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 The Next Wave of Vendor Relationship Management
Category: Transition & Governance IT Infrastructure & Applications Finance & Accounting Services...
What is the next great strategic sourcing practice for sustaining cost reductions and driving an efficient, competitive business in an environment that is constantly and dramatically changing? The answer is in how companies are addressing vendor relationship management and creating incentives that better leverage the capabilities of their current providers.
Most mature outsourced companies have created a concentrated multi-provider base, often with a handful of large sourcing vendors playing a major role in supporting the organization. These efforts have shifted business critical processes and value chain activities to outsourcing providers, creating new major provider relationships that are vital to operational continuity. Accelerated software delivery life cycles, vastly more sophisticated infrastructure virtualization, rapid pace of process and technology convergence, and the need to work seamlessly with offshore vendors have made effective vendor relationship management more demanding and more critical than ever before.
These companies are developing a new set of vendor relationship management capabilities by creating vendor "tiering" structures - including processes, governance mechanisms, and systems to manage sourcing vendors on a day-to-day basis over the full relationship lifecycle.
This paper describes the new vendor relationship management and service management environments, the challenges of extracting increased value through vendor management, and the vendor relationship management best practices leading edge companies are already applying in order to deliver maximum value from their multi-sourcing provider base.
F&A Outsourcing: Crafting a Sustainable Relationship
Category: Strategy & Business Case Finance & Accounting Services Outsourcing
Finance and accounting business process outsourcing is a logical next step for chief financial officers and controllers considering the next phase of process improvement, especially in leading companies that have already elevated their internal processes to be "best in class." However, F&A outsourcing can be a complex process. Before you outsource your business processes, be sure to take into consideration several key questions that will help your organization successfully outsource your finance and accounting functions. CFOs considering BPO must ask themselves:
- What are my sourcing objectives?
- How do I decide which functions are outsourcing candidates?
- If we make the decision to evaluate the options, how do we proceed from "deciding to decide" to the decision to the actual transformation?
- Is the BPO trend sustainable and a permanent part of the business landscape?
- If true, are there alternatives to outsourcing that will also achieve my objectives and how do they compare?
- Is outsourcing the "last step" in the improvement evolution or simply another step along the journey?
What is clear is that there is no one perfect solution that meets all of a company’s goals for F&A outsourcing. A careful consideration of the strategic fit of all alternatives available within your "toolbox" is the wisest approach. In the final analysis, the "best in class" companies will likely have an optimal mix of offshoring, "near" shoring, "lights out" internal processing, shared services, and outsourced functions.
Once the decision to outsource has been made, the provider has been selected and the contract has been negotiated, managing the client/provider relationship will be instrumental to your F&A outsourcing success. Focusing on the relationship, properly shaping the solution, purposeful governance, restructuring the retained organization, operationalizing the contract, educating your organization on outsourcing and getting third-party assistance will help create a sustainable, long-term relationship with your provider.
This white paper focuses on answering these questions. The F&A BPO trend is sustainable, and many companies continue along that path. However, as with any business process trend, clear pros and cons will become obvious over the long-term that were not readily apparent for the early adopters. A well-documented list of the pros and cons of outsourcing is provided in this white paper.
Solving Outsourcing's Value Equation
Category: Benchmarking IT Infrastructure & Applications
Measuring the value of outsourcing has evaded even the savviest buyers of outsourcing services. Often, the intense initial focus on cost inhibits the discovery of outsourcing’s real impact on the organization as well as how well the organization is embracing the new sourcing operating model.
In addition, as the outsourcing relationship evolves and matures, new drivers of value appear and other value drivers supplant the original cost arbitrage objective. Measuring the value of outsourcing based on the terms of the contract (e.g., scope, pricing, and service level performance) may provide some level of comfort, but for CIOs and CFOs who are looking for continuous value identification and hard evidence of value creation, these measures fall short.
As with any business competency, companies should be able to measure the value of outsourcing capabilities and determine how to best improve their sourcing performance. Any assessment should be designed to help identify areas of weakness and priorities for improvement. Tools and processes should be designed to get a deeper understanding of the capabilities and performance around each of the four quadrants for sourcing success.
Many contracts only marginally address some of these value metrics, and most don’t consider them at all. Often, in long-term relationships, the relationship deteriorates because the parties are focused on measures of performance that don’t really matter to the business. All the time that providers spend on reporting service level performance, and for all the metrics that business service management dashboards splash on fancy graphs, few companies have captured and measured the economic value of outsourcing.
Companies that do not regularly evaluate the four quadrants of sourcing performance often find that 40% to 70% of the original contract value has been lost. But most disturbing, they do not realize they are losing value and continue to pay for services they are not receiving. Surprisingly, this is not the providers’ fault. The lack of a vendor management structure and poor contract and relationship management contribute to value leakage.
This white paper offers a self-assessment that provides insight into potential areas for development and areas to consider when evaluating whether or not your organization is experiencing value leakage as well as tools and methods to help buyers of outsourced services capture and measure the economic value of outsourcing throughout the course of the sourcing relationship.
The Practitioner's Guide to Shared Services and BPO - Vol. 1
Category: Strategy & Business Case Business Processes Outsourcing...
"From an economic perspective, a business case details the associated costs and benefits (both quantifiable and non-quantifiable) of the proposed solution."
Volume 1 is the first of a series of Guidelines for Shared Services and Business Process Outsourcing (BPO) developed by Alsbridge to reflect a shared understanding of good practice in developing a business case, organizational design, change management, SLAs and service levels, charging and benchmarking.
This white paper provides guidance on business cases for organizations contemplating a Shared Service or BPO initiative. It can be read straight through, as an introduction or overview, or used on a section by section basis as appropriate. Sections include an outline of the fundamentals of business case design, a description of the points in the Shared Services and BPO life cycle when business case activity is required, and details on the contents of a business case.
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