Outsourcing Use Case

The 2009
Outsourcing World Summit®
Approach to Strategic Sourcing: A Case Study
Joann Martin, PMP, COP
Director Strategic Alliances, Pitney Bowes
Andrew Kokes
Vice President, Sitel

The 2009
Joann Martin, PMP, COP
Director Strategic Alliances, Pitney Bowes
Joann leads the Global Strategic Outsourcing Sourcing team
at PBI which is responsible for BPO Vendor Management. She
received her BS in CS Engineering from Uconn and her MBA
from 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 to
undertake a strategic, cross-functional initiative to use
outsourcing to cut operating costs, limit capital investment,
and improve operating flexibility. Joann Martin, Director of
Strategic Alliances for Pitney Bowes, led the development of
the outsourcing agenda and selection of global partners. Key
learnings shared are: How to lead a strategic outsourcing
initiative in a heavily decentralized organization; the
advantgaes of selecting best-of-breed partners; and how to
sell the internal organization and then deliver the value
promised.

The 2009
Andrew Kokes
Vice President, Sitel
Andrew Kokes is responsible for Sitel’s business intelligence,
strategic planning, product line management and corporate
marketing for the America’s region. In this role, his
responsibilities include supplying business-to-business
market intelligence to drive vertically targeted growth
planning, for building awareness that drives the Sitel brand
into desired industry and geographic markets, and for
supporting frontline operations with the development and
implementation of products and services that meet Sitel's
450+ customer requirements.
Andrew has been with Sitel since 1997 in BPO solutions roles
focused on functional sourcing as well as global sourcing to
Latin America, the Philippines and India. Andrew was
instrumental in the Greenfield launch of Sitel's Philippine
operation. Andrew is an alumni of Hastings College in
Hastings, Nebraska.

&
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 individual
silo-ed business units
– How to measure with the internal organization and achieve the
expected value and ensure internal governance
– Building a governance model with selected partners to address
ongoing cost challenges and ensure long term success

Strategic Outsourcing
in a Decentralized Organization
Global
Requirements
• Keys to Success:
– Top-down decision from executive
leadership to align costs to today’s
business
• Reduce operating cost, limit capital
investments and improve operating
flexibility
– A champion for the cause
(Strategic Alliances), plus a
committee accountable for internal
stakeholder adoption
• Created a cross functional plan to
adopt outsourcing as a strategic
initiative
• Selected global BPO partners
Chief
Executives
Lines of
Business
BUs
BUs
BUs
BUs
BUs
BUs
Strategic
Alliances
FEEDBACK

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 Outsourcing
Opportunities
• Monitor Industry Trends
• Risk Assessment
• Execute Enterprise Outsourcing Strategy
• Monitor Outsourcing Performance /
Benefits
• Approve Cross-Functional Outsourcing
• Approve Vendor Consolidation
• Approve Outsourcing Business Structures
Functional PMO(s) Governance
Outsourcing Steering Committee Framework
Project PMO Governance
Outsourcing Steering Committee Governance

Building a Governance Model
• Outsourcing Steering Committee Charter
– To serve as the governing body for outsourcing activity across the PBI
enterprise.
– Execute governance per outlined processes with active roles in the
approval of:
• Outsourcing strategy
• Vendor selection
• Vendor consolidation
• Business structuring
• Outsourcing standards
• Monitoring of benefit realization

Mature Outsourcing Processes
The following are the documented processes covering Outsourcing:
1. New Sourcing – Requirements to Contract Process
Ensure the acquisition of third party commodities and services satisfy all PBI
internal business and strategy requirements.
2. New Project w. Existing Supplier Process
To ensure the proper identification, capture and communication of all PBI
product, business, and strategy requirements to an existing supplier and ensure
compliance with internal PBI business and financial controls.
3. Requisition to Pay Process
Ensure that payment is made to the supplier for services or product supplied.
4. Supplier Relationship Management Process
Ensure negotiated process efficiencies and business benefits are realized,
consistently and proactively managed w. supplier through the life of contract.
5. Outsourcing Steering Committee Governance Process
Provide a formal mechanism for the review, approval and knowledge sharing of
outsourcing activities and supplier performance across the enterprise.
6. Dispute & Escalation Process
Ensure formalized process for escalating and resolving disputes with suppliers.
7. Contract Management Process
Provide a framework to ensure contract compliance and benefits achievement.
Contract Management Process (Post Deal – Life of Active Contract)
Outsourcing
Steering
Legal
Enterprise
Procurement
Function/PMOPartner
START
END
Document
Source: Enterprise Procurement, Strategic Alliances
DecisionActivity
Last Updated: 08 / 08 / 2005
Page 1 of 1
START
Highlight Request
Event to
Procurement &
Legal
Highlight Missed
SLA event to
Enterprise
Procurement
START
Scenario – Missed SLA,
Service Credit Event
Scenario – End of
Contract Life
Event
Highlight Request
Event thru PB
Procurement
START
Scenario – Early
Termination
Request Event
Scenario – Early Termination
Request Event
START
Highlight End of
Contract Event to
Function & Legal
(6 mo. Notice)
Convene PB
Internal
Stakeholders
Terminate
or Extend?
Start New
Sourcing Process
New
Sourcing
Process
Advise / Approve
Termination /
Extension
Decision
Re-
Negotiate?
Negotiate
Extension
Advise on
Termination Steps
Advise on
Extension /
Negotiation
Help Define
Negotiation
Issues
Negotiate
Extension
Advise / Approve
Termination /
Extension
Decision
Awareness of
Service Level
Credit
Cure?
Review Service
Credit per
Contract
Attempt Cure per
Contract
NO
YES
NO
YES
EXTEND
TERMINATE
Process
Ref
END
END
END
Notify Partner &
PB Enterprise
Procurement
Notify PB
Stakeholder of
Cure
Execute
Extension /
Update Contract
database
Coordinate
Termination Steps
Submit Invoice
with Service
Credit
Review Invoice to
Ensure Service
Credit
Disputes & Escalation Process
Outsourcing
Steering
Legal
Enterprise
Procurement
Function/PMOPartner
Last Updated: 08 / 08 / 2005
Page 1 of 1
Document START
END
Activity Decision
Process
Ref
Partner
START
Document
Dispute to EP
Partner or
Function?
Function
Provide Partner
Documented Miss
Scenario –
Partner Payment
Dispute
START
Scenario –
Function Quality
Dispute
START
Scenario –
Process
Execution Miss
Escalate to EP
Document
Dispute to
Partner
Document
Process Miss
Provide Function
Documented Miss
Partner
Govern
Process
Partner
Cure?
Review Dispute /
Attempt Cure
END
END
NO
YES
Partner
Govern
Process
Mediate Dispute /
Partner
Relationship Mgt
END
END
Review Dispute /
Investigate with A/
P and Function
OK to
Pay?
NO
YES
Req to
Pay
Process
Escalate to EP
Mediate Dispute /
Partner
Relationship Mgt
Post Deal PB Governance
Outsourcing
Steering
Legal
Enterprise
Procurement
Function/PMOPartner
Last Updated: 08 / 08 / 2005
Page 1 of 1
START
END
Process
RefDocumentActivity Decision
Maintain
Outsourcing
Artifacts / Metrics
START
Maintain Metrics
DashBoard
Maintain Partner
Capabilities
Assessment
START
Set PBI
Outsourcing
Strategy
Maintain
Outsourcing
Steering Charter
Maintain
Financial Benefits
Realization
Maintain
Governance
Processes
Conduct Partner
Relationship
Reviews
Partner
Governanc
e
Conduct PMO
Meetings with
Partner
Partner
Governanc
e
START
Identify
Outsourcing Need
New
Sourcing
Process
Approve New
Sourcing Deals
Approve CIPs
Approve High
Level Deal Terms
Approve Contract
Termination /
Extension
Guide Vendor
Consolidation
Goals
Monitor
Governance &
Benefits
Realization
START
START
Facilitate
Outsourcing
Steering Mtgs
Participate in
Outsourcing
Steering MtgsProvide Metrics
for Rollup to
Dashboard
Supplier Management Process (Post Deal Supplier Governance)
Outsourcing
Steering
Legal
Enterprise
Procurement
Function/PMOPartner
Last Updated: 08 / 08 / 2005
Page 1 of 1
Decision Document
Process
Ref
START
END
Activity
YES
Coordinate
Quarterly Partner
Relationship
Meetings
START Disputes?
NO
Maintain Issues
List
START
Manage
Functional PMO
Maintain SLA
Dashboard
Facilitate Monthly
PMO Mtgs with
Partner / EP
Participate in
Monthly PMO
Mtgs
Assist Function
with Open Issues
and Metrics
Participate in
Monthly PMO
Mtgs
Participate in
Partner
Relationship Mtgs
Participate in
Partner
Relationship Mtgs
Pull Together
Metrics, Open
Issues Across
Functions
PMO Metrics
Rollup
PB
Governance
Supplier
Scorecarding
Rollup
PB
Governance
END
Facilitate Partner
Relationship
Meetings
Demonstrate New
Capabilities
Forecast Demand
for Outsourcing
Dispute
Process
NO
Disputes?
Dispute
Process
YES
Update Partner
Capabilities
Assessment
Procurement Req to Pay Process
Outsourcing
Steering
Legal
Enterprise
Procurement
Function/PMOPartner
Last Updated: 08 / 08 / 2005
Page 1 of 1
Document
Process
RefActivity Decision
START
END
Create Shopping
Cart in B2B
Dispute
Process
Existing
Supplier?
YES
START
NO
Open New
Purchase Order in
SAP
Add Supplier to
SAP
Open new PO for
SOW amount
Services
Performed
according to SOW
Satisfied
with
Vendor?
YES
NO
Submit Invoice to
PB A/P
PO
Approved?
A/P Pays Invoice
NO
YES A/P: Is PO >
$750?
YES
NO
END
Approved
in B2B?
SOW
Required?
Ensure SOW
YES
Monitor
Approvals /
ReSubmit if
Necessary
NO
A/P: OK to
Pay?
Submit Goods
Receipt
YES
NO
New Project w. Existing Outsourcing Partner Process
Outsourcing
Steering
Legal
Enterprise
Procurement
Function/PMOPartner
Source: ADM, TechCentral Processes
Last Updated: 08 / 08 / 2005
Page 1 of 1
Document START
END
Activity
Process
RefDecision
Initiate New
Project
START
Scope New
Project
Draft Statement of
Work
Advise on SOW
Format / Content
Help Define
Scope / Estimate
Resources
CIP
Required?
Req to
Pay
Process
Negotiate SOW /
Pricing
Negotiate SOW –
Ensure
Consistency w.
Contract
Submit CIP
CIP
Approved
Submit Final
SOW to EP &
Legal
Submit
Requisition
File Final SOW –
Update Contracts
database
YES
NO
NO
YES
ENDNotified of New
Project by
Function / PMO
Review SOW for
Commercial
Terms
Approve SOW for
Legal Compliance
Scan & File SOW
New Sourcing - Requirements to Contract Process
Function/PMO
Enterprise
Procurement
Legal
Outsourcing
Steering
Partner
Last Updated: 08 / 08 / 2005
Page 1 of 1
Process
RefActivity Decision Document START
END
Initiate New
Sourcing Request
START
Initiate New
Sourcing Request
START
Assist w.
Requirements
DefintionAssist w. Sourcing
Strategy / Make-
Buy
Prepare for
Formal RFP
Perform Strategy /
Make-Buy
Decision
Project Manage
Sourcing Effort
Advise on RFP
Perform Vendor
Landscaping - RFI
Issue RFP
Deal
Define
Requirements
Draft CIP
Respond to RFI Respond to RFP
Evaluate
Responses
Update CIP
Negotiate
Contract
Negotiate
Contract
Negotiate
Contract
NO
YES
Approve Sourcing
Strategy
Advise on
Sourcing
Execution
Approve Deal
Execute
Contract / Update
Contract
database
Submit Non-
Disclosure if
needed
Draft Contract
Documents
END
Negotiate
Contract
Conduct Vendor
Due Diligence
Select Vendor

Selection of
Best of Breed Global Partners
• Prior to involving
individual silo-ed
business units
– Build “Outsourcing Steering
Committee”
– Prioritization
– Forecasted Impact
– BU Business Cases
– Selected Global Experts
– Built MSA Structure with
standard SOW attachments
for new LOBs
IT
ADM
Project
Contract/Consulting
Call Center
Product Support
Customer Support
Collections
Back Office
Tax
HR
Finance
Software/Product
Development
Product
Development
Contract/Consulting
Global BPO Partner Matrix

• 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 coordination
Pitney Bowes partnered with
Sitel for Call Center
IT
ADM
Project
Contract/Consulting
Call Center
Back Office
Tax
HR
Finance
Software/Product
Development
Product
Development
Contract/Consulting
Global BPO Partner Matrix
What’s different
after 3-years?

How to sell the internal organization
and achieve the expected value
Managed Risk
• Political
• Legal
• Security
• Financial
• Technical
Cost
• Labor
• Infrastructure (telecom)
• Internal (travel,
managed)
• Hidden
Expanded Capability
and Speed
• Language
• Global
• Single Customer View
Risk
Cost
Capability
The core driver for
partnering with Sitel is…

What is Measured
• Same on shore and
offshore
– For product support
• Service level
• Abandonment
• Average handle time
• Occupancy
• First call resolution
– For transaction work
• Service level
• Handle time
• Accuracy
• Benchmarking of captive
and outsourced
– Quality
– CSAT
– Revenue Generation

The Win – BPO’s are an invested partner
Managed Risk
• Technical Expansion
• Legal Global Central
Point
• Security
• Financial
• Labor Disputes
Cost
• Cost Savings
• Cost Avoidance
• Revenue Enablement
Expanded Capability
and Speed
• SLAs
• Collections
• Cross Sell
• Warranty
• Back Office
• Global
Risk
Cost
Capability
“Sitel’s success as a BPO
company is measured by the
shared success we are able
to create for our customers;
when they win, we win.”
David Garner
President and Chief Executive Officer, Sitel

Addressing Ongoing Cost
Objectives & Long Term Success
• Address ongoing cost objectives
(challenges)
– Alignment of contact center to
business impact
– Flexibility in model
– Outsourcer is not a dumping ground
for risk
• Ensure long term success
– Thorough due diligence and planning
– Invest resources (both parties)
– Realistic implementation ramp
timeframe
– Ongoing strategic business reviews
Strong KPIs in SOW
Quarter Strategic Calibration
Spread elements of start up over the contract
+/- Performance based elements to costing model
Onsite due diligence and knowledge transfer
process
Client transition team aligned to Sitel transition
team
90-day KPI plan, 6-month total transition, 1-Year
budget
Senior Sitel R.M. provides consultative thought-
leadership
Clear Objectives + Mutually Agreed Plan = Aligned Expectations

Takeaways
• Sitel & Pitney Bowes Case Study
• How to chose a partner whitepaper
• Analysts Reports
• Sitel Capability & Locations Overview
Additional resources
are available at:
www.sitel.com

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