LPO BIG DATA OUTSOURCEXPLORES the Pros and Cons – and How to How Are Providers Old and New We Launch Our New In-Depth Make It Work for You

p106 TheProfessionals FP.indd 106 20/6/12 09:46:00

ISSUE 28

SUMMER 2012 LPO BIG DATA OUTSOURCEXPLORES The pros and cons – and how to How are providers old and new We launch our new in-depth make it work for you... meeting the challenge? content series platform outsource

Issue 28 Summer 2012 www.outsourcemagazine.co.uk In association with PEOPLE | TCNLG OUIN www.outsourcemagazine.co.uk TECHNOLOGY | SOLUTIONS Deep thought Phil Fersht and Martyn Hart on the death and rebirth of outsourcing

JOHN TIM CUMMINS BUY-SIDE SEDDON The IACCM head WAR STORIES An exclusive, honcho on the Are you one of unﬂ inching Q&A need for new The Professionals? with the systems models – and more Take our Q&A and thinking guru accountability... share your tales...

thinking head.indd 2 15/6/12 14:37:34 20859-102651 GrantThornton IFC DPS.indd 2 15/6/12 14:36:34 20859-102651 GrantThornton IFC DPS.indd 3 15/6/12 14:36:49 p4-5 20859 Beijing Great Idea DPS.indd 4 18/6/12 11:03:59 p4-5 20859 Beijing Great Idea DPS.indd 5 18/6/12 11:04:23 p6 20859-10752 OCE UK Ltd FP.indd 6 12/6/12 17:19:13 editor’s letter martyn hart and phil fersht go head-to-head; John seddon; tim cummins;service marketplaces;LPO;recruitment process outsource technology;outsourcexplores and more...

Editorial Editor Jamie Liddell he argument of how appropriate (or otherwise) the [email protected] Editorial Assistant Jessie Bland term “outsourcing” now is to describe the plethora of Contributors Toby Barnes, Clare Blatchford-Hanna, Steve Bynghall, activities which – perhaps for want of a better word – Phil Clarke, Kevin Colangelo, Oliver Colling, Laurence Collins, come within its promiscuous embrace has been around Simon Constance, Neal Dempsey, for a while; but in recent months it has moved into the Phil Fersht, Tony Filippone, Alex Hamilton, Matt Heffron, Srini Krishna, Tspotlight thanks in part to Phil Fersht, CEO of our research partners David Lewis, Jamie Lyon, Eoin McCoy, Kavitha Nair, Kjetil J. Olsen, HfS Research, who has driven the debate forwards via a number of Duncan Pithouse, Thomas Reby, Michael Stock, Rob Sumroy, posts on his Horses for Sources blog. We thought for this issue of Gian Piero Zambrini Outsource we’d tackle this question head-on: so we invited Phil, and art NOA Chairman Martyn Hart, to take part in a very special Head-to- Art Editor Andrea Mitchell Designers Conrad Holding, Ellie Allen-Eslor Head looking at the very nature of this crazy business some of us Multimedia Developer Kyri Theodorou Images Getty Images, PA Photos, call “outsourcing”… See page 14 for a unique, wide-ranging debate istockphoto, Shutterstock between two titans of the space. copy Elsewhere we have another varied feast of content for you, from Head of Production Dahlia Cuby Production Controller Kelly Lever exclusive Q&As with maverick systems thinking champion John commercial Seddon (p24) and IACCM supremo Tim Cummins (p52) through Project Director Al Tepper [email protected] reports on the services marketplace landscape (p30), the pros and Marketing Manager Dave Louca Sales Executives Tom Allen cons of LPO (p62), technology in the recruitment space (p76), to the launch of our new OutsourceXplores in-depth multi-channel reports corporate Account Director Dee Anderson (p85) and plenty more. Accounts Manager Tara Rahman Circulation Manager Roma Katten To end with glasses raised: it’s a special summer for our partners

published by at the NOA, as they are currently celebrating the 25th anniversary of Emp Media Ltd, EMP House, Pembroke the founding of the organisation; so allow me to sign off this issue’s Road, Muswell Hill, London N10 2HR Publisher/Managing Director Daniel Cuby Editor’s Letter by wishing them PA to Publisher/MD Filippa Woolf Consulltants Arkle all a very happy birthday, and Telephone 020 8444 3401 Fax 020 8883 9504 many happy returns – here’s Customer Services 020 8442 0178 Website www.outsourcemagazine.co.uk to another quarter-century of excellence. subscriptions outsource is published four times a year. A one-year UK subscription costs £50 (UK). See website for full details or email Jamie Liddell [email protected] ©outsource magazine Editor All rights reserved. No part of this publication may be copied, reproduced, transmitted, photocopied, recorded or stored on any retrieval system without prior PS: Buy-side professionals, don’t written consent of the publishers. It is not the intention of this magazine to print any matter that discriminates on miss our new Q&A series: see the grounds of sex, race or disability. The views expressed in this publication are not necessarily those of the www.outsourcemagazine.co.uk/ National Outsourcing Association (NOA) or the publisher. theprofessionals outsource magazine Published by EMP Media

outsource magazine Total average net circulation: 11,159 | Jan - Dec 2011

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7 ed letter .indd 7 19/6/12 11:57:48 China: Manageable risk in Software?

DOES CHINA, as an emerging provider environment simple result measurement is country represent an opportunity for inadequate, on-going monitoring required. Western companies to manage software Knowing what is being developed is Feeling lucky? whilst lowering Outsourcing cost? important but knowing how is critical. A trade delegation including Omnext‘s CEO recently visited China and was By: In a constant confronted by the enormous strides being ✱ Providing metrics for due diligence and made in infrastructure developments establishing goals during RFP/RFI; quest to together with major investments in ✱ Monitoring business goals supported by reduce education and training for Outsourcing fact based communication; IT expenditure companies as a profession. China is coupling short ✱ Documentation and audit trails term effectiveness with long term quality supporting transition to a following are searching for new goals in becoming a leading player in the contract; options in Outsourcing Outsourcing Industry. beneﬁ ts can be reaped and risks How can an experienced Outsourcing effectively managed. Software. Does China customer beneﬁ t from providers with less represent an opportunity experience, how can the risk involved be Whether the goals are modernization, managed and mitigated to acceptable integration, consolidation or maintenance where risks can be levels? cost reduction having on-demand access managed? Omnext's CEO In Software outsourcing Due diligence, to information is essential to meeting these KPI’s and SLA’s are measurements to business objectives. recently visited China as gain and then maintain control over part of a trade delegation. the application source in a MATURE Interested in a Proof of Concept? environment. In a less mature Read his thoughts and insight on the risks and potential @ www.outsourcemagazine.co.uk/omnextchina or via

THE NEXT GENERATION OF SOFTWARE ANALYSIS IS HERE Find out how to reduce IT expenditure from a real insider with a 360o view In a constant quest to reduce IT expenditure companies are searching for new options in Outsourcing Software. Andy loved what Omnext are doing so much he jumped at the chance to leave National Grid as a Senior IT Project Manager and join Omnext to head up their UK operation. Oh, Andy is also Operations Director for the NOA, so he knows what he’s talking about.

Discuss the risks and potential for your business with Andy on [email protected] or +44 (0) 7770-444383 p8 OMNETEXT final.indd 8 13/6/12 11:14:10 this issue Head-to-Head; OutsourceXplores; LPO; Big Data; John Seddon; Tim Cummins; HfS Research in this issue

30 FEATURES The world is one big service 30 marketplace At Your Service? Steve Bynghall examines service marketplaces, a revolutionary way of connecting buyers and providers of services – and asks “where’s the catch?” 36 Plenty To Chew On Thoughts and musings from our dinner and roundtable with Stephenson Harwood 50 Invested Outsourcing Duncan Pithouse looks at the rise and rise of Investment Management Outsourcing – and highlights some of the key issues that all parties should consider 68 Managing Knowledge in a Partnership Thomas Reby of eBay explores the role knowledge plays in an outsource cover storIEs relationship 14 72 Deep Thought A Long Way Still To Go Martyn Hart and Phil Fersht go Head-to- Jamie Lyon of ACCA believes plenty of Head on the relevance of “outsourcing”, opportunities are still untapped in shared the need for a defined career path, cloud services and outsourcing computing and much, much more 76 44 Recruitment Process Technology Big Data What is the impact of accelerated Kavitha Nair investigates how providers technological evolution on recruitment – large and small are facing up to the and how does this affect RPO specifically? opportunities and challenges posed by the Our experts tackle some very big issues… big data phenomenon 80 62 Let’s Talk About Our Relationships LPO Extracts from our exclusive panel on Alex Hamilton and Kevin Colangelo 76 Vendor Relationship Management at the examine some of the impacts of the rise of Where recent Sourcing Interest Group London tech meets Legal Process Outsourcing – and explain recruitment Roundtable – two leading buy-side how to make it work for you luminaries share their experiences...

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9-11 contents.indd 9 19/6/12 12:40:31 p10 20859-102057 ForumEvents FP.indd 10 12/6/12 17:19:49 THIS ISSUE HEAD-TO-HEAD; OUTSOURCEXPLORES; LPO; BIG DATA; JOHN SEDDON; TIM CUMMINS; HFS RESEARCH IN THIS ISSUE

INTERVIEWS REGULARS 24 12 John Seddon News The systems thinking legend looks back Some of the biggest developments from the over his career, and across a landscape that outsourcing space over the last quarter still has plenty of room for improvement… 56 40 NOA Round-Up The Power of Two News and announcements from the Michael Stock continues his series of National Outsourcing Association double-header interviews by tackling Anne 24 Marie Forsyth and Sidney Yuen John Seddon: 98 pulling no Top Ten punches... 52 Rising HR star Clare Blatchford-Hanna looks Tim Cummins at what organisations need to consider The IACCM President gives us his thoughts when “navigating the quagmire of UK on changing organisational models and pension reform” structures – and why greater accountability isn’t just a “nice to have”… 100 The Legal View Slaughter And May’s Rob Sumroy gives a OUTSOURCEXPLORES NEW forthright perspective on multi-sourcing... 85 102 Welcome HfS Round-Up We present our new and unique content Our partners at HfS Research examine the series platform 94 rise of the global business services model... Professor Philip Taylor looks at the 86 rise of rightshoring 107 Great Expectations Offshoring We look at ‘The Future of Finance The Sourcing Sage’s latest masterpiece Outsourcing’ with Grant Thornton and ACCA, beginning with an exclusive panel 108 Online Round-Up 90 Some of the best content from Outsource Transformative Technology online from the last three months Our series with Oce Business Services starts with a look at the value of 113 transforming data and document Inside Source management It’s all kicking off for our undercover spy… 94 114 The Future of Rightshoring 52 The Last Word Tim Cummins: Our OutsourceXplores with Scottish new models are An anonymous contributor walks a ﬁ ne Development International kicks off with an required line between pedantry and righteous exclusive Q&A with Professor Philip Taylor indignation…

Get great new, exclusive content via our website: www.outsourcemagazine.co.uk

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9-11 contents.indd 11 19/6/12 12:40:49 this issue: SAP BUYS ARIBA; CGI BUYS LOGICA; PROCUREMeNT OUTSOURCING; HP CUTS STAFF news

Bill McDermott, procurement co-CEO of SAP PO: growth through to 2013

The number and value of global outsourced procurement deals has increased for the second year running, according to a report recently published by Everest Group. The study, ‘Procurement Outsourcing Annual Report 2012 – The PO Market: Steadily Marching Forward’, announced the cumulative value of outsourced procurement contracts at £7 billion – an increase of 17 per cent. This increase is attributed to a rise in average contract value and the adoption of PO deals by medium-sized companies (with revenues between £600 million and £3.2 billion). m&A Saurabh Gupta, VP, Everest Group, commented: “For the second consecutive year, we’ve seen the SAP snaps up Ariba procurement outsourcing (PO) market set record numbers for new deals, Enterprise software giant SAP announced the clear leader in on-demand supplier renewed contracts, and a significant in May the takeover of cloud-based relationship management,” said SAP co- rebound in mid-market adoption. Spend commerce application provider Ariba for CEO Bill McDermott. reduction, process optimisation and some $4.3bn – the second billion-dollar-plus The deal is being seen as something of a compliance remain the primary drivers cloud acquisition by SAP in under a year coup for SAP – which is nevertheless paying for PO adoption.” following its purchase of SuccessFactors an approximately 20 per cent premium on The report also discovered that towards the end of 2011. Ariba’s pre-acquisition value – in that it both around 80 per cent of the total value Although some questions remained takes out its primary competitor and snaps of deals in 2011 were in companies in over the Ariba purchase following the up Oracle’s own leading competitor in the consumer packed goods and retail, announcement – notably, the prospect that procurement applications space. manufacturing and financial services; SAP’s arch-competitor Oracle could engage It also creates huge disruption in the with the outsourcing of accounts payable in a bidding war – at press time it appeared procurement ecosystem: as Peter Smith in finance and accounting (F&A) that the acquisition was going ahead, with writes on Spend Matters UK/Europe, “we’re identified as an accelerating trend. In completion predicted for some time in seeing the early stages of what is going addition, the report forecast that 2013 August. to be a scramble as firms position, or in will see further growth for PO contracts “We are taking another bold step in our some cases re-position themselves, for the – again being led by smaller companies. strategy to achieve leadership in the cloud. post-SAriba landscape. And the knives are With this acquisition, SAP will also become coming out...”

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12-13 news .indd 12 27/6/12 09:58:50 PROVIDER NEWS RESEARCH SSOs outpacing HP slashes outsourcing workforce Services and hardware leviathan HP

The use of captive shared service Stan Lepeak announced in May that it is to cut 27,000 organisations is outpacing traditional of KPMG jobs globally – a reduction of some eight outsourcing according to KPMG’s latest per cent of its entire workforce. The cuts, quarterly Sourcing Advisory Pulse Survey. which the company says will reduce costs Some 52 per cent of respondents cited by up to $3.5bn (£2.2bn) are expected shared services as the strongest growth “to impact just about every business and area in the arena, compared with just 27 per region” according to a company statement, cent for “traditional” outsourcing. and are the largest in the company’s history. “In some cases, buyer organisations are “Workforce reductions are never easy… pulling back work previously outsourced They adversely affect people’s lives, but in and placing it into shared services centres; this case they’re absolutely critical for the but more often expansion of shared services long-term health of the company,” CEO represents an ongoing consolidation of Meg Whitman told analysts. operations previously internally managed computing adoption continues to grow, The cuts were announced despite and distributed across the organisation,” this is not happening “as quickly as some quarterly results that came in above said the report, lead authored by KPMG’s on the sell-side advertise… Many buyers industry expectations and above HP’s Stan Lepeak (an Outsource Editorial Board still struggle to decipher the true business own stated predictions – with profits in the member). case for cloud, especially relative to three months to April 30 reaching $1.59bn The report also found that while cloud longer-term cost savings opportunities.” (£1.02bn) – and include a farewell to former Autonomy CEO Mike Lynch, the costly acquisition of whose company was widely M&A seen as being fundamental in the departure of Whitman’s predecessor Leo Apotheker. CGI Group buys Logica Whitman pointed out that the renovation of the company is very much an ongoing UK-based outsourcer and management “This announcement is consistent with effort: “Our results appear to be stabilising. consultancy Logica is to be acquired by our profitable growth strategy and with While I wouldn’t say we’ve turned the Canadian ITO, consultancy and systems our belief that the global consolidation corner, we are making progress.” integration giant CGI Group for £1.7bn, of our industry is both necessary and Nevertheless, many industry onlookers it was announced at the end of May. The inevitable... It further underscores our are predicting more tough times ahead for offer represented a 60 per cent mark-up ongoing commitment to support our clients the stumbling giant. on Logica’s stock price at the time of the as they expand their businesses locally “Meg Whitman is doing what she was announcement. and globally. In addition to operational hired to do – straighten the ship, re-energise breadth and depth, the combined business the management talent and getting HP on CGI founder and will have critical mass and key blue chip a roadmap to competitiveness. However, executive client relationships,” Michael Roach, CGI’s this is the start of a long process to correct chairman Serge Godin President and CEO, told the press and the utterly rudderless policies of Léo analysts after the news broke. Apotheker’s short-lived, but very damaging, David Tyler, Logica’s chairman, said: spell as CEO. While a ten per cent layoff is “Given the very limited geographic overlap tough to take, this is likely not going to be and CGI’s strong reputation for successful the last workforce correction we’ll see from integration, we believe this transaction will Whitman this year,” wrote Phil Fersht on offer great opportunities.” Horses for Sources.

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12-13 news .indd 13 19/6/12 17:13:39 T A L K I N G HEADS

Phil Fersht: There is a level of near time for some change in terms of the sophistication that’s now developed in the way our industry is perceived, and the roles industry, in the last two to three years in and responsibilities of all key stakeholders. particular, where we really do need to start to create more of a business focus for our Martyn Hart: The NOA started in 1987: clients – and they need career focus as a long time ago now. Outsourcing, we well – and the term “outsourcing” just does say, actually started much earlier than not mean much. It is really just a vehicle that (it depends on who you talk to, but for externalising process. Whereas the real thousands of years). I think the real problem discussions in our industry are much more the NOA had when it ﬁ rst started was, about how do we achieve new value; how do how do you deﬁ ne outsourcing? You said we get a better alignment of stakeholders; “externalisation” – in fact that’s what the how do we make sure, when deals are French call it, externalisation – but we signed at the senior level in a company, that really struggled with to come up with a business objectives are translated down to name that means what outsourcing means the trenches, the operations managers and to us, the people who understand it, rather people like that? So I think we are getting than “sourcing” or even “externalisation”

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14-23 HEAD TO HEAD.indd 14 19/6/12 16:30:01 FEATURE HEAD-TO-HEAD

In recent months a debate has arisen around the utility – or otherwise – of the term “outsourcing”: is that one word sufﬁ cient, or appropriate, to describe the plethora of different activities and endeavours which it currently encompasses? Driving this debate forwards has been Phil Fersht, CEO of our research partner HfS Research – so who better to explore this compelling topic than Phil himself, and who better than the chairman of our partners at the National Outsourcing Association, Martyn Hart, to join him? Read on for a truly unique, wide-ranging and compelling Head-to-Head, featuring two of the biggest names in outsourcing – or whatever you want to call it…

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14-23 HEAD TO HEAD.indd 15 19/6/12 12:01:49 FEATURE HEAD-to-HEAD

According to the latest NOA research the general public can’t ❛ differentiate between outsourcing and offshoring (and as you are in the States you probably recognise that Obama has difficulties with that as well)❜ Martyn Hart (because even the French eventually So we had the Head of Sourcing of one decided against using that phrase for of the biggest banks addressing us in a outsourcing). meeting of 41 – let’s call them “buyers” Outsourcing means more than just because that’s what people seem to be placing a contract with someone else, calling them at the moment. They said one it’s really a generic, if you like, a way of thing which really hit home to me, which approaching getting someone else to was: “All the new people we are hiring to do something for you. And the sort of run our operations tend to be a slightly things you have to do in outsourcing – you younger generation of individual who have mentioned alignment of stakeholders, and only ever known this ecosystem, this way also of governance and relationships which of doing things – globalisation, offshoring, are the main key areas that the NOA is outsourcing, whatever you want to call it. focussing on – are also things you have to And they are used to working within this do for shared services and also even just reality, and they are spending their whole to get a team within an organisation to do time trying to improve process, trying to something. perform effectively – and the big issue is So the NOA would agree with you in a – then maybe, at least, that would be a step with the older generation of people who sense: outsourcing is an overused phrase, forward. But my gut feeling, Phil, is that it continuously compare what we’re doing and according to the latest NOA research won’t happen. It might happen if something now with the way things were done ten, the general public can’t differentiate completely new could come along that 15, 20 years ago, and refuse to change between outsourcing and offshoring (and could make a step change – and if you read and embrace. I think in 10 years’ time as you are in the States you probably some of the Gartner reports, some Gartner our conversation now will be completely recognise that Obama has difficulties with analysts have said “cloud will be the end of moot, in that we will have gone through this that as well), so the general feeling is that outsourcing”; but of course people who are generational change and will just accept the we probably agree that we need some saying that are probably talking of ITO and business reality of the day. encapsulating word or phrase that we could probably thinking that rather than outsource So that’s what I think is really going reuse. But at the moment it’s defeated us as ITO per se, if you move to cloud you get on. The image problem is really tied to what that should be. the benefits of virtualisation and pay-as-you- corporate determination to drive down cost You also have to remember there are go. Maybe: but with most outsourcing, the and become efficient – but people within lots of organisations that make money from end users (of an outsourced service) could the outsourcing business itself get targeted using the words “outsourcing” or “shared not care if it was in the cloud or on the moon because they are looking at the actual act of services”. Of course, it is not in their interest or anywhere else as long as it delivers their one of the vehicles of making this happen. to destroy their brands or products just for service. the sake of a name. MH: Just to endorse some of that: the PF: The term outsourcing is a symptom NOA’s view is that it’s a sign of the maturity PF: At my company HfS we make our living of something much larger, and that’s of the market. So as the market matures, by being known as the analyst firm which the way that the corporates and midsize more and more things gets outsourced that is purely dedicated to “outsourcing and businesses today are approaching how perhaps would not have been outsourced shared services”. So if we start calling it to run their global operations much more or offshored previously, and things which something else we are pretty much putting cost-effectively. That’s really what this is – maybe five years ago maybe would have ourselves at as much risk as everyone else! and there is a hell of a lot of stigma attached been thought a bit leading edge are just to it. So to address your points, I think we taken for granted. So right now for example MH: But if we could get a name we all are going through something that we’ll I don’t suppose any large corporation would agree on – at least the major players in ultimately look back on as a generational even think of starting up its own full-blown terms of the people that support the industry shift in this business. in-house IT department.

The National Outsourcing Association celebrates its 25th anniversary this year; Martyn Hart founded the organisation in 1987. For more information see www.noa.co.uk

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14-23 HEAD TO HEAD.indd 16 19/6/12 12:02:04 p17 20859-101998 Sitel FP.indd 17 12/6/12 17:20:19 FEATURE HEAD-to-HEAD

PF: When I think of the small businesses of the shared services route and blended more business are looking at increasing today which are growing, they are the ones delivery. Five years ago it was really about outsourcing and increasing shared services where everything is pretty much sourced moving to an outsourced model and since – and actually when you get down to the intelligently, and the ones who are going to the recession the mindset has changed; industry level that’s where you see the real build the business models of the future. outsourcing is now seen as an element differences. It’s those industries going of a bigger corporate picture and it’s a through a more secular, fundamental MH: So companies like Virgin are a good component that helps companies develop change to their economics which are more example where it’s the brand which is more holistic strategies where you can embracing of outsourcing than those which important rather than the way they do get better leveragability between shared are more staid and cyclical. So I agree with things. Mind you, if the NOA’s recent services, between outsourcers – that’s why you here that outsourcing is not going away, research is right, there is a gulf between everyone is going on about GBS. it’s growing and it’s growing rapidly – but large corporations and the medium and But the reality is that shared services it’s growing as part of a bigger picture of small enterprises. Large corporations are is not going away any time soon, and sourcing frameworks that companies are sophisticated enough to understand the outsourcing hasn’t dominated in the manner able to adopt. logic of outsourcing and offshoring and So we are in a very interesting time where why they are doing these things; but as you companies are figuring out what’s the best start moving to smaller companies they model for them. One of the things which I begin to align more and more with what the did want to add which is quite alarming is general public believes, and so therefore how little companies use their outsourcing what the outsourced vendors are seeing or their shared services or their hybrid in Europe is the cost of sale to medium to frameworks as they deliver process to the small enterprises is just as much as to the company. So we’ve got some data to show large ones – so they are not intending to that when you get to processes like procure- encourage it. to-pay, or order-to-cash, these types of things, only ten per cent of these processes PF: Getting into research: we did a massive today sit in an outsourced model, and in study where we partnered with ACCA and shared services model it’s barely 20 per spoke with 1,800 organisations globally. cent. We used their European network and our So even though companies are investing

The term outsourcing is a symptom of something much larger, ❛and that’s the way that the corporates and midsize businesses today are approaching how to run their global operations much more cost-effectively❜ Phil Fersht US network. When you look at large-scale we thought it would dominate five years an awful lot of their money in the shared organisations today - which is $3-billion- ago, and we’re looking at a different way services infrastructures and trying to get plus revenue companies – barely ten per for organisations to manage their global into more outsourcing, they are still talking cent of their business is predominantly in operations. about barely a fifth of their actual work an outsourced model; the rest of it is split being done. Everything is still sitting in- between a purely shared services model MH: Or maybe, Phil, it is may be about house, Martyn. or a hybrid model. So they retain a lot of what exactly they term as outsourcing, their shared services and tend to restrict because if you look at some of the recent MH: Which means there is a fantastic outsourcing to more transactional tasks. And press they are predicting a significant rise opportunity, Phil, because if you think about that’s the more common MO for the large in outsourcing. And in fact outsourcing is it in the good old days you would say for enterprises – and even in the mid-market, rising significantly. an average organisation, IT accounted for the billion-euro-size companies, only 12 three to five per cent of its turnover. Maybe per cent of their model is predominantly PF: When you get down to “where are you less, even, depending on its administration outsourcing and still going much down going to invest more in the future?” then load. So even if you said five per cent, that’s

“Outsourcing and globalisation of manufacturing allows companies to reduce costs, benefits consumers with lower-cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.” – Larry Elder

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14-23 HEAD TO HEAD.indd 18 19/6/12 12:02:51 Martyn Hart addresses the audience at the heading another heading here National Outsourcing Association Awards 2011

the sort of market of ITO and cloud and the per cent” – and if you think about it you are organisation just got fed up with them. One other stuff that aims for that – but for business taking away 80 per cent of someone’s job, of the reasons why some people said they process outsourcing we are talking about and telling them just to focus on the really outsourced (in NOA surveys around 2000) the next 90 per cent, and as you say we have strategic stuff or the high-value stuff. was to get rid of the IT department! hardly scratched the surface. So there is a Unfortunately, not everybody can claim massive opportunity for all organisations to they have even the 20 per cent of the high- PF: If you look at the roles of the CIOs today, take some of this away. value work today. I mean look at HR for they’re business managers, they’re not But do you think there may be a cultural example: it’s all admin and operations work. technologists. The whole function is going issue here? People don’t want to lose control, That’s why you get such a violent resistance from strategic to reactive over the course of they don’t trust it – not everybody can be a to bringing in a third party because its maybe five or six years. Virgin… really just threatening people – and it gets to a point where the business functions MH: Maybe that will happen in some PF: You’re giving the editor his headlines resistance is overwhelming, and that’s other functions; companies need to be here, Martyn! I think, if you’ve ever walked why multi-process HRO never succeeded competitive, Phil, they have to take some around a company as a consultant, or even because you are really fighting a business drastic action. Your example of HR is a good as an analyst, doing an outsource evaluation function who aren’t really creating a value. one. Maybe they outsource the entire HR for that business and you were looking at That’s what is happening in other areas as because the strategic or interesting level a process – say, let’s look at finance for well. of HR also means you have to be up to example, which outside of IT is the biggest The IT area was much more operational. date with all the latest regulations – and of area of potential opportunity for outsourcing You could actually take a bunch of course here in Europe, the directives seem for most organisations – and you did an those activities like SAP maintenance or to come out without number. In a medium- operational analysis that says “accountant programming a particular application or size company, can you really afford to have A spends 80 per cent of his time doing some of the lower-end work and it was easy an expert in those regulations and the relatively administrative tasks: pumping just to replicate it. rules of HR, just because you might need data from SAP, into spreadsheets, creating them? Wouldn’t it be better to outsource reports, things like that; and he spends 20 MH: I agree with your cultural point in that the whole function, so you get rid of your per cent of his time doing actual high-value if the business is against it, it’s hard to bring administrative stuff and also you’ve also strategic work, such as preparing analysis it through. But I think IT is its own worst got someone in the (supplier) organisation and research for his board, that sort of thing. enemy: people did not communicate, they responsible to make sure you have the best The whole adage here is that “he can remove acted like priests around the great god advice and that your company does follow a lot of that 80 per cent and focus on the 20 Mainframe... But the business part of the the rules and regulations?

“Reliable data on the outsourcing of American jobs is sorely missing from the debate on globalisation.” – Dan Lipinski

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14-23 HEAD TO HEAD.indd 19 19/6/12 12:02:59 FEATURE HEAD-to-HEAD

PF: I think this is a great point you’ve We just did another study – this one raised. I have been involved in a number with PwC – which basically reveals that of outsource evaluations where from the majority of governance functions the start of the evaluation to finishing it, today are really only doing administrative companies would actually downsize a lot work: they’re managing contracts. They of their overhead to get to the point where are basically glorified procurement. And outsourcing didn’t look as attractive and because of that, it’s hard to have proper would eventually go away. With HR for discussions about innovation or anything example it’s hard to find organisations – like that: it’s really just about how do we small, medium or large – who actually have manage all these vendors and keep them bloated HR. It’s been cut to the bone. In tied to the contract etc. the outsourcing business case taking out So I think our industry needs to focus costs is often not that key any more; you are heavily on the career path for the clients, really trying to sell them the value upside helping them become more empowered, of being able to hire better people etc but and helping them to get educated on how With most outsourcing, the end users could not care if❛ it was in the cloud or on the moon or anywhere else as long as it delivers their service❜ Martyn Hart in terms of saving money the business PF: Well, we have looked at terms like to do this more effectively. That’s where case is getting much more difficult. There business services or business optimisation I think we find the nub of the issue. It’s are however huge amounts of overheads services – but I think to find the answer we not on the sell side: the sale side is doing sitting in Finance in many organisations have to dig into where the problems are what it needs to do to market itself and sell and it’s a question of being able to move arising. And right now we see the biggest more gear. The real issue is how to get out some of that cost and being able problem sitting on the client sides, where these sell-side guys more empowered to to spend it on better things. The more you have clients who are just trying to manage the deals more effectively – and companies look at this, the more you will figure out what this is all about and how to once they stop talking about “outsourcing” start to see companies becoming more manage it effectively. Now, I have had an that’s where I think a change will come. It’s competitive naturally in-house and looking unbelievable amount of CVs from people about how do we effect the cultural shift, at outsourcing more as a vehicle to do that. on the buy side desperate to get out. They how can the industry help facilitate that. And hate it. Because it’s sitting on a contract part of this might be to stop using the term MH: I think that’s right... To come back to you’ve known for four or five years, and “outsourcing” because it does not create our first point about “what is outsourcing?” you’re still trying to get alignment internally; positive behaviours, it just creates negative Do we have a term we can look at this thing you are an unpopular figure within your behaviour. Maybe we should start to talk with? You may be right that it’s the wrong organisation because you are going against a bit more about global business services name; but how do we get the right name, the grain of protecting jobs and things or business services, something like that, or how do we get people to understand like that. There is no defined career path which really embraces the change that’s this particular name of sourcing – rather for those who do outsourcing on the buy going on. than insourcing, rightsourcing, offshoring, side. On the sell side it’s fantastic: go to whateversourcing or whatever other terms a vendor, make tons of money, become a MH: Yes, “business services” is one of the companies would like to put in front of VP or whatever you want to be. You can things we talked about. However, here in the sourcing? There are two things: either we really profit in this business. But on the UK within the orbit of “business services” change the name or we educate people buy side it gets challenging: if the buyer comes everything from construction to to understand that this is more than going organisational leadership can’t step up and hospital cleaning: you can argue they are outside to buy something. It’s a long-term create proper roles and responsibilities and outsourcing but they are not at the level of involvement in which you have to do a true governance functions that add value sophistication we are talking about. number of things like alignment, build then we really are in danger of going down What the NOA is trying to do is, we have relationships, govern it, make sure it’s this slippery slope to the lowest common accredited academic qualifications now in viable. denominator. outsourcing, and because we believe what

@Tricia1989: I’d like to outsource my Mondays to India....

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14-23 HEAD TO HEAD.indd 20 19/6/12 12:03:18 20859 SIG FP.indd 21 19/6/12 12:36:24 FEATURE HEAD-to-HEAD

you actually do for outsourcing is generic I think when we look at the future needs outsourcing aggressively to their customers these qualifications are also valid for shared of the governance organisation, the real based on a risk mitigation cost reduction services and in-house. So we are trying to strategic alignment sits within the business pitch, and I think that really is beginning address that issue you mention. units; so while its admirable that people to hit a wall in terms of those providers I think you are right in terms of what like the NOA are creating qualifications who really are investing in talent to help happens to a buyer, or someone running and spreading education – I think it’s those clients transform versus those who an outsourcing contract: there is nowhere absolutely essential – I do think ultimately talk a big game but when it comes down to go. I am thinking of the sort of people I companies on the buy side can’t just go to it really don’t have the talent to help deal with: obviously a lot are in procurement out and hire loads of qualified personnel their clients move beyond a cost reduction and only a few companies have a Chief to run outsourcing: they need to train standpoint. Again that’s one change you are Procurement Officer. Do you become Chief their personnel to do this better and more going to see happening in the industry. It’s Finance Officer or Chief Operations Officer effectively. So it’s actually taking those just going to take a few other providers to or something as you come up through those people in business units with institutional step it up – and show they are making that roots? Or is outsourcing something that is knowledge of their processes and their difference. adjunct to other things you do? functions and educating and training them more effectively on how to manage in a MH: Showing that they are making that PF: I think this ultimately has to move to the globally distributed model. That is the difference beyond cost savings... business function. Creating the outsourcing only way to do it – and keeping it aligned professional, while these are important skills with business functions. So procurement PF: You have been around for a long time, and qualifications to gather, ultimately the outsourcing is very different from finance Martyn; have you seen that evolving or do CFO needs to run a finance function which and accounting. It’s all different – so it’s all you still see more of the old stuff around risk has a globally distributed delivery model, about helping each function to cope better mitigation or cost reduction, just with a bit whether it’s shared services, outsourcing, within a global model. more sophistication? in-house, whatever. Same with IT: the CIO needs to figure out how to manage IT to the MH: That’s why it’s hard to have a vertical MH: I think with the recession we’re best of his or her abilities using all the best profession in terms of promotion, like the certainly still looking at cost reduction… I resources and external capability available. example you gave for sales. The salesmen think some suppliers have tried to do value will always move on to sell something else, for money or produce business benefits MH: So your argument, Phil, would be a or bigger instances of what he’s selling up and beyond cost reduction, but I don’t bit like an MBA, where you can become a already, and he is rewarded in terms of see the customers going with them on that. Master of Business Administration: you’d how much he sells – but an outsourcer I think the problem with a lot of customer have those finance, marketing, admin, is always doing it in conjunction with organisations is, if they are outsourcing operational-type modules, but you’d also another business function. So it’s the for the first time a lot of knowledge is have a parallel module that will allow you to business function, as you say, that needs going to move out of that client to the find out how to get the best from outsourcing to understand outsourcing rather than outsourcer. Most large organisations are and shared services, to help you achieve having a Director of Outsourcing or a Chief not outsourcing for the first time – it’s their your functional requirements. Outsourcing Officer. second or third time – but they still haven’t done it very often for that particular function. PF: Absolutely and I would really hope PF: Absolutely – and let’s talk about how So it’s still not done very well. They are not that today’s MBAs all include that… Let’s the industry is evolving to keep pace with following any best practice. take a look at what’s going on today in that. In the old days it was the consulting And, also, the people who are doing it, that governance organisations tend to be firms like the old Andersen and PwC because they don’t do it very often, move off administrative functions helping to shepherd who had partners who developed close and so you are usually left as you say with through a contract often signed between relationships with their clients and it would transactional people just following some a C-suite executive and a partner within a be very much a business conversation contract rules which may or may not be consulting outsourcing firm. The people about how to optimise more. Today we have applicable to what they are doing right then running the actual day-to-day outsourcing a lot of vendors in our business who don’t – because the world’s changed. are just trying to get through the contract have that calibre of consultative personnel; But then: if you look at the senior as that’s all they know and as that’s all they today it’s much more transactional and management: how long do they stay and have been told to do. administrative, and they are trying to sell what sort of targets do they have? The

@brianhdean98: Mediocrity is easy to outsource. Brilliance isn’t. #kh

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14-23 HEAD TO HEAD.indd 22 19/6/12 12:03:30 New horizons: HfS Research CEO heading another heading here Phil Fersht wonders if the outsourcing space is ship-shape or all at sea…

The image problem is really tied to corporate determination ❛ to drive down cost and become efficient – but people within the outsourcing business itself get targeted because they are looking at the actual act of one of the vehicles of making this happen❜ Phil Fersht senior management of most organisations Anyway, you can see the point I am competitively. The clients want to have the are held to their institutional investors who trying to make: there are all these conflicts kitchen sink and they don’t want to want to see gains, rises every quarter rather at the different layers of management – pay for it. The providers on the other than a year or two or three years, so there’s particularly in the UK and I suppose the US hand would love to have clients who no long-term investment. This is unlike because they are both similar economies want to change and invest in them. The Germany, of course – over here, Phil, there – and that sort of fossilises, in a way, the whole industry is in this chicken-and-egg has been a big spotlight on the way German position we are in. situation – and I think that we can look at companies operate: many take very long- the sell side and start to see a few of the term views and they are willing to invest in PF: I would agree with you. I think the providers who really do have a focus on the long term and they involve their unions industry can move only so fast as the low-cost, offshoring etc, who can couch so there is not an us-and-them-type attitude sell side allows it to. They are the ones this in as much PowerPoint as they like, that we can have here; the result is everyone who are building the centres, taking on but the bottom line is that they don’t have is bought into a long-term picture. staff and delivering this stuff. Right now true consultative business transformation So back to the cultural issues: it’s not just we are in a particular situation where specialists, domain experts in their team for businesses not wanting to be outsourced, clients are in a nice situation where they their clients and they’re never going to get it’s the fact that senior management are on can bid on low-cost bids, they have a beyond risk mitigation and cost reduction. a different incentive band from the people number of providers who give them Those providers who have that skill, have underneath them and probably from the capabilities in the lines of business they that capability, and are willing to invest in people outsourcing – and the outsourcing want to outsource – and the challenge they their clients and grow with them, will be suppliers. Most big outsourcing contracts have later is how do they find a partner the ones who win out. And I do think that is are still five years, ten years, and the rest. who can really help them improve business where we are right now. One I was told about yesterday, one of the processes, improve technologies and do EOA Awards entries, said over a period of things better. EVEN MORE the contract they would save £5 million; so I Having said that, the providers are For more from both the NOA and HfS Research see asked what the period was and it turned out struggling to provide a calibre of account their regular contributions to our website at to be 26 years and costing 50 million a year! manager – because they have to bid www.outsourcemagazine.co.uk

“We’ll keep a very lean and mean organisation, and we’ll outsource everything we can.” – Lee Raymond

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14-23 HEAD TO HEAD.indd 23 19/6/12 12:03:39 “I believe that our very survival depends upon us becoming better systems thinkers.” – Margaret J. Wheatley

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24-28 John seddon.indd 24 19/6/12 11:45:37 INTERVIEW John Seddon

At The Vanguard Few consultants are more highly regarded – or more controversial – than John Seddon, MD of Vanguard Consulting and a legend in the world of systems thinking. In this exclusive interview with Outsource, Professor Seddon looks back across three decades of studying change and casts his eye over the status quo – and when it comes to some of his betes noires, he’s pulling no punches…

outsource: John, it’s been quite a them, so by the time we got into the late ‘90s that not all service organisations are the ride for you over the last couple of we really had it down. We are now much same. So we have developed a whole set of decades. How did it all come about? faster and understand more about the need archetypes; you have to suss out what kind John Seddon: It started a long time ago… to have management do this work rather of service you are dealing with before you I am a psychologist, and during the 1980s than us. So the way we consult is quite start studying it, otherwise you make the I was studying programmes of change – unusual in that we go in and we help the mistake toolheads make, which is using the TQM programmes actually – so I had to people in the organisation study and then same methods for all systems. read the literature. Being a psychologist redesign their systems. So for example we have break/fix I thought, “Crosby doesn’t understand Because if you send in the suits, the systems; we have service centre systems; because he’s an engineer” – he thinks if you managers don’t get it – and through we have complex systems and not-so- train everybody in quality tools and send studying their system they realise all the complex ones – within transactional them out to solve problems, and then it fails, counter-intuitive truths we have discovered services they vary from simple to complex. I you should do it again. And I thought, well, for ourselves. And that’s the point: they will be publishing a lot of this stuff later this you should study why it fails! So I became realise it. If you stand up in a room and say year. One of my colleagues, Stuart Corrigan, very interested in the idea that quality as it to managers “I tell you what: targets make has just published a book The Need for was being taught back in those days – and performance worse” they will argue and Change [available through Triarchy Press] still these days with Lean Six Sigma – had rationalise. If you tell them “demand is your which addresses the need to establish what within it a philosophy that is diametrically greatest lever” they will map it on to their kind of service you are before you start opposed to the philosophy of the firm. current world view – and it’s their world studying yourself. I also read Deming’s work – and it just view that is the problem. If you take them took my head off. Deming taught me what’s out to study, they change their world view. o: How rapidly have client-side wrong with management: it’s a management organisations and systems evolved problem not a quality problem. He said we o: What do you see as having been the compared with that evolution you’ve need to reinvent management – we need most fundamental evolutions of your just described? to change it. He said we need to run our thinking over the time you’ve been in JS: Well I think the way to answer that is organisations as systems. He gave a lot of this arena? You’ve been refining this for something Russ Ackoff taught me. He examples in his books about manufacturing over a quarter of a century now, after said, basically, “look: if you are doing the but not much about service organisations. all… wrong thing you can’t learn, you will only So that became my interest – and ended up JS: I think the first big change is speed: we be trying to do the wrong thing righter; if being my life’s work. are now much faster – or, rather, we help you are doing the right thing you will always In the ‘80s I was only one page ahead of our clients in a much faster way – because learn – even if you are doing the right thing my clients, to be honest with you, trying stuff we know exactly what to go and study, wrong”. My clients are like that: we teach out and learning. Then through the ‘90s we whereas we were kind of working it out in them how to do the right thing, and they really got a handle on how to study service the early days. The second big area where go off up the learning curve on their own. organisations as systems and how to design we have developed is that we have learnt Our clients become quite independent

“Human beliefs, like all other natural growths, elude the barrier of systems.” – Miguel de Unamuno

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of us quite quickly. That’s good. But they that all of those major flagship programmes good watchdog; but if you read the report, maintain contact with us and we continue are massively over budget – we’re talking it’s very good on the evidence – “look, to provide them with support on questions hundreds of millions. these have all failed and it’s costing like “how do I do this?” and “how do I do I have spent a lot of time in Australia, and hundreds of millions” – but it’s very wrong that?” – which is quite easy to do if they are the Australians are much more open about on the conclusions. In fact the conclusions already thinking in the right way. If they are the failure. So what tickles me is that there is could have been written by IT companies. not thinking in the right way you can’t help a massive failure in Western Australia, and They are saying we need to bully more them. So they are all in various places on it appeared on the Scottish government’s government departments to share services the learning curve. policy document recorded as an example of – well, that’s clever; we need to make For example, if you take a big financial success! How does that happen? Because them standardise the work, because the services company, it will take a year or two the IT providers feed policymakers with IT platforms require it; and then it’ll work.

If you send in the suits, the managers don’t get it – but through❛ studying their system they realise all the counter- intuitive truths we have discovered for ourselves❜

to get the majority of managers changing things policymakers want to hear. And this Well, it won’t. One of the features of service their thinking, and it will be bit of a village is really important, you see, as we’ve now design is that you have a high variety of market in terms of where they are all up to – got ex-leaders of IT companies forming demand. So if you do anything to stop the but that doesn’t matter because at least they the government’s IT policy and strategy. system from absorbing variety what’s going are all moving in the same direction. So what do you suppose they are going to to happen to your costs? And that’s the story The interesting thing also is that once say? “It will be alright if you do it right.” OK. of what’s gone wrong. they have made the switch they never go “Show me one,” I say. Because there aren’t back. They will all tell you this. You can’t go any. o: That’s pretty damning… Do you see back. Why not? Primarily because you have There is massive failure – and any light at the end of the tunnel? understood what’s wrong with the old logic. underpinning it is a number of levels of JS: We live in a changing world. I said If you take the classical service logic; we problems. The first is they are all reliant earlier, the people who get this stuff don’t are going to have a front office and a back on big IT systems – so it’s IT-dominated give it up. There are now thousands of them office and we’re going to standardise the or IT-led change. I always refer people around the world (there are only 60 of us work; we’re going to specialise the work to to a marvellous book called Dangerous at Vanguard, but we teach others how to reduce the training costs; and the managers Enthusiasms by Robin Gauld and Shaun do it and once you got it you got it). In the all work on the core paradigm: how much Goldfinch which gives a tsunami of public sector they are running up against work is coming in, how long do people evidence of the failure of large-scale IT the status quo – but that’s not a problem, in take and how many of them are there – you programmes. Thirty-odd per cent don’t even fact it’s actually less of a problem now than learn that while it is conventional it is wholly see the light of day; a further 60-70 per cent it was under the previous government when wrong. Once you have understood what’s cost a fortune and never come right. That everything was controlled by the centre. wrong with that you never go back to it. doesn’t leave much, does it? Things will take time. The IT companies are So that’s the first level of problems. The not particularly warm towards me, but that o: One of the things you’ve been second level of problems is that basically won’t surprise you… particularly vociferous about in recent it’s a management problem: if you run a I have a number of jobs on at the moment times is public sector shared services conventional command-and-control-type in the private-sector outsourced services in the UK. It’s probably safe to say design, and try and build that into a shared area where the clients have started reading you’re not the biggest enthusiast for services – and again it is IT-dominated – my stuff and have contacted me saying this trend – what’s the problem? you’re going to knacker yourself. Because “we have this outsourced deal based on JS: Well, a complete lack of attention to the all of these assumptions about it being volumes and transaction costs and now evidence. And the evidence is extraordinary, cheaper to have front offices and back we understand what’s wrong with it. And and mounting. It’s costly – the last big offices and to standardise: they’re not true. we need some help to get out from where piece of evidence coming out of the UK is I am very disappointed with the National we are to get to a better place…” Now, the National Audit Office report which says Audit Office because they used to be a when you go to help these people it’s not

@BetaLeadership: Plenty of consultants, experts and managers will tell you targets work. When you carefully study systems you´ll always find that they don’t

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24-28 John seddon.indd 27 19/6/12 11:45:55 INTERVIEW John Seddon

IT providers feed policymakers with things policymakers ❛ want to hear. And this is really important, you see, as we’ve now got ex-leaders of IT companies forming the government’s IT policy and strategy❜

uncommon to find that as much as 60-80 all these mistakes over the last ten years you must put measures of achievement per cent of the demand going off to the – but they don’t tell anyone. I know quite a of purpose in customer terms into the outsource provider is failure demand. And number of big blue chip companies that work. Managers learn to work on the you are paying them £17.50 a pop… It’s have gone on this shared services route – leading measures – customer demand, absurd… of various kinds – but they wouldn’t make it capability and capacity – and understand So they got that far and they understand public that they’ve messed up… the relationship between these leading that this isn’t very clever and that the more measures and the old lagging measures failure you get the more it’s going to cost o: Perhaps not… So, John, what – which they then give up managing with, you. They know that – but they need help to advice can you give our readers to get for now they know what damage they map out their way to where they need to be. going in the right direction? caused… JS: Well, looking at some of the basics: o: Are you any more positive about the you have to understand the nature of EVEN MORE way the private sector tackles shared the demand, then you have to design For more from John Seddon, see his participation services? the service to absorb the variety of the in our 2011 roundtable ‘To Share Or Not To Share?’ JS: I would say that the private sector made demand. To help you learn and improve online now at http://bit.ly/Kefig6

“All systems are oligarchy. There is no other.” – Tom Metzger

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24-28 John seddon.indd 28 19/6/12 11:46:11 p29 20859-101909 SIEPA FP.indd 29 12/6/12 17:20:47 At Your Service? Service marketplaces promise a revolutionary way of connecting buyers and providers of services – across multiple geographies and with potentially huge gains for both ends of the trade. Steve Bynghall examines a rapidly growing space – and asks what it means for the future of work…

Steve Bynghall

Steve Bynghall is a freelance consultant and writer, specialising in knowledge management and collaboration solutions. He is a columnist for Outsource online.

espite four years of global platform to help manage projects, payments economic gloom and and the like. The service marketplace uncertainty, there are some makes most of its profits by taking a small businesses that have been percentage of the earnings made on each experiencing exponential project. Dgrowth. One corner of the outsourcing landscape which has been enjoying Explosive growth considerable success is the group of web- All three of the main big international service based marketplaces which offer a variety of marketplaces – oDesk, Freelancer.com different services predominantly to smaller and Elance – have almost been doubling businesses. in size each year. oDesk enjoyed $225m in These service marketplaces operate by overall fees in 2011, up from $115m in 2010. providing a web-based platform to access In 2009 this figure was approximately $60m. the talents of a global army of freelancers Meanwhile Elance claims that in 2011 “the and contractors. Generally this works by an number of businesses hiring on Elance individual or a business posting a job (“the and the number of online professionals employer”), freelancers and teams bidding working on Elance grew more than 120per for the work, and then one being selected cent.” Naturally this growth has drawn by the employer to carry out the work. the attention of investors. In January 2012 The sites provide value in a number of Elance announced they had secured $16m different ways including providing an online in funding, with oDesk securing $15m in reputation system based on employer March. ratings of each provider, as well as a Under this top tier are a layer of smaller

“Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men.” – Franklin D. Roosevelt

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30-34 Steve Bynghall - image changed.indd 30 19/6/12 12:44:01 FEATURE Service Marketplaces

marketplaces such as vWorker and Guru. com providing similar services, which have Whilst these been around a number of years and which task-based❛ sites have quite well-developed services. There are also some platforms particularly well may primarily established in specific countries or sectors; serve to facilitate for example PeoplePerHour.com is growing commercial rapidly in the UK. Like the larger global engagements, platforms, in 2011 it grew significantly – they are also from 120,000 users to 240,000. helping to embed outsourcing Related business models services as a There are related business models which mainstream are also growing at a rapid pace. One activity example is competition platforms, in ❜ which providers enter a contest (such as designing a logo) organised by a potential employer business. This is particularly prevalent in the area of graphic design, where sites like 99designs.com have attracted attention and healthy levels of funding, receiving $35m in 2011 from Accel Partners. A further development is a separate tier dealing with smaller personalised tasks and services focussed primarily on the individual. Players include TaskRabbit.com whose strapline is “Get just about anything done by safe, reliable, awesome people” and focusses on local markets in US cities, attracting $17.8m in Series B funding in December 2011. Yet another example is Coffee & Power, a start-up founded by Second Life’s Philip Rosedale. Whilst these task-based sites may primarily serve to facilitate commercial engagements, they are also helping to embed outsourcing services as a mainstream activity.

Future expansion This trend in growth in these service marketplaces is showing no sign of slowing. Ross Dawson, a Sydney-based business strategist, futurist and renowned crowdsourcing expert, believes that “service marketplaces will become fundamental platforms for the flow of global work, and will experience massive growth in years to come. The major marketplaces have solid, well-developed offerings that

@Khairil_Amali: Hoping that I’ll work as a freelance when I grow up. Working with bosses will never be easy.

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30-34 Steve Bynghall - image changed.indd 31 19/6/12 12:44:19 p32 20859-102658 BWTrading.indd 32 14/6/12 15:25:41 FEATURE Service Marketplaces

are ready for massive growth in both supply At the moment published in February 2012 by and demand for skilled services.” ❛the significant PeoplePerHour.com. It found 80 per cent Dawson predicts the pace of growth of respondents felt that “freelancing had in the immediate future to continue to majority of the become more common in the UK small be exponential: “We can expect work work carried out business community over the past year.” performed on online service marketplaces through the to grow close to $10 billion annually by major service Larger enterprises 2016, providing an increasing proportion marketplaces is At the moment the significant majority of the of the population in developed as well as commissioned by work carried out through the major service developing countries with either core or smaller businesses, marketplaces is commissioned by smaller supplemental income.” but they do provide businesses, but they do provide services But what is fuelling this growth? Together to the larger enterprise, and this is an area with the opportunity presented by the services to the likely to grow. In fact when we interviewed cloud, does it now show that outsourcing for larger enterprise, oDesk CEO Gary Swart for an Outsource individuals and smaller business has finally and this is an area feature last year [Outsource 24, Summer hit the mainstream? likely to grow 2011] he commented: “I still think we’re at ❜ the early stage of this market. I don’t think Attractive for small we’re at the knee of the curve of what’s to businesses and entrepreneurs come, as larger companies ask ‘what about Using sites like Elance was popularised us?’ These large companies need to save in Timothy Ferris’ book The Four Hour costs and would like to have fewer bodies Working Week. While that limited time and less office space and less infrastructure commitment seems like a highly unrealistic for their employees. They will need a way to gimmick, the attractiveness of using service leverage a global talent pool in order to get marketplaces for smaller businesses work done.” and start-ups is not difficult to fathom. In fact oDesk has already found Entrepreneurs can now access often very considerable success providing custom niche skills on-demand, at low cost and very solutions to some very large global web- fast speed. This helps to fuel growth, but based companies. For these businesses also innovation, giving businesses the ability oDesk has recruited, vetted and trained a to try out new initiatives at lower risk, and specific talent pool of freelancers from all often to be quicker to market. over the world, for jobs such as translation, For US-based web entrepreneur Jerry moderating photos or writing content. The McNamara, service marketplaces have company has also provided the direct web- proved vital to growing his businesses. based interface between the business and “Crowds can expand your competency the freelancer pool. nearly instantaneously and make you look particularly in the type of work relating to Having an on-demand dedicated pool like a genius,” McNamara says. “I’ve used internet growth – is helping to drive the from every timezone is attractive because crowds to fulfil a multitude of tasks that I growth of service marketplaces. it is cheap, flexible, fast and operates 24/7. either wasn’t good at or didn’t interest me. “Take the UK,” Barrie says. “Small As other businesses continue to rely more From a practical point, I’ve hired writers, business is the backbone of the economy. heavily on the web as a delivery channel for photographers, programmers, graphic There are 4.5 million small businesses, services or brand-building, there are likely artists, link builders, customer service.” responsible for 49 per cent of private sector to be further opportunities for customised Of course the need to have supremely turnover and they, by number, are 99 per enterprise solutions. low transactional costs may have been felt cent of enterprises. However, they all need more acutely as the economy continues websites. They all need to get online. Every The pool keeps on growing to stumble, but this seems unlikely to business today is an internet business in One of the major reasons for the growth evaporate once it returns to health. some way, shape or form.” of service marketplaces is that previously Matt Barrie, CEO of Freelancer.com, Barrie’s observations are corroborated comparatively isolated parts of the world believes demand from entrepreneurs – by a survey of 1,300 small businesses are now beginning to connect to the internet

@seanleom: This freelance design thing is starting to get old. I could use a steady cash flow

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at a revolutionary pace. In 2011 Cisco service marketplaces is that it’s just much predicted that by 2015 40 per cent of the easier to manage distributed work. This is world’s population – some 3 billion people partly through investments that the main – will be connected to the internet. marketplaces have brought themselves. For Matt Barrie this represents huge The process of hiring somebody through potential: “There are 2 billion people online. to paying a contractor can be managed There are 7 billion people in the world. through each of the sites, and because of Seventy per cent of the world’s population the maturity of these platforms (many are have not connected yet but they’re over a decade old), their offerings are now connecting right now. So as the other 5 well-developed and generally very easy to billion connect, I think it’s going to be more use. and more in the mainstream consciousness An important part of this is the online that the rest of the world is going online.” reputation system each of the platforms Barrie has also seen how top earning have in order to help the hiring process, but freelancers now become employees there have also been various enhancements themselves, often hiring freelancers who which reduce risk such as the development are just starting out: “We’re making a of recognised tests on each platform documentary at the moment where we are reflecting different expertise, on-boarding interviewing freelancers from around the and registration processes for freelancers world. The number one thing they all say is which help to filter out fraudsters, and ‘I want to hire another person.’” arbitration services to settle disputes. Another major reason for growth is The Chinese market that technology is making it far easier to Another market which has the potential to collaborate across borders. Some of this open up is China. Here, in fact, service technology, such as Skype or Google marketplaces with some similarities Docs, can be used completely free and as to Freelancer.com have developed its usage increases people are becoming separately over the past few years. Known more comfortable with the idea of working as “Witkey” sites (an abbreviation for the together virtually. The platforms themselves "key of wisdom") in late 2010 a conference have also added various tools such as suggested that there are over 20 million dashboards, instant messaging and even registered providers. The Chinese market video conferencing. leader is Zhubajie.com, which claims to have over 6.5 million users worldwide, a Is this the future of work? huge amount which dwarfs other rivals. It’s still too early to assess what the Interestingly, after venture capital firm As other influence of service marketplaces will be IDG Capital Partners invested what’s been ❛ on the general future of work, but overall it described as “tens of millions of dollars”, businesses appears that they are becoming a core way they opened an English-language version continue to rely that small business and start-ups outsource, of the site called Witmart.com firmly aimed more heavily on the and every year this creeps more and more at US-based small businesses. Whilst it web as a delivery into the mainstream. The pace of growth is remains to be seen how well this does, as channel for showing no signs of stalling, the technology more and more Chinese providers learn services or brand- and platforms make it easier to manage English, it seems likely they will become building, there are work, and risk continues to be reduced. dominant forces in this market, both as likely to be further providers and, potentially, as employers. EVEN MORE opportunities For more from Steve Bynghall check out his columnist Platform maturity and for customised profile online at www.outsourcemagazine.co.uk/ technology enterprise columnists/item/3603-steve-bynghall and see the links Another major reason for the growth of solutions.❜ to his column portfolio.

"The man who gives me employment, which I must have or suffer, that man is my master, let me call him what I will." – Henry George

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30-34 Steve Bynghall - image changed.indd 34 19/6/12 12:44:42 p35 20859-102681 SSON FP.indd 35 18/6/12 14:18:42 Plenty To Chew On At the end of May, Outsource partnered with law firm Stephenson Harwood to produce an exclusive dinner and roundtable debate on the topic ‘Outsourcing and the Inexorable Rise of Extraterritorial Regulation’. Some of the finest legal minds in outsourcing gathered to discuss one of the hottest and most complex topics in the space. Here, we share some of the thoughts and insights to emerge from a wide-ranging, forthright and frequently provocative debate…

ith the recent backdrop against, and a point of origin for, announcement by the a remarkably wide-ranging (and at times European Commission controversial) roundtable debate held by of a new draft Regulation Outsource and Stephenson Harwood at on data protection, the latter’s London HQ at the end of May. theW issue of extraterritorial regulation Some 16 general counsels, heads of legal and compliance – never too far from the and other similarly senior representatives minds (not to mention the nightmares) of various corners of the outsourcing of many outsourcing professionals – has space gathered for a dinner and debate once again been shoved to the fore. The entitled ‘Outsourcing and the Inexorable Regulation – which, it should be pointed Rise of Extraterritorial Regulation’; as well out, still has around two years to go before as the new EU proposals, the host – the it even becomes law, and then a further two aforementioned John Buyers – invited years before its various components come guests to consider factors such as US into effect – aims to unite what Stephenson copyright enforcement measures “and Harwood’s John Buyers describes as the increasingly aggressive way in which “a patchwork of various national data US authorities are prosecuting under the protection laws" into "a single set of Digital Millennium Copyright Act”; and “the European rules for data protection valid tendency towards increased regulation in everywhere across the European Union; one the cybersecurity space [and] the inevitable rule for twenty-seven member states and for rush by national authorities to implement 500 million people” – the words of Viviane cybersecurity measures in the wake of Reding, Vice-President of the European terrorist attacks”. Commission and EU Justice Commissioner Before dinner was served, and by way who oversaw the creation of the draft of setting the scene, Marie-Madeleine Regulation (and who claims the reforms will Kanellopolou of the European Commission save businesses some €2.3bn annually). presented some details of the new draft The proposed Regulation formed the Regulation and explored some of the drivers

“Generally I’m against regulation.” – Dorothy Denning

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behind it, pointing out that the current EU legislation is in fact necessary, the onus data protection legislation dates back to should be on the legislative body to make 1995, since when both technology and its legislation as easy and as affordable as the global socio-economic picture have possible to implement – and that part of evolved significantly. She explained that that process should be to ensure that only during the consultation procedure which appropriate data should come under the preceded the formulation of the draft legislations terms of reference. He asked proposals some 72 per cent of Europeans rhetorically: “Why should the data you questioned said that they were concerned are happy to give away on your business that their personal data may be misused; card be considered absolutely sacrosanct and at the same time, companies operating in other formats?” If the cost burden within the EU have to take into account being placed on organisations isn’t in fact 27 different – sometimes very different – warranted when it comes to much of the national legislative frameworks around DP. kind of data being protected, another guest This legal fragmentation, she said, was of asked, shouldn’t it be the person whose great concern: “For the Commission, this is data is being protected who pays for its not only an extra cost for business, it’s also a protection (directly rather than indirectly in missed opportunity: it holds back economic the form of higher fees and charges)? growth and innovation.” The point was then made that in the case With dinner served and the debating of organisations using and transferring data juices beginning to flow, it became clear to and from third parties – especially those relatively quickly that many present offshore outside the EU – the cost burden felt a degree of unease over whether is still greater as the responsibility for

The extra administrative burden placed❛ upon organisations was described by one attendee as being “potentially the straw that breaks the camel’s back for some companies” struggling across a particularly desolate economic landscape❜ this new raft of regulations – indeed, ensuring the integrity of that data ultimately extraterritorial regulation generally – rests with the former rather than the latter, would in fact go much beyond being “an so the former must not only protect its data extra cost of business” themselves. The but must also stand as guarantor for the best extra administrative burden placed upon behaviour of its supplier: “The obligation is organisations (in particular the requirement on the data controller to secure your data. for all organisations employing more than Ultimately a bank, for example, is on the 250 staff to have a full-time data protection hook to ensure that their provider is looking officer) was described by one attendee after customer data,” stated one guest. as being “potentially the straw that breaks One of the guests present, a the camel’s back for some companies” representative of a provider company, struggling across a particularly desolate pointed out that this means a hideous economic landscape. burden in the form of audits of great This concern – echoed by many of those regularity – made even more hideous present – led to a number of different by the fact that his company has clients attendant points being raised. Firstly, from multiple geographies, thus requiring one guest opined that if data protection compliance with US regulations too; all

“Is regulation per se bad? Is better regulation bad? I think better regulation is good for the business community, and I think that’s something we should get together on.” – Ed Rendell

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36-39 stephenson harwood.indd 37 19/6/12 16:21:58 roundtable Extraterritorial Regulation

these costs had to be passed back to his unacceptable’…” “China is the most challenging state when customers and thence to the end users, The second was that the overwhelming it comes to data protection – along with often consumers. There was a danger of complexity of different legislative copyright and patent infringement”, while throwing the baby out with the bathwater frameworks, when combined with the another pointed out that with the rise of KPO in the sense that many of the cost savings geographical promiscuity of much data – and the emergence of big data the costs which can be made by outsourcing, and especially when transfers between different for offshore providers of sticking to the offshoring especially, could be nullified in organisations are involved, and with one eye numerous different legislative frameworks part by the resources needing to be devoted on the advent of cloud computing provision were snowballing – “data analytics houses to compliance. and the mind-boggling ramifications of in India and China are facing huge costs in It was mentioned that the proposed virtualised data storage – mean that in compliance.” Regulation aimed specifically at reducing many cases companies simply exist in a de John Buyers pointed out that a less-cynical some of the administrative burden being facto state of non-compliance. As two of the perspective towards offshore destinations, so despised by simplifying the excessively guests mused: the EU proposals and data protection Far from being merely a painful burden, regulation could be ❛a force for driving innovation – indeed, could be a society- critical economic engine in its own right.❜

complex status quo within the EU at least – “You absolutely have no clue where to legislation generally could be to say that at which point the conversation took a more start and where to end; you don’t know regulations in one place have been seen fiery tone as one of the guests brought into whether when your subsidiary is in India to have beneficial legislative ramifications question the entire European project…: it’s compliant or not, because you don’t in others: “What you find is that the Indian “Sovereign states will implement things know whether you’re complying with the regime is moving towards the EU regime… they want to implement, when it comes UK regulations, the EU regulations, the US Parallel measures are actually being enacted to European edicts.” A flurry of points regulations – which regulations are you by Indian states. And this is happening were raised regarding the gap between complying with?” in other outsourcing jurisdictions as well: intention and implementation, the danger in “The only thing you know for certain is Australia has enacted a Data Protection law assuming all nation-states are keen to “play that you’re not compliant!” which is very similar to the EU regulations; fair” and whether the competitive advantage And there were plenty of murmurs of Canada has done the same.” to be found in operating in less judicially agreement… One guest quoted an Indian Another guest believed that, similarly, stringent geographies would be outweighed proverb – “For a thief there are 99 days of the adoption of data best practices by one in accordance with the laws of the market bliss and one day of reckoning” – and said organisation encouraged their rapid adoption by customers’ unwillingness to entrust such that even though many organisations are by others – both because of the market organisations with their data. trying very hard not to be “thieves” and requirement to stay above the normative Two especially salient points arose here. spending vast sums in the process, a day benchmark mentioned earlier, and also The first was that the greatest value of of reckoning in the form of the full weight because service providers and software the new Regulation – and indeed of data of the various regulatory frameworks is vendors create products in accordance with protection regulations full-stop – could be eternally just around the corner because of organisational needs, and so cutting-edge that it would act as a normative guideline the sheer volume of data involved and the versions of various products would tend to for the invisible hand of the market: in other number of different points of potential failure conform to the latest legislation globally. The words, without such legislation in place (especially in a multi-geography, multi- idea was then mooted that, far from being customers would have no guidance on sourced environment). merely a painful burden, regulation could how to discriminate, in that area at least, India was brought up by one guest as be a force for driving innovation – indeed, between good and bad organisations. an example of a geography which has could be a society-critical economic engine “Had there been no legislative protection in perhaps had a less than rigorous approach in its own right. The existence of regulation, the first place, how would we understand to data protection in the past, which initiated and the requirement for compliance, reputational damage? Because there another fiery chat about the various merits creates a commercial ecosystem which would be no norm against which we or otherwise of the major offshore sourcing simply wouldn’t exist otherwise and this in could say ‘that’s acceptable’ or ‘that’s destinations: one attendee opined that turn generates both economic activity and

@RossSpano: Free markets produce more economic growth, jobs and higher standards of living than systems burdened by excessive government regulation.

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36-39 stephenson harwood.indd 38 19/6/12 16:22:09 roundtable Extraterritorial Regulation

philosophical innovation of the sort which has contributed a great deal to the ongoing evolution of the outsourcing model, for The Draft Regulation example. Towards the end of the evening a debate examined arose over the question of whether or not there was the need for a global association by Jonathan Kirsop, Stephenson Harwood to be formed which would create a body On 25 January 2012, the EC released a draft Regulation which (together with a of knowledge which could be used as Directive to apply primarily in respect of law enforcement by public bodies) will replace the existing EC Data Protection Directive (95/46/EC) and the patchwork of reference by companies involved in data implementing national legislation which sits underneath. transfer, on two levels: a global level, outlining generally accepted global requirements and obligations; and a local Some of the key provisions are: level, detailing the specific legislative Harmonisation: as a Regulation, the law would have direct effect and apply across requirements of each country of activity. One all EU jurisdictions without requiring national, implementing legislation. This would 1 remove some of the inconsistencies and difficulties in monitoring compliance of the guests pointed out that the various across EU jurisdictions. A data controller’s obligations would be enforced by one “lead” DP legislative bodies were often less than Authority which will usually be based on the place of main establishment in the EU. adept at ensuring that those organisations which would be affected by their legislation Extraterritoriality: the Regulation would apply to non-EU bodies who offer goods were fully informed about it, and that an or services to EU citizens or otherwise monitor their behaviour (albeit there may be 2 issues around the enforcement of this). association able to provide such a “global companion” and “local companions” to data Registration: the regular notification/registration process is removed and effectively protection and extraterritorial regulation replaced with a requirement for data controllers to maintain documentation of would be in an excellent position to assist 3 all processing operations for which they are responsible. Data protection impact organisations struggling with the compliance assessments will also be required for particularly high-risk processing. burden. If nothing else, it could act as Enforcement: Data Protection Authorities (DPAs) will have the power to impose a repository of information on breaches fines on a sliding scale up to 2 per cent of worldwide turnover for breaches. This of the legislations in question to provide 4 represents a massive increase in the enforcement powers for most DPAs. organisations with lessons hard learned. Of course, the above is nothing more Consent: the requirement for consent from data subjects has been made more stringent (with reference to consent being “explicit”. The Regulation expressly than an abridgement of the discussion over 5 states that consent will not be valid where it is the result of a significant imbalance dinner. A multitude of other points were between the data subject and data controller (e.g. employer-employee). The data raised during what was both a fascinating controller also has the burden of proof to show processing is lawful. and an extremely entertaining evening, and guests left with both minds and bellies Right to be Forgotten and Right of Portability: the concepts of the “right to be forgotten” and “right of portability” are introduced meaning that in certain suitably replete. The fact that such wide- 6 circumstances data subjects can require erasure of data and that data be ranging conversation emerged from the topic provided to them in a certain compatible format. is indicative firstly, of course, of the calibre of the minds assembled – but secondly, of the Mandatory Data Breach Notification: there will be an obligation on data complexity of the topics under discussion. controllers to notify the Data Protection Regulator of a personal data breach within 7 24 hours “where possible”. There is no de minimus threshold, as currently drafted, so It may well be that there is scope for an would apply to any breach. association of the kind posited towards the end of the meal; at the very least, there is Data Protection Officers: a designated Data Protection Officer must be appointed certainly enough confusion and ongoing where the data controller/processor employs 250 employees or more. concern – about both the scale of the 8 challenges posed by data and the methods The Regulation is still to make its way through the legislative process but is likely to be currently being deployed to overcome substantially on the terms drafted. Once passed, it will become law two years after. Most them – to warrant much more discussion estimate full implementation will occur in approximately 2015 at the earliest. and engagement from all corners of the outsourcing space and beyond.

“There is no such thing as free regulation.” – John Hutton

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36-39 stephenson harwood.indd 39 19/6/12 16:22:15 The Power of Two In the second article in his series of double-header interviews with professionals from around the sourcing space, Michael Stock puts some posers to a pair of global customer experience titans…

Anne Marie Forsyth Sidney Yuen

“Every interview I give is a chance to puncture the myth I’ve created about my work and refine it.” – James Ellroy

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40-42 The Power of Two by Michael Stock - subbed - NO PG NUMB.indd 40 19/6/12 12:48:26 FEATURE The Power of Two

Michael Stock

Michael Stock is the co-founder of CoachFirst International and the National Outsourcing Association’s Board Member for Offshoring. He is the former Project Director and Head of Business & Partnerships for Marketing, Communications & Audiences for the BBC.

oth Anne Marie Forsyth and Sidney Yuen: I had an excellent mentor and dinner – and that’s positive PR. Sidney Yuen have devoted started off in Amex – at that time, probably What made it work so well? We all have a a big part of their careers one of the best providers of a global common goal in APCCAL, to benefit people to building up two of the service. I was lucky to be head of customer in the industry, and individual associations. leading industry associations service, with an HR background and had More people are wanting to be on the bus Bfor customer experience, as Chief seven wonderful years at Amex, and later now, to join APCCAL. There is no financial Executive of CCA-Global and Chairman joined Convergys as head of Consulting gain and we give equal airtime. of APCCAL respectively. I began by AsiaPacific and got to truly understand asking them for some thoughts on mega deals and the really complex. As Thinking about outsourcing generally, success… founder of ChinaWindmill Foundation which the public don’t always see the benefits, attracts CSR investments, and now as MD of with new research conducted by the Anne Marie Forsyth: I have a passion for NorthgateArinso, a UK HR service provider, NOA revealing that 80 per cent of the customer experience because organisations my focus is on China. general public do not believe that can get it right without massive difficulties outsourcing helps the British economy. but many allow internal procedures to get We get huge Does industry PR matter much, could in the way and CCA has allowed me to satisfaction❛ from it be improved, and what do you see in express this. We get huge satisfaction from your crystal ball? sharing insights and helping people having sharing insights AMF: The risk is that people working “ah-ha” moments – but I don’t underestimate and helping in contact centres and outsourcing feel the difficulties in convincing the rest of the people having precious about criticism. Having just organisation. ‘ah-ha’ moments come from an IOD conference, business CCA always stuck by core values: – but I don’t has to restate its aims and become more improve professionalism and continuous underestimate acceptable to the public. Trust is a big issue. improvement. Easy to say, difficult to the difficulties People like the channels, phone or email, but achieve. And yes, sometimes there have in convincing don’t like being fobbed off. Organisations been competitive pressures from other should be open, and educate customers bodies chasing the coin – but we have the rest of the on how to communicate. Take it as an attracted the big brands, have a good organisation❜ Anne opportunity. The public want improvements, balance between big and small members Marie Forsyth organisations should be grateful. and have three distinct groups: Product and If I could say something to the UK Supply; Industry Council; and now BPO. APCCAL – the Asia Pacific Contact government, which has been slow to Survival is good! We picked a good CCA Centre Leaders Association – was formed acknowledge the collective value of frontline team, stable and long-term with about 60 four years ago in Beijing and I became people who serve people, in the UK or years’ of experience between five people. chairman two years ago to co-ordinate work, overseas, and too often disparaged with lazy Everyone is working twice as hard and we share best practice, and make awards and journalism: there is an opportunity for large are collaborative. Coaching has never been arrange country visits. APCCAL represents global outsourcers to bring much more of more important and this year in May we 11 contact centre associations in Asia Pacific their work to UK. We have loads of people, will have launched a new form of the CCA with two million contact centre professionals lower currency, things have changed. Why Global Standard, a Standard Lite, based on in the region. Last year was the biggest do we not make more of this? We have the self-assessment. event with 800 people at the Hong Kong gala language and flexibility.

@emotethis: 47% of US contact centers reward reps on customer sat ratings – agents *can* make a difference!

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40-42 The Power of Two by Michael Stock - subbed - NO PG NUMB.indd 41 19/6/12 12:48:32 FEATURE The Power of Two

Multi-media contact centres and social media bring the industry❛ a better image, with interesting jobs, solving problems. The old perception, the old image, is gone❜ Sidney Yuen

I’d say to Vince Cable in the government, developer attracts incentives, training, R&D longer low-cost, with the RMB appreciating come and talk to CCA, with a big forum of and data centres. 20 per cent with cost and talent inflation. chief execs of major outsourcers. The UK is My crystal ball? Crowdsourcing: using But the Big Four – PwC, KPMG, Deloitte good at it – skilled management, knowledge social media to get the crowd to help. and Ernst & Young – are finding it easier to and empathy – so there’s a window of deal with China’s government. opportunity to sell the UK as a good global What do you see as the emerging location for outsourcing, and an opportunity themes and headaches for leaders? Finally, what are some of the to be high-end, like Burberry. AMF: It was a privilege to have Melanie ingredients of a great day? SY: PR is key in outsourcing, whether Howard, author of Teleculture, host the AMF: When I am with a group of CCA for contact centres, technology or HR. CCA 2011 Convention. Three things came people at one of the three conventions, or Offshoring, for countries like China, is a big out: one, think about the value of what they 12 councils, where we have an outcome job-creation strategy for the government do and how this is communicated into the – that is great. And working with the team and so has good internal PR, helping the organisations; two, how do we understand in-house: tiny, and flexible, not held back by economy, with retraining and investment. consumer expectations – do we spend too politics, doing what needs to be done. We Multi-media contact centres and social much time boring them with questions? rarely have bad outcomes, and I am often media bring the industry a better image, And three: the hunt is on for silver bullets – humbled by the passion of the people in this with interesting jobs, solving problems. The eg BoA and SKY – and there’ll be more on industry – and never deflected by what may old perception, the old image, is gone. this at the CCA Convention 2012. be in the news. We might educate the public that the SY: Key trends in China are, one: e-business SY: Personally, to help someone outsourcing business is a major industry cloud computing driven by finance, telecom unconditionally, never expecting a return. that improves the experience of users, and and healthcare; two, the hot topic is moving And when I can, to be 25-30m underwater, outsourcers must be able to manage the from “Made in China” to “Served in China”, no BlackBerry, totally immersed in a world whole business, end-to-end, and integrate. seen as a cleaner industry – huge demand; of magic in a top dive spot, like Sipidan in Government support is key to the and three, 22 Chinese cities have been East Malaysia. outsourcing industry. In China there are 6.5 designated as outsourcing hubs and four as million graduates per annum but only 30 per “cloud computing cities”. EVEN MORE cent find jobs. As well as tax support, China Headaches are: governance – China is in For more from Michael Stock, check out the first is pretty sophisticated in promoting inward the beginnings of learning and there is a big instalment of The Power of Two – online now at investment – eg in Chengdu, a science park debate about IP protection; and China is no bit.ly/LG1lS7

“An interview has become such a confrontational thing. It makes you very defensive.” – Francesca Annis

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40-42 The Power of Two by Michael Stock - subbed - NO PG NUMB.indd 42 19/6/12 12:48:44 p43 20859-102591 NOA FP.indd 43 12/6/12 17:21:10 Size Matters With over 2.5 quintillion bytes being created every day, data has got very big indeed – and so has the commercial opportunity implied by such a vast repository of information. But what forms does this opportunity take – and who’s best placed to take advantage?

“Is the disruptive value of big data going to continue to accrue only to risk-taking early adopters for the foreseeable future?” – Jim Stogdill

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44-49 Kavita.indd 44 19/6/12 12:50:03 FEATURE big data

Kavitha Nair

Kavitha Nair is a business journalist specialising in information technology and processes. She is a graduate of the University of Mumbai.

ervice providers are feeling the However, many mainstream providers are organisations that are able to successfully heat of big data as more and yet to catch up. A big difference between a leverage data are often the Web 2.0 more clients expect them to software vendor and an IT service provider companies, whose infrastructure is built on build capability around mining is that software vendors tend to take bigger NoSQL databases. Stanton Jones, Analyst and analysing the huge amounts bets. They understand what the customer of Emerging Technologies at Information Sof transactional data that is now being plans to buy and develop the technology Services Group, believes there will however generated. However, industry watchdogs accordingly. Service providers typically be discreet projects around big data – but believe that despite the huge demand would wait for the buyer to ask them for a these will be bundled together with the and some success stories, the traditional solution, post which they resell the solution service offerings from a provider (albeit on outsourcing providers are having a hard to their other clients. a small scale). “I think we are years away time getting a grip around the whole big According to Mendel, the traditional from any sorts of mature managed service data phenomena. model of opting to build a solution based offerings,” he added. “This is primarily because,” explains Dr. on open source and then integrate it within Big data technologies like Hadoop, Thomas Mendel, Vice President, EMEA, existing offerings, which are commonly complex event processing, etc. enhance HfS Research, “they don’t know how to sell based around labour arbitrage, will not a data-driven analytics and decision it.” Mendel explains that historically most work. Providers will need to buy products sciences culture in an organisation. What software innovations get productised to from the open market, integrate them into this implies is that data can be collected enterprises first before service providers their offerings and quickly go to market. from different business processes – be it in accept them or they are made available in “Most of the providers are talking about CRM, marketing, or manufacturing – and a SaaS model. This scenario is replicated it but are yet to productise their offerings. processed to drive insights. It also enables in big data as well. New technologies They need to completely rethink the way a feedback loop within the process, which like Hadoop are quickly gaining traction they innovate and go to market,” says allows for continuous improvements. and some companies like IBM, EMC and Mendel. Consequently parts of the process like Hortonworks, to name but a few, do provide Furthermore, integrating big data anticipation of faults and exceptions can be a combination of service and product or solutions within legacy systems is a automated, thus improving the service. This software based on this open source solution. challenge as well – which is why the automation does not necessarily imply the

“Size doesn’t matter; fast data is better than big data” – Hilary Mason

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44-49 Kavita.indd 45 19/6/12 12:50:12 p46 20859-102657 Gartner FP2.indd 46 14/6/12 15:26:08 FEATURE big data

Dai Clegg Dr Anurag Venkat Rajan Srivastava

Integrating big data solutions within legacy systems is a challenge❛ as well – which is why the organisations that are able to successfully leverage data are often the Web 2.0 companies❜

redundancy of human intervention. There Global IT Business, Wipro. by outsourcing,” says Clegg. will always be key human decision points as Wipro built a solution that linked the click Pankaj Kulshreshtha, Senior Vice heurism and human judgment will always information of the insurance company’s President – Smart Decision Services be important. Big data also encourages a website for different products, the derived – Analytics and Research, Genpact, discovery-driven approach that enables social information based on IP addresses, acknowledges the importance of training innovation and new opportunities as and open data information from public and adds that it is an area of significant opposed to a merely problem-driven sources. Wipro’s algorithm-based solution investment for his organisation. Expertise approach to analytics. provided insights on the geographies on big data is quickly becoming a worthy According to Rob Toguri, Vice President, from where the customer clicks originated differentiator in outsourced service Business Information Management, and simultaneously linked it to the social offerings. This realisation is driving a new Capgemini, the whole method of traditional network and demographic information. generation of the market, where innovative data modelling is moving to a much more This approach is starkly different from providers can leverage large volumes nimble and agile approach based on traditional data warehouse-based of data, combining analytical tools and ontology and events from the traditional customer intelligence solutions, and was technologies with industry/functional indexing of the structured logical data primarily ontology-driven. This allowed knowledge to create business insights. modelling techniques. the insurance company to decipher what Simon Sammons, Accenture’s global “This, therefore, requires an ontology- kind of customers clicked on what kinds of BPO offering lead, believes that “while driven approach wherein changes to products and the locations they are based. this is the market that we are driving models can be made depending on the data This data also considered any natural today at Accenture, many BPO providers insight on a dynamic basis,” Toguri says. events in and around those geographies aren’t here yet.” According to Sammons For instance, Wipro has helped an based on public information. As a result, many providers are still in the third and insurance company monetise on disparate the sales team could now effectively target occasionally even second generation of the data, which helped it increase its target consumers. market. Without the access to industry and customers, possible premiums, and But in order to exploit these new sources functional knowledge and without deploying effectively address customer churn. of data, new skill sets will be required (as analytics, some providers view the market “The insurance market is a mature but is the case with any new technology). The as one in which it’s all about transactional difficult sector characterised more by churn acquisition of these skills will be a challenge processing and cost alone. This view is than an absolute market growth. In order for the outsourcers feels Dai Clegg, Big increasingly out of step with what clients to help the company ramp up operations, Data Evangelist EMEA, IBM, but once really want from BPO, believes Sammons. Wipro went beyond the information available acquired will also prove to be a huge market As BPO evolves and matures, the field within the enterprise data and leveraged for outsourcing providers. of providers is beginning to separate out the open data outside of the organisation “As an alternative to taking the hit on in terms of their ability to provide new database,” says Dr. Anurag Srivastava, Chief investing in new technologies and skills up levels of value. Part of the value is the Technology Officer & Senior Vice President, front, companies can make rapid progress ability to analyse data about the functions

@shevski: “I’m sick of big data: what’s unique to our time is that individuals have the computing power to take on small data independently” #EDF2012

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44-49 Kavita.indd 47 19/6/12 12:50:21 p48 20859-102673 GlobalBus FP CIO.indd 48 14/6/12 15:26:42 FEATURE big data

Big data encourages a discovery-driven approach that enables ❛ innovation and new opportunities as opposed to a merely problem-driven approach to analytics❜ and processes being outsourced to more Deepinder these factors and the challenges that go predictably drive business outcomes. Singh with it.” IT providers today are all placing Dhingra, Therefore with a focus on outcomes, the significant bets on the bucket of analytics, MU Sigma capabilities these organisations now expect be it traditional or big data. These the IT service provider to demonstrate are companies are strengthening their real-time sense and response to business capabilities either through acquisition processes. This followed by fluid decision- of smaller organisations or through making, predictive analytics, and an ability partnerships. “On the analytics side what to integrate data from outside the enterprise. we see are software services, appliances “Now 90 per cent of the data needed bundled together with consulting services,” for the business process is outside the added Jones. Head of Strategy, Mu Sigma. enterprise. Companies need to be able to For instance, the BPO arm of Infosys, Symphony Teleca – in addition to building harness this data – find the golden needle in which has been investing significantly competency around big data technologies the haystack and rapidly make decisions,” in new business models like business and processes such as Hadoop, predictive says Venkat Rajan. process on cloud and business platforms modelling, semantic intelligence, CEP, Consequently, with the demonstration of leverages its preconfigured Infosys Edge social media, and log mining – also has these capabilities, clients of some providers Business Platform, which includes a social accelerators that combine their capabilities are re-aligning their business models to media platform for analysis of quantitative and partner solutions. For example, in take advantage of the new value. and qualitative data. This is delivered as pricing analytics, the company has solutions “They’re sharing the results – an outcome or transaction-based pricing that combine analytics and optimisation on increasingly we’re seeing outsourcing model – and as an alternative for customers internal transactional data with competitive contracts that are structured to incentivise who may already have in place an existing and social media data coming from the value creation through gain sharing, for platform, the company employs its internet. example,” says Accenture’s Sammons. Technology Value Accelerators tools which “This can be used in Retail and Big data is poised to bring about a sit on the existing platforms to accelerate Consumer Goods, Banking and Financial revolutionary paradigm shift. The industry the delivery of the expected business Services, Electronics and many other has been on a two-year progressive cycle. outcomes. B2C and B2B2C segments to "sense It started with virtualisation – which is “These solutions are bundled with and respond" in real-time to competitive infrastructure-as-a-service – then moved to BPO service offerings and offered to behaviour or react to an individual cloud computing focussed on the hardware customers along with analytics to enhance consumer’s relevant social media update,” and is now focussed in the application business value delivered,“ says Anantha says Venkat N Rajan, GM Analytics, space: SaaS and cloud applications. Radhakrishnan, Vice President and Member Symphony Teleca. “I see at least two or three years before of Executive Council, Infosys BPO. However, Chirajeet Sengupta, Practice we exploit big data in a massive way – we The decision sciences and analytics Director, Everest Group points out that don’t even know its edges and complexity solutions company Mu Sigma uses an the transition for buyers into big data yet. We already have data as a service and interdisciplinary approach, which includes is far from easy. “This entire process what we are talking about here is adding to business, mathematics and technology. This calls for process reengineering, as data the data technology, both knowledge-based hybrid approach brings product solutions resides in a fragmented manner within and machine intelligence technologies. But together with the services delivery model to an enterprise. All of this data needs to be when it does take off those in this space will provide value. integrated. Then there is the technology be highly sought after,” says Colin Nunn, “The services model gives flexibility, transformation, which helps optimise the CTO CloudApps, Logica. agility and creativity and the product or the processes. This primarily integrates the EVEN MORE asset-based component allows for scale different applications used to pull pieces For more on big data, see columnist Simon Briskman and time to market when solving a business of fragmented data. And finally there is the on ‘Big data meets the regulators...’, online now at problem,” says Deepinder Singh Dhingra, service delivery. The buyers understand http://bit.ly/KiuUbQ

“In every area of science we are generating a petabyte of data, and unless we have the equivalent of the 21st-century microscope, with faster networks and the corresponding computing, we are stuck.” – Alex Szalay

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44-49 Kavita.indd 49 19/6/12 12:50:45 Invested Outsourcing More and more insurers are contemplating the Investment Management Outsourcing option – but what does this entail and what are the attendant risks?

Duncan Pithouse, DLA Piper

Duncan Pithouse is a Partner with DLA Piper, specialising in non-contentious technology and sourcing matters, and focussing on complex international outsourcing contracts. He advises on a wide range of outsourcing transactions and all aspects of a client’s sourcing requirements.

he triple threat of Solvency to cover all bases with regards to scoping, FSA, Solvency II and other insurance II, the reduced yields from transition, change management, and exit, sector-specific rules on outsourcing, so it “traditional” asset classes that some issues become magnified and other will of course be essential to ensure that mean new classes need to be new considerations arise. the contract covers these issues. This examined, and the ever-present has two impacts. First, the SYSC rules Tneed to reduce internal fixed costs are What then are the top five applicable to insurers tend to relate to causing insurers to look at outsourcing the IMO-specific issues that the manner in which the arrangement is management of their investment portfolio. need to be considered? selected and managed and so the overall Investment management outsourcing procurement and the terms will need to be (IMO) will need to deal with many, if not all, Regulatory Overlay thought through carefully to ensure that the of the various issues as with any large-scale This type of outsourcing will contractual “triggers” allow for the required outsourcing. So, whilst it will be important 1 inevitably be subject to the various level of management.

“Goodness is the only investment that never fails.” – Henry David Thoreau

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50-51 DLA.indd 50 19/6/12 12:52:30 FEATURE Investment Management Outsourcing

Secondly, if there is any suggestion that Control over Investment so as to perform some form of more the outsourcing is taking place on the Decisions immediate and quicker benchmarking investment manager’s terms, they will need 3 Leaving aside the regulatory of fund performance, and link relative to be carefully considered not just from nuances of the degree of discretion performance against this benchmark to the the usual risk and legal issues but also to involved and the impact that has on investment manager’s revenue under the ensure that the regulatory requirements are carrying on FSMA-regulated activities, one deal. covered, since the investment manager’s of the principal drivers, from a sourcing terms might not be set up properly to take perspective, behind investment portfolio Risk account of those factors. Rules applicable outsourcing is to gain access to a different As the saying goes: “investments to the carrying on of business outside of skill-set, particularly in relation to the 5 can go up and down”, and the “home” jurisdiction of the insurer client potential investment in different kinds of investment managers are at pains to might also need to be considered if the assets. ensure that they are not responsible for the assets relate to insurance business written The insurer needs to balance its prevailing economic climate. Liability is in other countries. potentially inherent desire to control the then generally limited to the losses that are Likewise, the broader regulatory investment classes, against the investment caused by the negligence or wilful default permissions and licensing regime will need manager’s ability to invest in the classes of the investment manager, but this can be to be considered not just in relation to the in which it considers appropriate (which is difficult to prove given it would, essentially, terms of the contract but also in respect of after all part of the skill-set that the insurer require an analysis of the actual steps the procurement and appointment to make is buying). and decisions made by the manager, as sure that these are performed within the However, loading significant restrictions against those that ought reasonably to have requirements (for example any appointment on the investment manager’s ability to invest been taken. Contrast this with what can requirements under the Pensions Acts), so where it thinks appropriate may well lead be achieved from a liability perspective that the contract itself is valid. the investment manager to seek to limit on other outsourcings that involve any liability and to move away from any handling of money (e.g. payroll or portfolio Pricing outcome-based approach, on the basis administration) and it seems to be a less Typical outsourcing pricing models that the more limited its degree of control, than perfect position. 2 such as fixed price, FTE-related the less it can be expected to be able to By the same token, a liability cap pricing or some form of unit pricing influence the success of the portfolio. structured in the “usual” way by reference probably do not work on this kind of deal. to a percentage of annual fees is not likely More likely, the fees will take the form of Outcomes-Based Approach to be appropriate. a fee linked to assets under management, More and more, clients are So, the usual approach to liability caps plus specific transaction fees. It is key to 4 looking to measure the success in outsourcing contracts needs to be be clear on the nature of the services that of the service provider by reference to the reconsidered and structured so as to the management fee covers, and what the outcomes they achieve, and to tie their generate a fair balance of the expectations transaction pricing relates to, if the insurer “reward” (i.e. their profit margin) to these of responsibility the investment manager is to be able to maintain control over the outcomes. IMO is, on the face of it, an “should” take, from the investment charges payable under the agreement, outsourcing arrangement that is perfectly manager’s and the insurer’s perspective. and therefore, the inevitable impact on set up to create that link by reference to the business case of entering into the an increase in the portfolio value at certain Final Thoughts agreement in the first instance. points in time. There is no doubt that investment Likewise, the circumstances in which the The difficulty with this approach, at management outsourcing brings with it an additional fees are chargeable – and the least from an investment manager’s entirely different perspective to control and amount of those additional fees – will need perspective, is that it puts them at risk to the risk, and the link between these two is more to be carefully specified and administered, potential vagaries of the macro-economic inextricable on this nature of outsourcing particularly as the nature of the relationship climate. Putting aside the argument that than on many others. This means that there is likely to be a de facto exclusive one the investment manager might be able needs to be a fresh look at the manner (at least in respect of the funds under to overcome this issue through the use of in which outcomes are assessed and management) such that the insurer cannot skill and dextrous asset selection, it could measured, and the way in which liability take its business elsewhere very easily if it be possible to assess performance by is controlled if the deal is to deliver the needs the additional tasks performed. reference to comparable asset classes benefits the insurer hopes it will.

@KING617: There’s no better investment in tomorrow than time spent with your children today.

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50-51 DLA.indd 51 19/6/12 12:52:35 Adapt or Die! Tim Cummins is the renowned President and founder of the International Association for Contract & Commercial Management (IACCM). We caught up with Tim at the 9th Annual IACCM EMEA Forum in April to get his thoughts on shifting organisational models, the importance of accountability, and the need now more than ever to look beyond traditional structures and definitions…

outsource: Tim, you’ve been a as it has successes. As The Economist o: Do you feel those attitudes are keen observer of the commercial and observed a couple of years ago, when it maturing – have you become more organisational landscapes for many comes to outsourcing, most companies optimistic about the level of trust in years now. What do you see as being are not very good at contracting. So one commercial partnerships as time has the key trends right now in terms of the thing we can say with relative certainty is gone by? development and evolution of business that organisations remain limited in their TC: I never stop being optimistic! I guess organisations – especially with an eye capability when it comes to building good if I were not optimistic I might as well towards the outsourcing space? trading relationships. give up... So my belief is that we will get Tim Cummins: I think businesses are there. But I think part of the problem is actually becoming more adaptive or at least In some ways that many organisations are confused are intending to become more adaptive. ❛ about their goals and objectives; I think The keynote speakers here today have been outsourcing the measurement of management systems talking about how the CEO community has been a is too primitive to deal today with this new is awakening to the fact that traditional proving ground environment. They drive the wrong partner relationships – particularly within their own for strategic selection, inappropriate incentives and the industries – don’t address the emerging partnering. But as wrong internal behaviours. Ironically, our needs and expectations of today’s society. we both know, it response to complexity involves the creation This drives a need to deliver projects in very has had as many of more and more specialist groups, which new and different ways, through strategic themselves become a source of complexity relationships that span industries. Shell, failures as it has in decision-making, communications for example, sees a need for strategic successes❜ and enabling both internal and external partnering with IBM and Unilever – not the relationships. sort of companies that historically would o: “Partnership” gets used frequently Part of our work at the IACCM is looking have been top of the list for executive focus. within outsourcing but there is a at the barriers to collaboration, and one of And I think this cross-sector partnering debate about how much genuine the key things I heard recently was from lies at the heart of the outsourcing debate partnership there actually is… one of our board members who said “When as well. To me, sustainable, long-term TC: The word is used frequently but the it comes to negotiation, I’ve realised we relationships are critical to businesses behaviour is not there to match. If your view spend more time fighting for functional that are seeking more flexibility and of having a partner is regularly beating them interest than we do fighting for business the ability to respond faster and more into submission. then some companies are goals.” Many organisations find it extremely appropriately to market conditions. In pretty good at that, but of course in those difficult to build internal collaboration – so some ways outsourcing has been a proving cases the level of commitment and fidelity no wonder they struggle when it comes to ground for strategic partnering. But as between partners is tested: there is not an external partners. we both know, it has had as many failures underlying sense of fairness and trust. CEOs are very aware of the changes that

“I shall fulfill my contract, no more nor less.” – Lillie Langtry

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52-55 tim cummings.indd 52 19/6/12 12:54:53 INTERVIEW Tim Cummins

@willijeson: To err is human, to blame it on somebody else shows management potential.

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52-55 tim cummings.indd 53 19/6/12 12:55:03 INTERVIEW Tim Cummins

are taking place; the C-suite increasingly Many judgment.” It was a difficult decision for that understands the new dynamics and ❛ general counsel – and you see a number the extent to which market success organisations are of GCs in that position where the word will depend on new connections. confused about “contract” comes up as being the root of Unfortunately, this awareness is not always their goals and the problem. translating into action. Far too often, objectives; I think The real question in this time of dynamic parts of the organisation are waiting for the measurement change is over the ownership of the instructions, focused on dealing with the of management contract and the commercial processes. problems created by today’s business systems is too The C-suite has responsibilities for pieces environment rather than seeking ways primitive to deal of it – but they don’t really get insights to to simplify, to do things differently… much of the work that goes on in many, And that’s one of the biggest challenges today with this new many commercial areas of relationships. I see around the partnering issue: it environment❜ Ultimately, very few organisations does require levels of leadership and undertake ‘commercial assurance’ with accountability which are frequently anything like the rigour they apply to lacking. technical assurance.

o: Do you see the accountability issue o: Outsource was at a legal that you're talking about as reflecting conference recently and a big topic the obsolescence of traditional was the changing role of the in- control structures? house legal team when it comes to TC: I think that’s right. An example involvement in these processes. A lot we’ve encountered recently is that of legal professionals feel they are in of a major PLC where the board had a state of utter confusion because it is become aware of a number of significantly more than obvious to all observers that troubled contracts in emerging markets, their role is changing, but at he same where the quality of risk assessments time no one really knows how – is this and management of relationships was something the IACCM is looking into inadequate. Their traditional organisational at the moment? model gave too little visibility into the TC: It’s something that we are very risks that were being taken until things conscious of and work with our members were going badly wrong. As a result, they to address. Probably five or six years ago, found that cashflow and profitability were in a McKinsey study (which we promoted severely damaged by erroneous estimates actively at that time as it was so much in our of the investments that were going to be line with our philosophy) they were talking needed. about a need for organisational integrators In this case, because these were seen – I am not sure that was exactly their term, as contractual issues, the Board turned to but in essence what they were saying was the General Counsel to recommend a fix; that real value in future would be found in but the GC of that particular company was the people who could become business pretty much weighing up the question: integrators. Increasingly you have in-depth “Do I accept some level of ownership, specialists – experts in risk or intellectual and have my head above the parapet property laws, data privacy, whatever it as the person responsible for contract might be – who might be sincerely trying performance – or should I seek to duck to protect their business in their area of down and make the point that this is much expertise; but if you allow them to dominate more about the way that commercial the discussion they will never make a decisions are made? The contract is a balanced decision. problem, but it is a problem because of What we need is the ability to integrate the business people’s lack of commercial across those specialisms and come up

“I think it is quite dangerous for an organisation to think they can predict where they are going to need leadership. It needs to be something that people are willing to assume if it feels relevant, given the context of any situation.” – Margaret J. Wheatley

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52-55 tim cummings.indd 54 19/6/12 12:55:15 INTERVIEW Tim Cummins

with harmonious solutions and I think projects, the project manager, finance that’s what we are struggling with – and manager, and contracts manager are why Legal often feels it is caught in the viewed as being at the same level and have middle. We have the growing specialism the same joint and several responsibility - some of which is internal, some of which for successful delivery. It is very clear that has been outsourced - but how does that it’s a no-blame environment: the guy in get coordinated? Very often it’s left to finance can’t point a finger at the project nobody, or to senior management: but of manager and say it is his fault, and vice course they don’t have the time or resource versa. And that’s interesting because the actually to provide the integration role. complexity of many of the things in which So then we often get kneejerk reactions, we engage today suggests that perhaps frustration, quick decisions that have no modern organisational leadership is no substance behind them. longer appropriate. I think in politics Ironically most organsations are globally, we can see many examples fairly good at the technical stuff. They of this – but if you look at the corporate have robust lifecycle management level, there are possible new models organisations, they have fairly good emerging. Companies like SAP and systems for professionals to undertake Deutsche Bank have joint CEOs, which technical discussions. So that’s reflected everybody said was ridiculous and was in the fact that if you look at troubled never going to work, but look at how they projects and troubled relationships, it did it and the results it is having. Maybe is relatively rare for them to be troubled the alpha personality is not the right model for technical reasons. The majority are for large corporations any more, our in trouble because of commercial terms complex world depends on the ability to that were not properly tested, escalation collaborate and share responsibility. I like mechanisms that do not work, performance the way the combination of project, finance management criteria not appropriate to and contract managers all sharing joint the context, inadequate scoping, or poorly responsibility transforms leadership, via aligned relationships and cultures. When the concept of leadership as a team activity things go wrong, it mostly comes down to rather than an individual one. I think that the definitional element of that relationship could be an interesting shift. and its management. We have a lot of commercial problems because we don’t o: The kind of challenges we’re have commercial assurance processes. facing globally are challenges that That’s where IACCM plays, and where have typically, in the past, thrown up we are trying to push for much better quite conservative reactions. Do you approaches. I would not say this is one- CEOs are very feel that this is the right time for the size-fits-all – and this is not about us ❛ questions you’re asking to be coming saying “Hey, you need to have hundreds aware of the to the fore? of commercial management or contracts changes that TC: I think they have to come to the fore. specialists”: in fact, quite the opposite. are taking place; I think we are seeing, as I said before, That would just be another specialism and the C-suite such a complex environment, with so it would add to the complexity mix. Our increasingly many elements that have to be taken into point is that we need a more robust understands the account, and the power and influence commercial assurance process and there amongst individuals is quite reduced – the are various models through which people new dynamics and ability to exercise substantive control is can build that capability. the extent to which certainly compromised by the complexities To give you an example, there was a market success of the global environment, so new models company I came across the other day will depend on new for organisation and management are no that’s moved to a model where for major connections❜ longer simply an option.

“Organisation can never be a substitute for initiative and for judgement.” – Louis D. Brandeis

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52-55 tim cummings.indd 55 19/6/12 12:55:24 This Issue: 25th Anniversary; Account Management; Outsourcing Works Celebrating silver; going for gold The National Outsourcing Association celebrates its 25th anniversary this year; Chairman Martyn Hart looks forward to plenty more.

ack in the late ‘80s, There are many great offshoring outsourcing was almost always destinations around the world. We need to a local, cross-town practice – a make sure that the UK is positioned as the man on a moped couriering finest of them all, so given the intricate and a tape reel containing the complicated projects we undertake, we Bmonth’s payroll data springs to mind – but should also be positioned as the go-to-guy as the technology has driven forward, for high-end, complex work. so has the expanse of things that can be So that both of these thrusts will ultimately outsourced (or shared even). Of course, prove lucrative for UK PLC. liberalisation of the telecom markets was Not only do we have the skills and the a game-changer, as the cost of sending a knowledge base, other crucial factors are byte of data along a phone line dropped at play: our geographic location means that dramatically once competition was the UK is commutable from most places, introduced into the equation. Nowadays, our time zone means we are contactable absolutely any business function or on the same business day from just about process can potentially be delivered by anywhere. a partner organisation and reported on in Maybe the UK public’s attitude to real time. outsourcing would soften if they knew Which means that for many that there was a huge amount of inbound organisations, outsourcing is now the recent study into The Public Perception of offshoring going on, creating well-paid jobs norm. The modern business environment Outsourcing shows. for British citizens. Celebrating existing involves firms of all sizes taking strategic Offshoring is not going to go away. projects, enticing and inciting a myriad decisions that leverage external capacities, Companies with the appropriate attitude more, and making sure they deliver the capabilities, competences, knowledge and to risk will always be tempted to bolster goods on a monumental scale: there is skills of organisations across the globe. Or their operations with high-quality, low-cost much work to be done. more commonly, despite perceptions, those work done offshore. But, in the year that Please go to www.tinyurl.com/ of companies on our own doorstep. NOA celebrates its Silver Jubilee, and the onshoringsurvey to complete a short The NOA formed in 1987, just at the cusp whole nation celebrates Queen Elizabeth’s questionnaire around what the UK is good of outsourcing being recognised as an Diamond Jubilee, how patriotic are we at, and what could be done to develop operational strategy. Back then, outsourcing feeling out there? the UK’s position as the de facto global practices were largely limited to local (UK) For all of our 25 years, the NOA has been strategic hub for outsourcing. suppliers and contractors – this is still the advocating excellence in outsourcing – we We hope to have that reverence major part of the industry, but, as far as the truly are the home of best practice. Just secured by the time of the NOA’s Golden public is concerned, this seems to have like the United Kingdom! We are the global Anniversary, and still solidly in place by been forgotten. Outsourcing’s image these strategic hub for outsourcing and shared the time we ape the Queen and reach our days is synonymous with offshoring, as our services knowledge. Diamond Jubilee.

To find out more about the NOA visit www.noa.co.uk

56 ● ● ● www.outsourcemagazine.co.uk “amber / red”. The projects range from the building of ships and helicopters to transformative outsourcing projects, which, of course, are of particular interest to us. The report states that the very system designed to give assurance over projects’ progress is “not built to last.” Currently, there is not yet close co-operation between the different organisations involved in the assurance system. Processes need to be formalised, and there needs to be more collaboration between the departments involved. The Major Projects Authority – a joint venture between the Cabinet Office, HM Treasury and departments with the fundamental aim of significantly improving the delivery success rate of Major Projects across central government – needs to get a grip on this. HM Treasury is also not routinely using the Authority’s project data to spot and address potential problems across the portfolio of projects. Cabinet Office, HM Treasury and departments have not yet agreed on how to publish project Putting heads information transparently – an essential step in building an effective and enduring system. Currently, by not adequately sharing together… data on the success / progress / issues … beats scratching one head every time – with its projects, the government is perpetuating a culture of persistent especially when it comes to major projects ‘wheel reinvention.’ And with the stakes (just take it from Sir Francis Drake) of £376bn on the table, the government needs to quickly prioritise its focus, as an n 1587, Francis Drake said: “There quoting him recently, as he spoke of a alarming one fifth of its major projects are must be a beginning of any great report published on the government’s in grave danger. Collecting and sharing Imatter, but the continuing unto the end plans to “eradicate the poor performance information on what makes major projects until it be thoroughly finished yields the which has led in the past to the failure of go wrong – and what makes them go right true glory...’” Bet he never thought he’d be major projects.” – would be an enormous step towards the quoted with reference to outsourcing in According to the report, there are 205 government saving taxpayer’s cash. 2012. Hero to some people, pirate to others projects in the government’s Major Project Failing to systematically capture data – see ‘Public Perception of Outsourcing’ Portfolio, with a combined whole-life cost to use information and use it to improve research over the page – Drake seems an of £376 billion, and annual cost of £14.6 project performance is sinful in any appropriate commentator. Hence Amyas billion. Thirty-nine of those projects have business. But it’s even worse in the Morse, Head of the National Audit Office, a delivery confidence rating of “red” or high-value – and therefore high-risk –

Interested in joining the NOA? To apply for NOA membership, please give us a call on +44 (0)20 7292 8686 or visit our website: www.noa.co.uk

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56-61 NOA.indd 57 19/6/12 12:13:49 This Issue: 25th Anniversary; Account Management; Outsourcing Works

projects that the government has cause to commission. Knowing which deals are working is one thing, but government departments still need to do more in terms of sharing learnings with each other. Studying the BS11000 standard in Collaboration would be a good place to start eradicating the waste that a culture of not sharing brings about. The National Outsourcing Association applauds all efforts to better capture project performance data, particularly in the area of on-going incremental benefit tracking of IT contracts. Long-term benefit tracking is the way to highlight the true value that these deals bring. An earlier study by the NOA showed that of the five major shared services arrangements under examination, only two were making any effort to track their cumulative benefits. Not monitoring results at all could be considered negligent and the Major Projects Authority should stamp this out. I reckon Sir Francis Drake would agree. As he said: “continuing unto the end until it be thoroughly finished yields the true glory” – well, out of the 205 projects, 166 are not red or red / amber, most of these deals are ongoing, most of them are successful. So keep tracking, keep sharing, and use this knowledge as an opportunity to drive down the alarming rate of red / amber rated projects. Having 19 per cent of the government’s Major Projects Portfolio in the red or amber-red state of delivery confidence is far too many, and rather than reinventing the wheel, every time, it is better to track and balance wheels that are already in existence. Detailed performance monitoring / reporting and superlative cross-departmental communication channels are the way to ensure this happens. And if we can help, well they know where we are.

To find out more about the NOA visit www.noa.co.uk

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56-61 NOA.indd 58 19/6/12 12:13:16 The public perception of outsourcing Outsourcing has an image problem. It’s a dirty word, in many people’s eyes.

esearch conducted in April because they don’t understand us – nearly UK economy, and ultimately, empirically by Populous and the National a quarter (22 per cent) of the public list prove the value that outsourcing brings. ROutsourcing Association confirms outsourcer as a profession they dislike. Part of this will involve changing some that outsourcing has an image problem. That’s up there with estate agent, which perceptions and misinterpretations of what It is very much maligned because it is traditionally one of the most despised outsourcing actually is, as much of the is misunderstood. Statistics from the professions around. Outsourcers are still negativity stems from misunderstanding. research show that the public do not nowhere near as disliked (according to the The intention is to prove the value of believe that outsourcing is a major survey) as politicians and bankers. outsourcing through research and case contributor to the UK. This is in spite It is criminal, given the amount of studies highlighting success. of research last year showing that people we employ, and the amount of tax For end-users, Outsourcing Works will outsourcing contributes roughly the same we pay, that outsourcing is maligned as provide the biggest ever forum to rub to GDP as the financial sector does. This a negative force on the UK economy. By shoulders with people just like yourself, fresh NOA research highlights the public making our industry better understood, who know all about the hurdles you face misconceptions of what outsourcing even we can enhance its reputation and thus when outsourcing. Many will be more is, let alone what benefits it brings, and help it grow. Through adversity comes experienced than yourself – mixing with details scenarios in which the public would opportunity. By banding together, we can these mature, intelligent consumers warm to the concept of outsourcing… enhance the reputation of outsourcing. can only help you get better value from According to the “Public Perception In simplistic terms, the more fondly your outsourcing. By making sure it is of Outsourcing” research a staggering outsourcing is thought of, the more likely done right every time, and the benefits 80 per cent of the general public do not businesses are to make that initial leap into communicated, we can improve the think the sourcing industry is helping sending work out. perception of outsourcing together. UK PLC. This is in spite of research last Currently, perceptions of outsourcing To show your support, join the year stating outsourcing to be the second centre on cost-cutting (65 per cent), job Outsourcing Works group at biggest contributor to GDP – weighing losses (53 per cent) and various examples www.LinkedIn.com in with 8 per cent, only a nose behind the of offshoring such as call centres and We need our members’ support. 8.1 per cent from the finance sector. On manufacturing. Onshore outsourcing Through adversity comes opportunity. top of that, outsourcing contributes £14 barely pricks the public consciousness We must unite to make our industry better billion in business taxes, and outsourcers – only 27 per cent recognised “a local understood. Increasing understanding hand over £21 billion in income tax. computer company providing IT support and appreciation of the value we add will The general public just do not currently to small businesses,” as an example of be a positive step for everyone involved in believe that outsourcing helps the British outsourcing. Similarly, only 14 per cent outsourcing. Help us prove Outsourcing economy, with only 19 per cent believing recognise that employing the services of Works by giving us your evidence, both that outsourcing can help get the UK out of an accountancy firm is outsourcing. anecdotal and qualitative. It will form recession. Outsourcing Works is the NOA’s part of a huge research project and And still the public think we do not campaign to raise awareness of the PR campaign that the NOA will roll out do our share. The public don’t like us, benefits that outsourcing brings to the throughout 2012/2013.

Interested in joining the NOA? To apply for NOA membership, please give us a call on +44 (0)20 7292 8686 or visit our website: www.noa.co.uk

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56-61 NOA.indd 59 19/6/12 12:13:23 This Issue: 25th Anniversary; Account Management; Outsourcing Works

Best Delivery of Business Value – the NOA’s ‘Tis the flagship campaign for 2012 is Outsourcing Works. This award will go to the project that displays the most significant business benefits delivered when compared the season to original business case. In other words, the project that best demonstrates that Outsourcing Works. End users, suppliers apply yourself and advisories are all welcome to submit projects for this award. Excellence in outsourcing can yield great rewards Closing date for entries is Friday 27th July – including, for the true leaders, a coveted National 2012, when the NOA’s panel of outsourcing Outsourcing Association Award… experts will commence the judging process. Entering is free and straightforward – for football manager works just as hard in-house professionals (both supplier details of the entry process download the in the close season – plotting for and customer side), including buyers entry pack at www.noa.co.uk . The shortlist A the next campaign, wheeling and of technology services, procurement will be announced in September. dealing in the transfer market. It follows professionals, in house lawyers, heads of The NOAA ceremony will take place in that the more effort he puts in the summer, outsourcing, supplier deal analysts etc. London on 25th October 2012. So it’s tuxes the more likely he’ll reap the rewards the Shared Services Centre of the Year – and party frocks on, champagne and smiles following season. Maybe even win a trophy. with more and more organisations sharing for the winners, and poker/gracious faces And, in perfect parallel, now is the services, it is important to have strong and drowning of sorrows for those that miss time to be writing up fresh cases studies, role models, hence the introduction of out! See you there! highlighting your innovations, showcasing a best practice award for sharers (and your best practice and illustrating the potential sharers) to aspire towards. To The National Outsourcing Association Awards 2012 – in association with business benefits derived. All in the hope of be in the running for this, it is essential Wipro Technologies bagging a much coveted trophy: National to demonstrate the business case and Outsourcing Association Award (NOAA). provide statistics for the client’s tangible The Award Categories in full: This year, we have responded to the ROI, as well as other metrics for value ❋ In-house Outsourcing Professional of the Year – sponsored by Olswang ever-evolving landscape of the sourcing created for the wider business, as well ❋ The Outsourcing Works Award for Best industry by introducing five new categories. details of the end customer response. Delivery of Business Value The NOAAs 2012 – in association with Outsourcing Rising Star and Skills ❋ Outsourcing Rising Star ❋ Skills Development Programme of the Year Wipro Technologies – are set to be bigger Development Programme of the Year ❋ Shared Services Centre of the Year than ever before. both recognise the increasing maturity ❋ Outsourcing Service Provider of the Year In-house Outsourcing Professional of the sourcing industry, and the fact ❋ Outsourcing Advisory of the Year ❋ BPO Contract of the Year of the Year – sponsored by Olswang that it is now a true profession and a ❋ IT Outsourcing Project of the Year – provides a much needed chance to specialism in its own right. The Rising ❋ Financial Services Outsourcing Project of recognise the unsung heroes of our Star award will contribute to positioning the Year ❋ Public Sector Outsourcing Project of the Year industry, those in-house professionals who outsourcing as a progressive, fulfilling ❋ Telecommunications, Utilities and High Tech work so hard to ensure that outsourcing career; a proper, ‘professional’ profession. Outsourcing Project of the Year projects work. The winner will be the one The Skills Development Programme is ❋ Offshoring Project of the Year ❋ Offshoring Destination of the Year who best demonstrates how they have open to all organisations who can detail a ❋ Outsourcing Contact Centre Provider of the aligned the outsourcing strategy to deliver unique approach to addressing the need Year business benefits to the company, with to improve outsourcing skills, and can ❋ Outsourcing End-User of the Year ❋ Award for Innovation in Outsourcing details of their contribution, the difference demonstrate excellent results from the ❋ Award for Corporate Social Responsibility they made and the value brought to the programme. ❋ Award for Academic internal client. This award is open to all The Outsourcing Works Award for

To find out more about the NOA visit www.noa.co.uk

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56-61 NOA.indd 60 19/6/12 12:17:08 Events PREVIEW & calendar

DATE EVENT Type TitlE VENUE TIME

JUN-12 27th Awards Ceremony EOA Awards The Law Society, London 7PM - 11PM 28th One Day Conference NOA's 25th Anniversary & london Film Museum 8.30AM -10PM Conference JUL-12 5th Special Interest Group Outsourced Applications CMS Cameron McKenna LLP, 9AM - 11AM Management london 10th Steering Committee professional Services Hogan Lovells International LLP, 9AM - 10.30AM London 12th Special Interest Group Cloud Slaughter & May, London 9AM - 11AM 17th Steering Committee sourcingfocus.com Roundtable Olswang, London 4PM - 7PM on Good Governance SEP-12 TBA Steering Committee Supplier Only Webinar TBA Special Interest Group Offshoring london TBA Steering Committee End User Only london, TBC 13th Members Seminar New sourcing models - Hudson & Yorke, London 9AM - 1PM pro's & con's 26th Members Seminar Knowledge Knowhow in Regional – venue TBC 1PM - 5PM Outsourcing – effective knowledge management, transfer and retention to ensuring deal success OCT-12 25th Awards Ceremony NOA Awards park Plaza Riverbank, London 7.30PM - 1AM NOV-12 TBA Steering Committee Supplier Only Conference Call 13th Topical Event TBC london, venue TBC 9AM - 11AM 22nd Members Seminar Sourcing Partnerships – from Regional - venue TBC 1PM - 5.30PM problem to success. How to develop the benefits of collaborative sourcing partnerships and deliver tangible value DEC-12 4th Members Seminar Mid-life Crisis Eversheds, London 9AM - 1PM

Interested in joining the NOA? To apply for NOA membership, please give us a call on +44 (0)20 7292 8686 or visit our website: www.noa.co.uk

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56-61 NOA.indd 61 19/6/12 12:14:06 Making LPO Work As the LPO business grows in scale and scope the pressure on organisations at least to investigate its potential benefits is simultaneously increasing – but not everyone in-house sees this as a positive development. We take a look at some of the impacts of the rise of the LPO model – and how to make it work for you…

Alex Hamilton, radiant.law

Alex Hamilton is a Principal at radiant.law in London, where he advises on outsourcing, IT and commercial transactions. Previously, he was a partner at Latham & Watkins and global co-chair of its Technology Transactions Group.

Kevin Colangelo, Yuson & Irvine

A veteran lawyer, legal services innovator and client relationship strategist, Kevin Colangelo is a Partner at New York law firm Yuson & Irvine. He was previously a member of the leadership team at LPO pioneer Pangea3.

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62-65 Alex Hamilton (LPO).indd 62 27/6/12 09:58:06 feature LPO

he UK and US legal markets who are actually doing anything of interest will have to re-engineer their organisations are in the throes of change. with LPO, ignoring that one time where the (and economic models) to keep up with the With depressed economies, client twisted their arm to use a team in demands of clients and the brutal reality of rising client exasperation with India for a week-long project, is markedly a better and lower-cost way of delivering the status quo and, in the UK, lower. legal services. Tthe entry of new competitors following Interestingly, the vast majority of progress The tension today, though, between most liberalisation this year, traditional law firms in this area has come from in-house legal law firms and the LPO model is stark. Legal are facing a range of challenges. It is this departments. They have not only done the process outsourcing is not like the typical backdrop which makes the rise of the still- highest-profile deals, but by being actually outsourcing industry, replacing the non-core nascent legal process outsourcing (LPO) motivated to work smarter since they aren’t back office work. Despite the protestations industry so potent. paid by the hour, have made the most of the industry, LPO is a direct attack on the The slog part of disclosure exercises has for years been❛ seen as below the pay-grade of qualified lawyers, and has been subjected to a number of process and technology improvements. LPO in these areas is just the next logical step – at least to the clients❜ LPO’s growth has to date been fuelled progress in adeptly moving services outside law firm market, replacing some of the most by one-off large document review projects, the organisation. profitable work for law firms (lots of junior usually for litigation disclosure exercises, And, while statistics on the use of LPO lawyers spending thousands of hours on but increasingly for merger and acquisition by in-house legal departments remain disclosure and due diligence exercises) that due diligence. These types of projects relatively scarce, some estimates show that law firms traditionally considered “core” are important, and certainly lucrative to the global market for LPO is approaching services. The “process” component of LPO the suppliers, but of limited interest to USD$1 billion annually and rising at a rate of alone is a significant mind-shift to most US outsourcing connoisseurs. The slog part 25-35 per cent per year. and UK practitioners, and when coupled of disclosure exercises has for years Our perspective is relatively unusual. with rates that are often discounted by 70-80 been seen as below the pay-grade of Alex and a number of other former (and per cent from their law firm counterparts, it qualified lawyers, and has been subjected repentant) big law partners set up a law is clear that LPO is not as easily embraced to a number of process and technology firm in London specialising in outsourcing by the affected practitioners as we’ve come improvements. LPO in these areas is just that was premised on fixed fees and to expect in the traditional ITO and BPO the next logical step – at least to the clients. using LPOs for junior work to support outsourcing paradigms. However, LPO providers offer a broader senior onshore lawyers. Kevin, a former range of services, with suppliers moving big law lawyer in New York and advisor So how can you make legal up the food chain to provide sophisticated on outsourcing, spent six years on the process outsourcing work? commercial contract support. This work leadership team at a major LPO provider as What are you trying to achieve? is far more potent in terms of LPOs GC and head of the provider’s Corporate Like all outsourcing projects, the starting challenging the core work of law firms Practice, before recently joining a boutique point is a clear definition of goals. These and is the type of service we are focussing firm in New York that also uses LPOs for can vary widely for LPO and may lead to on in this article. This work may be being junior work. Kevin’s former company now very different arrangements, but without performed either on- or offshore by the employs over 1,000 lawyers in the US and understanding why your organisation needs supplier. India. to do LPO, you are preparing for failure. What we have seen actually work LPO is currently thought of primarily LPO’s place in the market in practice has convinced us that in terms of labour arbitrage and short- The number of law firms who have declared standardisable junior legal work is going term savings. But the standardisation that they are “happy” to use LPO providers offshore (or to low-cost onshore centres) and process that LPO both requires and is high. Some have even gone so far as to whatever the opinions of lawyers in the UK provides mean that risk management can set up a panel of preferred suppliers, raring and US as to how the world should be. So be a goal in its own right; one that increases to go at the first opportunity that comes although this still feels like frontier territory in relative importance to your organisation along. However, the number of law firms right now, we are convinced that law firms over time. Another goal may be to improve

“You cannot do today’s job with yesterday’s methods and be in business tomorrow.” – Nelson Jackson

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62-65 Alex Hamilton (LPO).indd 63 19/6/12 12:21:31 feature LPO

Status calls should occur with regularity (and typically❛ more frequently in the beginning of the engagement) and both parties need to commit to addressing action items as quickly as possible❜ the productivity (and happiness) of your departments in some industry sectors) organisation’s lawyers who can focus to get a real view of what works and on more satisfying, higher-value work what doesn’t. There are also now a few and assume a more strategic role in the consultants in the market who can offer business aspects of such transactions. a nuanced perspective on what works, what questions you should be asking Are you ready for this? your colleagues and suppliers and which Before leaping into working with an LPO suppliers should be on your list. supplier you should have a real think As with ITO and BPO, a lot will come about whether your firm or department, down to finding a supplier who is right for as an organisation, is ready. Despite the you and your organisation. This is a long- claims of law firm marketing departments, term investment requiring real commitment declaring that you are willing to work with and daily interaction. So most important of LPO suppliers, or that LPO providers are all is making sure that you and the team who to be used going forward, is really not the are going to lead the interactions are really same as being prepared to implement. We happy with the supplier. This means site can assure you that many forward-thinking visits and talking to more than just the sales companies have failed at LPO simply team. You’re also going to want to look at: because they themselves were not ready the size and capitalisation of the to invest the proper amount of time and organisation, as there are more than a few resources in the undertaking. suppliers operating out of bedrooms; LPOs are highly process-driven and the security standards that the metric-focussed companies. They actively supplier has adopted (although a level of look for ways to standardise processes and pragmatism should be applied here, given are excellent at managing variation. They that the major LPO providers are now are looking to make work repeatable, not operating to standards far higher than your bespoke. This approach can be a jarring average external law firm); contrast to the traditional western model of the culture of the organisation, including law as art, where every lawyer is an artiste recruiting and training standards and and commoditisation is a mortal sin. To lift methodologies, the career paths of the and drop activities outside the four walls lawyers and the turnover rates. Does the of the firm or department requires that the company actually understand legal services work is at least recognised as repeatable or is it an ITO or BPO supplier that has and there are some processes in place bolted on some law graduates? Conversely, to implement the same. Similarly, do you does this company actually understand have – and properly use – document process, because purely lawyer-driven management, workflow and other tools in organisations haven’t historically been place that can help manage this flow? particularly strong on this front!

Doing your research Making LPOs work As a relatively young industry doing your In parallel with assessing your readiness, research on the suppliers is essential. You establishing your goals and doing your should talk to your peers (recognising that research, you will need to understand, with there are major differences between legal a fair degree of detail, what the relationship

“Even when laws have been written down, they ought not always to remain unaltered.” – Aristotle

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62-65 Alex Hamilton (LPO).indd 64 19/6/12 12:21:42 feature LPO

with the LPO will need to look and feel like consistency across various stakeholders on a day-to-day basis. and jurisdictions? Typical items to implement include: Ownership of the relationship: less Communications protocols: the tangible but nonetheless critical, there best LPOs are masters of structured must be clear relationship responsibility on communications, so much so that it may be both sides of the engagement. Much like jarring at first. Be clear on how instructions ITO and BPO, we have found that these and feedback will be given, and how issues relationship leads often end up serving as will be escalated and resolved. Status advocates for the other party with their own calls should occur with regularity (and teams, and this can be critical particularly typically more frequently in the beginning for the client. Not every lawyer embraces of the engagement) and both parties need LPO; many view it as a threat to their career. to commit to addressing action items as The fact is that it is not a threat to anyone quickly as possible. who provides value to their employer, Perform activity analyses on your and that must be stressed to everyone most common transactions: this is not as involved in the relationship. We’ve seen far difficult as it sounds, and should probably too many LPO engagements sputter due be occurring within every legal organisation to “jealous guardians” at the client who anyway. The value of doing this exercise look for ways to question the value of the in the context of LPO is that it provides the engagement. These people should instead foundation for both parties to understand be encouraged to become “benevolent which activities need process improvement, custodians” of their work, secure in the and which of those process improvement knowledge that the success of their own initiatives can be turned over in whole or in interactions with the LPO provider will part to the LPO. improve their standing with their employer. Preparing playbooks (also referred to as guidebooks): playbooks are often Conclusion key to the success of the overall LPO The value and advantages offered by initiative, and even where they are not, both LPO are clear when you see it in action. parties learn an immense amount about However, this is an area that requires a the client’s approach to risk management close long-term working relationship with and negotiation tactics just by undertaking the supplier and you can’t just throw a the exercise. There is often a stigma problem over the wall. LPOs are perfect around playbooks that assumes they’re for ramping up over time; there is no only valuable in the most simple, most need for a big bang transformation. Our commoditised of transactions. Our response recommendation is therefore to start early to this is that if your firm is comfortable and get going on learning how to make this using a form document for a transaction, work for you. then that transaction is also perfectly suited to the use of a playbook. The playbook EVEN MORE is essentially the form document plus a For much more on LPO, see our regular online column significant level of transactional guidance. “The LPO Perspective” by Mark Ross, indexed at Who wouldn’t want to have that as a tool http://www.outsourcemagazine.co.uk/mark-ross – and for managing risk and creating contractual numerous other articles on the Outsource website

The value and advantages offered by LPO are clear when you see❛ it in action. However, this is an area that requires a close long-term working relationship with the supplier and you can’t just throw a problem over the wall❜

@EpicFacts: Crazy Law: It is illegal to hunt for whales on Sundays in Ohio.

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62-65 Alex Hamilton (LPO).indd 65 19/6/12 12:21:50 p66-67 20859-102074 Aviva DPS.indd 66 12/6/12 17:21:34 p66-67 20859-102074 Aviva DPS.indd 67 12/6/12 17:21:48 Managing Knowledge in a Partnership

As knowledge-driven economies emerge in the wake of globalisation and IT infrastructure development, it makes sense to examine what role knowledge itself plays in an outsource partnership. One thing is certain: it should be managed with purpose.

Thomas Reby, eBay

Thomas Reby is the Global Head of Knowledge Management for Customer Services at eBay Inc

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68-71 thomas renby.indd 68 19/6/12 16:06:53 FEATURE Knowledge Management

s the well-known proverb has is a paradox, which must be managed for solution does benefit individuals in many it, “the pen is mightier than an outsource partnership to grow strong. ways, but wider objectives (such as global the sword”. But implied is a If we define knowledge as information capabilities) may not be a prominent focus, fact that is difficult to contest: plus context, thereby creating the ability not internally nor at an outsource partner at he who wields the pen must to take action, there are two stakes, which the lowest level. beA knowledgeable in doing so. typically are divided thus: Ownership of knowledge is essential to By the same token, company activities the buy-side company has ownership of establish between the company and the must be conducted with the aid of well- intellectual property and information about outsource partner. Specifically, master managed knowledge (harvesting and its business; service agreements and statements of dissemination). The practical benefits are the outsource partner, through its work must call out knowledge repository clear: engagement, builds highly tuned context management and utilisation, the harvesting the removal of re-work in processes around the application of the buyer of knowledge from individuals and and consistency in operating methods company’s information. attributed rights upon dissemination. addressing the ever-present variation Both of the points above come in various The true value of knowledge should be caused by knowledge gaps in people; shapes and sizes, or more accurately, seen as a worthwhile point to establish. the reduction of time-to-proficiency, thus tacit and explicit forms – supported It can be argued that it makes sense softening the overhead impact of attrition by knowledge management systems to replace the word “knowledge” with and growth; development during the past decade. “intellectual capital” in this sense. providing the capability to cross-pollinate With these dynamics at play, a case is Knowledge has value when deployed knowledge across geographies and made for a clear knowledge management performing activities, but even more so languages (undeniably a challenge in global strategy – and, as a result, some key when it comes to measuring outcomes. environments); decisions should be made. Often, outsource performance is gauged providing context to the information within by activity – “countables” – but where it is a company, thereby creating ability to take When an possible, linking the use of e.g. knowledge- action. ❛ base content to a CRM system allows for a The list could go on, but settling with organisation completely new dimension of establishing the above, there is a strong argument to reaches a certain value. Borrowing methodologies from manage knowledge, especially as it relates size, knowledge medical science is very appropriate in to outsource vendor partnership, multi- management this context, knowledge-base article vendor scenarios and the inevitable change should become usage being equivalent to clinical trials in these relationships, through tenders and prominent as a of new medicine. Does taking the pill procurement. business enabler (using documented knowledge) make you ❜ healthier? Interests may differ, but so Finally, the long-term value of an does the contribution Core points of consideration outsource partner needs to be put in context A company undoubtedly benefits from When an organisation reaches a certain of knowledge development. Is the outsource managing the knowledge in a outsource size, knowledge management should partner merely considered a consumer? partner relationship, by achieving become prominent as a business enabler. Or potentially a strong contributor? If the strengthened strategic agility in outsource This in turn should lead to establishing a context an outsource partner provides to partner selection and reduced risk in dedicated program to sanction and govern information is truly considered valuable, it the decision to change that selection as knowledge management practices, as well calls for an evaluation of the objectives and opportunities emerge. as to provide subject matter expertise in the compensation for work performed. Conversely, an outsource partner selection of tools and design of processes. should have high interest in retaining the Without clear direction, it is a challenge What behaviours and management of knowledge, given this to enable employees on both sides to measurements are we provides the “stickiness” and longevity in contribute and benefit from a knowledge looking for? the contracts, equally reducing exposure management solution. As a preface to any debate on behaviour, due to the premium of the vendor know-how. In addition, it is important to ensure it is important to commit to adjusting This is not necessarily something that can that sponsorship is strong and the big measurements accordingly. Historically, be viewed as a problem to solve. Instead, it picture is seen. A knowledge management a transactional view on outsource partner

“Real knowledge is to know the extent of one's ignorance.” – Confucius

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68-71 thomas renby.indd 69 19/6/12 12:27:59 p70 20859-102673 GlobalBus FP SCL.indd 70 14/6/12 15:27:15 FEATURE Knowledge Management

productivity has led to elaborate ways Knowledge-Centered Support (by the harvest knowledge from both sides become of measuring the “countables” in a Consortium for Service Innovation: important. Good knowledge management multitude of ways. To avoid gaming, more see www.serviceinnovation.org), for solutions can scale to meet this challenge, measurements have been put in place to customer service organisations, that but others that are essentially content counter or optimise each other towards specifically address how to capture management systems cannot. a perceived equilibrium. In this state, the knowledge as a by-product of solving transaction efficiency supersedes all else. incidents. Establishing the methods to The need for joint success Knowledge contribution feeds off the be used should assist in selecting the As due consideration is given to the strategy aspiration to address root causes once appropriate technical solution, but the and the tools – it is imperative to go back and for all, and that mind-set should be important point is to make sure that the to the interest paradox. For a knowledge- encouraged. Subsequent contributions knowledge management program does sharing outsource partnership to evolve, will continuously evolve the captured not overemphasise tool deployment as the certain principles must be held in regard. knowledge, but in addition, it promotes silver bullet. Knowledge sharing should be a rewarded ownership and evangelism of more activity. This cannot be emphasised enough, advanced knowledge management Without clear especially when dealing with companies practices. It is easy to promote knowledge ❛ that are driven by merit-based performance you associate yourself with, hence direction, it is management, with focus on individual a knowledge-base that includes an a challenge to activity. While easier to measure, the greater individual’s own contribution is hard not to enable employees good is lost if the reward system does not speak in favour of. on both sides reflect the concept of sharing knowledge for There is a key benefit in this behaviour to contribute collective benefit. which should be capitalised upon, by and benefit from A knowledge management program is the buyer company and the outsource culture-based. Processes and tools can be partner alike. Support functions to frontline a knowledge established and subsequently rolled out services spend too much time solving the management internally and to outsource partners, but same problem over and over – either via solution❜ without strong leadership enforcing culture delivering tacit knowledge they possess, change, there is no guarantee that the intent explicit knowledge that is not looked up, Two important emerging trends should transfers from the company to the outsource or sometimes both. It is unfortunate for all be acknowledged when knowledge partner. This is especially true in contact parties that high-performing individuals are management tools are evaluated: centre environments, where knowledge promoted to support functions, but often consumerisation and crowdsourcing. We base articles can be deployed by the end up “playing broken records”. Turning are becoming accustomed to being able to company as contact prevention initiatives this time spent into active knowledge seek information on any device, anywhere on the web. Unless the culture and trust contribution, and coaching colleagues in and contributed by anyone. Peer product is built on joint growth, motivation for the how to seek it out, is a ripe opportunity in reviews are becoming a strong factor in outsource partner to engage is likely to be many organisations today. buying patterns and self-education via non-existent. mobile devices is considered elementary Finally, business innovation on behalf Then there is the knowledge by younger generations. When architecting of the company is often the first large management tool a solution for knowledge management, it is step in growth, but refinement is derived Pragmatically, knowledge management important to evaluate whether or not these from marrying the innovative idea with tools are supposed to support people are opportunities to leverage. the context of usage as it is applied by and processes, not the other way around. And as a warning: a typical scenario in customers. Very often, the outsource vendor In particular, being able to contribute a new outsource engagement could be is the key listening post, enabling the critical knowledge must be frictionless and that the company “knows better” and can link for further development and future low-cost value-add. It is very easy to de- contribute both information and context. success. prioritise the contribution of know-how But over time the balance shifts and into a system, because the contributing then the model of centralised in-house EVEN MORE party already knows what they know. subject matter expertise and authoring For more on knowledge management, see our 2011 There are methodologies developed becomes antiquated. As such, distributed article ‘Knowledge Sustainability for Outsourced for various business areas, such as contribution and designed activities to Professionals’, online now at http://bit.ly/KTpqsN

“A little knowledge that acts is worth infinitely more than much knowledge that is idle.” – Khalil Gibran

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68-71 thomas renby.indd 71 19/6/12 12:28:06 a long way still to go Transforming finance: opportunities are still untapped in shared services and outsourcing, says Jamie Lyon

“Transformation literally means going beyond your form.” – Wayne Dyer

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72-75 Jamie lyon.indd 72 19/6/12 12:57:16 FEATURE finance transformation

Jamie Lyon, ACCA

Jamie Lyon is Head of Corporate Sector at the Association of Chartered Certified Accountants (ACCA), the global body for professional accountants. He is leading ACCA’s global research and insights programme on finance transformation.

oday’s CFO operates in a the journey new priorities also come on reduction; and the achievement of service challenging and complex stream; quality, scalability, transformation level agreements. Fewer than one in six environment. With continuing and talent quickly rise up the agenda as businesses are adopting broader measures uncertainty on the horizon of outcomes sought too. No pressure then? of success such as return on investment the global economy, more than As aspirations increase, the key question targets, profit contribution targets, and Tever before the CFO is in the spotlight to is whether CFOs believe shared services net promoter scores. Only five per cent of transform the finance function to support and outsourcing can delivering against the businesses currently attempt to link their the business more effectively – but how outcomes desired? Here is the stumbling shared services and outsourcing investment successful are current transformation block – this survey suggests not quite. So to shareholder value. Perhaps this is part of activities, and are shared services and this is a story of growing expectations not the problem. outsourcing really living up to the promise? quite being matched… It’s a challenging Unsurprisingly, these findings also A recent groundbreaking study from picture with the consensus that effectiveness correlate with the use of monitoring tools, ACCA, the global body for professional needs to improve: not surprisingly, however, which remain in their infancy. According to accountants with over half a million students this survey suggests those businesses with the survey only 31 per cent of businesses and members globally (www.accaglobal. currently use finance dashboards to monitor com), suggests many opportunities remain There is much the programmes, and less use internal or untapped. Uniquely, the survey focused ❛ external benchmarking or other tools such on the views of CFOs themselves on the talk about going as Six Sigma / Lean processes…. success or otherwise of shared service and beyond cost These findings are consistent with outsourcing strategies, outlining the initial reduction as the ACCA’s previous study on shared services drivers behind their adoption and gauging barometer of and outsourcing at the start of the year, and how the business outcomes sought have success, yet this reported in Outsource magazine in the shifted. Almost 500 CFOs and other finance survey suggests Spring 2012 edition, which concluded that leaders across the world participated in the measures of there was much more that could be done study, complemented by in depth interviews to embrace remote delivery and capitalise with some of the world’s leading brands success remain in on the benefits promised – change like Microsoft, GE, and AOL. The outcomes their infancy❜ management and service experience in make compelling reading. particular were cited as key challenges in to The good news is that these findings more longevity in their shared services greater success. don’t appear to detract from the attraction of and outsourcing relationships typically see So where next? Well, it’s not all bad news. shared services and outsourcing for CFOs. greater effectiveness. CFO aspirations remain positive and this is In fact, quite the opposite. The survey Of course one of the critical questions reflected in the desire for future investment suggests most finance leaders have very from the adoption of shared services in shared services and outsourcing high aspirations on the business outcomes and outsourcing is, fundamentally: what according to the survey. Put simply, those that shared services and outsourcing can does success look like? There is much CFOs who had already invested in shared deliver - and guess what: these aspirations talk about going beyond cost reduction services and outsourcing expect to continue are getting higher too. CFOs cite the usual as the barometer of success, yet this to significantly increase their investment. In trifecta of business outcomes as reasons survey suggests measures of success contrast, those who haven’t adopted remote for undertaking the journey in the first place remain in their infancy. Overwhelmingly delivery as part of the finance solution are – cost reduction, efficiency and finance businesses remain focused on measuring seen to be less bullish about investing in capability – but as they progress through success through two methods: cost their current finance delivery model.

“First comes thought; then organisation of that thought, into ideas and plans; then transformation of those plans into reality. The beginning, as you will observe, is in your imagination.” – Napoleon Hill

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72-75 Jamie lyon.indd 73 19/6/12 12:57:23 20859/102682 WINS FP.indd 74 18/6/12 14:14:32 FEATURE finance transformation

Overwhelmingly businesses remain focused on measuring ❛success through two methods: cost reduction; and the achievement of service level agreements❜ Starting with perhaps the obvious (or shifting the “higher-value” finance activity when the making the case for transitioning maybe not?), not everyone has adopted out remains just that, even with the largest higher-value finance activities and shared services or outsourcing, even for businesses. Approximately 60 per cent unlocking the value that shared services transactional finance activities. Twenty- currently kept higher-value activities in and outsourcing can truly deliver. Our eight per cent of respondents to the survey house according to the survey. survey suggests some CFOs may still need suggested they were still to take the plunge These findings should be seen as a a little bit more convincing still... into remote delivery of some finance wake up call to those people involved in For more information on ACCA’s finance operations. Where they do, the survey shared services and outsourcing delivery transformation programme please visit suggests a story of shared services and on a daily basis. The reality is that shared www.accaglobal.com/transformation. If you hybrid models as the significant preference. services and outsourcing won’t always be are a CFO or Finance Director with interest We hear a lot that shared services and at the top of the CFOs mind, and it won’t in finance transformation and / or shared outsourcing have been an overwhelming always be given the focus and priority services and outsourcing and want to success, particularly around transactional it perhaps deserves. There is no doubt contribute to ACCA’s programme in some finance activities. And in many senses that shared services and outsourcing capacity going forward please contact this is true as leading brands around the has delivered significant cost reduction, Jamie Lyon at [email protected] world have tapped into a compelling improved finance processes and helped +44 207 059 5513. labour arbitrage and driven process drive control transparency. Leaders in the standardisation. But this survey sounds a shared services and outsourcing space EVEN MORE note of caution and suggests there is much need to continually restate and remind For more from Jamie Lyon, see last issue’s article more still to do… Many CFOs are still not businesses and finance chiefs of the ‘Transforming Finance’ online now at http://bit.ly/ using remote delivery for their transactional significant benefits already achieved, and M6tjpU – and see our panel on the future of finance finance activities, and the promise of not just themselves. This is particularly true outsourcing on Page 86...

“As Gregor Samsa awoke one morning from uneasy dreams he found himself transformed in his bed into a gigantic insect.” – Franz Kafka

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72-75 Jamie lyon.indd 75 19/6/12 12:57:30 Recruitment Process Technology

The highly sophisticated tools now available to recruiters would boggle the minds of their predecessors of only a couple of decades ago – but what is the impact of the proliferation and ever-greater complexity of recruitment technology on recruitment itself? We asked a handful of experts to give their thoughts on some of the biggest issues facing recruitment today…

“Build into each budget the cost of hiring and don't lump yourself with capital investment.” – Ann Macbeth

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76-79 RPO.indd 76 19/6/12 11:49:06 feature Recruitment

What are the ramifications Eoin McCoy, General Manager, in the Human Cloud the emphasis is put of an increased reliance on Lumesse R&D on skills, presentation, former clients’ analytics and automation in Analytics will support a more targeted and ratings and feedback from contractors. the recruitment process? personalised approach which delivers This skills-based process ensures that benefits to candidates and recruiters. Time recruitment is based more on facts and Simon Constance, Director, HR and focus can be directed to bottlenecks, experience rather than gut feel. Advisory, Ernst & Young elements of a process for improvement and The current batch of early adopters data can identify candidate behaviour and What steps, if any, are are finding that analytics offers huge highlight the performance of recruitment providers taking to ensure opportunity, principally in two areas. processes methods, steps and results. the retention of the "human The first is in the operational aspects of Automation should be focussed on factor" in recruitment? campaigns. The best Applicant Tracking removing low-value administration and and candidate CRM systems provide should be harnessed to improve the Laurence Collins, HRO Proposition really rich insight and reporting on the interaction with candidates and in turn and Solutions Director, Logica process of managing applications. the overall experience. Regular updates, The emphasis of the human factor is The challenge, though, that only a few continued process feedback, reduction shifting. Interaction with the candidate applications have cracked, is tracking in decision timeframes underpinned by a is more frequently a blend between the world of "social media recruiting". more transparent and trusted process helps technology based-service, HR facilitated In a world where talent pools are streamline the process and free up time to co-ordination and hiring manager increasing being targeted via re-tweets spend on higher-value activities. Automation engagement. These elements, when and recruiting campaigns piggy-backing needs to be carefully calibrated to ensure a managed successfully, combine to form on multi-channel B2C social media positive candidate experience and should a positive brand experience. Increasingly marketing, there is no single URL on a demonstrate efficiency not a removal of current employees, alumni and even campaign board to track. As a result really personal interaction. The volume of activity future buddies are being sprinkled into the knowing the point where the candidate's in recruitment – driven by the internet process and organisations seek to find the interest was captured is hard. Even if they and recently by social networks - makes perfect balance between efficiency of the eventually apply directly via your company automation a necessity; recruiters would process and quality of the experience. recruiting site, short of surveying after drown in data without it. But automation the application, how do you know if does certain things well, like filtering out Toby Barnes, Director, Kindred HR the social campaign you are running is people who don’t qualify for geographical For large employers weathering the working whilst it is live and burning cash? or educational reason. It’s not good at more downturn sufficiently to still be hiring, Application buyers need to look for that nuanced distinctions. It can mean that good there is an issue of finding an efficient kind of analytics functionality to future- candidates who supply poorly-constructed and respectful way of rejecting large proof their approach. CVS are likely to miss out. But there is also volumes of applications that are not close The second is in the shaping of a trend for candidates to optimise their CVs enough to minimum specification. Easy attraction strategy. Organisations for automation, either by using standard to trigger a reject email from your ATS, are sitting on rich data about in-role profiles from sites like LinkedIn or even not so easy to understand or repair any performance, hiring source, academic borrowing techniques from the SEO world reputational issues caused by doing so. performance, career trajectory, to to make sure certain keywords are picked I am starting to see bolder advertising name a few data points. Whilst initially up first by filters. styles (“Are you good enough?”) to capturing these may be difficult, once encourage self-selection – but they send they are available the opportunities to Kjetil J. Olsen, European VP, Elance a very one-dimensional message that examine the potential success of various With the growing trend of candidate rarely contributes to employer brand! A hiring strategies is immense. It takes sourcing through digital platforms, we've recommendation would be to think harder an open mind to play with the data and seen that the hiring process is becoming at the attraction stage – the key is not pose creative questions of it. However more fact-based and less emotional. While having to reject at all, but to find a way to interrogating this can offer new insight ordinary recruitment processes are subject ensure the inappropriate candidates focus into how campaigns might play out, and to many emotional factors, we see the their efforts on the right opportunities. In a where they should be focussed. complete opposite at Elance. When hiring world of binary process, hard criteria and

“Time spent on hiring is time well spent.” – Robert Half

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76-79 RPO.indd 77 19/6/12 11:49:15 feature Recruitment

continuous process improvement, it's easy quantitative measurements within the substantial amount of information on a to forget that a well-crafted message to the recruitment process not only delivered prospective employer online, facets of a right candidate pool can reduce irrelevant reduced advertising costs, but also candidate’s online reputation can often application volumes at what is the highest identified scope for increased efficiency. be available to the recruiter. With a bit process inertia point. Examples of this are quantified time to of research a recruiter can learn and We know it's important to reach the 'best- hire and cost per hire. Additionally, in understand more about an individual fit' candidates quickest – but in doing so some countries and sectors, adherence by reading the subtext and analysing we need to be careful to manage their peer to a government-mandated diversity online activities. For example, a glossy group too – otherwise the good candidates agenda has also been an output from the and creative Flickr photo gallery may will not apply. When we're addressing the application of technological innovation to indicate a creative streak and eye for digitally enlightened, an online approach the recruitment process. The introduction detail not necessarily described within a isn't just sufficient, it's expected. There's of pervasive technology has also freed CV. Amongst digital innovation in the field a generational bias that says we have to recruitment teams from laborious, paper- of recruitment, measurable tests such as speak to everyone before they will feel as centric processes, freeing up time to psychometric, critical reasoning and others though they been addressed personally – determine candidates’ suitability, including can now be delivered on line; however, the but by using online communities/groups the identification of outlier candidates by final call still relies on a degree of human etc via LinkedIn, Facebook and the various applying the “human factor”. factor’s judgement to validate the outputs regional versions (Xing etc.) and well- An example of the above activity is the from tests. crafted written communication, the human research of candidates’ profiles online factor is not only retained, but to the right using interfaces with social networking Eoin McCoy, General Manager – groups, promoted in context. It brings a sites, which provide potential applicants Lumesse R&D huge employer brand opportunity. with greater exposure to recruiters than Technology enables a fusion of different ever before. A change to a candidate viewpoints and data sets to be combined How successfully can profile online may result in an alert to a to provide a broader evaluation of a current technology identify recruiter searching for a particular skill, candidate. Resume, free text questions, outlier candidates – the triggering a personal call, email (or a skills analysis, personality assessments, “valuable mavericks”? human intervention) to the prospective references, referral data and social media applicant. Indeed, the introduction of CRM data for example can be collated and Gian Piero Zambrini, Business functionality for candidates makes it easier combined to provide a recruiter with a Systems Manager, Ochre House for recruiters to identify potential talent blended view of the candidate which is Recruitment has gone exponentially outside what is normally stated in a CV. proven to enable the valuable mavericks “digital” over the last ten years, particularly In as much as a candidate can find a to be detected more readily rather than gathering momentum with the advent relying on a one-dimensional approach. of integrating social networks with The key to success is to ask the right applicant tracking systems through tools questions, and also tailor the recruitment such as LinkedIn, Twitter and Facebook process by thinking about a candidate during the last five years or so. The persona and ensuring the recruiter selects digital approach to recruitment has also the right process steps to capture a broad resulted in a proliferation of technology set of information to compare and contrast solutions available in the market place, using the solution. It’s technically feasible thus leading to a commoditised range – but it depends on companies identifying of cloud-based applications designed to the characteristics they want or think they manage campaigns and candidates. This want. It’s easier in some disciplines than growth on “company own recruitment others. For example, Google is known for sites” compounded with integration with creating online puzzles which effectively the aforementioned social networks has ‘screen-in’ certain types of people such as additionally had an effect on advertising clever coders or mathematicians. It would fees and usage of job boards. The probably be hard to do the same for, say, intelligence gathered about candidates’ good sales people. media preferences and the time and

“We are the children of a technological age.” – Lawrence Clark Powell

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76-79 RPO.indd 78 19/6/12 11:49:31 feature Recruitment

How aligned are buyers' market entrants, but also as a result of services. This takes the pressure off internal expectations of what increasing maturing within the recruitment teams and provides access to services that they want from RPO and profession. Across our client base, we're they would struggle to develop on their own. providers' capacity to seeing an increased need to focus on The final one is of course costs. Here deliver? HR transformation and flexibility, and the pressure is less on providers to bring recruitment is right at the front of making these down and down. That is a zero- Phil Clarke, Director, Independent significant change to an organisation. As sum game for the candidate experience In-house understanding about what RPO stated before, technology has also matured and recruiting organisation. However it is can deliver has advanced considerably as allowing RPO to blossom out into broader forcing RPO providers to offer greater value the practice has become more common, areas of talent management for their price per hire. In very large client partly due to the positive experiences organisations we have seen them investing had by companies buying and running What are the main drivers for in their own recruiting teams to the point of successful outsourced partnerships. Now, change currently at play in becoming cost-competitive with a number the challenge is more about curbing the the RPO space? of RPO players. It is hard, unless RPO expectations of those companies looking to companies really are very efficient, to make outsource. For example, where a decision Simon Constance, Director, HR the business case on cost alone these days. to outsource permanent recruitment comes Advisory, Ernst & Young The need to access tight global labour from a clear business strategy linked to a The first major one is the need for markets for critical roles, also means that concrete people and resourcing strategy, companies to build an integrated the doing for cost reasons alone is rare. All the platform and motivations are clear. resourcing and talent strategy across the this means cost alone is not going to be a However, where a decision to outsource whole workforce, that covers internal and sole decider in buying decisions. Buyers are permanent recruitment comes from a external talent pools. For too long the world looking to see what additional innovation procurement-led agenda and is viewed as of contingent labour and permanent hire they can get for their money. a bolt-on to an outsourcing contractor and outsourcing have been separate, hindering to temporary labour hiring, there are likely that; the first often being a vendor selection Toby Barnes, Director, Kindred HR to be significant issues around expectation process led by Finance and Procurement, Agility and cost. The market is versus delivery. with the latter by HR. Successful companies throwing up so many variables of its Also, it's worth noting that many new recognise that these are two sides of the own, alongside employers' own mixed players currently fuelling the RPO space same talent acquisition strategy, and look fortunes, that it is hard to maintain a are essentially recruitment agencies with for providers that see them as such. The cost-effective, high-quality internal no RPO experience. Often at the bottom best providers have recognised this and solution. That doesn't mean putting end of the market they focus on supplying adapted their offering to support the earlier everything out to tender – it means really contractor or temporary labour. While they analysis of which type of role is needed, and understanding what works and seeing may be experienced in the provision of how that changes over time and with the how you could buy the same or better for temporary labour hiring, it does not follow execution of the business strategy. That can less. Large RPO companies are natural that they will make good RPO providers, be then fed into the sourcing activity that magnets for best practice, offering a although they are often prepared to charge they are running. stable employment proposition of their lower fees to undercut the competition. The second is the need to invest in own that will often outshine those of their Engaging an RPO provider should be approaches to build passive talent pools customers – so value becomes a big about taking on the strategic element of an to improve the long-term effectiveness of driver too. organisation’s HR agenda and not just a recruiting hard to fill roles. This is labour bolt-on to the procurement agenda. – and technology-intensive work. It also requires flexibility. The peaks and troughs EVEN MORE Laurence Collins, HRO Proposition and are hard for many internal teams to support. For more from Simon Constance, see his Head-to- Solutions Director, Logica Identifying potential candidates for these Head with Steve Leach, online now at http://bit.ly/ RPO has matured from what could be pools and then communicating regularly I5nxUu – meanwhile, if you are interested in taking called ‘mess for less’ into an added-value and genuinely with them, via web and other part in an Outsource roundtable or panel discussion, activity which supports organisations at channels, is leading providers to develop or would like to discuss getting involved editorially in a business level. This has been driven in offerings that manage “social” channels, any other way, please write to the editor at part by increased competition and new also to provide offshore talent mapping [email protected]

“Always be smarter than the people who hire you.” – Lena Horne

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76-79 RPO.indd 79 19/6/12 11:49:37 Let’s Talk About Our Relationships Earlier this year, the Sourcing Interests Group (SIG) held its second London Roundtable bringing together a broad range of experts from across the sourcing space to tackle a number of issues critical to sourcing best practice. As part of this event, Outsource was proud to host a panel debate featuring two luminaries from the supplier relationship community – and plenty of input from the audience to boot. Now, we’re equally proud to present some edited extracts from that debate, looking at some of the biggest topics at play in the space today and bringing some indispensable advice straight from the front line…

“Money creates a power relationship between the payer and the payee.” – Joichi Ito

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80-83 SIG Panel.indd 80 19/6/12 12:17:11 Panel Vendor Relationship Management

Srini Krishna, Microsoft

Srinivas Krishna is Director, Finance Operations – Global Supplier Management at Microsoft. He was the inaugural winner of SSON's Personal Contribution to the Industry Award at the 2011 SSON Excellence Awards – India.

David Lewis, Carphone Warehouse

David Lewis is Vendor Relationship Manager, Group Operations for Carphone Warehouse. He has over 25 years’ experience in IT environments across a number of different disciplines.

Outsource: Let’s begin by taking on might win in the short term but the next you want suppliers to increasingly start to a tough question: how can we bridge service you procure from them, they’ll put display, rather than say “I’m a supplier; I’ve the gap between two big ongoing that extra ten per cent back on it again. All just got my job finished when I delegate this trends, namely cash-strapped buyers that you end up with is that, because you’ve service”. beating up providers on price, and the asked for something cheaper, you’ve got the increased drive towards a genuine B, C, or even D team and you’ve broken the O: Srini, you’ve been recognised philosophy of partnership within relationship. Have you really won? No, you internationally for your work on one outsourcing relationships? probably haven’t. particular deal between Microsoft David Lewis: You tend to hear a lot about Srini Krishna: I’d break this into two parts. and Accenture which had at its heart this: “more for less”, “driving value in the One of these I would call pure hygiene and a philosophy which our friend [and contract” – and personally, I think that it is this means from a buyer’s perspective my Outsource columnist] Kate Vitasek a window-dressing for “I want something expectations are just what I want; if we’re describes as “what’s in it for we”: how for free”. The example in the press a few buying and I want a grey-coloured widget can buyers take the steps to ensure the months ago was the M&S approach, to claw then give me a grey-coloured widget; don’t right balance so the relationship makes back 1.25 per cent of turnover with their sell me a black-coloured widget and say sense from both sides - and how can suppliers to finance £600-million-worth of it got black because it was out in the sun you approach it from a “what’s in it for store refurbishment. Now either that’s for and eventually it will become grey. Just we?” perspective? free, or we’re going to walk into M&S stores give me what I want. To David’s point, SK: It really is saying “what’s in it for we?” and they’re going to be in IBM blue and historically outsourcing has started off from The point is again, if I’m going to start an have “I think therefore IBM” on the walls – a confrontational position, so there’s always outsourcing relationship or a sourcing so it’s likely to be free. black and grey and we end up somewhere relationship by arguing about whether I get My problem with this is from the in the middle but I think there’s that basic 60 per cent of the cake or 40 per cent of relationship side of things – because I “get” hygiene of “I want an SLA with a turnaround the cake, we could keep fighting with each cost-savings, I really do, but my problem is of two days” – that’s basic stuff. other forever – but if there is a way in which that if this mindset persists and continues But there’s another part, which is slightly we can start to work with our suppliers to in the current climate, we’re going to find touchy-feely, and this question is: what are say “well, this is the starting point; can we that we’re going to start breaking those we expecting from a supplier? I think there then look to expand the pie over the life of relationships; there are only so many times is a change in mindset that is required the contract so that there is something for you can almost steal from your suppliers. where suppliers can also come to the buyer you and there’s something for me?”, then The issue that I’ve got then is it’s too much and say “let’s work on that together” rather there is a possibility of saying that together of the win-lose; that’s the easy way to get than saying “okay, this is a change order, we can achieve something bigger than money back, there’s no win-win in this ABC clauses, XYZ dollars and so on and what we would have achieved if it was just a scenario. I think everyone in this room will so forth”; a mindset where we say “I’m not question of going for each other’s throat. probably understand that eventually the just a service provider, I am actually part I think this is a fundamental shift in suppliers will claw their money back; you of your team”. I think that’s something that mindset; Kate’s research has actually shown

@trendallicious: The joy of 2-week old shorthand. Did a vendor exec really say: “We’re establishing a UK foothold and are going to be stuffing everyone” ???

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80-83 SIG Panel.indd 81 19/6/12 12:17:30 Panel Vendor Relationship Management

several organisations trying to adopt this broken your SLAs or whatever – but if you get me the Easter bunny too. For heaven’s type of contract, to say “let’s see how we can actually invoke that exit you need to have sake, you can’t have everything. expand our own horizons and see how we a relationship that’s strong enough to get Quite often there are contradictions can work so that both of us can gain.” And through it and allow you to continue with between some of these things and that’s just giving one example – to the point that the services that you’ve got, so that you can where prioritisation comes in. Now, to David made – if I make money as a buyer end with your current supplier and transition achieve some of this, the buyer has to put in and I’m assuming I want to beat the guy to the new supplier and still know that you some investment and money, otherwise you and don’t want him to make money, that’s a can go back to that original supplier at the can’t expect the seller or the service provider slightly stupid thing because both of us are end: it isn’t a case of burning bridges. So to put in all of the money to deliver all those commercial organisations; we’re not in this again, I’d like to impress on people that things. So I think there is this whole clarity for charity, and I’m just as responsible for the relationship is not just for the contract of outcome – and again when you talk about my shareholders as he is to deliver financial negotiation and the delivery of the service; clarity of outcome, it’s not about “I want value. it’s also to the end, to the exit. accounts payable done”, it’s “what do I want DL: On finding the right balance and actually Delegate: I’ve done a lot of outsourcing from to achieve at the end of five years? What do having a relationship: personally I promote both sides of the table and I was thinking I want my accounts payable function to look a relationship that works from the beginning back to what we were talking about earlier, like?” That’s what’s got to be driving the to the end, and one topic that seems to be how there was a skill of deal-shaping and buyer going after the sourcing provider and prevalent today is about buying the service - that skill was about making deals work so saying “this is what I want”. It might sound s❛imple but people need to go back to basics. Even to the level of making sure you take minutes at meetings! David Lewi❜s

but no one has actually talked about exiting that financial incentives were aligned on both Delegate: Having been on the buy side the service. One of the key areas about sides: that was all about “let’s find the pie and the sell side both, I think there’s blissful making sure you’ve got the right relationships together”. Around the early 2000s as the BPO ignorance written into SLAs – and I blame right the way through the end-to-end cycle industry – which I work in particularly – took both sides for that. The buy side always look for that particular agreement is that you can on a lot of IT outsourcing (usually through up to the nineties – we love high nineties, we exit on equal terms. One of the things that sourcing providers and advisors) they got love one hundred – and yet if we go back to I’ve experienced with my work for the NOA, this almost lazy deal-making with apples-to- the sell side and say “what if I only ask you for instance, is that exit management seems apples comparisons as the only thing that for eighty per cent; what will that cost me?” to be one the first things to be forgotten when mattered. So as both the seller and the buyer it’s the same price. They don’t know how to you’re buying the services: nobody thinks of the BPO, I’ve seen the innovation and the cost it at 80 per cent – and a lot of the time about the exit because you’re just getting into value sucked out of deals – and I am so with I don’t need things at 98 per cent, but that the relationship, so why should you worry you on the exit, David. I’ve actually had a number makes me look good. To me, when about it? client say “I don’t care, I won’t be here; let’s we write SLAs in blissful ignorance, I blame One thing that we’ve found from our just get this thing done…”. both sides – because now we’re creating experience at Carphone is that if you ignore SK: As a buyer, I personally believe that unrealistic expectations at prices that can’t the exit management side of things, your buyers are at fault here. Because when we be moved because we’re not appreciating relationship will break the instant that you go and come up with a sourcing request, what it takes to deliver. decide to exit. This might just be through everything is required: lowest cost, a SK: I agree, but if I went to the CFO and said natural progression or a strategic decision Rolls Royce, platinum customer service; “I’ve got a 75 per cent SLA” I should start – it doesn’t have to be because you’ve innovation; transformation – and by the way looking up websites for jobs because I won’t

“Harmony means that the relationship between all the elements used in a composition is balanced, is good.” – Karlheinz Stockhausen

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80-83 SIG Panel.indd 82 19/6/12 12:17:42 Panel Vendor Relationship Management

survive. The other part is that SLAs are just On my side, where I’m actually doing exercise. part of the whole process; there’s still stuff more of the performance governance, it DL: Unfortunately this just sounds too that’s lying on our side. You can outsource might sound simple but people need to go familiar… 95, 98, 99 per cent but there’s still got to be back to basics. Even to the level of making SK: A second piece is, governance someone in the buyer organisation that’s got sure you take minutes at meetings: “Where needs to be going from oversight to more to complete that process. You could have are your minutes? Where are the terms of insight. What we have historically done is wonderfully green SLAs but the situation reference to decide what you’re going to to outsource work, we’ve gone through a is still screwed up because the rest of the discuss in this meeting? Where are your huge vendor selection exercise and said process is not working. inputs? What is actually going to output?” “we have got the experts” – and then what Delegate: We had a member who said If you don’t get your basics, you’re just we do is sign a wonderful contract and go that they had a two-day turnaround on going to sit there and argue. We’re going and stand over shoulders and say “are you an outsourced IT agreement: a two-day through a process whereby we’re going pressing the Q and then the W, or are you turnaround for a desktop delivery, a fully back to basics – some people call it a pressing the W key before the Q?”. You’ve utilised desktop computer – and they got hygiene exercise – to make sure that we’re given it to them; let them do their work. it and, my God, they paid for it. Those doing the things that we’re supposed to be And I think that whole of feeling of a loss of computers were stocked all over the world – doing. While it sounds simple, do you know control drives this oversight. Governance imagine, to get them there in two days on the what? It’s the sort of thing that people in any really needs to change into getting more desktop fully installed. And then their internal organisation forget and say “well I’m having insight into what’s happening and how to IT department took six weeks on average my review meetings”; they’re holding their drive the whole outcome forward; change to issue the passwords and connect the conference calls but do they really know the outcome. What other outcome do I desktops to the internet… what they’re supposed to be talking about? want? That’s really where the governance SK: And then the IT department will send you No, no one’s actually agreed it! needs to change. a customer satisfaction survey saying “are SK: We’re looking at governance and there DL: Just to touch back on the issue of you satisfied with x,y and z?” and you’re not – are a few changes that we are making in beating your vendors up, Srini: in the and then you’ve got the vendor looking down many of our BPO contracts in Microsoft. original outsource for my department I the barrel of a sub-standard satisfaction One is going back to the law of requisite played both performance and relationship score. variety. Your governance organisation needs manager . So I was trying to get both win- DL: You need to try to integrate people to be able to manage the complexity of win deals, trying to put partnerships in that actually understand the services that your outsourcing contract; if you have a place, trying to get value but I’m also doing are needed on the ground – so when the global contract like ours that spans all of the the performance management; so one business says “well, no, I want 98 per cent” regions, spans all the time zones, has about minute I’m going in there with my big stick actually the IT delivery department realises forty-odd languages – three towers if you and saying “you didn’t meet SLAs!” and then that you can deliver it in five weeks and that may – then your governance organisation the next minute I’m saying “and I want to be will be fine, and that’ll match with the other has to have the capability to manage the your friend now” and you can’t do both; you IT services that we’ve procured and their complexity. You’re talking about 95 financial really can’t. capability of getting the password sorted out. controllers; 60-plus procurement managers; Earlier we were talking about good cop every one of the 90,000 employees is your and bad cop, and you sometimes have to O: Obviously all this has a lot to do with customer. deploy that sort of philosophy; you’ve got to governance: do either of you have any What I’ve often seen is a governance have the team to go in there and scrutinise key must-dos for getting governance organisation that was intended to be lean the data and ensure that it is actually right? and mean because you wanted to reduce genuine and accurate. And then you’ve DL: I think I’ve just touched on one. One of cost, and you had one business owner got to have the team that is looking to build the key things that we’re certainly trying to sitting somewhere up in the stratosphere that relationship. The need to manage our do with strategic sourcing at the moment and then you had a person that was in my organisation on a holistic basis will increase is to ensure that we’ve got the SRM or the role called the vendor manager – and that’s and effective management of knowledge is relationship support to those going through it, your governance finished there! So the an integral element of this. the procurement process; so at the moment role of the vendor manager was periodically we have a seven-step process and by step to beat the vendor up, and the beating EVEN MORE four we’ve already got the relationship in would usually start around January because For more from David Lewis, see his article ‘Good there. that’s when you start your budgeting Reviews’ online now at http://bit.ly/MBlb5m

“It is better to have a relationship with someone who cheats on you than with someone who does not flush the toilet.” – Uma Thurman

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This issue sees Outsource blaze a trail into uncharted territory, with the launch of our new OutsourceXplores content series. Prepare for deep multi-channel dives into speciﬁ c topics in collaboration with key partners over the next quarter; the articles which follow are only the beginning...

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85-89 xplores ACCA.indd 85 19/6/12 12:05:44 The Future XPLORES of Finance outsource Outsourcing with

Great Expectations To launch our exploration of ‘The Future of Finance Outsourcing’ with Grant Thornton and ACCA, we thought it would make sense to take a look, in this exclusive panel debate, at the status quo in the space from both organisations’ perspectives – and at how the drivers of the past few years will still have an impact on outsourcing relationships and organisational models for some time to come.

x For more great content on ‘The Future of Finance Outsourcing’ see the series index at www.outsourcemagazine.co.uk/gt

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85-89 xplores ACCA.indd 86 19/6/12 12:15:20 panel Finance Transformation

Jamie Lyon, ACCA

Neal Dempsey, Grant Thornton

Neal Dempsey is Financial Management Advisor at Grant Thornton, one of the world’s leading organisations of independent assurance, tax and advisory firms.

Oliver Colling, Grant Thornton

Oliver Colling is Head of Financial Management & Effectiveness at Grant Thornton, helping clients realise the value from their finance, procurement and human resources functions.

Jamie Lyon: Let’s kick off by touching The second big finding was around So these were some of the headlines upon the two major pieces of work that the relationship between the outsourced that I took away from the first piece of we’ve done recently. We did a piece of provider and the client in terms of work. And I was wondering if you had any research in January called ‘Expert insights expectations, and the alignment between observations from your clients around into shared services and outsourcing’; what the clients wanted and what they those. we talked to 20 of the world’s biggest were delivered; whether or not there was brands and the main BPO providers, some some sort of misalignment between what Neal Dempsey: I suppose the question advisory firms and quite a few global the outsourcer and the provider wanted. is, what kind of things are we seeing clients of shared services and outsourcing Things like speed of transition: the BPO driving people at the moment either to look providers about what’s happening in the might want to go really quickly; the client at outsourcing additional processes or global space in terms of shared services might not. The other major issue was expand their existing activities – or squeeze and outsourcing: what they saw as the the retained finance function – we got a a little bit more out of the existing model. opportunities, the issues, the challenges… clear sense that often the retained finance The phrase that was popular a few months My headline observation there was function had been overlooked as part of ago was “this is the new normal” – and a lot that essentially they were saying was that the transformation journey. of people just wanted to take a look at what they were pretty comfortable with some So, from a buyer’s perspective, a lot of that new normal was: “If this is the way we of the technological and tactical aspects questions around: how do we make the are going to be for a couple of years – fairly of outsourcing and shared services, but relationship work, and how do we design stagnant in terms of growth opportunities – that some of the softer stuff was still the and restructure or transform our finance then we’ll look to do more with less.” most difficult to embed. So with a transition function to drive that optimum finance Ultimately the cost argument – the leaner, process or a financial transformation model? From a provider’s perspective, more efficient organisation – is still driving process, things like change management just because you got really effective in a lot of the thinking. Also a big chunk of that just kept coming up time and again: “We terms of your service level agreement has been public sector-driven for us of late haven’t really worked out how to manage does not necessarily mean you have – and the whole cost-cutting agenda there the change process effectively”; “Change happy clients! And there are issues is of a different order. They are looking at was a big issue.” around that. dramatic change, certainly, in that sector.

For more from Grant Thornton, see www.grant-thornton.com; for more information on ACCA, see www.accaglobal.com x

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85-89 xplores ACCA.indd 87 27/6/12 09:56:32 The Future XPLORES of Finance outsource Outsourcing with

JL: For our second piece of work, which is more in terms of driving value back to the capability to move it to the next level? coming out shortly, we ran a survey with business. There should be much more of One of the things that came out from the almost 500 CFOs and finance leaders a discussion around how to work with the CFO study was that there was a sense globally. It was interesting to ask CFOs provider better to get more value. that a captive model was perhaps more themselves as opposed to people who effective sometimes in moving some of the have day-to-day responsibilities for shared Oliver Colling: I think there has been high-value stuff – and I don’t know if this services or outsourcing; a lot of research an expectations gap: those organisations is, because it’s in-house, maybe there is done previously has talked to the latter who are two or three years into a major issue about better control, or better control kind of people in the industry, so I thought outsourcing arrangement were sold a of talent development. But there definitely it would interesting to talk to the ultimate strategic partnership, a transformational was a case for shared services at the finance customer. What do they see in partnership – which actually, now the higher end, and I wonder whether there is terms of how successful are shared economic situation has changed and both the same case for BPO… services and outsourcing? What were their internal and external customers are more initial drivers? How have their aspirations demanding and value-driven – they’re ND: A lot of this will come down to evolved? And there’s a sense that these actually finding out what they have is a organisational culture, when you start to models haven’t quite delivered on promise commercial arrangement under which the think of what some of those more value- in every area. There is something around providers are meeting service levels and adding activities might be. Typically the “we got labour arbitrage, we got the cost BPO is still operating something of a silo, – and that’s good; but our businesses are ❛Nobody got into and isn’t sufficiently close to the culture struggling at the moment and it’s a very these arrangements of its client business most of the time, competitive environment, so we would like wanting to fail and it will be hard to step up to deliver that more of that - and by the way we like more to end up in any kind service. I think that’s where you are seeing cost out and we want lots of other things as a number of people deciding that “I can well…” of confrontational get more from my shared service; I can situation. But the mould that to the culture to the rest of ND: Larger organisations are much world’s a very different business”. It’s much more a servant of the more mature in terms of transactional place to what it was company rather than a customer-supplier outsourcing. It is that point where three or four years ago relationship - which the BPO is always organisation might have moved big chunks Oliver Colling ❜ going to be. of activity a number of years ago now, taken the benefits that are there, and then service level agreements and targets but JL: So if we take that argument on a little lived for a while with some of the pain of doing no more. There’s now a demand bit: when we talk about the future of F&A an incomplete understanding of roles and in terms of value-add, in terms of quality, outsourcing, there is obviously more responsibilities, and a bit of a break-up of rather than just the transactional element. ongoing talk about transitioning the higher- the end-to-end process. So there is a lot Nobody got into these arrangements value stuff; with the real high-value activity more discussion in terms of “what are the wanting to fail and to end up in any kind of like insight and analysis, I have a question bits we haven’t thought about properly?”. confrontational situation. But the world’s in my head over whether there is a natural If you think about, say, credit control a very different place to what it was three line that has to be drawn in the sand, and revenue assurance-type processes, or four years ago, so with the promises purely because you can’t just move some some organisations dump out the basic of value and service, unless providers stuff out - or whether actually the future transactional stuff, and then the retained are actually contractually obliged to for outsourcers is very rosy and you can knowledge in the organisation - say in meet qualitative measures, a lot are now move virtually everything out of the finance the UK or in the parent business - is lost; retreating into doing what the contract says function. so organisations tend to have lived for a - and that’s it. period of time with the discomfort that can ND: In a lot of organisations there is still an create. JL: So pretty much sticking to the letter awful lot that can move – it comes back to They are perhaps thinking about putting of what’s in the contract - and that is the the piece around the retained organisation a bit more of that process onto the provider nature of the relationship. Is it your view and people actually understanding what and starting to squeeze them for a bit that the main BPO providers have the that looks like. In terms of getting that

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85-89 xplores ACCA.indd 88 19/6/12 12:06:47 panel Finance Transformation

right: I don’t know sometimes whether OC: Yes, it has been a big topic – and journeys? Is it all about getting the cost the effort of the actual outsourcing project a big concern – all the way through the down and showing the return that way? means that the retained organisation recession. Finding and retaining and How do they measure that? What are your gets left behind, and assumed that it will motivating good staff is still one of the thoughts? just know what to do “because they’re number-one issues, because good people accountants, aren’t they?” I feel that are hard to find and it’s become even OC: Success in the beginning of the happens sometimes. I do think that there harder to persuade them to move. We journey was to go through the outsourcing are organisations where it might well be have the perverse situation where we got process and then ultimately to realise better that most of that retained function high levels of unemployment amongst the cost savings; then – particularly for those were outsourced, in terms of how the broader finance community but not enough organisations who are two to three years organisation works – because people talent to fill these really important roles in into their relationships – their questions aren’t getting that bit right, and aren’t retained organisations. have changed. Operationally they getting the value from what they retain becoming more demanding of functions within the business at the moment. It gets JL: One of the striking observations from like finance, HR, procurement and want forgotten and there is the gap between “we the whole finance transformation agenda more from an outsourced relationship than hope to move more out into the BPO” and – and as part of that, shared services they did previously. “we hope to develop more of a business- and outsourcing – is that once you start partner relationship in-house” – and to break up and offshore elements of the ND: There is that element of, “two or neither of those things happen. finance functions, all career paths are three years down the line do we view our not necessarily available anymore. In relationship with confidence? Are they not OC: The retained organisation is a really the near future, what are the implications the trusted advisor but a trusted partner?” important point. Typically, what has of developing new talent through your One of those has slightly more intangible happened is that the retained organisation extended finance functionality? Once measures of success – but it’s actually a has been made up, literally, of those you start to offshore to India, how do you really important issue: “Can we go to the who have been retained – when actually continue to develop talent across finance? provider with the new problem? Can we the skills and experience required can For future CFOs what are the entry points? have confidence that they are not going to be quite different, because you are Are those questions cropping up in your see this simply as a revenue generator?” talking more about service and contract discussions? management. Someone who has been OC: The whole governance around responsible for managing the task is ND: Only in the sense that they’re not ones relationships I think is evolving. We have not necessarily the best person to be that people seem to be able to answer… been involved in a lot of instances where managing the delivery of that task from Leading organisations increasingly look the relationship has broken down and a third party. Not all organisations have to rotate their talent through the SSO. I become very confrontational. And there’s a grasped the nettle there. don’t necessarily see that people have that lot to learn from that. When you go through kind of relationships with their outsourced something like this you need to build in JL: I think you’re right – and I think providers, to take certain members of their some kind of area for good identification business partnering is a term that team through. Maybe in those kinds of and quick resolution of any issues. organisations widely misuse; some situations where there are development are doing some element of business projects between the two partners you start ND: It comes back to “what will success partnering, but a lot of business partnering to get more junior members of the finance look like when we have done this?” It’s activity taking place really is routine and team involved so they can see beyond important to make clear to the provider not particularly insightful nor analytical to their existing role, and start to get involved that “this is what is important to us as an the business. With regards to the retained in business and process improvement organisation, and for this relationship to be finance function: it leads to other questions activities – but generally I don’t necessarily successful to us these are both the hard around the whole talent development see huge examples of really good practice, numbers and the soft, more intangible issue, which is something in which we are let’s put it that way. things that will be important to us.” But very interested. Has talent development some people are finding that hard enough cropped up in many conversations you JL: We asked CFOs: what does success to work out for themselves, never mind have been having with your clients? look like for you in these transformation articulate to the providers!

Each OutsourceXplores is a separate content series created in collaboration with a commercial partner. The Outsource editor retains final editorial control of course. For more information write to [email protected] x

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85-89 xplores ACCA.indd 89 19/6/12 12:06:56 outsource XPLORES Transforming Business Through Technology with

Transformative Technology Our series on ‘Transforming Business Through Technology’ begins with an exploration of some of the biggest issues affecting the document services space today – and why no organisation can afford to get this wrong…

For more unmissable content on ‘Transforming Business Through Technology’ x see the series index at www.outsourcemagazine.co.uk/obs

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xplores OCE.indd 90 19/6/12 17:15:45 feature Document Services Technology

Jamie Liddell

Jamie Liddell is the Editor of Outsource and www.outsourcemagazine.co.uk

et’s begin by considering two communication channels – so, for example, quotations I feel are particularly for all the talk about (and ecological drive pertinent to the topic at hand: towards) the redundancy of paper as a “There are times when the medium of communication over the last 20 greatest change needed is a change years, and despite a decrease overall in the Lof my viewpoint.” – Diderot amount of paper now used both within and “As the pace of change accelerates, between organisations, we are still very far there is naturally a greater need for from true paperlessness (as a quick glance effective leadership.” – John Kotter at the average consumer’s letterbox will There has never been a time of greater, testify); meanwhile, however, organisations more rapid or more rapidly accelerating also now need to support email, SMS, change than the era in which we find social media messaging and a number ourselves – and in few areas of business of other formats simultaneously. It is not has this change been more evident, or simply a question of one medium replacing more consequential, in recent years than another overnight: multiple capabilities in the data and document management must be maintained, at cost, in order to spaces. The impact on the way businesses keep up communication with a population receive, handle, interpret and distribute growing significantly more slowly than its data of the move from a paper-based to a number of touchpoints. digital communication paradigm has been Cost has of course itself been a big driver and continues to be tremendous; in only a of the move towards greater document and couple of decades organisations have had data management efficiency: the initial cost to comprehend, analyse and operationally focus which led to the adoption of smarter encompass the advent of electronic technologies has slammed into the broader document management systems, cost agenda brought on by macroeconomic scanners, OCR systems, smartphones, developments and worsening trading software-as-a-service/cloud delivery environments. Organisations – especially models and numerous other technological at the larger end of the spectrum – have innovations which have each, in their own become relatively au fait with the principles ways, revolutionised the very idea of data of process improvement and streamlining and documentation – and, increasingly, upon which much document management transformed at a profound level the transformation has been grounded; relationships between business, customer the danger has emerged though of an and supplier, and between the individual excessive focus on cost at the expense of parts of the organisation itself. capability – in other words, the challenge One of the main challenges which rears up increasingly prominently of how to continues to complicate approaches to ensure successful communication, analysis effective data management has been and continuous improvement when the that the aforementioned technological impetus has become so overwhelmingly advances have not led immediately to the towards reducing the negative impact on obsolescence and disappearance of extant the bottom line.

For more from Oce Business Services see www.ocesolutions.com x

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xplores OCE.indd 91 19/6/12 17:15:57 outsource XPLORES Transforming Business Through Technology with

This challenge is frequently exacerbated type of error can cause should not be seen an extraordinary amount of process within outsourcing relationships as underestimated; “the strength of a chain is improvement development in recent buyers demand “more for less” from their its weakest link” and a document process years – and which in the data management providers; as Kate Vitasek wrote in the of any importance cannot be allowed any arena can be hideously costly. A real drive last issue of Outsource, “companies want weak links (and, of course, the more links towards genuine transformation in this solutions to close the gaps, but they do the greater the chance of breakdown). field can pay huge long-term dividends, as not want to make investments in people, “For example, one sector in which the long as it is correctly aligned with business processes and technology where they do efficient gathering, collation and handling strategy and the needs of the organisation. not have a core competency… The result of records is operationally critical is A third risk of note, and one of extreme is that the industry is at a crossroads, with healthcare, where in extreme cases import, is the compliance risk inherent in both buyers and service providers wanting it can be a life or death matter,” wrote the documents themselves – especially innovation – but neither wanting to make LDC’s Yann Souillard for Outsource. for organisations doing business across the investment due to the conventional “The volume of data generated by international boundaries. Non-compliance transaction-based commercial structure of today’s healthcare providers presents with tax and data protection legislation how the companies work together.” an immense challenge… A patient’s can have catastrophic consequences for Organisations which haven’t invested healthcare record has on average an the guilty organisation – yet, of course, sufficiently in document services active life of 80 years over which it must document processes need to have such risk suffering a disconnect between compliance bound into them at every their strategic objectives and actual organisations stage, along with being flexible enough to communication (both internal and ❛ react to the imposition of new regulation. external). Indeed, if we divide the targets which haven't invested Constant adherence to a multiplicity of of transformational document services into sufficiently in document different regulatory parameters is not internal (ie, organisational improvement services risk suffering a merely a nice-to-have. designed to “make the business better”) disconnect between their Technology, of course, is the tool via and external (ie, improving and innovating strategic objectives and which these risks are being nullified – but it communications with the organisation’s actual communication is not merely the application of technology, customers and to a lesser extent suppliers) but the transformation of the business via it is clear that any strategic objectives (Both internal and technology, which provides for the greatest for either or both of those divisions can External❜ value gains – and again, these gains can be seriously impeded by an insufficient be found in an organisation’s dealings focus on document and data services, be managed and different parts may be with both internal and external elements. and that risks exist and are exacerbated held by different organisations, creating Technology isn’t just transforming how an which could have major ramifications for a fragmented mosaic of information from organisation can do things; it is changing, the smooth and profitable operation of the which clinicians may struggle to extract fundamentally, what it can do at all. business. vital details. Health services are already Take customer contact: in the primordial Those risks fall into a number of overburdened with administrative and soup before the digital revolution, categories, some of the most prominent logistical tasks so it makes sense for them communication with customers revolved of which are worth examining here. One to outsource the problem, to enhance around postal and then telephonic of the most obvious is legal risk in terms information storage, management contact. Not only did such communication of a breakdown in document processes and retrieval capabilities in order that involve large cost (partly as a result of resulting in a failure to deliver services: information is always maintained in its the significant structural and logistic so a disconnect somewhere in the most usable form for clinicians.” overheads involved) but the ability of the documentation throughflow from order to Another risk worth considering is the organisation to extract, and analyse, useful output could result in a service delivery structural cost risk posed by inefficient monetisable data from this communication failure ranging from one failed delivery processes causing excess expenditure was pretty limited. to one consumer through to a large-scale at the back end. This is the kind of Now, however, there are a multitude of failure impacting upon multiple end-users leakage which organisations have different channels available – in the words at a B2C client. The kind of damage – focussed very hard on driving out in other of Derek Parlour, Head of Commercial both financial and reputational – this functions – Finance for example has for National Rail Enquiries, “what’s really

For more unmissable content on ‘Transforming Business Through Technology’ x see the series index at www.outsourcemagazine.co.uk/obs

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xplores OCE.indd 92 19/6/12 17:16:08 feature Document Services Technology

driving us is users’ changing use of a real drive towards question. A lack of joined-up thinking with technology: we’re seeing people moving ❛ regards to document services can be away from call centres. The web is now transformation in both costly and damaging. For example, by far our main channel and we’re seeing the field of document an insurance firm providing a client with more and more people using mobile services can pay huge more than one product might well have applications” – and these channels don’t long-term dividends, as more than one communication route – just provide replacements to older versions long as it is correctly even utilising the same media (so the but offer genuinely new capabilities. The aligned with business customer may receive, say, paper-based combination of an effective document strategy and the needs of communications from different divisions management infrastructure with robust the organisation which are not communicating with each real-time analytics can enable an ❜ other). Optimising these interactions organisation – to construe a relatively can have great benefits in, for example, simple example – to receive contact ensure compliance with all necessary customer retention or increasing the from a customer via email, send out a regulatory frameworks, and add to the value of each individual customer to the targeted sales offer to that customer via organisation’s analysable data set. business; on the other hand, failure to social media, receive an application for The flipside to this, of course, is that optimise can lead to disengagement on that offer via SMS, and send out a paper an insufficient focus on transformative the part of the customer, or at least leave confirmation of the invoice as per the technology could result in this land open doors through which more capable, customer’s request – and retain an entirely of opportunity becoming a slough of joined-up organisations can slide to steal joined-up record of the entire process, despond for the hapless organisation in the customer.

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xplores OCE.indd 93 19/6/12 17:16:21 The Future of XPLORES Rightshoring in outsource association with The Future of Rightshoring Philip Taylor is a Professor at the University of Strathclyde, Scotland, and the author of numerous works on call centres, offshoring and business process outsourcing. To launch our Xplores series with Scottish Development International examining ‘The Future of Rightshoring’, we spoke with Professor Taylor about the trend towards rightshoring, the drivers behind location decisions, and what lies ahead in the way of challenges and opportunities… usiness platforms, enabled by where we identified business platforms as the fusion of cloud computing, having four key characteristics: outsourceSaaS :and Professor BPO innovations Taylor, can in an offshorebusiness English-speaking platforms deliver voice standardised services and the Philippines remain easily the we beginintegrated with your singular idea of managed what you tobusiness India or processes; the Philippines, but might at the most important destinations for business considerservice, to be the are current emerging state rapidly of as samebusiness time seek platform to utilise owners Eastern (service Europe process outsourcing (BPO). In fact, there Brightshoring?the desired “one-to-many” utility service forproviders, IT solutions not buyers) or perhaps manage Latin the America are now more call centre operators in Philipfor providers Taylor: and The a starting new source point of for value what forbusiness a Spanish-speaking processes associated voice capability. with the Philippines than there are in India mightfor outsourcing be termed buyers. as rightshoring Business isplatform to grasp Sothe whatbusiness have platform emerged and have furnish been themulti- servicing the international market. IT- aoutsourcing company’s offerings position combinein global businessservice locationalcomplete solution,strategies including as the scale the peopleand related services and the different types of delivery,process outsourcingor global sourcing. with enabling Remote complexitythat operate of them, offshoring the underlying and outsourcing software non-customer-facing BPO activity are still locationstechnologies – offshoring and services, to developing and the world’s haveplatform grown. and the infrastructure; resourced to the greatest extent from India. countrieslargest providers (which classicallyare beginning has totended dust offto Nowbusiness within platforms this global focus service on business delivery, But the multiplicity of offshore beexisting – at least offerings in terms and of invest publicity aggressively focus – theoutputs question or outcomes of the most such appropriate as improved destinations has also grown. Despite aroundto lead incall niche centres markets. or the To back better office from locationworking forcapital a particular and higher type customer of service has South Africa’s earlier promise, it has not theunderstand UK or the the US evolution to India) of tended these toservices be arisen,loyalty, notwhich inputs might such be astermed labour rightshoring. and grown to the extent that was anticipated. conceivedand the state of ofa one-to-one the market, relationship. HfS polled So Thisphysical formulation assets; is essentially concerned The Middle East – and for a period Egypt companies21 service providers in developed and evaluatedcountries, 112the UK withbusiness a mix of platforms quality and service cost. moreCost isthan – grew significantly as well. There are a andbusiness US, send platforms call centre as part services of its Business to India obviouslyone client. a very important factor driving host of destinations servicing the English- andPlatform the centres Map™ theremarket serve survey customers during in offshoring,Well-executed the relocation business of platforms business speaking world, but none of them have the theseQ4 2011. geographies. Over three This months kind we of briefedone-to-one services,provide customers but is by no with means compelling the only scalability or the importance in terms of relationshipproviders on seemed their strategy to fit theand earlyofferings. years of one.technology-enabled The questions of business labour capability, process value that India or the Philippines have. remoteThis report outsourcing outlines someor offshoring. highlights of our labourservices skill, that labour help drive quality, innovation infrastructure, via The second strand is nearshoring which results.What has happened over the last half- supportiveprocess re-engineering, government policy, greater political business involves the relocation of a service or a decade or so has been a change in which stabilityagility, and and productivity so on are factors improvements. that process to a geography adjacent to the Whatbuyer companies are business if they are larger, or complementThey are flexible and probablyand scalable qualify in the skill, face so home geography. The classic example platforms?suppliers if they’ve got greater capability, it’sof global within demand this decision-making fluctuations scenarioand provide might be here Canada to the United States, HfShave Research tended to first locate documented different facilities the thathigh-quality organisations process are workflows. trying to adjust the where historically labour costs might be emergenceand different of services this set ofin offeringsdifferent locations.in appropriate mix of ’shore’ locations. cheaper but they share a similar time, ourThe research suite of global document locations titled has ‘What grown. Are There are three important strands. First culture and so on. To an extent nearshoring BusinessNow it could Platforms be that and an organisationWhy Do They might of all, there is remote offshoring. India has been chosen because it has less risk Represent the Future of Outsourcing?’, xx For more great content on ‘The Future of Rightshoring’ see the series index at www.outsourcemagazine.co.uk/sdi

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94-97 xplores scottishDevInt.indd 94 19/6/12 12:59:27 interview Philip taylor

❛Rightshoring is adjustment, or a selection by an organisation of the appropriate skill sets, in the appropriate locations, at the appropriate costs to deliver services as part of a wider global service or global service delivery paradigm❜

For more on Scottish Development International see http://www.sdi.co.uk/sectors/bpo.aspx xx

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94-97 xplores scottishDevInt.indd 95 19/6/12 12:59:34 The Future of XPLORES Rightshoring in outsource association with

❛What is important to recognise is that what has tended to be moved offshore have been the most standardised and transactional of services in terms of call centres❜ than remote sourcing albeit that it generally end analytical processes. involved a higher level of cost than going to Now clearly these are going to find India or the Philippines. different location points in terms of the Scotland might be considered to have a skill mix available for them. You wouldn’t, nearshore relationshipxplores to London and the XXXXXfor example, find multi-lingual call centres South EastTwo of England: issues on agoa similar the land HfS Research team looked at the emergencebeing established of in India.business You have multi- mass, sameplatforms; time zone but now the costs VP can Research be Robert McNeill returns toskilled the topiclinguistic following hubs in Eastern an Europe 25 toevaluation 30 per cent lower. of Cultural21 service complexity providers and 112 business platforms,but they dowith not tend some to be of findings such large and linguisticwhich congruence demonstrate are advantages genuine value over and above traditionalscale and you find models. there’s a locational so for these reasons the ability to provide factor. It’s similarly true of different types of relatively complex services at a relatively back-office activity as well. lower cost does have an attraction over and above the pure labour cost arbitrage that is o: So turning to our topic of the future supposed to prevail in offshoring to remote of rightshoring: how do you see this countries.usiness platforms, enabled by where we identified business platforms as changing going forwards in terms of The thirdthe element fusion of is cloud onshoring. computing, That havingPT: I think four that’s key characteristics: an interesting question. both new locations emerging and new essentiallySaaS means and keeping BPO innovations located onshore in an Onebusiness has to haveplatforms a look deliver at the overallstandardised capabilities emerging within existing services thatintegrated might otherwise singular managed be either businessprofile of processes;the services to have moved locations such as Scotland? nearshoredservice, or offshored. are emerging rapidly as internationallybusiness platform and globally. owners We (service know that PT: One overall trend that’s important is BtheWith desired rightshoring, “one-to-many” there areutility additional service providers,of offshored not business buyers) services, manage thehistorically, that when relocation takes place it tends optionsfor providers including and a“homeshoring”, new source of value businessabout 50 perprocesses cent or associatedmore have beenwith to be accompanied by a business process essentiallyfor outsourcing homeworking. buyers. Business While this platform thein financial business services. platform andThis includesfurnish the big re-engineering, that is to say a process doesoutsourcing not offer offerings a scale combinesolution, itbusiness certainly completeinsurance solution,companies including doing standardthe people – particularly if it’s a back-office process seemsprocess to outsourcing fit and be appropriatewith enabling for some thatinsurance operate claims them, and the policyunderlying processes, software – is examined, reengineered, and then organisations,technologies and where services, skilled and people the world’s with platformbasic bank and functions, the infrastructure; all the main functions lifted and shifted to another location. And thelargest appropriate providers skills are beginningmight be living to dust in off wherebusiness a degree platforms of standardisation focus on business occurs, it might be reduced in complexity, if it is dispersedexisting offerings communities. and invest aggressively outputsso the vertical or outcomes sector suchthat has as improvedbeen being delivered remotely. to Solead rightshoring in niche markets. is adjustment, To better or workingresponsible capital for mostand higher offshored customer activity has One unanticipated consequence aunderstand selection by the an evolution organisation of these of the services loyalty,been financial not inputs services. such as Thislabour is followed and of offshoring has been that the labour appropriateand the state skill of the sets, market, in the HfS appropriate polled physicallargely by assets; telecommunications and then markets that exist in the principal offshore locations,21 service at providers the appropriate and evaluated costs to 112 bybusiness a diverse platforms range of differentservice moreindustry than locations of India have been shallower deliverbusiness services platforms as partas part of a of wider its Business oneverticals: client. IT/computer services, retail, than people imagined them to be. Just globalPlatform service Map™ or market global surveyservice during delivery hospitality,Well-executed hotels, business transport, platforms tourism. because you have millions of graduates paradigm.Q4 2011. Over three months we briefed provideWhat iscustomers important with to recognise compelling is that leaving university every year does not providers on their strategy and offerings. technology-enabledwhat has tended to be business moved processoffshore mean to say that they are all capable oThis: It report does outlinesseem that some it ishighlights very of our serviceshave been that the help most drive standardised innovation and via of immediately working in the BPO results.much a case of horses for courses, processtransactional re-engineering, of services greaterin terms business of call industry and interrelating with customers then, in that for each individual agility,centres. and This productivity is not exclusively improvements. the case. in the west. NASSCOM, the Indian Whatorganisation are businessthere might be a very TheySome are computer flexible help and desk scalable activity in the is offace industry organisation, has estimated that platforms?different shoring recipe. Do you find ofa greater global demandcomplexity, fluctuations but in the mainand provide in somewhere between three to five per cent HfSthat Research the various first capabilities documented of the the high-qualityterms of voice process services workflows. lower complexity of all of those who apply for a job in Indian emergencedifferent geographies of this set of offeringsprovide infor workflows have tended to move. In terms BPO are actually going to get taken on. oursimilar research industries, document similar titled sectors‘What Are to of back-office services, span of complexity So there are a lot of divergences if you Businessbe utilised Platforms in the sameand Why clusters Do They for is greater: everything from routine data like between potential capability and actual Representexample? the Future of Outsourcing?’, processing to relatively high-level, high- employability; the level of linguistic and x For more great content on ‘The Future of Rightshoring’ see the series index at www.outsourcemagazine.co.uk/sdi

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94-97 xplores scottishDevInt.indd 96 19/6/12 12:59:43 interview Philip taylor

❛One overall trend that’s important is that when relocation takes place it tends to be accompanied by a business process re-engineering, that is to say a process – particularly if it’s a back-office process – is examined, reengineered, and then lifted and shifted to another location❜ cultural congruence, and tacit knowledge sense that you’ve probably got a higher that will happen going forward, is that there are important. And this has meant that guaranteed level of quality, less attrition. will be more of a segmentation between the labour market has been tighter; the The cost gap between the remote location voice and other forms of non-customer- demand for labour has exceeded supply and the domestic location has possibly facing activity. There is clearly a trend to over many years leading to levels of job narrowed over time, so there’s been an reshoring – i.e. contact centre services turnover, attrition, wage inflation, which important change. What appeared to coming back to the UK. have led in turn to a certain amount of be the unalloyed attractiveness of going overheating in some of the key locations abroad has been qualified by concerns o: So there could be obstacles ahead? in India. It seems to be the case that high over rising costs and quality. PT: Well I think political instability is a attrition rates are also happening in the The big decision last year was taken by question here. As I said before, rising Philippines. Santander to make sure that its call centre costs or tightening labour markets in The consequence has been a general activities were going to be all delivered remote locations can lead to a greater rise in labour costs. When this is combined onshore. Now, of course, these are voice attractiveness of nearshoring or with concerns over quality of customer services and the same constraints of homeshoring. Protectionism may also be interaction this can – and I’m using the customer interaction do not apply to the an issue in the United States especially conditional here – lead to the greater same extent to back-office activity. That is where there has been a lot of rhetoric about attractiveness of nearshore delivery, in the an important distinction. I think one thing the need to keep services onshore.

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94-97 xplores scottishDevInt.indd 97 19/6/12 12:59:54 TOP TEN

UK PENSION REFORM This issue’s Top Ten examines what organisations big and small need to consider in the light of recent legislation reforming the UK’s pensions landcape…

Clare Blatchford-Hanna

Clare Blatchford-Hanna is a specialist in HR Service Delivery within organisations ranging from small UK- based businesses through to large-scale international corporates.

ver the next few years, communicated with employees and can Understand your staging all businesses in the UK, report on activity and opt-outs as required. date and be prepared including those with a As this requires a minimum one per cent 1 There are changes that will single employee, will be pensionable employee salary contribution by need to be made: changing contracts, considering how best the employer, and the marketplace continues communications, brieﬁ ng groups, Oto deliver the Pension Auto Enrolment to drive competition, it is not a particularly training payroll/HR etc. These need scheme. Fundamentally, Auto Enrolment – welcome addition to the ledger (along with to be planned in for launch, and a government led initiative aiming to ensure its trusty sidekick "administrative burden"). be compliant from day one. Most the UK population has a provision for However, it seems that providers are very providers have not yet been inundated retirement – requires that all employers join willing and able to support, and are offering with requests to participate in vendor eligible employees to a pension scheme a strong employee communication service selection and are keen to secure on the ﬁ rst day of eligibility, whether that critical to successful change programs. business early. This means they have is into a NEST (government) or private Here are my top ten issues to bear in mind time to engage on a very detailed pension scheme/fund. Employers must when navigating the quagmire of UK pension level should you require support on show that they have marketed their offering, reform. understanding the legislation.

“A corporation’s responsibility is to the shareholders, not its retirees and employees. Companies are doing everything they can to get rid of pension plans and they will succeed.” – Ben Stein

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98-99 top ten.indd 98 19/6/12 13:04:16 TOP TEN UK Pension Reform

Understand eligibility opportunity though if the strategy is a one- offer a very good engage-and-build model Auto enrolment has strict eligibility stop benefits shop). for attracting employees into the scheme(s) 2 criteria, so before embarking on on offer, with award-winning technology; in supplier selection, ensure you understand Communication, my opinion its drawbacks are yet another the numbers of employees or potential communication, communication login for employees; and it’s relatively employees involved (i.e. permanent 5 Depending on your workforce expensive in comparison to other providers. employees and fixed-term contractors). As demographic, the level of understanding with most procurement, buying in bulk can about pensions can be quite diverse; Negotiating costs often aid negotiation, and determine just for example, there is a fear that lower- Demand is uncertain, hence how much support will be required from paid workers may not understand the 8 pricing is slightly sporadic. Most the provider. deductions and assume the company pension providers already have member is simply taking money off them. Most administration mechanisms in place so Know your pensions pension providers will enhance their they are simply able to harness existing For medium to large companies, existing offering to include a full-scale technology for the joining, correspondence 3 there is often an incumbent multimedia communication attack at no and reporting processes and provide pension scheme in operation. Providers extra cost, including face-to-face meetings additional support within call centres. This will advise on this area, but it is important with employees if required. Benefits offering appears to be "free" to the employer to understand the incumbent offering(s), providers appear to be offering the same. in most instances, and is included in the and compare with the legal minimum Suppliers such as People’s Pension have management costs for the employee. contribution levels. The NEST scheme simple, clearly branded messaging (and Benefits providers are understandably is portable between employers but the a pragmatic approach to pension fund doing the same, where the service is free funds cannot be transferred into other structure); however some suppliers require but will likely increase costs as the service schemes until after five years. This is a critical mass to be reached before offering is provided on a cost-per-employee basis. beneficial to contractor types but may not some services. Should they so wish, be appetising for permanent employees. eligible workers can opt out on day one; Compliance and governance For organisations where the contractor however employers must be seen actively Providers often spend more time population is significant, it may be to be encouraging their employees to stay 9 marketing the awards they’ve beneficial to auto enrol into NEST to keep enrolled. won than on the auditing compliance the "company" pension clean. accreditations (if any). Ensure the provider Consider your employee selected has a serious understanding To transform or not to demographic in choosing the of the Department for Work & Pensions transform the benefits offering: 6 scheme type framework, and relevant obligations. 4 that is the question… Unlike most pension schemes where at Most offer penalty clauses and refund Companies often have a sole objective to the earlier age the initial risk is high and mechanisms should they fail an audit; get the enrolment process in as quickly decreases over the life of the pension, however it is more comforting to have and cheaply as possible with minimum the NEST scheme has been set to start at avoidance mechanisms in place to avoid disruption. Using the same employee/ medium risk to encourage people to stay those scenarios than have a contract that employer portals either directly from the with it, so that workers who are unused to states they’ll pay every time they get it provider or flex benefit portals means it’s pensions will not be scared of the bouncy wrong. a fairly seamless integration of the new nature of high-risk investment and leave the requirements. However, if there isn’t an scheme early. Check the payroll processes existing provider, this is a much bigger and dates question. Do you implement a whole flex Deciding on provider type 10 Dates are key to the efficiency and benefits portal at the same time or not? There are the usual suspects in effectiveness of the process. If existing and Benefex and Thompsons Online Benefits 7 the running: pension providers future payroll processes are not mapped have good platforms that can help manage themselves such as Standard Life; benefits and include timeframes, there is a risk of multiple terms and conditions and benefits providers such as Benefex; and then the agreeing a process that involves duplication eligibility rules, but understandably it does likes of Johnson Fleming who provide a between payroll services and the services require a lot more effort up-front (a useful pure pensions administration service. JF of the enrolment provider.

“Chase your passion, not your pension.” – Denis Waitley

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98-99 top ten.indd 99 19/6/12 13:04:21 playing ball Having “one throat to choke” used to be seen as preferable to dealing with multiple suppliers – but buyers are increasingly turning to multi-sourcing arrangements. However, approaching these in the same way as traditional single-source models is a recipe for disaster, says Rob Sumroy…

Rob Sumroy, Slaughter And May

Rob Sumroy is a partner at leading international law firm Slaughter And May, advising on all aspects of IT and data protection. He is a member of the PLC, IPIT, and the Outsource Editorial Board.

he inevitable firm, but fair, most simple, describes a sourcing process find the UK Premier League just a little too deadline reminder from the engaging multiple suppliers; in effect the dull, and come up with a number of ploys editor has given me welcome opposite of a single source arrangement. to jazz it up; the ultimate being an overtime respite from a complex and Done well and with some sophistication, period of ‘multi-ball’ where multiple footballs gruelling multi-sourcing multi-sourcing can deliver significant are cannoned onto the pitch. The theory I Tnegotiation for a large enterprise client. benefits to procuring entities (and, suppose is: more balls, more actions, more Multisourcing. It’s all the rage at the many would argue, for the participating goals. moment; at least within the small sourcing/ suppliers). Done badly, the associated risks Why then the current trend away from procurement circles I mix in. Chances will far outweigh any potential benefits, and single-source, prime contract arrangements are that somewhere in your procurement can lead to disruption, disappointment and towards multi-supplier procurement team, as you are reading this Legal View, chaos. This all brings to mind a Budweiser strategies? As with multi-ball, the multi- there are people planning, designing or advert, broadcast on UK television at the sourcing strategy has developed from implementing multi-sourcing strategies for time of the 2010 FIFA World Cup. It’s perceived problems and disaffection with your organisation. So what actually is ‘multi- worth a look on YouTube (I could only the prevailing prime-contract model. The sourcing’? find the shortened version: http://www. essence of a prime contract is that the Like most sourcing labels, ‘multi- youtube.com/watch?v=wH_ihfDnohI) but customer has one (main) supplier who sourcing’ is highly descriptive and, at its the essence is that the US Budweiser guys has prime responsibility for providing all

“Individual and national rights to wealth rest on the basis of civil and international law, or at least of custom that has the force of law.” – Alfred Marshall

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100-101 Legal View.indd 100 19/6/12 12:01:53 FEATURE The Legal View

contracted services and so is the ‘single advantage of multi-ball, a team would throat to choke’ should problems or failures need a strategic approach to defining and arise. These prime contracts were very providing for all of the interdependencies much in vogue in first-generation and early- between each of the ballplayers. Likewise, stage outsourcings. The prime purpose a multi-sourcing customer must understand was often achievement of significant costs and cater for all of the inter-dependencies reduction; removing inefficient assets between each of the various suppliers, to from the balance sheet (under-performing ensure that an end-to-end service can be staff, depreciating kit, costly real estate) properly and effectively delivered across and replacing hefty capex budgets with the whole supply chain. If any of the chain manageable and flexible opex charges; links are broken, it is the customer who all within a relatively prosperous and ends up carrying the service failure risk and stable economic climate fuelled by readily loss. available debt financing. suppliers and Suppliers and customers in a multi- Unfortunately, for many in these prime customers❛ in a source arrangement need to adopt a new contracts (customers and suppliers) and fresh approach. Perhaps the best the deals have gone stale, and disputes multi-sourced analogy is the football coach: in multi-ball and disappointment have arisen. These arrangement need a team needs a coach who can develop, monolithic contracts are now seen as to adopt a new implement and manage a coherent strategy unwieldy and unresponsive to the needs and fresh for all players with all balls. In the multi- of the customer or the supplier. In many approach source world, we see the development cases the contracts are simply ignored ❜ of the supplier relationship management and the parties muddle through with a incurred in the early contract years; (SRM) function, which now needs to view commercial and operational ‘fix’ based on where suppliers stumped up significant supplier relationships holistically across the the supplier’s typical, standard offering. investments to deliver shiny new services whole end-to-end service delivery model, One of the biggest customer complaints at attractive prices. They underpin the rather than as a series of individual, discrete we hear in the prime contract world is that supplier’s original business case for supplier relationships. The need for a true the customer cannot get behind the prime the whole deal. But customers are not multi-source coach has seen the rise in supplier to develop close and productive happy. They want a piece of the supply importance of the service integration (SI) direct relationships with the various sub- chain management action, and this is all function: a body whose job it is to ensure contractors who are engaged by the prime exacerbated by, though not necessarily coherent and consistent end-to-end service supplier to deliver the services. Both caused by, seismic shifts in the regional and delivery by a series of multiple suppliers, when failures and problems occur, and global economic climate. many of whom are fierce competitors. when opportunities for efficiencies or new/ Hence the push within procurement Recruitment of a sufficient skillset for SRM improved services and standards arise, the functions to contract directly with the supply and SI requires significant investment and ‘one throat to choke’ has actually become chain. The aim is to achieve a series of takes time; whether directly employed or a tall and impenetrable brick wall (once bilateral buying arrangements between itself taken on as an outsourced function. described to me as being “as thick and the customer and each of the individual There are many things you could impenetrable as the contract”. Not one of suppliers. However, from the contractual, do to jazz-up football without adopting my contracts, I should add…). commercial and risk perspectives, this a full-blown strategy of multi-ball The prime contract arrangements are poses significant challenges. It is not ‘soccertainment’. Likewise, there are many now perceived to be costly and inefficient, possible, and in fact quite dangerous, things you could do to improve a traditional as customers see suppliers swallow all simply to replicate the traditional single prime contract, single-source arrangement benefits, both service and financial, from source procurement process, and the prime without adopting a full multi-source the management of the supply chain of contract it produces, for a strategic multi- strategy. However, if you do want to take sub-contractors, or at best deliver a small source arrangement. Back to Budweiser’s advantage of the multi-source opportunities, percentage through convoluted gainshare multi-ball analogy for a moment: if multiple be prepared to invest the time, effort and mechanisms. What customers often forget balls led to 11 games of one versus one, resources for an appropriate procurement is that suppliers need these benefits to there would be very little gained, and process, contract structure and retained compensate for the up-front costs they potential inefficiencies. To really take organisation.

“No civilised society can long exist, with an active power in its bosom that is stronger than the law.” – James Fenimore Cooper

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100-101 Legal View.indd 101 19/6/12 12:02:02 This issue: GLOBAL BUSINESS SERVICES

The significance of global business services rises as outsourcing outcomes fall short Our partners at HfS Research return with a study hot off the presses, examining how organisations do – and should – utilise their various business support services structures. CEO Phil Fersht and Research VP Sourcing, Governance and Healthcare Strategies Tony Filippone tell us more…

In March 2012, HfS Research and from 325 participating organisations important cost-reduction vehicle, it remains PwC conducted a major research focused on how leading organisations less effective when not integrated into a survey entitled “The Future of Global achieved superior outcomes. The study shared services program. Business Services”, to identify the had six major findings. drivers and results of organisational despite the proven Iefforts to improve business support standalone benefits of their services. outsourcing 2 shared services and “Global Business Services” (GBS) is 1 provides a cost- outsourcing initiatives, a strategic governance framework that centric approach that most organisations only helps organisations transform business achieves few additional include a small proportion support functions into services that solve benefits for far too many of their operations in business problems and create new, more organisations. their shared services or effective solutions for both internal and Results of the study (see Figure 1) show outsourcing initiatives. external customers of the organisation. that shared service initiatives outperform Forty-one per cent of organisations’ GBS focuses on optimising the mix outsourcing initiatives by a significant customer service, 49 per cent of their of resources, process acumen, and margin across productivity, quality, facilities management, and 58 percent technology (including cloud computing) innovation, and alignment with corporate of their supply chain organisations to deliver technology, finance, human strategy objectives. Hybrid initiatives remain in decentralised in-house models. resources, procurement, sales support that leverage both shared services and Organisations must overcome internal and other services on an enterprise-wide outsourcing operating models also resistance to change and shift operations basis to support the business strategy. outperform stand-alone outsourcing into shared services and outsourcing An executive summary of the results can models in terms of productivity, quality, and programs to achieve better performance be found here. The analysis of responses innovation. While outsourcing remains an results.

Phil Fersht is CEO of HfS Research. He can be contacted at [email protected]

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While outsourcing remains an❛ important cost-reduction vehicle, it remains less effective when not integrated into a shared services program.❜

For more information on HfS Research visit http://hfsresearch.com

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102-105 HFS.indd 103 19/6/12 13:05:45 This issue: GLOBAL BUSINESS SERVICES

Figure 1

Hybrid initiatives that leverage both shared services ❛and outsourcing operating models also outperform stand-alone outsourcing models in terms of productivity, quality, and innovation❜

many organisations outsourcing transformations. Consequently, the best outcomes for their are learning that many of the initial decisions organisations organisations. 3 a polarisation on made, concerning selection of service Across business outcomes such as lower cost reduction leads to provider partnerships and shared services costs, higher quality, driving innovation, poor selection of service design, have proven hard to rectify based and aligning corporate strategy with providers and shared on their shifting business objectives. By operations, centralised governance teams services design, as their leveraging a GBS framework, organisations consistently outperform decentralised prime business focus shifts making major service provider and shared teams or organisations without a to talent strategy and services decisions can learn from the governance team. In particular, centralised cultural change. experiences of peers and place greater teams drive innovation and alignment with Compared to when they began their emphasis on talent and cultural change. corporate strategy nine per cent and 13 per shared services and outsourcing initiatives, For those organisations already caught cent better, respectively, than organisations experienced organisations now place in the middle of existing initiatives, GBS without governance teams. Based on this double the amount of importance on frameworks help their companies shift focus information, every organisation should driving cultural change and gaining access to align with current corporate strategies. organise a governance team and, despite to talent and capabilities (see Figure 2). internal resistance from IT and business Organisations have also reduced their centralised leaders who do not want to lose control, focus on cost reduction by 15 per cent, governance organisations should seriously consider since the onset of their shared services and 4 organisations create centralised teams.

Tony Filippone is Research Vice President, Sourcing, Governance and Healthcare Strategies with HfS Research. He can be contacted at [email protected]

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102-105 HFS.indd 104 19/6/12 13:05:51 Organisations that actively manage a business are on average ❛ 26 per cent more likely to generate significantly better productivity, quality, innovation and alignment with business strategy. Yet, less than half (46 per cent) of governance teams have a formal business case that is reviewed on a set schedule and is formally updated as changes occur❜ governance approach is needed to improve strategic reviewed on a set schedule and is formally teams frequently and operational effectiveness. updated as changes occur. Governance 5 accomplish their teams have significant opportunities to primary objectives, but Sixth, the study mature their ability to manage business struggle to create similar reiterated the critical cases and drive innovation and GBS outcomes in areas outside 6 role of governance frameworks provide a model to improve of their key focus areas. teams to manage shared maturity. Both shared services and outsourcing services and outsourcing These six findings are significant initiatives struggled to achieve business service provider indicators of organisations’ maturing outcomes outside of their initial key focus performance, as well as approach to managing shared services areas. For example, organisations that the overall program to a as standalone outsourcing initiatives show focused on reducing costs experienced business case. their limitations. Yet, they also prove how outcomes that accentuated operating Organisations that actively manage a much room for improvement organisations costs over innovation, and organisations business are on average 26 per cent still have. Organisations should seriously that sought to gain access to talent and more likely to generate significantly consider adopting a GBS governance capabilities, found strong alignment with better productivity, quality, innovation and framework to demonstrably improve their business strategies, but struggled alignment with business strategy. Yet, outcomes. to drive innovation and reduce operating less than half (46 per cent) of governance To discuss these findings in more detail, costs. A disciplined, balanced governance teams have a formal business case that is please contact [email protected]

Figure 2

For more information on HfS Research visit http://hfsresearch.com

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102-105 HFS.indd 105 19/6/12 13:05:56 p106 TheProfessionals FP.indd 106 20/6/12 09:46:00 this ISSUE Cartoon; Online Round-Up; Inside Source; The Last Word the back end

Offshoring The Sourcing Sage points his satirical paintbrush at a subject guaranteed to rile the masses…

Matt Heffron

By day, Matt Heffron is Director, Global Integrated Solutions for Sutherland Global Services – but when the sun goes down his alter ego emerges: the Sourcing Sage (www.sourcingsage.com), offering mordant satire in graphic form.

“All cartoon characters and fables must be exaggeration, caricatures. It is the very nature of fantasy and fable.” – Walt Disney

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107 cartoon headlines - matt heffron.indd 107 19/6/12 13:33:47 The Back End Online Round-Up

Online Round-Up The Outsource magazine website (www.outsourcemagazine.co.uk) provides indispensable outsourcing and business transformation content every day, from our in-house team, our portfolio of 50+ columnists and a plethora of occasional writers. Each issue we provide a round-up of some of the quarter’s top content, so read on to whet your appetites – and if you’re reading this via our digital edition, just click the URLs to go direct to the relevant article online…

Managing turnover in outsourcing relationships by Sanjay Chadha The last decade witnessed a shift towards outcome-based management in outsourcing relationships. As a result non-linear delivery models (e.g.: outcome-based or transaction-based pricing; fixed price etc...) have been gaining interest with buyers. Even though buyers have matured with managing outsourcing initiatives, the fact still remains that the success of projects depends on the quality of skills deployed and the longer stability of provider resources. Resource turnover continues to be highlighted as a major risk to project delivery. If the provider faces significant resource turnover, the chances are that one or more of the project parameters (quality, time or cost) will go out of balance and the provider will not be able to meet its SLA commitments. http://bit.ly/OMOnlineJun1209

Consendre mod eugait alit luptati sisisisit augait num iusti facidunt ipsumsan el eraestrud exerat ad onulla cor ing eumsandre ex elit @djjosiane: Always be nice to those younger than you, because they are the ones who will be writing about you. atetue tet ulla feu feum niamconEm ea commodiam ad tem dolortio Utat lum quisim et, quissi.Volobore m iurero dolobore.

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108-111 online round-up.indd 108 19/6/12 13:34:38 Outsource, insource forget and make life easy. or shared service? However, our ability to assess There’s a place for each the quality of the product or service model in the service and measure it against NHS… our expectations before by Brian choosing to pay (or not!) Gorman is gradually being eroded. Healthcare The flip-side is when we in the United do have the opportunity of Kingdom true discretionary spend our is provided expectations are significantly by the government through sharper because these its healthcare provider, the decisions have become rarer. National Health Service We expect a greater degree (NHS). The NHS is one of of expertise from a service the largest employers in the provider, and we expect a world. In England alone it result significantly better than employs 1.4 million people could have been achieved (just under half of whom are had we done it ourselves. If clinically qualified) and caters we engage a builder, plumber for a population of 52 million. or decorator, for instance, we Around three million people find it easy to generate an are treated by the NHS in expectation of the result we England every week. There want and to measure output is much need for widespread against this expectation. change across the NHS; in We can be a very exacting the way it works, delivers customer indeed… business services and provides http://bit.ly/OMOnlineJun1204 patient care. With duplication of processes and dated Relationship quality systems and procedures, there measures: “Mind the are many parts of the NHS gap!” requiring overhaul in order to by Richard achieve optimal operational Condon efficiency… Quality Chinese choices: location selection http://bit.ly/OMOnlineJun1203 aspects drive considerations for global enterprises us personally by Philip Hadcroft Why does signing a and influence The size and growth curve of the Chinese cheque deliver higher the way we look, the products economy, relative to those countries more quality for SMEs? we use, the materials we seriously affected by the recent crises in global by Mike buy and the way we conduct finance and sovereign debt, is stimulating many O’Connell ourselves in our everyday companies to think more deeply about where Many of us pay lives; in fact they influence us their business is represented. Which markets offer the best for our internet, more as human beings than potential for growth and positive shareholder returns? Certainly telephone, we often realise and allow those companies that position themselves as global services utilities and us to differentiate ourselves enterprises and as multinational corporations must be reaching even settle our credit card from those around us. It also the conclusion that their market positions require them to have a bills using standing orders seems that the more we presence in China… and direct debits. These types envelop ourselves in quality http://bit.ly/OMOnlineJun1202 of payments mean we don’t credentials the more confident

“If a writer knows enough about what he is writing about, he may omit things that he knows. The dignity of movement of an iceberg is due to only one ninth of it being above water.” – Ernest Hemingway

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108-111 online round-up.indd 109 19/6/12 13:34:52 The Back End Online Round-Up

we feel and the easier it services industry is, therefore, becomes to trust the decisions one of the most pressing we make. Similarly there is issues facing countries today. a parallel in industry, where Building capacity to harness the companies identify with the benefits from the IT/BPO sector value of “quality” and will adopt is an essential prerequisite standards that attempt to set to transform the society and them apart from others… economy of a country. In a broad http://bit.ly/OMOnlineJun1205 sense, capacity building in the IT/BPO sector encompasses Business analytics and the development of a country’s outsourcing: is it the human, scientific, technological, next wave? organisational, institutional and by Bharat resource capital in order to meet Vagadia the requirements and skill sets to Business compete effectively in a modern intelligence (BI) global economy. and business http://bit.ly/OMOnlineJun1207 analytics (BA) aren’t new concepts (I Highlights from the SIG remember using pivot tables Global Sourcing Summit in Excel over 15 years ago by Sarah and Amazon using predictive Holliman recommendations 10 years As I started ago). However, today, the ability working on the to aggregate, store, mine and highlights from analyse data is cheaper, faster, this spring’s SIG easier... and you have social Global Sourcing Summit, I was media! overwhelmed by what a great http://bit.ly/OMOnlineJun1206 mix of thought leadership and networking it was. Twice a year Outsource – or cloudsource? Building capacity to we gather with our members by Daniel Sasaki harness the potential of – sourcing and outsourcing There’s no question that cloud computing is the IT/BPO industry leaders from Fortune 500/Global here to stay. A recent infographic released by Kevin 1000 companies – to share best by IT consulting firm Avanade shows that Parikh practices, hear transformation globally, 74 per cent of enterprises are using The past two stories, network with colleagues, some form of cloud services – a 25 per cent decades have and hold strategic conversations. growth since 2009. It is clear that the uptake of witnessed I always walk away in awe of our cloud computing is changing the IT outsourcing landscape, rapid growth members’ accomplishments, and one might wonder where the UK fares amidst these global in the IT/BPO sector resulting and grateful that they are willing statistics. A 2011 survey by VMware, a leading provider of in improvements in the to share the challenges they cloud infrastructure, has found that the UK SME sector is in lives of millions of people had to overcome in frank, no- fact behind the rest of Europe when it comes to cloudsourcing, worldwide and being a source nonsense discussions so other with 48 per cent of British SMEs adopting it compared to a of livelihood for many. Seizing organisations can learn from European average of 60 per cent… the opportunities presented by their mistakes and celebrate http://bit.ly/OMOnlineJun1201 the digital revolution and the their successes… rapid growth of the technology http://bit.ly/OMOnlineJun1210

“There is creative reading as well as creative writing.” – Ralph Waldo Emerson

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108-111 online round-up.indd 110 19/6/12 13:35:07 THE BACK END ONLINE ROUND-UP

S’il vous plait, please habla Deutsch! by Max Buchler Or; try to keep it somehow simple and speak the same language as the customer. I too often read and listen to new IT defi nitions, re-defi nitions and buzz. We have all the clouds, all the XaaS from A B C to at least S (and I’m sure there is a Z somewhere…), crowd- co- out- versions of sourcing – even to me these are sometimes a bit confusing. Then; if I – as some sort of a pro - sometimes don’t understand do you think the customer understands if “1. this is soda; 2. It fulfi lls the ability to quench thirst; 3. We will be able to do more and be more productive and earn more money”? In other words; do you think the IT business helps customers to buy IT solutions in the easiest way? Sorry, but I don’t think so.. http://bit.ly/OMOnlineJun1213

SSON’s 12th Annual much of the discussion over data might build a customer making a number of strategic European Shared the next three days touched profi le based on details of his acquisitions and continuing Services & Outsourcing on these from one angle or web browsing habits, prior to take huge bites out of the Week: a review another… orders, phone calls, location, UK and European market. by Barbara http://bit.ly/OMOnlineJun1211 social media, electoral roll At this year’s 12th Annual Hodge information and other private European Shared Services & Amsterdam Big data meets the and public details. Outsourcing Week conference was buzzing regulators... http://bit.ly/OMOnlineJun1212 in Amsterdam (see left for last week – and by Simon Barbara Hodge’s write-up of not just in the Briskman Q&A: David Poole, CEO, the event), we spoke with David cafés! The Shared Services & Big data opens Serco Global Services UK Poole, the CEO of Serco Global Outsourcing Network ran its up a world of & Europe Services UK & Europe, about 12th annual European event, possibilities for It’s been a the strategic thinking behind where hundreds of delegates organisations fascinating – some of the organisation’s and providers from as far wishing to exploit the vast array and hugely recent purchases – and to afi eld as Qatar and as near as of information available to them. signifi cant – get his thoughts on what’s Amsterdam itself met to hear But big data programmes are few quarters going wrong, and right, with from industry leaders and on a potential collision course for Serco, outsourcing today... debate changes in the market. with the regulators. Big data with the outsourcing giant http://bit.ly/OMOnlineJun1208 Three big topics hit the stage is the neat label for a set of right from the start: tomorrow’s technologies which are coming workforce; data analytics; and of age. New analytic tools allow REMEMBER You can keep up to date with all high-technology companies rapid appraisal of real-time the articles published online by subscribing to our driving value through transactions and facilitate weekly OutsourceXpress email: see our homepage operations. These seem to deeper analysis of multiple at www.outsourcemagazine.co.uk for more details… be the core issues at stake as databases. For example, big

“The internet is the Viagra of big business.” – Jack Welch

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I spy, with my little eye… outsourcing mischief!

The red mist… Regular readers of this scoping out a piece of work, column might be forgiven and somehow concealed it for assuming that my life is inadvertently in such a way as one long whirl of high-class it has been missed by most of events, boozy tetes-a-tetes and the people it’s touched up to salacious gossip – and, it’s now. The poor kid at the end of true, I try to live that lifestyle as the phone took the brunt of my fully as possible. But every now anger – which was thoroughly and then (OK then, all the time) unprofessional of me and I I get dragged down to earth will be sure to make amends by an unfathomable amount of very shortly. But as for the idiot work, and the cocktail parties whose mistake it’s been… and premieres get transformed As John Travolta says in Pulp into long nights and early Fiction: “It’d almost be worth mornings in front of the laptop. him doing it just so I could And when this happens, catch him…” like everyone else, the very If this column doesn’t appear last thing I want is for my in the next issue, it may be workload to be increased by because I’ve been detained at the incompetence of others. Her Majesty’s pleasure after Unfortunately this does losing it completely. In which And more… occasionally take place, and case: can someone bring me a my wrath knows no bounds. cake with a file in it? I’ve got a Good to know, though, that through the meeting one of them And today is one of those times. situation that needs fixing. my company’s not the only said something that another Earlier today I got off one making balls-ups at the one disagreed with and before the phone from one of moment. How’s this from an our eyes a full-on stand-up our offshore delivery anonymous contributor: row developed which got so centres having shouted “Dear Inside Source, ferocious that they had to be myself hoarse at I thought you might like this pulled apart and the meeting someone who bears anecdote. Today I attended was quickly wound up. As they no responsibility a meeting with a software were ushered out the front door whatsoever for a gigantic development company who they were still squabbling and SNAFU which will cost is – was? – hoping to get a tasty apparently fisticuffs broke out us several thousand – little piece of business from us. before they were out of sight. perhaps tens of thousands We weren’t calling it a pitch but I am trying to persuade our – of pounds to put right. that’s what it was. They had put security team to put the video up The problem is totally at together a presentation with on YouTube and will send it to our end: someone who some nifty video content that you if they ever do!” should have known very must have cost them a few bob. I can’t wait! Remember, you much better has made a They actually seemed quite can send me your scurrilous very very obvious mistake interesting – some good case stories at insidesource. studies as well – but halfway [email protected]

“However I dress it up, I was a spy and I am not proud of it.” – Christine Keeler

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113 inside source.indd 113 19/6/12 13:35:53 THE BACK END THE LAST WORD

are activities which you used to do yourself (like a graphic designer getting other people to do his design and enjoying a hefty mark-up) but I refuse to, because for me another element to this is that it has to involve the transfer of jobs. If the people aren’t changing employers it ain’t outsourcing. Why do I get so fed up with this? You might say I’m just being a pedant but actually I think it’s really important to get the terminology right – especially with such an emotionally charged thing as outsourcing. People getting confused over nomenclature leads to confused thought processes and bad practice – look at the damage which the confusion of outsourcing with offshoring has done to the reputation of the former in the US for example. I don’t think it OPINION is pedantry to insist on correct usage when it’s so important Get it right, right? to get that usage correct – and if it is pedantry, fine, call me a pedant. Just don’t put A few weeks ago when citing any but indulge me for a previously done within the things in the drawer marked the editor of Outsource minute. organisation – she didn’t have “outsourcing” that clearly don’t mentioned that he hadn’t yet I saw a TV programme the an organisation as such at that belong there. found someone to write the other day about a woman who point anyway – and getting Last Word for his next issue, had built a successful lingerie someone else to do it. And it’s I realised this was a great business from scratch, and she not offshoring because it’s not opportunity for me to let off told how she had “outsourced” work that was originally done ‘B. Accurate’ a bit of steam about one of her manufacturing to Thailand. onshore and then moved. my personal bugbears. What I wanted to scream at the Here’s another example. I Would you like to have been implored by a well- is this that so irks me, I hear you television “that’s not %*&£% contribute an interesting, ask? Well allow me to explain outsourcing!” It’s not even known service marketplace provocative – and, if you myself. offshoring really (and don’t to “outsource” my way to my wish, anonymous – piece I am sick to the back teeth of get me started on the regular fortune. But getting people to to The Last Word? Or would the word “outsourcing” being confusion of those two terms do things for you via a service you like to respond to this particular column? Why marketplace isn’t outsourcing: used to describe things that by the media). What it is, not drop a line to the aren’t outsourcing at all. There is sourcing product from a it’s just procuring services. editor at jamie.liddell@ are so many examples of this low-cost destination. It’s not Some people might put this in outsourcemagazine.co.uk misuse all over the place that it’s outsourcing because it doesn’t the “outsourcing” category if to discuss your thoughts? probably unnecessary to start involve taking work that was the services you’re procuring

Consendre mod eugait alit luptati sisisisit augait num iusti facidunt ipsumsan el eraestrud exerat ad onulla cor ing eumsandre ex elit “The wages of pedantry is pain.” – Carroll O’Connor atetue tet ulla feu feum niamconEm ea commodiam ad tem dolortio Utat lum quisim et, quissi.Volobore m iurero dolobore.

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