NEO INSIGHTS SERIES. How to Avoid Common Outsourcing Transition Challenges. August 27, 2015

Transcription

1 NEO INSIGHTS SERIES How to Avoid Common Outsourcing Transition Challenges August 27, 2015 Pankaj Sharma, Partner & SVP, Neo Group Shom Biswas, Advisory Manager, Neo Group Adolfo Masini, former SVP, MD, Digital Services, Comverse

2 2 NEO GROUP S SINGULAR FOCUS SINCE 1999 " 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. We deliver results through three distinct and linked solutions and services: ADVISORY SERVICES Globalization Strategy Sourcing Location Strategy Health Checks Renegotiations Governance 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

3 3 SPEAKERS FOR THE DAY 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. 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. 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.

4 4 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

5 5 TRANSITION PLANNING - VALUE OF TRANSITION 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 Transition Management Steady State Governance 9 Value Realization Assessment Business Driver Awareness Functional / Role Assessment 1 Architecture Globalization Strategy 2 3 Sourcing Negotiations and Contracts 4 Sourcing ( if using 3 rd party vendors) 5 6 Migration to Global Team Knowledge Transfer 7 8 Steady State Globalization Life Cycle

6 6 QUICK POLL #1-3: TRANSITION PLANNING 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

7 7 QUESTIONS TO ASK BEFORE PLANNING 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.

8 8 WHY DO OFFSHORE TRANSITIONS FAIL? Poor transition governance and project oversight Poor risk management during the transition Lack of Leadership support and intervention Unreasonable expectation of timelines for completion of transition Weak Knowledge Transfer and no checks and balances to check success at every milestone Relationship/Cultural gaps (stemming from poor choice of vendors/poor recruitment of leadership in captive location)

9 9 TRANSITION RISKS Resource Risks Non-Identification of key resources Efficient hiring Critical & Core Identification of critical resources for Non-Critical delivery team Non-retention of core and critical resources Operational Risks Ineffective knowledge transfer Non-compliance on regulatory matters Inadequate disaster recovery and BCP Feasibility Inadequate data privacy and security Production outages Country-specific work councils/unions Trade union challenges Financial Risks Longer transition than expected Increased usage of client personnel Unsteady steady state Increased travel to location Delay in savings Higher client side cost structure Cultural Risks Lack of clear communications Slower response times Increased re-work Understanding each other s norms and work ethic Steeper learning curve Control Risks Managing Efforts/ Issue Risks Vendor/Captive Center in complete control of service delivery Lack of client understanding of Vendor/ Captive Center practices Steeper learning curve Lack of daily oversight HR transition and morale 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

10 10 QUICK POLL #2 TRANSITION RISKS 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

11 11 TRANSITION ROADMAP: IMPLEMENTATION PLAN MOBILIZE EXECUTE Setup Transition Governance Knowledge Transfer Plan Transition People Process Technology Shadow Support Reverse Shadow Support Review Scope Transition Baseline Steady State (Stabilization) Transition Governance Change Management Time

12 12 KEY STEPS IN CREATING TRANSITION ROADMAP

13 13 STRATEGIC TRANSITION ROADMAP 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 The guiding principle of wave sequencing is to minimize risk and increase the probability of success L Process / Technical Readiness for Globalization H H Functional Suitability for Globalization Stage 1 includes Stage 1 Quick includes Wins Quick that will Wins enable that Proof will enable of Concept" Proof of and execution Concept capability and execution capability. L Wave Attributes Wave 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

14 14 TACTICAL TRANSITION ROADMAP (1/2) 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

15 15 TACTICAL TRANSITION ROADMAP (2/2) 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

16 16 BENEFITS - STRUCTURED TRANSITION FRAMEWORK Framework Benefits Define ownership Program approach Change management Transi1on planning Next phase ready Risk management Best prac1ces Value Addi*ons Strategic alignment Delivery effec1veness

17 17 TRANSITION GOVERNANCE ROADMAP Transition Governance Strategic Operational Tactical It s never too early to begin planning the governance structure! Align business strategy & global services transition initiatives, guide execution of enterprise wide globalization initiatives Ensure adequate risk mitigation and controls Program sponsorship and championing 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

18 18 OPERATIONAL TRANSITION GOVERNANCE Financial Management Performance Management Service levels monitoring, reporting Schedule management Issues in quality Offshore workload management Process flow for onsite/offshore delivery Resource Management Invoice review Budget to actuals Expense allocation Invoicing procedure Change management to base model Contract Management Retention Buffer Training Vacation, holidays Onboarding Resource transitions Conserve knowledge transfer Skills update One team Track issues to closure Bridge culture gaps Relationship Management Key personnel Staffing, attrition Background checks, Insurance DR/BCP plans, readiness Reformulate service levels for relevancy

19 19 QUICK POLL #3 CRITICAL SUCCESS FACTORS 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

20 20 MEASUREMENT OF TRANSITION SUCCESS (1/2)

21 21 MEASUREMENT OF TRANSITION SUCCESS (2/2)

22 22 QUICK POLL #4 POST-TRANSITION ISSUES 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

23 23 RECAP: HURDLES TO TRANSITION

24 24 RECAP: ELEMENTS OF EFFECTIVE TRANSITION 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

25 25 RECOMMENDATIONS " 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

26 26 THANK YOU! USA 340 S Lemon Ave., 3252 Walnut, CA 91789, USA info@neogroup.com PANKAJ SHARMA Senior Vice President/Partner pankaj@neogroup.com AMSTERDAM, NETHERLANDS BANGALORE, INDIA BOGOTA, COLOMBIA SHOM BISWAS GUADALAJARA, MEXICO Manager - Advisory shom@neogroup.com LONDON, UK NEW YORK, USA SAO PAULO, BRAZIL SILICON VALLEY, USA SYDNEY, AUSTRALIA