Certified Outsourcing Professional (COP) Exam Study Guide
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1 Certified Outsourcing Professional (COP) Exam Study Guide DEVELOPED BY THE INTERNATIONAL ASSOCIATION OF OUTSOURCING PROFESSIONALS (IAOP) PART OF THE COP PROGRAM 2011 The Certified Outsourcing Professional (COP) Program sets the stage for professionals who aspire to consult at all levels of the organization and to lead successful outsourcing programs.
2 COP Exam Study Guide 1. What are the primary objectives of the COP program? a. Establish a common, globally-recognized standard for the experience and knowledge outsourcing professionals should possess. b. Define the process for professionals to demonstrate they possess the required capabilities. c. Create a highly coveted professional designation distinguishing the field s leading practitioners.. 2. What tactic is least useful in analyzing an outsourcing opportunity? a. Case studies b. Benchmarking c. Supplemental staffing d. Specialized service provider service quality and costs. 3. What is not a primary driver for outsourcing? a. Shorten product or systems lifecycles. b. Competition. c. Sourcing options that can deliver solutions or services. d. Management preference.. 4. What are accepted forms of outsourcing? a. Transactional b. Transitional c. Transformational 5. What are the benefits of outsourcing? a. Focus on core competencies. b. Cost reduction. c. Opportunity cost. d. All the above 6. Which factors are important in deciding between creating a shared service center or to outsource specific functions in an organization?
3 a. Organizational maturity b. Capital investment c. Subject matter expertise 7. What factor has the most influence on the selection of an off-shore vendor? a. Industry certifications. b. Government support. c. Language proficiency. d. Industry, process, function and/or application knowledge and experience. 8. What is not an outsourcing stage in the outsourcing process stages? a. Idea stage. b. Assessment stage. c. Risk stage. d. Implementation stage. 9. Which stage of the outsourcing lifecycle stages is the transition stage? a. Four b. Three c. One d. Two 10. The primary purpose of the outsourcing business plan (OBP) is to a. Provide a framework for organizing and providing the right information at the right time in a way that is consistent and useable at the various levels of the organization. b. The OBP is begun in the assessment stage and is continuously updated and refined through the organization s outsourcing process. c. The OBP becomes a central tool in establishing an independent management system with the organization s service providers. d. None of the above. 11. What are the five (5) levels of outsourcing process maturity (e.g. like in the CMMI Model), which can be used to assess an organization s current and future target state of maturity? a. Initial process, structured process, managed process, and optimized process. b. Initial process, structured process and standards, organizational standards and institutionalized process, managed process, and optimized process. c. Ad hoc, basic knowledge, process definition, process control, and process improvement. d. Initial process, structured process, organizational standards, process control, and process improvement.
4 12. What are the three stages of change management as they pertain to outsourcing? a. Decision making, risk assessment, and post implementation b. Decision making, outsourcing implementation and post implementation c. Decision making, outsourcing implemenation and vendor coordination d. None of the above 13. The focus of the bottoms up approach to outsourcing is to: a. Identify activities on a continuous basis that contribute to a unique competitive advantage for the organization. b. Once the activities in (a) above are identified, compete these activities against the marketplace of service providers to make the optimum choice for the organization. c. Identify basic activities on a continuous basis that do not contribute to a unique competitive advantage for the organization and solicit proposals for these activities from outsourcing service providers to make the optimum choice for the organization. d. None of the above. 14. In prioritizing outsourcing opportunities, what factors should be considered in the decision? a. Size of the opportunity, risk, and the marketplace of suppliers b. Potential benefits and the ease of execution c. All of the above d. None of the above 15. In the make versus buy decision, in most cases, which factor is the least important when making a buy recommendation? a. Cost reduction. b. Speed up time-to-market. c. Lack of critical skills. d. Public reaction 16. What is the sequence of steps which should be followed in the risk management and mitigation process? a. Risk identification, risk quantification and risk mitigation b. Risk identification, risk mitigation, risk quantification and risk management plans c. Risk identification, risk quantification, risk mitigation and risk management plans d. Risk identification, risk mitigation, risk management plans and risk management plans 17. A key consideration in outsourcing at the customer interface is to recognize that the client organization should maintain
5 a. Full control over what services its customers receive from the vendor. b. Partial control over what services its customers receive from the vendor. c. No control over what services its customers receive from the vendor. d. Shared control over what services its customers receive from the vendor. 18. Which of the following team conflict resolution techniques will generate the most lasting solution? a. Forcing. b. Smoothing. c. Compromise. d. Problem solving. 19. What would be considered key attributes of successful outsourcing teams? a. Clear purpose, listening skills, open communications and clear roles and responsibilities. b. Self assessment, style diversity and shared leadership. c. Civilized disagreements, consensus decisions and developing external relations Which of the following is not part of critical outsourcing project leadership characteristics? a. Champion change and good communications skills. b. Ability to build trust and planning skills. c. Negotiations and conflict resolution skills. d. A desire to manage as a disciplinarian. 21. What key performance indicators should be required for most outsourcing deals? a. Service levels relative to volume, capacity, schedules, etc. b. Project management metrics of time, cost and quality. c. Both of the above. d. It depends on the initiative. 22. What must occur to ensure that an organization first develops a clear understanding and agreement of its own goals and objectives relative to outsourcing? a. The team developing the requirements document has representation from multiple disciplines. b. The current processes and related components have been documented. c. The future process requirements have been identified.
6 23. It is often appropriate to perform a reality check on the CSFs and KPIs that have been established by a company to ensure that they are appropriate. Which questions help to assess the appropriateness of the CSFs and KPIs? a. Do they translate into specific actions? b. Do they manage end-to-end results? c. Do they drive performance and process improvements? d. All the above. 24. What is the most useful purpose of an RFI? a. Obtain select information about potential vendors. b. Obtain information about potential vendors which is used to eliminate vendors that do not qualify from further consideration by the customer. c. Collect information on vendor profiles, products and services, etc. d. None of the above. 25. In a typical vendor selection process flow, what would be the first set of processes to be completed? a. Internal/external research, requirements definition and establishing vendor evaluation criteria. b. Develop and distribute RFI, RFQ and RFP. c. Bidder s conference and vendor presentations. d. None of the above. 26. What is a key factor in building a solid customer and vendor relationship from a customer s perspective? a. Partnership, trust and good communications b. Best people to manage relationship with an executive liaison and escalation process c. Assignment of oversight responsibilities with fair metrics 27. Should a bidder s conference be used, where there are multiple qualified vendors? a. All the time b. Some of the time c. None of the time d. It depends on a number of factors 28. In identifying potential providers, the professional network of contacts should include what? a. Trusted advisors such as law firms, accountants and consultants b. Outsourcing brokers c. The company s executive officers and Board members d. All the above
7 29. What is not a major category for consideration in scoring and selecting a vendor? a. Demonstrated competencies b. Total capability c. Competitiveness of solution d. Certification 30. Developing the outsourcing financial case and pricing includes what standards? a. Develop a comprehensive financial model that includes all relevant costs b. Project the financial benefits over the life of the outsourcing deal. c. Develop a comprehensive contract with pricing d. Ability to evaluate and select the optimum pricing model 31. Which contract type describes where the provider is paid for actual costs plus a predetermined fixed amount or percent? a. Incentive-based b. Gain-sharing c. Cost plus d. Achievement bonuses 32. Achievement bonuses paid to outsourcing vendors are usually paid for achieving certain milestones except for? a. Superior performance b. Tied to earlier-than-expected completion dates c. Achieving higher-then-expected service levels d. Getting better-than-expected throughput 33. What is a major limitation to a unit pricing agreement? a. The service provider is motivated to find ways to increase the customer s utilization of services at the customer s expense. b. The vendor is seeking to reduce its internal per unit costs. c. The vendor may be in direct conflict with the customer s desire to drive down its utilization rate and reduce the total cost. d. None of the above. 34. In evaluating vendors, each organization should determine the most important factors for it and weigh them based on their relative importance. After being individually weighted, each criterion should be evaluated on what kind of scale?
8 a. 1 (poor) to 5 (best) b. Low, medium and high c. 1 (poor) to 10 (best). d. None of the above 35. Which of the following financial measures take into consideration the time value of money? a. Net present value. b. Return on investment. c. Internal rate of return. d. All the above. 36. ROI (return on investment) is one of the measures used to evaluate the financial benefit of an outsourcing business case opportunity. What factor does not need to be taken into consideration in the ROI calculation under the cash flow basis? a. Annual cash inflows and outflows are developed for the life of the deal. b. The discounted cash flow rate or return or internal rate of return, is calculated. c. A breakeven analysis is determined. d. The present value of the investment is calculated and the internal rate of return is used to evaluate an individual investment. 37. What is a limitation of the break even analysis? a. Does not consider the time value of money b. Uses total investment costs and savings to calculate the break even point c. Uses cash flows as part of the calculation d. None of the above 38. According to the OPBOK, which is not part of the contracting and negotiating for outsourcing standard? a. Define the most appropriate structure for an outsourcing contract. b. Ensure that all applicable legal considerations for the home country jurisdiction are reflected in the contract. c. Ensure that each section of the contract addresses the critical management and business considerations of the relationship. d. Negotiate an outsourcing agreement that takes into consideration the interests of all parties. 39. What items would usually be on a customer s negotiation checklist? a. Define negotiation team members and roles b. For negotiations with multiple vendors, establish dates for best and final offers c. Include individuals from both parties with sufficient decision-making authority on the negotiation team
9 40. Which law requires businesses to follow certain procedures during outsourcing and also provides for employee rights through the outsourcing action (such a pension provisions)? a. Warn Act b. Acquired Rights Directive or Tupe (in the U.K) c. HIPAA d. Sarbanes-Oxley Act 41. In negotiation with offshore vendors, what special considerations must be given? a. Privacy and data security b. Intellectual property protection c. Court of jurisdiction, in case of a dispute d. Job terminations and transfers 42. What factors should be considered when negotiating termination options? a. Triggers and conditions b. Roles and responsibilities of each party c. Costs and who absorbs what 43. During negotiations, if a vendor offered you a bribe, what should you do? a. Accept it b. Reject it c. Report the vendor to authorities d. Break off the negotiation 44. Which of the following is not part of the standards for managing the transition to an outsourcing environment? a. Develop and oversee the transition plan to the outsourced environment. b. Develop and coordinate an end-to-end process for managing the impact of outsourcing on the organization s personnel. c. Direct and motivate project teams at each stage of the outsourcing process. d. Develop and coordinate the communications of an organizational agenda for change that demonstrates how customers, employees and shareholders will be impacted and benefited.
10 45. What are key aspects of the transition process? a. Assign roles and responsibilities to both customer and vendor teams for the transition b. Prepare a detailed check list of actions that must be completed for a successful transition c. Communications and human resource plans are finalized for all constituents impacted by the transition d. All the above 46. What is the primary output of the transition stage? a. Approved contract b. Approved detailed transition plan c. Approved business case d. Approved risk plan 47. What is normally not an activity in an outsourcing pilot effort? a. Finalize pilot acceptance criteria b. Define test environment and criteria c. Approve pilot d. Prepare the organization for change 48. What activities should occur in the planning phase of managing the impact on employees? a. Communications plan b. Severance plan c. Employment law implications d. All the above 49. As part of the integration phase, an outsourcing vendor need not consider which factor when transferring employees? a. Benefits b. Support c. Integration d. Training 50. What major elements does an effective outsourcing communications plan not include? a. The compelling need for change b. Outsourcing benefits and implications for the customers, employees and organizations c. Outsourcing risks and constraints d. Change techniques to be employed
11 51. Which standards are part of outsourcing governance? a. Design and implement an interdependent outsourcing project management office (PMO) for managing across multiple organizations. b. Ability to measure, assess and achieve continual improvement in organizational outcomes through outsourcing relative to original goals and changing business needs. c. Develop and design an outsourcing model 52. If you were designing an outsourcing governance system, what key principles would be included in the initiative? a. Strategic responsibility kept close to the top b. Create multi-level organizational links c. Conduct regular, goal and performance review oriented meetings d. All the above 53. What is normally not a responsibility of an outsourcing executive team in an outsourcing management multilayered team arrangement? a. Approve new service levels b. Monitor health of relationship c. Review and approve strategic outsourcing plans d. Resolve major issues and approve major changes 54. Indicators of changes in current vendor performance include all of the following except: a. Win of a major new customer b. Less frequent contact with the provider s senior management c. Inconsistency in the level of service provided d. Problems getting passed around and not being solved 55. The key to getting the right exit provisions in an outsourcing contract is to ask the right questions. Which questions should be asked? a. Why will you want to terminate for cause, convenience or normal contract end? b. What termination rights do each party have? c. What will you need from your service provider to make a smooth transition either to another service provider or to reinsource? d. All the above. 56. Which industry recognized process maturity model can best be used to assess an organization s level of outsourcing maturity and help to develop a roadmap to improve the level of maturity and effectiveness of an organization?
12 a. Six Sigma b. CMMI (Capabilities Maturity Model Integrated) c. escm (esourcing Maturity Model) d. All the above 57. What major components are not part of the management and support services of the common business process framework? a. Human resource management and facilities management b. Information and communications technology management and financial management c. Real estate and capital asset management and facility services d. None of the above 58. Which is not one of the primary outsourcing professional skills identified in the planning and strategy phase of outsourcing? a. Develop outsourcing value model for the organization b. Develop end-to-end outsourcing project management process c. Determine scope of potential outsourcing opportunities d. Accept, reject and prioritize potential outsourcing opportunities 59. Professional responsibilities of an outsourcing professional include what principles? a. To adhere to the highest standards of ethical business practices in all business dealings. b. To conduct oneself in a way that contributes to a positive image for the individuals and organizations that work in the field of outsourcing. c. All of above. d. None of the above. 60. To be a proactive advocate for outsourcing as a management practice and as a profession, what guidelines should be followed. a. Proactively invest professional time and resources in outreach and advocacy of outsourcing. b. Openly engage in dialogue with those outside the field to promote and shape business and public opinion on outsourcing. c. Strive to stay on top of the latest trends in outsourcing Conflict is an inevitable consequence of organizational interactions. Therefore, what is the best way for a manager to resolve a team conflict? a. Dictate the solution. b. Listen to both parties and suggest additional ideas so that the parties in conflict can resolve it on their own.
13 c. Let the team vote and majority rules In which stage of team development does the team reach its maximum effectiveness? a. Performing b. Storming c. Norming d. Forming 63. What is one of the less reliable sources of direct research to identify vendors? a. Review of articles in the press b. Attend conferences and trade-shows c. Other vendors d. Use of consultants and other advisors 64. When making outsourcing decisions, a number of strategic, value and delivery question should be asked. Which of the following is not a strategic question? a. Is the outsourcing investment consistent with our business principles, plan and direction? b. Is the outsourcing investment contributing to our strategic objectives and sustainable competitive differentiation? c. Does the outsourcing investment have a consistent, disciplined and scalable management and governance process? d. Does the outsourcing investment provide optimum value at an acceptable level of risk? 65. What are the additional risk factors associated with off-shore outsourcing? a. Government support, labor pool, infrastructure and education system. b. Actual cost savings realization, quality and cultural compatibility. c. Time/distance advantage, language proficiency and geopolitical environment Which potential risks should have a contingency plan developed for them to mitigate the risk? a. All risks. b. Risks with the highest probability of occurring. c. Risks with the highest probability of occurring and the highest impact on the business. d. Risks with the highest impact on the business and a low probability of occurring. 67. There are a number of government laws in various countries that impact some aspect of outsourcing. These laws generally cover one or more of the following areas except:
14 a. Privacy b. Financial reporting and verification of accuracy c. Employee rights d. Risk management 68. All of the following may be factors for prioritizing outsourcing opportunities except: a. Benefits realization. b. Location of suppliers. c. Legal and regulatory considerations. d. Degree of risk. 69. A successful approach to the scoping of an outsourcing activity should include which of the following? a. Conduct a series of process modeling workshops. b. Use subject-matter experts. c. Use consistent terminology and documentation. d. All the above. 70. The tools used in the scoping of an outsourcing activity should include all of the following? a. Iterative process, white board and common set of diagrams b. Iterative process, white board, common set of diagrams and supporting textual descriptions c. Iterative process, white board and common set of diagrams using a consistent symbolic language as well as supporting textual descriptions 71. What are the principles for achieving program and project management excellence in an organization? a. Create the right environment and culture. b. Develop program/project plans. c. Ensure an adequate governance and control process, excellent communications and institutionalize the entire program/project management processes What is the best approach to strategic planning? a. Top down. b. Bottom up. c. Iterative. d. A hybrid of the above techniques.
15 73. A top down approach to integrating outsourcing into a business s strategy includes all of the following steps: a. Segment the market place, project changes in each segment, assess size and growth and how to dominate, sourcing, forecast business outcomes and invest in execution. b. Segment the market place, scenario planning, assess size and growth and how to dominate, sourcing, forecast business outcomes and invest in execution. c. Segment the market place, project changes in each segment, asses size and growth and how to dominate, sourcing, forecast budgets and financials and invest in execution. d. Segment the market place, project changes in each segment, assess size and growth and how to dominate, sourcing, forecast business outcomes and invest in governance. 74. What are the key questions that should be asked in developing a business plan? a. Where are we? (situation assessment and establish a base line) and Why change? (opportunities and threats) b. What could we do? What should we do? c. How do we get there? Did we get there?. 75. What are the three stages of change management as they pertain to outsourcing? a. Decision making, risk assessment, and post implementation b. Decision making, outsourcing implementation and post implementation c. Decision making, outsourcing implementation and vendor coordination d. None of the above 76. Based on the outsourcing decision matrix, which outsourcing strategy should be followed when the performance of an activity relative to the market is weak and the differentiator is strong and not a commodity? a. Form more exclusive alliances to obtain capabilities (e.g. co-branding, licensing). b. Keep in house. c. Outsource for scale advantage and increased focus on differentiators. d. Outsource for scale and capability. 77. One way of evaluating outsourcing at the customer interface includes which of the following two dimensions? a. Level of judgment and value of the contact. b. Level of interaction and level of judgment. c. Level of judgment and risk of poor performance. d. Level of judgment and value of interaction. 78. To minimize the impact of highly sensitive customer interaction situations from being impacted by outsourcing, considerations should be given to all of the following :
16 a. Begin outsourcing with lower level risk interactions and then migrate based on a track record of success to higher risk interactions. b. Invest more effort into the planning and monitoring of outsourcing performance. c. Customer s may not even be made aware of the fact that a service they are receiving is outsourced. 79. What is an obstacle to team building in a matrix organization? a. Team organization is technically focused. b. Team members are borrowed resources and therefore, can be harder to motivate. c. Teams are too centralized. d. Teams are too large and therefore difficult to manage. 80. The influence and involvement matrix is used to understand and develop communications strategies for all stakeholders. Which category of stakeholder will typically have both high influence and high commitment to the success of the initiative? a. Allow. b. Perform. c. Sponsor. d. Involve. 81. To ensure that an organization first develops a clear understanding and agreement of its own goals and objectives relative to outsourcing, which of the following must occur? a. The team developing the requirements document has representation from multiple disciplines. b. The current processes and related components have been documented. c. The future process requirements have been identified. 82. The balanced scorecard is an organizational performance management tool that focuses on which of the following measures of performance metrics? a. Financials, customer satisfaction, internal processes and learning and growth. b. Financials, customer, processes, learning and projects. c. Financials, customer, employee, and learning and growth. d. Financials, customer, internal processes and service level innovation. 83. Key performance indicators for outsourcing contracts should include all of the following factors except: a. Financials. b. Customer and vendor escalation c. Customer satisfaction. d. Performance measures such as SLAs, etc.
17 84. Defining desired results in clear, accurate and measurable terms is key to managing any business process, whether it is outsourced or not. Balanced scorecards are typically used to define business outcomes, while SLAs are often used to define. (Please fill in the blank) a. Project management effectiveness. b. Process measures. c. Issues resolution effectiveness. d. All the above. 85. Although the layout of the sections of an RFP may vary from organization to organization, there are a few generally accepted principles that should apply to all RFPs. Which principles would apply? a. Focus on objectives and results. b. Focus on resources and methodologies. c. Specify the information and format required so that the proposals from various vendors can be easily compared to each other 86. A pricing section in a contract should contain: a. The pricing model b. Price points and triggers for price increases or decreases c. Payment terms d. All the above 87. The RFP is used to define the buyer s requirements, scope, objectives and. (Please fill in the blank). a. Background. b. Deliverables. c. Acceptance criteria. d. Constraints. 88. In developing the outsourcing requirements process, all of the following should be considered except: a. A defined process to identify the potential vendors to receive the document. b. Sufficient guidelines on the vendor response structure and evaluation criteria. c. Definition of the key activities and dates for the distribution, response, review and selection process. d. The contract development process.
18 89. While there are several ways to submit outsourcing requirements to a vendor, the represents the most common process. (Please fill in the blank). a. RFI, RFQ, RFP. b. Collaborative business case. c. RFP. d. RFI, RFP. 90. What components should be included in the vendor selection process? a. Development of a comprehensive list of factors to consider. b. Determination of the relative impact and importance of the factors. c. An objective process for evaluation, scoring and decision making. d. All the above. 91. Site selection is an important criteria for which type of outsourcing deals? a. It depends (on distance, regulations, language, tax implications, labor skills, etc.) b. Large engagements c. Minor deals d. Off-shore deals 92. What is not a factor in the major vendor selection criteria of competitiveness of solution? a. Solution itself b. Project or service delivery c. Financial proposal d. Culture 93. Activity based costing is one of the most difficult and one of the best techniques for capturing costs at the activity level. What does activity based costing typically include? a. Direct costs of all resources consumed b. A portion of the overhead costs allocated to the activity c. Match costs to outcomes as defined in CSFs and KPIs 94. All of the following are good ways to set and validate the price level for outsourcing services except: a. Benchmark current operations b. Market dynamics get multiple bids c. Sole source solicitation d. Use consultants
19 95. Achievement bonuses paid to outsourcing vendors are usually paid for achieving certain milestones which answer would probably not be one of those milestones? a. Superior performance b. Tied to earlier-than-expected completion dates c. Achieving higher-then-expected service levels d. Getting better-than-expected throughput 96. In a risk/reward sharing deal, which is the most common outcome? a. Both the customer and vendor have money at risk b. The customer benefits more than the vendor c. The vendor benefits more than the customer d. All the above 97. Which item would usually be on a customer s negotiation checklist? a. Define negotiation team members and roles b. For negotiations with multiple vendors, establish dates for best and final offers c. Include individuals from both parties with sufficient decision-making authority on the negotiation team 98. In developing the financial base case for outsourcing, in addition to budgeted costs, what other costs should be considered to obtain a true total cost number? a. Off-budget costs, such as training b. Support services such as management, human resources, etc. c. Assumptions such as future volumes, etc. d. All the above 99. The terms section of a contract should generally include the following component(s)? a. Define the intent of the relationship b. Describe how the contract will be managed c. Identify the contract terms that govern the entire agreement 100. The transition section of the terms section of a contract should cover all of the following except:
20 a. Describes the plan and actions for converting the customer s current operation to the provider s operation. b. Identifies what equipment and facilities are being transferred from customer to provider. c. Identifies the people that are being transferred. d. Identifies lease transfer charges and whose responsibility they are.
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