“if we keep doing what we're doing, we're going to keep getting what we're...
TRANSCRIPT
“If we keep doing what we're doing, we're going to keep getting what we're getting.”
Stephen R. Covey
Allan ColaçoOrlando Utilities Commission 500 South Orange Avenue
Orlando, FL 32801 407-236-9643 Office
407-423-9160 Fax407-719-3015 [email protected]
Yet another perspective on Yet another perspective on Outsourcing! Outsourcing!
OUC – Orlando Utilities Commission
OUC— The Reliable One is a municipal utility owned by the City of Orlando. We provide electricity and water services to customers in Orlando, St. Cloud and parts of Orange and Osceola counties.
In 1923, the state Legislature granted the city a charter to establish the Orlando Utilities Commission to operate the system.
OUC has more than $2 billion in assets and annual operating revenues in excess of $700 million.
Electric sales are at approximately 8.8 trillion kilowatt hours a year and Water sales are at approximately 30 billion gallons a year.
Over the last 82 years, OUC’s customer base has grown to approximately 196,000 electric and water customers.
OUC – Orlando Utilities Commission
IT Infrastructure: {Staff – 78}
Information Systems, Information Resources, Application Systems, Micro-Computer Support, Telecommunications, CIS, Energy Management
Business Infrastructure:
General Counsel, Communications & Customer Relations, Power Resources, Energy Delivery, Customer Connection, Electric Transmission, OUCooling, OUConvenient Lighting, Information Technology, Water, Corporate Services, Financial Services,
Origin of Outsourcing
It appears that outsourcing {sourcing} gained notoriety and became an industry buzz word only when our economy took a down turn and focus was placed on outsourced jobs; specifically off-shored jobs)
(A June 2004 U.S. Department of Labor study showed that less than 2% of workers who lost their jobs in 1Q of 2004 lost them to offshore labor)
Outsourcing has been a general business practice since even before the term risk diversification was coined.
Manufacturing Industry: Parts, Tools, Raw Materials, etc. were purchased rather than acquired internally
Insurance, Financial, Commerce: Private labeling, product/fund diversification, satellite services,etc.
The Manifestations of Outsourcing {Sourcing}
Consulting Services
Staff Augment Hosted Solutions
Remote Managed Services
Shoring
Offs
hore
, Nea
r-
Shor
e,Ons
hore
ASP
The 4Ws; Why, What, When and Where
Why?Improve company focus•Gain access to world-class capabilities•Accelerate reengineering benefits•Asset transfer•Share risks•Free resources for other purposes•Make capital funds available•Cash infusion•Reduce time to market•Reduce and control operating costs•Resources not available internally•Function difficult to manage or out of control•Take advantage of offshore capabilities
What? {Some Examples}Human ResourcesHuman Resources information systemsBenefitsPlacement and outplacementRecruitment and staffingRelocationWorkers compensationForms processing
General FinanceFinancial information systemsConsulting and trainingFinancial reporting and analysisGeneral accountingInternal auditInvestment accounting and analysisPayroll processingPurchasingTaxesTransaction processingTreasuryGeneral Finance
What? {Some Examples}Sales and MarketingCRM (Customer Relationship Management) information systems AdvertisingConsulting and trainingDirect mailField salesMarket research and strategyGeneral Sales and Marketing
What? {Some Examples}Information TechnologyApplication Service Provider (ASP)Applications management (development, maintenance, enhancements)Applications maintenanceConsulting and reengineeringClient/serverData entry and conversionData networks: Local areaData networks: Wide areaDesktop systemsDistributed systemsE-CommerceEnd-user support systemsFull I/T outsourcingImaging and OCR servicesInternet/Intranet & Web HostingMainframe data centers & InfrastructureRemote computing and timesharingSystems integrationTransitional outsourcingVoice networks
What? {Some Examples}AdministrationCopy center management and copy productionConsulting and trainingMailroomPrinting and reprographicsRecords managementSecretarial and clerical
Contact Centers/Call CentersB2B or B2C inbound salesB2B or B2C inbound customer serviceB2B or B2C outbound salesB2B or B2C outbound customer serviceB2C or B2C inbound sales
Distribution and LogisticsFreight auditFreight brokeringImport/ExportLeasingMaintenanceManagementOperationsReturns processingWarehousingGeneral Distribution and Logistics
The 4Ws; Why, What, When and Where
Where/How? Off-shore Near-shoreOn-shore
Remote Managed ServicesHostedASPConsulting ServicesStaff Augmentation
What? {Some Examples}TransportationTransportation information systemsConsulting and trainingFleet maintenanceFleet managementFleet operationsGeneral Transportation
When? 200520062007
Regardless, of the timing, make sure you give your team ample time to gather the answers to the 4Ws
The 4Ws; Why, What, When and Where
The Sourcing Lifecycle
The 4 Primary Phases
ASSESSMENT RFP DEVELOPMENT
SELECTION GOVERNANCE
ASSESSMENT
•Defining outsourcing strategy
•Deciding which functions to outsource
•Organizing the outsourcing effort
RFP (Request for Proposal)
•Gathering data for RFP
•Building RFP
•Issuing RFP to service providers
SELECTION
•Vendor selection
•Proposal evaluation
•Negotiation
GOVERNANCE
•Transition
•Post-contract relationship management
Contract negotiations and SLAs
Setting internal expectations
Req. and Specs.; What is in-scope,out-of-scope, retained, assumed and pass-through
The Life After; the post go-live landscape
Most common problems associated with the outsourcing process tend to be lack of;
Time, Expertise,
Bandwidth, Budget,
and Access to Service Providers
The Sourcing Lifecycle {Lessons Learned}
Sourcing Solutions At OUC
Examples of just a few ;
• Publishing, Media communication,
• Telecommunications Support Services,
• Software Support
• Hardware Support
• Network Services,
• Facilities,
• Legal Counsel,
• Business and IT Consulting Services,
• Bill Processing (EBPP, .....),
• Payment Processing
• Customer Self Service Components
Outsourcing Summary
The outsourcing justification of “Cost Savings/ Cost Cutting” in just a year has changed to “Strategic Alliances“
Companies seem more inclined to outsource non-core services (but how do you define those and are they really “non-core services”)
Companies considering Outsourcing should really consider multi-sourcing (Consider developing a Vendor Relations/Vendor Management Team – The most successful manage their relationships better)
Decisions on sourcing should derive their bases from the Corporate Strategy (Hence Executive Strategists are a must in this process!) – The Goals Must Come From The Top!
Outsourcing Summary
Companies that are not recognizing the benefits from outsourcing typically have two factors to blame; I. The initial approach to outsourcing was tactical rather than strategic, II. The management of the contract was adversarial rather than cooperative.
The successful outsourcing ventures have; I. Strong relationships between the client and vendor, II. Hold high level strategic reviews, III. Have effective processes for continual improvements
Create A Shared Vision – The Contractual Agreement Must Reflect The Vision
Include effective and measurable performance measures that motivate the vendor and the client. – Develop a provision in your contract that supports the evolving nature of standards to a point that they are solidified by year 2 of the relationship.
Outsourcing Summary
Effective Communication is a must! (The more complex the service the more active and precise the communication needs to be)
Weigh the value of customized versus standardized services – It Can Be A Trap! (Customization can deliver specialization and differentiation whereas standardization can deliver agility and speed)
Develop a solid contingency plan and exit strategy – Though the objective of any contingency plan is for it not to be used, it must be in place before any agreement can be reached. (When essential services are provided externally, continuity must be guaranteed)
Be Realistic In Your Expectations!