a toolkit for bpo success

Th 2010 O i W ldThe 2010 Outsourcing World Summit

A Toolkit for BPO SuccessStephen Hunsberger, PhD

Shared Services & Outsourcing Summit Page - 1

Application Development Pain Pointspp p

• Vendor Related Issues• Milestone commitments – use the project workbook approach and getting the

contract off to a good start• Contract violations – use the quality approach to defining test cases and document

payments around the successful completion of use casesP l l t d i t t h kill d fi d d th t it k th • People related issues – ensure contract has skills defined and that it makes the contract invalid if the skills are not fullfilled

• Incomplete Deliverables – same using the 2 week review process• Customer Related Issues

• SME commitment – have a customer contract outlining the commitments required for this effort – violations

• Customer Review and Signoff• Defect definition as part of the quality managers responsibilities

I l IT R l d I• Internal IT Related Issues• Requirements Definition – use cases for functional specifications and supplimental

specifications• Internal Staff issues -


BPO Related Pain Points

What are the pain points between expectations and partner's performance?

Given that delays can reflect poorly upon pproject managers, it is easy to see why “slower than expected execution” would yield a higher percentage of issues

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percentage of issues than other areas.


2008 Source: TechWeb Survey 475 US and Canadian Organizations

Agenda of Key Items

• Marketplace Dynamicsp y• Risks and Pain Points • BPO Framework• Requirements Management• Financial Model Development

f• Partner Performance


BPO strategies are increasingly a part of every corporate agenda…or it soon will be

Percent implementing offshore strategies before 2007 vs. by end of 2009

(75% are large companies)

Corporate Wide

R&D

Product Design

IT

Engineering

Software Development

Marketing & Sales

Call Center

Finance & Accounting

Human Resources

Procurement

0% 10% 20% 30% 40% 50% 60%

Before 2007 By 2009


2009 Source: Duke University/The Conference Board Offshoring Research Network 2007/9 U.S. Survey

HR, Tech Support and Finance Top the List of BPO Areas

Is your organization engaged in any of these types of BPO activities?

The high interest in HR outsourcing highlights the growing trust c stomers are placingcustomers are placing in their BPO providers, as these processes touch the assets that are most vital to the success of any

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success of any organization: its employees.

A failure to properly execute good service can damage thecan damage the reputation of a company, especially when it comes to the recruitment and retention of talented workers.



However, room for improvement is evident as only 26% would consider their BPO initiative(s) successful …

How successful were you in your BPO initiatives? Two-thirds of those d t lif th irespondents qualify their

success as “marginal” rather than “successful”

The criteria used to determine whatal

ysis

alys

isIt was unsuccessfuldetermine what “successful” means varied between responders.

An

An

Achieved some benefits

Too soon to tell

It wassuccessful



Slow Execution and Poor Customer Service Cited as top BPO Partner Performance Issues

What are the pain points between expectations and partner's performance?

Given that delays can reflect poorly upon pproject managers, it is easy to see why “slower than expected execution” would yield a higher percentage of issues

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percentage of issues than other areas.



Despite BPO benefits, organizations are faced with a number of inherent risks

Key BPO Risks

Financial Risks• Unanticipated transition costs erode

savings

Financial Risks• Unanticipated transition costs erode

savings

Security and Compliance Risks

• Poor adherence to security regulations

Security and Compliance Risks

• Poor adherence to security regulations

Service Quality Risks

• Inconsistent service quality

• Lack of effective measurements

Service Quality Risks

• Inconsistent service quality

• Lack of effective measurements• High support costs reduce net

savings• High support costs reduce net

savings• Undocumented controls over

sensitive data• Undocumented controls over

sensitive data

• Lack of effective measurements and SLAs to monitor service quality

• Lack of effective measurements and SLAs to monitor service quality

• What is the cost to provide secure connectivity to BPO partners?

• What is the expected level and cost of ongoing support?

H ill li i t h

• How does the BPO provider’s security policy protect sensitive customer data?

• Are the BPO provider’s Business Continuity Plans consistent with internal company standards?

• What are the appropriate service level metrics to manage service quality?

• Do the BPO vendor’s current assets support future service and

it i t ?• How will licensing costs change given that BPO provides may not have access to the same scale-driven discounts?

capacity requirements?


Enabling successful outcomes requires strong Governance and Project Management disciplines throughout the BPO Lifecyclej g p g y

Define Case forChange

ApproveBusiness

Case

Select Partner(s)

Transition the Process

Manage Performance

1. Understand Business Objectives / Needs

2. Assess Pain Points & Opportunities

Change Case

6. Internal / External Measurements –Benchmarking

7. Gap analysis

10. Assess vendors capabilities

11. Define SLAs

12 Solution Definition

15. Create Transition Plan / Project Plan

16. Review Process andImplement Reengineering Efforts

20. Collaborate for Continuous Improvement

21. Manage changes, SLAs, new reqs., and contractOpportunities

3. Build Model (financial / process)

4. Build Support for BPO Strategy

8. Establish Success Criteria - Use / Test cases development

9. Approve Business Case

12. Solution Definition

13. Create RFP

14. Execute Selection Process

Reengineering Efforts

17. Implement Training Program

18. Develop scorecard

19. Manage Transition

new reqs., and contract

22. Re-evaluate / Measure success criteria

23. Evaluate Back-Sourcing potential

5. Define Scope / Scenarios

Covered in Today’s

PresentationTeam Profiles

• Vendor Management• Department

Management• Finance & IT• End Customers

• Department Management

• Organizational Change Management

• HR

• Department Management

• End Customers• Senior Executives• Finance & IT

• Senior Executives• Target Departments• Finance & IT• Organizational

Change Management• End Customers

• Senior Executives• Organizational

Change Management

• Finance & IT• End Customers


• End Customers

Project / Program Management & Compliance

Deeper Dive: Understanding Business Objectives / Needsp g j /


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLAs



16. Review Process andimplement reengineering efforts








13. Create RFP


reengineering efforts









Decreasing Costs Is the Top Driver for BPO Servicesg p

BPO adoption is tied to much more than cost savings yet that is the

What are the primary and secondary business drivers for BPO services within your organization?

savings, yet that is the primary business driver.

If the BPO providers don’t succeed on cost, A

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,they may not get the chance to prove their merit in terms of other important drivers, such as adding business

l ti

AA

value or creating business transformation.



Identifying and managing BPO requirements effectively drives success…similar to typical IT development efforts run by Project Managersyp p y j g

• On the top level are stakeholder needs. Usually, a project contains five to fifteen of these high-level needs. On the lower levels are features, use cases, and

l ifi i O diff l l f hNeeds

Features• Use cases describe functional requirements, and supplementary specifications describe non-functional

supplementary specifications. On different levels of these requirements are different details. The lower the level, the more detailed the requirement is.

Scenarios

pp y pitems. In addition, every use case maps to many scenarios.

• Before creating a test case, you need to identify all of the scenarios for the given use case. A scenario is an instance of the use case It describes one specific path through

Use Cases, Sup.Spec

Test Cases• While doing scenarios and test cases, you can give

feedback to use case designers and refine requirements. This can help shift some tasks early on

case. It describes one specific path through the flow of events.

q p yin the process, and eventually contribute to the team's ability to finish the project sooner.

Note: Identify test cases in contracts to ensure conformance to requirements and have pa ment terms based pon passed test cases


payment terms based upon passed test cases

Deeper Dive: Build Model (financial / process)p ( / p )


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLAs











13. Create RFP











Determine Appropriate BPO Model & Assess Implications

BPO Model Attributes Characteristics Considerations1

• “Transactional” • Retain key

A – “Pure Labor Arbitrage”

Transactional roles transferred

• Processes and Technology remain “unchanged”

“analytical” roles• Provide access to

applications• Minimal process

improvementimprovementB – “Pure

Software As A Service (SaaS)”

• Retain functional roles

• May retain some IT roles

• Modify processes to accommodate “best practice” processes and technologies( ) g

C “Pure BPO”

• Partner with vendor

• Transition all roles

• Process, roles and responsibilities clearly defined

• Need strong C – Pure BPO • Transition all roles• Higher level of

process maturity

governance• Achieve significant

benefits & ongoing improvements


1Key BPO Risks (i.e., Financial, Security & Compliance and Service Quality) apply Source: IT Planning Associates LLC, www.itpallc.com

Hybrid models are likely based on firm objectives

Identify process areas that will meet the business objectivesy p j

Organizations are broadening their BPO

Recent BPO Process Focus / Targets

experience beyond Technology Help Desk and Customer Care processes into those that involve higher skilled and therefore

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skilled and therefore higher cost local labor

Shared Services & Outsourcing Summit Page - 16Source: 2008 TechWeb Survey 475 US and Canadian Organizations

Drill deeper within a Process Area to determine which specific sub-process(es) would meet the Business Objectivesprocess(es) would meet the Business Objectives

High Typical Retained Processes

Finance & Accounting Example

High Typical Retained Processes

Corp.Svc. &

Exam

ple

Exam

ple

Financialue A

dded Decision

Support

Mgmt

Typical Outsourced Processes

EE

Accounting& Reporting

FinancialPlanning& AnalysisVa

lu

Initial Candidates

High BasicComplexity of Interaction

Basic RevenueCycle Disbursements

Shared Services & Outsourcing Summit Page - 17Source: HCL Consulting

Analysis of Candidate Positions for BPO Outsourcing – continuing drilldown examplep

Department Job Title

No. Candidate Positions

Total Burdended

Salary1

Significant analysis is required in determining the roles that can be outsourced within asi

ssi

sScenarios

rvat

ive

Department Job Title Positions SalaryCredit & Collections Admin. Staff Associate 4

Billing Associate 2Collections Associate 5Contract Associate 3Credit Reporting 2

outsourced within a selected process, consider:

• BPO Objectives• Impact to firm’s

• customers

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Con

se

ress

ive Acctg Associate 24

Principal Staff Associate 2Senior Staff Associate 4Team Leader 1

47 $4,021,031Credit & Coll Acctg Cash Application Assoc 4

• stakeholders• Maturity of current

processes• BPO Vendor

LandscapeSkills

Agg

r Credit & Coll. Acctg Cash Application Assoc 4Team Lead 1

General Accounting Accounts Payable Associate 4Payroll Associate 3Sr Payroll Associate 1Sr Staff Account 6

• Skills• Employee

retention• Language• SLAs, etc.

• Geographic ScopeStaff Accountant. 4Supervisor / Financial Acct. 1Team Leader 1

25 $2,758,15772 $6,779,188

Geographic Scope• Scale / number of

roles to be outsourced

• Ability to re-deploy partial FTEs


1Based on payroll, assumed 4% COLA increase and 28% for all benefits/overhead

• …

Develop and Refine the Financial Model Throughout the BPO Framework – Example During “Define Case for Change”

Prior Finance Scenario (72 Positions – Aggressive Scenario)

p g g

Core team develops several scenarios, each scenario varies i &isis

2008 2009 2010 2011 2012 2013Baseline

Baseline Cost of Positions Considered for BPO 6,779,188$ 6,779,188 6,779,188 6,779,188 6,779,188 6,779,188

High-Level Outsourcing Financial Model

Outsource Scenario: Aggressive Finance ScenarioPositions Outsourced 72Transaction Costs - Fixed in scope &

assumptions, providing adequate information to socialize the impact to the organization:

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Balance of other Finance Positions 1,788,357$ 1,788,357 1,788,357 1,788,357 1,788,357 1,788,357

Total Baseline Cost (Total Finance Dept. Cost) 8,567,545$ 8,567,545 8,567,545 8,567,545 8,567,545 8,567,545

Outsource Scenario: Aggressive Finance ScenarioPositions Outsourced 72Transaction Costs - Fixed

Legal 275,000$ Consulting 550,000Due diligence site visits 40 000

Legal 275,000$ Consulting 550,000Due diligence - site visits 40,000

Transaction Costs - VariableSeverence Cost - Finance (see note 4) 1,450,000Retention Bonus 170,000

Transition Costs On-site transition team (including IT costs) 500,000 the organization:

• Through transition

• in “steady-state”

Due diligence - site visits 40,000Transaction Costs - Variable

Severence Cost - Finance (see note 4) 1,450,000Retention Bonus 170,000

Transition Costs On-site transition team (including IT costs) 500,000Change Management 125,000

Ongoing Outsourcing Costs 100,000 100,000 100,000 100,000 100,000Total Outsourcing Transaction / Transition Costs 3,110,000$ 100,000 100,000 100,000 100,000 100,000

Change Management 125,000Ongoing Outsourcing Costs 100,000

Total Outsourcing Transaction / Transition Costs 3,110,000$ 100,000

Revised Organizational Costs - Low End SavingsOutsource FTE Cost (Replaced Positions) -$ 4,963,493Retained Personnel Cost 8,567,545$ 1,788,357

Total Cost With Outsourcing 8,567,545$ 6,751,850

Scenario Summary

Annual Net Savings:$1 820K $2 230K

Revised Organizational Costs - Low End SavingsOutsource FTE Cost (Replaced Positions) -$ 4,963,493 4,963,493 4,963,493 4,963,493 4,963,493Retained Personnel Cost 8,567,545$ 1,788,357 1,788,357 1,788,357 1,788,357 1,788,357

Total Cost With Outsourcing 8,567,545$ 6,751,850 6,751,850 6,751,850 6,751,850 6,751,850

Net Improvement From Baseline Operations -$ 1,820,000 1,820,000 1,820,000 1,820,000 1,820,000Cummulative Net Improvement from Baseline -$ 1,820,000 3,640,000 5,460,000 7,280,000 9,100,000NPV @7% discount 6,970,000$ NPV @9% discount 6,490,000$ NPV @12% discount 5 860 000$ Break even (months): 20 5

Net Improvement From Baseline Operations -$ 1,820,000Cummulative Net Improvement from Baseline -$ 1,820,000NPV @7% discount 6,970,000$ NPV @9% discount 6,490,000$ NPV @12% discount 5,860,000$

Revised Organizational Costs - High End SavingsOutsource FTE Cost $ 4 545 898 $1,820K - $2,230K

Transaction/Transition Cost:$3,110K initial$ 100K ongoing

Break-even:17 - 21 Months

NPV @12% discount 5,860,000$ Break-even (months): 20.5

Revised Organizational Costs - High End SavingsOutsource FTE Cost -$ 4,545,898 4,545,898 4,545,898 4,545,898 4,545,898Retained Personnel Cost 8,567,545$ 1,788,357 1,788,357 1,788,357 1,788,357 1,788,357

Total Cost With Outsourcing 8,567,545$ 6,334,255 6,334,255 6,334,255 6,334,255 6,334,255

Net Improvement From Baseline Operations -$ 2,230,000 2,230,000 2,230,000 2,230,000 2,230,000Cummulative Net Improvement from Baseline -$ 2,230,000 4,460,000 6,690,000 8,920,000 11,150,000NPV @7% discount 11,150,000$ NPV @9% di t 11 150 000$

Outsource FTE Cost -$ 4,545,898Retained Personnel Cost 8,567,545$ 1,788,357

Total Cost With Outsourcing 8,567,545$ 6,334,255

Net Improvement From Baseline Operations -$ 2,230,000Cummulative Net Improvement from Baseline -$ 2,230,000NPV @7% discount 11,150,000$ NPV @9% discount 11,150,000$ NPV @12% discount 11 150 000$


17 21 MonthsNPV @9% discount 11,150,000$ NPV @12% discount 11,150,000$ Break-even (months): 16.7

NPV @12% discount 11,150,000$

Deeper Dive: Internal / External Measurements - Benchmarkingp / g


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLAs











13. Create RFP











Metrics and Process Benchmarking are used to support a business case whereas, Strategy is often defined as a business objective

Benchmarking can be seen as falling into three broad categories: Metrics, Process & Strategy over the lifespan of Diagnosis, Redesign and Implementation

Metrics Process Strategy

Diagnosis Performance Maturity Examination of Genaral

Type Definition Where Best usedMetrics or Competitive Benchmarking

Businesses consider their position in relation to performance characteristics of key products and services ususally drawn

Performance in key areas or activities in comparison and finding ways of closing gaps in

Diagnosis Surveys Models of Genaral Approaches

Redesign Targets Learning and adaptingExternal Best

from the same sector. performance

Process Benchmarking

Focuses on improving specific critical processes and operations. Usually sought from best practice

Achieving improvements in key processes

Implementation Milestones and Budgets

Change Management

Practices - Process

Reengineeing

organizations that perform similar work or deliver similar services.

Strategic Benchmarking

It involves considering high-level aspects such as core

t i d l i

Re-aligning business strategies that have bcompetencies, developing

new products and services and improving capabilities for dealing with changes in the external environment

become inappropriate


Internal Benchmarking can identify realistic goals within an organizationg

Accessing which process to benchmark can be identified thro gh a

In the 1970’s IBM issued an internal directive that all new products must have a superior performance to any existing products and any competitors products- thus, benchmarking was born ys

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identified through a Firm Impact vs a Customer Impact chart

Example of Best Practice Comparison Chart Ana

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Best Practices

Order Management Comparison across Warehouses

33.5

44.5

5

High Process

Assessing Processes for Benchmarking

00.5

11.5

22.5

Impa

ct o

n Fi

rm

Process

Process

Process

Process

Process

OrderReceipt &

Entry

OrderVerification

OrderConfirmation

OrderProcessing

TransactionMonitoring

PaymentProcessing

Warehouse 1 Warehouse 2 Warehouse 3 Warehouse 4

Impact on Customer High

Low

Low


External Benchmarking is usually done standalone or after Internal Benchmarkingg

Identifying Industry Best Practices is a powerful focus for change. The gap between internal and external benchmarks can provide a starting point to overcome resistance to change

External Benchmarking is the process of drawing meaningf lisis

Benchmark Comparison Against External Organizations

6

meaningful comparisons between a company’s performance and its competitors. For many companies,

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3

4

5

6 many companies, these known best practices can become a beacon for continuous improvement in

0

1

2

Order Order Order Order Transaction Payment

functionality, reliability, usability and availability

Receipt &Entry

Verification Confirmation Processing Monitoring Processing

Company 1 Company 2


Deeper Dive: Gap Analysisp p y


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLAs



16. Review Process and Implement Reengineering Efforts








13. Create RFP











Bridging the Gaps -What do you do if you need to reengineer a process? y y g p

There’s no right answer when it comes to how

Is it wiser to transform a business process by …

you will BPO a business process.

But experts agree on one thing: Before you or your outsourcer can

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your outsourcer can improve a process, you must understand your process workflows.

That means it’s important to invest time to document and diagram the workflows, including roles and responsibilities, business rules and policies.



About Half Transform a Process After Outsourcing It

BPO providers have taken on the job of

Organizations that attempted to transform a process after outsourcing it to a BPO service taken on the job of

transforming a process in 45 percent of cases.

Typically, companies

process after outsourcing it to a BPO service provider?

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will work in tandem with the provider to make changes that are often impossible to do on their own with overburdened inoverburdened in-house staff.



Deeper Dive: Approve Business Casep pp


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLAs











13. Create RFP

14. Define Selection Team










How Business Case lifecycle costs impact project value

Cumulative Cash

Speed at which the

Benefits - TCO

Breakeven

project reaches scale

Project Launch

Start-up costs impact benefits

Cost to Scale Support Cost

Time to Time to

Time


Idea Time to Market

Time to Volume Value Realization

Two examples of how lifecycle costs can impact organizational project valuep j

A h l hA l h i l i A shorter launch may drive support costs

A lengthy implementation will slow benefits capture

Cumulative CashCumulative Cash

Breakeven

Breakeven

Cost to Scale Support Cost Cost to Scale Support Cost

Should we adjust the project scope?Should we reassess the business case?

TimeTime


A decision to move forward is supported by the meaningful consolidation of information directly impacting business objectivesy p g j

Standard Business CaseFinancial Architecture Opportunity

Project ValuationPayback PeriodNPVIRR

Project Category-Strategic Development-Mandated Initiatives-Discretionary investments

• Description, rationale• Steering committee members• Business risks

T h l i k

Financial Analysis

Architecture Review

OpportunityAnalysis

IRRROI

Five Year Cost Benefit Analysis•Software Capitalization•R&D tax credit analysis

Discretionary investments

-Consistency with IT architecture and data standards and data-Opportunities to leverage existing functionality-Timing issues

• Technology risks• Cost of not proceeding• Project dependencies• Staffing requirements• Legal or regulatory requirements• Training requirements• Retirement strategyR&D tax credit analysis

•Cast FlowBenefitsProject Costs-Capital-Expense-Operating expensesS S ff

Retirement strategy• Project plan, milestones

• Project vendor selection process • Impact on existing operations

OperationsReview

SourcingReview

-Support Staff-Ongoing Maintenance-Training-Communications

j p• Opportunities to reuse existing contracts• Offshore development opportunities• Lease vs. buy analysis

p g p• Ongoing maintenance requirements - TCO• Savings and costs associated with

decommissioning• Contingency and recovery costs• Security considerations• Expected service quality


Deeper Dive: Define SLAsp


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLA’s



16. Review Process and Implement Reengineering Efforts








13. Create RFP











An SLA Construction Workbooks is used to document, communicate and provide SLA historical informationp

• Choose measurements

Application Development

MaintenanceKey considerationsKey considerations

Choose measurements that motivate the right behavior

• Choose measurements that can be easily collected

• Metrics should reflect factors that are within the vendor’s control

Category Measure Definition Measurement Values and Calculations

Status

Performance Application Availability The extent to which a supplier developed / maintained application is available for use by end user in accordance with its intended functions

22 hours availability online2 hours scheduled maintenance22 hours actual uptime(22/22)*100 = 100%

As of Jan 2009, used for xyz applications and planned for abc application in June 2009

Production Support

• Set a baseline• Less is more. Do not

have more than 2-3 service levels per type of work

• Use Service levels that evaluate both performance and quality

Performance Maximum Duration of a single outage Maximum amount of time allotted during scheduled availability for the supplier maintained application to be unavailable to the end user

Based upon historical data, ideally captured before quality

• Define the approach for the capture of data for the SLA

Performance Downtime Frequency Number of events in a rolling x month period.

Others Problem response time

y poutsourcing begins

Category falls into “Performance” or “Quality” category

Problem resolution timeProcess improvements


Some key Vendor Management and Contractual practices used to support success outcomespp

PM Practices Contractual Items

• Interview key project candidates• Validate Skill levels. Some Vendors

provide the A team onshore and the B team off shore.

• Payment made based on a sound (peer reviewed) project plan. This requires a very good planning process. Payment only when a deliverable has been acceptedteam off shore.

• Insist an onsite PM for large projects and a part time PM for small projects

• Review the Corporate policies and Governance proceedings with the vendor

• Train your staff on the Methods of the Vendor (CMM, CMMI, Six Sigma, etc.)

• New Development – frequent validation of work products (every two weeks)

• Maintenance/BPO – Monthly score / report cards that report activities against SLA’s and other objectives

• Removing or replacing personnel are subject Vendor (CMM, CMMI, Six Sigma, etc.)• Review the contract with the Host staff

and ensure that each of the staff be sensitive to any changes within the contract

to a successful interview and an appropriate amount of notice


Your success is dependent on your partners success. Treat them with respect with a seat at your key meetings

Example Steering Committee Charter

Purpose of the Steering Committee• The Steering Committee provides a stabilizing influence so organizational concepts and directions are established and maintained with a

visionary view. The Steering Committee provides insight on long-term business strategies. Members of the Steering Committee ensure business objectives are being adequately addressed and the project remains under control.

• The primary function of the Steering Committee is to take responsibility for the feasibility, business case and the achievement of outcomes. The Steering Committee will monitor and review the project status and make recommendations for corrective action when neededThe Steering Committee will monitor and review the project status, and make recommendations for corrective action when needed.

Membership list and contact information• Internal and vendor contacts

Meetings

Primary Functions• Monitoring and review of the project at regular Steering Committee

meetings• Providing assistance to the project when required Meetings

• Frequency• Minutes from last meeting• Review of actions arising from previous Steering Committee

meetings.• Review Project Status• Overall Status

g p j q• Controlling project scope as issues force changes to be considered,

ensuring that scope aligns with the agreed business requirements of project sponsor and key stakeholder groups

• Communicate vendor issues as arise• Resolving project conflicts and disputes, reconciling differences of

opinion and approachF l t f j t d li bl • Vendor Update

• Scope status• Schedule status• Budget status• Reason for deviation from green

• Formal acceptance of project deliverables.

Approval Responsibilities• Change Controls• Risk Mitigation Review• Knowledge of Business Case Content


Deeper Dive: Define SLAs


ApproveBusiness

Case

Select Partner(s)


Manage Performance



Change Case


7. Gap analysis


11. Define SLA’s



16. Review Process andimplement reengineering efforts








13. Create RFP


reengineering efforts









Consistent objective measurements through scorecards allows Partner ranking and proactive managementg p g

Company Vendor Scorecard 1 = Poor 4 = Excellent

xyz vendor

Items Completed / Major Milestones Accomplished

Project xyxQuality of Vendor Personnel

Flexibility - Ability to react to change 1 2 3 4Training - Independence and thoroughness 1 2 3 4Post-Sales Support - Responsiveness to post-sales support 1 2 3 4

1 2 3 4Innovation Contribution

Frequency of continuous improvement suggestions 1 2 3 4

…….…….. Defects

2 63 7100%Frequency of continuous improvement suggestions 1 2 3 4

Resulting savings fom continuous improvement suggestions 1 2 3 4Share of savings given back 1 2 3 4

1 2 3 4Price Competitiveness

Relative prices versus comparable vendors 1 2 3 4

Service Quality

3 74 55 46 47 4

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6

Series2

Series1Aa

Service QualityComplaints per Product Invoice Accuracy < 1% 100-99% 1-3% 98-94% 4-6% 93-88% > 6% < 88%

On-Time Delivery Cycle Time Improvement 100-90% > 50%

Personnel

Person xyz was replaced with XzyPlanned vacations are as follows:

100 90% > 50% 89-80% 30-49% 79-70% 10-29% <70% <10%

Time before Failure Warrenty Claims > 2 x planned rate 0-2% 2 x planned rate 3-5% Met Plan 6-10%

Change Controls

xyx Approved for $123abc still under investigation for $345

Issues / Risks


less than planned rate >10% None

Partner Service Improvement Plans and Annual Partner Reviews provide a vehicle for communicating feedbackp g

Vendor Information

Partner Service Improvement Plan (SIP)V d L

Vendor ContactContract Expiration

Scorecard Period

Explanation of event requiring SIP

1. Vendor failed to respond to one Severity 1 incident ….2. Vendor issued invoices that had been previously paid for

including..

SIP Information

Vendor Logo Scorecard PeriodMonth Requiring SIP

SIP Participants

Categories of DeviationContractual

Proposed SIP resolution

1. Vendor identified the issue and provided a process improvement to prevent further outages

2. Bills were identified to cross in the mail

Non-contractualVendor / Client meetingsAccount ManagementFiscal ManagementProjectsOperational Support and Service

Grading KeyA = 5B = 4C = 3D = 2

VendorAverage 3.5Vendor Annual Review FY2009

D = 2F = 1

Vendor Contractual Account Management

Fiscal Management and Billing Implementations Operation and

Service SupportSr. Leadership Assessment

Overall Average

Vendor Logo 4.2 4.5 3.1 2.1 3 4 3.5


Vendor Logo

Have open minded communications and share risk / reward to align interest

Moving to an Interdependent Model to avoid failure relies on a shared vision and strategy with both parties' willingness to do their part in achieving the vision.


KEYS TO SUCCESS AND REASONS FOR FAILURE

Success is derived from the following key practices:

Failure usually occurs when companies:practices:

• Secure senior management support• Implement a change management

program to reduce employees’ resistance• Create a customer-focused culture

• Implement with weak senior management support

• Focus on implementing technology and consolidation of processes, rather than

• Execute quickly with well-planned interim goals and checkpoints

• Establish an ongoing performance management toolM i

p ,improving the processes

• Reduce costs too quickly• Focus on technical skills at the expense of

customer service• Manage customer expectations• Ensure adequate skills (or engage 3rd

party) experience in the various aspects of BPO

customer service• Fail to continuously measure and improve

performance


a toolkit for bpo success

Documents