1) Implementing/Transitioning into Outsourcing Advice for Beginning an Outsourcing Partnership

We do a lot of work to make sure what is useful at Outsourcing Center. It is believed that the implementation and transition phases are very complicated and will encounter the challenges from time to time. Perhaps some of them turn out to be a success, but others hemorrhage so badly at this stage of the game that it's difficult to recover and achieve the desired results in the timeframes anticipated.

The second thing to do is to set up outsourcing relationships in a manner to achieve success. In this step, something dangerous would happen, which might affect smooth implementation and transition.

Patchwork

It is believed that many beautiful quilts are the successful product of patchwork; this does not mean that outsourcing relationships begin with this type of approach. It is obvious that no buyer or service provider considers this approach as a strategy, but the fact is that best-laid plans evolve to patchwork because of the buyer’s unawareness towards factual data and inadequate information be provided to the provider when the agreement is signed.

Take Oxiquim, located in Chile, as an example. It outsourced some of its IT processes to Getronics Chile. Andres Loyola, Oxiquim's IT manager, says that their agreement asked for Getronics to support Windows, Microsoft Office, Lotus Notes and some of other standard software programs. But they met some end users with additional software programs during implementation and configuration. "At first, we hadn't considered that some users also had some translation software and drawing software programs," says Loyola. "As a result, we promote the trouble, and Getronics is so nice to respond to our request and agreed to support those programs for us." However, it is necessary to sign a new agreement, which includes the new software.

The director, Eileen Palumbo, Shared Services Benefits at Johnson & Johnson - which has outsourced some of its desirable processes - cannot explain clearly its relationship with service provider, Hewitt Associates. She points out the importance of data quality when asked what she would improve if they had to go through the outsourcing arrangements again.

“Before giving it to Hewitt, I would have been more insistent on cleaning up the data," Palumbo says. "That was one of our biggest lessons we learned. If we do a lot of job to clean up data, we can do better of the technology that's available through Hewitt."

Peter Whalley, relationship manager for BP's outsourcing arrangement with Exult, agrees that, if he had to go through it all again, he also would "pay a great deal more attention to the data quality." The company had a heritage of acquisitions and mergers during the past 10 years prior to outsourcing to Exult, and it totalized to a residual of unresolved issues.

Whalley says, "The quality of data shows up when you begin to pushing the boundaries down. Suddenly you find out that one piece of data is not same to another and you have to start building all types of things to get around it. Especially if you want to globalize things, getting very serious about your data very early on is very important."

During the process of outsourcing its facilities management processes to FBG Service Corporation, Alliant Energy encountered major problems from missing data. Steve Gladson, regional facility manager, recalls their difficulties of internal complaints about the provider's services at the outset. "We thought we had delivered them the data on all the sites that we had, but there were several hundred sites that did not get." The initial complaints about missed service are because of the locations that were not in the database.

He also represents, "We should have had more internal people got involved and discover a way to make sure we had a more accurate database when we started. " if you are missing five or ten percent of your data, It can be a killer."

Also, the outsourcer's flexibility and willingness to solve problems made the difference in the success of their relationship. With the hope of identifying missing sites, the provider was involved at each Alliant zone and walked through the database again, "Then they got right on top of it and got somebody out to those sites as soon as possible to take care of whatever the problem was." Gladson says.

When Outsourcing is twinned with M&A

When the execution stage of one outsourcing operation take place at the same time, never underestimate the complexities and unexpected challenges that can arise, or closely following other main deals in the vendee’s organization. Either merger or acquisition is very troubled.

The bank had just completed its acquisition of London 's National Westminster Bank (NatWest) during the five-month implementation for outsourcing of Royal Bank of Scotland 's flexible benefits process to Hewitt Associates. "It was a real shock to both Royal Bank and Hewitt the enormity and scale of the movement of data and amount of paperwork," recalls Greig Aitken, manager, HR Strategy Development at Royal Bank of Scotland . Because we were trying to swallow NatWest, an organization whose population was three times as large as ours, it was an unbelievably exhaustive process.”

Similar difficulties were encountered by Compaq Computer Corporation due to its acquisition of Digital in 1998. Elaine Beddome, director, Compaq Benefits, says " We were both already outsourcing our benefits programs at the time and we were two large organizations re-inventing ourselves together as one large company, " Apart from challenges in ensuring accurate data from the buyer, Hewitt had to go to both prior vendors, build an entire new process and train the Hewitt teams to understand a double set of existing benefit plans and rules.

Making the Leap
In making the leap to outsourcing, none of the approach is a sure-fire guarantee of success. But Ray Brusca, vice president of Employee Benefits at Black & Decker, advises those considering outsourcing for the first time not to be "fooled into thinking that a service supplier can take you from one extreme to another in a very short timeframe. Things take time. I'd rather do it slow and right than fast and wrong."

When a company is faced with the rapid changes in today's marketplace, how does one do it slow? The best approach is to use an outsourcing consultancy with expertise and methodologies in developing effective Requests for Proposal, service descriptions, service level specifications and metrics, and transition and governance documents, for outsourcing is a strategy that's complicated to structure and implement successfully,.

Lessons obtained from the Outsourcing Journal:

It is crucial to success in implementing an outsourcing agreement the accuracy and completeness of the buyer's data

When the implementation phase of an outsourcing arrangement happens concurrently or close on the heels of a merger or acquisition, build extra time into the implementation phase for challenges that can appear.