successful outsourcing transitions webinar presentation

How to Avoid Common Outsourcing Transition Challenges

Pankaj Sharma, Partner & SVP, Neo Group Shom Biswas, Advisory Manager, Neo Group Adolfo Masini, former SVP, MD, Digital Services, Comverse

August 27, 2015

NEO INSIGHTS SERIES

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© 2015 Neo Group Inc. Proprietary

•  Globalization Strategy •  Sourcing •  Location Strategy •  Health Checks •  Renegotiations •  Governance

"   Since 1999, we have been helping clients accelerate benefits and minimize risks associated with global services and sourcing.

"   We have a singular focus on the global services supply chain.

"   We achieve outcomes through deep intellectual property, real-time analytics, proven methodologies, experienced advisors and co-creation with our clients.

NEO GROUP’S SINGULAR FOCUS SINCE 1999

We deliver results through three distinct and linked solutions and services:

ADVISORY SERVICES GOVERNANCE SOLUTIONS

•  Design •  Run and Support •  Ongoing Resource, Contract

and Performance Management Services

SUPPLY MONITORING & ANALYTICS

•  Country •  City •  Supplier •  Real-Time Event Alerts •  Subscription-Based

Monitoring

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Pankaj Sharma, Neo Group Partner & SVP, brings over 25 years of experience in management consulting, corporate governance, project management, BPO/IT services and consulted with large global companies, including Time Warner, Home Deport, Chevron, EA, Visa, Time Inc., EMC, Kronos, Cendant and many others.

Adolfo Masini, former Senior Vice President, Managing Director for Digital Services at Comverse, has extensive experience in the areas of general management, business transformation and renewal, product management and development, global sales and business development.

SPEAKERS FOR THE DAY

Shom Biswas, Neo Group Advisory Manager, has extensive Globalization Consulting experience, having worked with and consulted leading global companies, including Comverse, Time Inc, True Value, Northern Trust, and many others, in the areas of Sourcing Strategy, Transition Strategy and Post-Transition Governance.

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AGENDA

Ø  Transition Planning

Ø Why Transitions Fail

Ø  Transition Risks

Ø Risk Mitigation - Transition Roadmap

Ø  Transition Governance

Ø Measuring Success

Ø Recap: Hurdles & Elements of Effective Transition

Ø Recommendations


TRANSITION PLANNING - VALUE OF TRANSITION

Assessment

Transition

Sourcing

Functional / Role Assessment

Sourcing ( if using 3rd party vendors)

Negotiations and Contracts

Migration to Global Team

Business Driver Awareness

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5 6

7 8

2 3

Globalization Strategy

Knowledge Transfer

Steady State

Steady State Governance

9

1

Architecture

Management

Globalization Life Cycle

Valu

e R

ealiz

atio

n

Transition acts as the §  Accelerator for globalization value capture §  Inflection point for return on globalization investment Governance protects the value of investment by §  Control and conformance to timelines, processes and outcomes §  Realizing business objectives

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QUICK POLL #1-3: TRANSITION PLANNING 6

1.  Is your organization planning a global transition? a.  Yes, within the next 6 months b.  Yes, but no definite timelines c.  Not at this moment

2.  If yes, the transition is: a.  vendor(s) b.  To own GIC

3.  If yes, the nature of the transition is: a.  A new transition b.  Adding / increasing the

current globalized scope


As you consider the potential need for a transition to take place these are some of the key questions you need to ask:

–  What: What to globalize – identify the tasks that can be globalized and how they may be defined as individual defined processes.

–  Where: Where to globalize – identify the location and operating model. Should you work with a supplier or open your own center?

–  When: What are the timelines to globalize and transition?

–  How: How to go about it – Transition Roadmap and Plan.

QUESTIONS TO ASK BEFORE PLANNING 7


WHY DO OFFSHORE TRANSITIONS FAIL? 8

Poor transition governance and project oversight

Unreasonable expectation of timelines for

completion of transition

Poor risk management during

the transition

Weak Knowledge Transfer – and no

checks and balances to check success at

every milestone

Lack of Leadership support and intervention

Relationship/Cultural gaps (stemming from

poor choice of vendors/poor recruitment of

leadership in captive location)


TRANSITION RISKS 9

Resource Risks

Operational Risks

Financial Risks

Cultural Risks

Control Risks

Managing Efforts/ Issue Risks

•  Efficient hiring •  Identification of critical resources for

delivery team

•  Inadequate data privacy and security •  Production outages •  Country-specific work councils/unions •  Trade union challenges

•  Increased travel to location •  Delay in savings •  Higher client side cost structure

•  Understanding each other’s norms and work ethic

•  Steeper learning curve

•  Client’s best interest not being followed •  Inability to manage Vendor/Captive Center

and changes •  Inability to detect when program is off track

•  Monitoring performance from a distance and without local knowledge

•  Organizational resistance •  Clear vision and communications

•  Vendor/Captive Center in complete control of service delivery

•  Lack of client understanding of Vendor/Captive Center practices

•  Ineffective knowledge transfer •  Non-compliance on regulatory matters •  Inadequate disaster recovery and BCP •  Feasibility

•  Steeper learning curve •  Lack of daily oversight •  HR transition and morale

•  Lack of clear communications •  Slower response times •  Increased re-work

•  Longer transition than expected •  Increased usage of client personnel •  Unsteady “steady state”

•  Non-Identification of key resources •  Critical & Core •  Non-Critical

•  Non-retention of core and critical resources


QUICK POLL #2 TRANSITION RISKS 10

What are the most relevant concerns and/or risks you foresee or perceive for the transition? (Select all that apply)

a)  Internal Knowledge will be lost, offshore employees

will not be able to cope b)  Cultural challenges leading to communication gaps c)  Job losses will lead to loss of credibility with

stakeholders, community d)  Internal buy-in within organization will be difficult to

get e)  It will take too long/face delays, cost benefits will be

below par


TRANSITION ROADMAP: IMPLEMENTATION 11

Setup Transition Governance

Plan Transition

People

Process

Review Scope Transition Baseline

Technology

Knowledge Transfer

Shadow Support

Reverse Shadow Support

Steady State (Stabilization)

Transition Governance

Change Management

Time

EXECUTE MOBILIZE PLAN


KEY STEPS IN CREATING TRANSITION ROADMAP 12


STRATEGIC TRANSITION ROADMAP 13

§  Pre- Transition: Clarity on Transition -  Scope – defined clearly and in detail -  Resources – retention strategies -  Processes – changes required -  Technology requirements

§  Expectation Setting –  Stakeholders’ map –  Department/Process

interdependencies –  Clients –  Vendors

§  Effective Communication -  Communication plan – internal & external -  Active Championing of the Program by Leadership

H LFunctional Suitability for Globalization

L

H

Pro

cess

/ Te

chni

cal R

eadi

ness

for

Glo

baliz

atio

n

Stage 1 includes “Quick Wins” that will enable “Proof of Concept" and execution capability

Wave AttributesWave 2

§ Significant customer interactions

§ Significant industry knowledge

§ Highly complex activities

Stage 2§ Complex activities§ Fractionalized

activities§ Workflow

dependencies

Stage 1 § “Quick Wins”§ Limited

dependencies§ Ease of

implementation

The guiding principle of wave sequencing is to minimize risk and increase the probability of successThe guiding principle of wave sequencing is to minimize

risk and increase the probability of success

Stage 1 includes “Quick Wins” that will enable “Proof of Concept” and execution capability.


Key Elements: §  Monitoring & Reporting

–  PMO –  Roles and responsibilities (RACI) –  Meetings: subject, attendees, cadence –  Reporting: frequency, responsibility, metrics

§  Transition Risk Management –  Issue and escalation management –  Risks identification and mitigation strategies –  Change control

§  Resources –  Retention and rebadging strategies –  Job descriptions and hiring plans –  Recruitment: no show management

TACTICAL TRANSITION ROADMAP (1/2) 14


§  Create Baseline –  Process maps – “as-is” process before transition –  Performance benchmarks –  Current productivity and utilization –  Technology requirements –  Statutory & regulatory requirements

§  Transition Training and Knowledge Transfer –  Training process and success parameters –  Training tools – documents, process maps, modality –  Transition Training Feedback Mechanism

§  Time Zone Management -  Time zone requirements -  Expectations realignment -  Operating model – new vs. current

§  Holiday Work Allocation Mechanism

TACTICAL TRANSITION ROADMAP (2/2) 15


BENEFITS - STRUCTURED TRANSITION FRAMEWORK 16

Value Addi*ons

Framework Benefits

Strategic alignment

Delivery effec1veness

Define ownership

Program approach

Change management

Transi1on planning

Next phase ready

Risk management

Best prac1ces


TRANSITION GOVERNANCE ROADMAP 17

Transition Governance

Strategic

Operational

Tactical

§  Coordination, communication & control between process owners

§  Provide for knowledge transfer and knowledge management

§  Opportunity Identification & enable demand aggregation

§  Cross-functional, cross-geography, cross-vendor alignment

§  Manage globalization service levels §  Manage vendor relationships, performance and

resources §  Manage scope and integration, contract

management, Risks & Issues §  Reporting, Meetings, Escalation Management

§  Align business strategy & global services transition initiatives, guide execution of enterprise wide globalization initiatives

§  Ensure adequate risk mitigation and controls §  Program sponsorship and championing

It’s never too early to begin planning the

governance structure!


OPERATIONAL TRANSITION GOVERNANCE 18

§  Service levels – monitoring, reporting §  Schedule management §  Issues in quality § Offshore workload management §  Process flow for onsite/offshore delivery

Performance Management

§  Invoice review §  Budget to actuals §  Expense allocation §  Invoicing procedure §  Change management to base model

Financial Management

Contract Management

§  Key personnel §  Staffing, attrition §  Background checks, §  Insurance §  DR/BCP plans, readiness §  Reformulate service levels for

relevancy

Resource Management §  Retention §  Buffer §  Training §  Vacation, holidays § Onboarding §  Resource transitions §  Conserve knowledge

transfer §  Skills update

Relationship Management

§  One team §  Track issues to closure §  Bridge culture gaps


QUICK POLL #3 CRITICAL SUCCESS FACTORS 19

What factors do you feel are most critical to success? (select all that apply)

a)  Detailed Plan/Roadmap b)  Change management c)  Experienced project and transition management

team in both buyer and supplier organizations d)  Strong partnership between buyer and supplier e)  Detailed contract terms/conditions, SLA’s, KPI’s

etc. f)  Other – Specify using the question/chat feature


MEASUREMENT OF TRANSITION SUCCESS (1/2) 20


MEASUREMENT OF TRANSITION SUCCESS (2/2) 21


QUICK POLL #4 POST-TRANSITION ISSUES 22

After transition of a function to a global location, what is the biggest challenge you/your organization has encountered?

(select all that apply)

a)  Organization has not offshored to global locations yet b)  Availability of right talent - problems in finding and/or

training the right offshore resources c)  Expectation-setting with external and internal clients d)  Relationship with service providers (or) our global

offshore center team e)  Service Delivery from offshore location was poor.

Previous service levels were not met. f)  Other – Specify using the question/chat feature


RECAP: HURDLES TO TRANSITION 23


RECAP: ELEMENTS OF EFFECTIVE TRANSITION 24

§  Effective Transition Governance Model §  Detailed Transition Program Plan

§  Agreed upon Tactical Transition Plan

§  Defined Transition Processes (including issues, risk management, escalation procedure)

§  Ready Transition Check Lists, Guidelines, Supporting documents and Templates

§  Comprehensive Transition Score Cards/Dashboards/Status Reports

§  Structured Change Control Procedures §  Pre-defined Transition Quality Audit Process/Checklist

§  Efficient Hiring §  Successful Knowledge Transfer


RECOMMENDATIONS 25

"   Start early - Planning for transition is never too early

"   Define scope clearly – “what to retain”, “what to globalize” – arrived through a collaborative and trusted process & methodology

"   Plan transition keeping in mind the end-state

"   Conduct transition workshops – enabling common understanding

"   Include all stakeholders in transition planning - management, operations, supporting functions, clients, vendors)

"   Invest in transition PMO/Governance

"   Set-up a structured governance to manage transition – with well-defined RACI, processes, reporting

"   Embrace a continuous improvement mindset – strategy, people, operations, technology, compliance

"   Promote and practice the “one-team” concept

"   Communicate – importance of the globalization program


THANK YOU! 26

USA 340 S Lemon Ave., 3252 Walnut, CA 91789, USA +1.415.839.8050 [email protected] AMSTERDAM, NETHERLANDS BANGALORE, INDIA BOGOTA, COLOMBIA GUADALAJARA, MEXICO LONDON, UK NEW YORK, USA SAO PAULO, BRAZIL SILICON VALLEY, USA SYDNEY, AUSTRALIA

PANKAJ SHARMA Senior Vice President/Partner [email protected] SHOM BISWAS Manager - Advisory [email protected] www.NeoGroup.com www.SupplyWisdom.com