outsourced– Quality– CSAT– Revenue Generation
  13. 13. Copyright © 2009 IAOP. All Rights Reserved.The Win – BPO’s are an invested partnerManaged Risk• Technical Expansion• Legal Global CentralPoint• Security• Financial• Labor DisputesCost• Cost Savings• Cost Avoidance• Revenue EnablementExpanded Capabilityand Speed• SLAs• Collections• Cross Sell• Warranty• Back Office• GlobalRiskCostCapability“Sitel’s success as a BPOcompany is measured by theshared success we are ableto create for our customers;when they win, we win.”David GarnerPresident and Chief Executive Officer, Sitel
  14. 14. Copyright © 2009 IAOP. All Rights Reserved.Addressing Ongoing CostObjectives & Long Term Success• Address ongoing cost objectives(challenges)– Alignment of contact center tobusiness impact– Flexibility in model– Outsourcer is not a dumping groundfor risk• Ensure long term success– Thorough due diligence and planning– Invest resources (both parties)– Realistic implementation ramptimeframe– Ongoing strategic business reviewsStrong KPIs in SOWQuarter Strategic CalibrationSpread elements of start up over the contract+/- Performance based elements to costing modelOnsite due diligence and knowledge transferprocessClient transition team aligned to Sitel transitionteam90-day KPI plan, 6-month total transition, 1-YearbudgetSenior Sitel R.M. provides consultative thought-leadershipClear Objectives + Mutually Agreed Plan = Aligned Expectations
  15. 15. Copyright © 2009 IAOP. All Rights Reserved.Takeaways• Sitel & Pitney Bowes Case Study• How to chose a partner whitepaper• Analysts Reports• Sitel Capability & Locations OverviewAdditional resourcesare available