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Outsourcing Use Case
The document discusses Pitney Bowes' strategic outsourcing initiative led by Joann Martin. Some key points: 1) In 2005, Pitney Bowes decided to outsource to cut costs, limit investments, and improve flexibility. Martin led partner selection. 2) Pitney Bowes selected best-in-breed global partners before involving business units. This included Sitel for call centers. 3) To gain internal support, Martin had to show how outsourcing would manage risks, reduce costs, and expand capabilities globally. Metrics ensured partners delivered value.
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Outsourcing Use Case
- 1. The 2009 Outsourcing WorldSummit® Approach to Strategic Sourcing: A Case Study Joann Martin, PMP, COP Director Strategic Alliances, Pitney Bowes Andrew Kokes Vice President, Sitel
- 2. The 2009 Outsourcing WorldSummit® 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.
- 3. The 2009 Outsourcing WorldSummit® 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.
- 4. & Copyright © 2009IAOP. 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
- 5. Copyright © 2009IAOP. All Rights Reserved. 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
- 6. Copyright © 2009IAOP. 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 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
- 7. Copyright © 2009IAOP. All Rights Reserved. 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
- 8. Copyright © 2009IAOP. All Rights Reserved. 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 Source: Enterprise Procurement, Strategic Alliances 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 Source: Enterprise Procurement, Strategic Alliances 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 Source: Enterprise Procurement, Strategic Alliances 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 Source: Enterprise Procurement, Strategic Alliances 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 Source: Enterprise Procurement, Strategic Alliances 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
- 9. Copyright © 2009IAOP. All Rights Reserved. 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
- 10. • Global DeliveryModel – 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 Copyright © 2009 IAOP. All Rights Reserved. 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?
- 11. Copyright © 2009IAOP. All Rights Reserved. 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…
- 12. Copyright © 2009IAOP. All Rights Reserved. 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
- 13. Copyright © 2009IAOP. All Rights Reserved. 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
- 14. Copyright © 2009IAOP. All Rights Reserved. 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
- 15. Copyright © 2009IAOP. All Rights Reserved. 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