The need for efficiency
Companies
outsource their business process for a number of reasons:
- to reduce or contain cost
- to release capital or inventory
- to improve cash flow
- because the demand for the process is variable
- to improve service
- to improve productivity
- to access technology and skills
- to provide a catalyst to introduce radical or strategic change
- to allow management to focus on core activities
- Someone with leading edge IT
- Someone with great people
- Someone with a healthy respect for the process
- Someone with imagination
- Someone with customers like you
- Someone who has done it before - Successfully!
The success or failure of your outsourcing project will depend on some or all of the following:
Managing Expectations -
It's ironic how planning for 20% saving and achieving 15% can be seen as failure whilst planning for 5% and achieving 7% can be presented as a great success. Many very successful projects are deemed as failures simply because the expectation level was unrealistic and unmanaged. Care has to be taken not to oversell the potential benefits of any outsourcing programme particularly when announcing such projects to staff.
Disclosing All the Facts -
It is important to recognise that the business case for outsourcing is only as accurate as the facts on which it is built. Full disclosure of all pertinent information is essential if dispute and disagreement is to be avoided. The potential Customer should be clear on their current capability level in the area to be outsourced and also clear that the data which will be used as a base for measuring performance is based in fact and verifiable.
The Right Contract for Both Parties -
The goal of any successful outsourcing deal is a 'win-win' outcome. Therefore a contractual relationship that sets out to provide both parties with the benefits and protection they require is necessary to make the relationship work. Contracts need sensible exit clauses, which reflect the fact that businesses are dynamic and need to be changed from time to time at acceptable cost. The contract has to be fair to both parties and right for the duration of the contract, not just the day it was signed.
Service Level Agreements -
Decide and quantify the results expected from the outsourcing arrangement and measure the fulfilment of these. Service level targets need to be set higher than those achieved by the Customer in the past and should ideally be well incentivised as a reward for excellence or over achievement. However it has to be accepted that the outsourcer must be able to fulfil the contract at a profit, therefore unrealistic targets only lead to disappointment and are normally commercially unsustainable.
Contract Management -
The biggest mistake made by outsourcing Customers is to assume that the day after signing an outsource agreement they no longer have to be involved in the project. Active, continuous involvement in an outsourcing contract is a non-negotiable, pre-requisite for a successful relationship and requires the Customer to field capable people to fulfill this role.
Maintaining the Partnership -
The outsourcing arrangements have to be sponsored at the
highest level in the Customer organisation. Communication
becomes the responsibility of the Contract Management Team who are
given a clear mandate and given access to the resources necessary to
make the contract work. Everybody involved has to be clear
that this arrangement is built on the basis of mutual benefit; typical
buyer/seller attitudes will not provide long-term sustainable value to
either party. Last but not least, staff continuity is critical in the
first two years to establishing a real and lasting partnership.
Whatever your needs we can help you to make the decision that's right for you. With 24 hour assistance, you can "bounce" your thoughts to our team at any time. |
Our team will get to know your business from the ground up, and help to re-train your team to work smarter faster and more efficiently with a full development plan. |
After our initial process investigation, we can help you define a strategy for implementation with the minimum amount of impact to your day to day running. |
