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Whitepaper Managingsuccessfulbusinessprocesstransition 120829105135 Phpapp02
Whitepaper Managingsuccessfulbusinessprocesstransition 120829105135 Phpapp02
www.isg-one.com
INTRODUCTION
Selecting a service provider is just the start of the outsourcing journey. For
many multinational or global organizations, ensuring a successful transition to
the new service provider is a complex and difficult effort. This paper draws
from lessons learned across several global transitions covering multiple
business processes, such as finance and accounting, order management and
logistics distribution. The intent is to describe practices that worked well and
helped avoid the pitfalls. Although this paper is focused on business process
outsourcing (BPO), many of the lessons can readily be applied to information
technology (IT) outsourcing as well.
Figure 1
HUMAN RESOURCES
The transition to an outsourced process model obviously has a major impact on the organization’s staff — both permanent
and contract. The agreement with the service provider may involve staff transfer, or it may be left to the client organization
to redeploy or make redundant their staff.
In early BPO contracts, the service provider usually would move work to its own delivery centers, without any staff transfer.
In recent transactions, however, some service providers have been keen to build a regional staff presence, and this has
created opportunities for meaningful transfer of staff to the service provider. Whether or not staff members are transferred
as part of the agreement, it is vital to understand and comply with the many variations of human resources (HR) law across
the globe.
However much due diligence is conducted by the service It is important to stress that it must always be the service
provider before the contract signing, it is always a provider’s responsibility to set up measurement tools
surprise for the provider to discover the extent of and produce quality reporting. The client may help with
process variation and the difficulty in creating a new access to internal systems, etc., but must not allow itself
common process. With that in mind, the transition plan to be dragged into doing the service provider’s work.
must include time for comprehensive knowledge capture
and process documentation by the service provider. TECHNOLOGY
In most cases, the business process under review will be
ROLES AND RESPONSIBILITIES supported by technology of some form. This may range
The transition will have profound effects on from a single integrated, global enterprise resource
organizational roles and responsibilities. These will planning (ERP) system through various regional ERP
primarily affect the function being outsourced (e.g., the versions to stand-alone software applications. Accessing
finance department), but will also have a ripple effect on this technology from the provider’s delivery centers is
roles within other areas of the organization. necessary for service delivery — this is the easy part of
the transition.
Managers of the affected staff members will no longer
have line responsibility; instead they will be receiving the It is likely that the service provider will plan to implement
service from the new provider. Managers will not be able workflow technology within its delivery center to support
to “just ask” their staff about operational issues as they its control of the process. Extending workflow into client
did previously, because there now is an “arm’s length” functions (upstream and downstream of the provider-run
relationship with the service provider. Old relationships process) can also offer benefits of transparency.
have been broken and — as a result — managers often However, it is easy to overcomplicate user requirements.
feel disenfranchised. New roles are now required to
Figure 2
Successful organizations have used this approach to drive change during transition projects by ensuring continuing focus on
the key objectives. A well-structured scorecard enables diverse cultures to be traversed and ensures that both client and
service provider drive for the same set of objectives. It is an important tool for transition governance and helps put in
context the more standard transition management tools, such as weekly progress reports, etc.
TRANSITION ORGANIZATION
The contract should state that the service provider is responsible for transition and is obligated to put in place an
appropriate transition organisation. Typically, the organization and service provider agree to this prior to signing the
contract. Transition, however, is not a one-way process and it requires a complementary organization from the client side.
It is a must to have a transition team with experience in understanding processes, contracts and people, as well as strong
project management skills to avoid slippages and the ability to prioritize deliverables.
A successful client organization for a multinational transition project needs to include representation from global, regional
and functional stakeholders as appropriate. Strong global direction is required, which is complemented by equally strong
regional management. Transition strategy and approach needs to be set and managed globally; however the
implementation of this strategy requires hands-on local management at regional level. Functional team members for IT, HR,
Change Management, etc. should have both global and regional representatives as necessary.
Figure 3 shows an organization recently put into place for a global order management and distribution transition.
Regional
Regions Support Functions
Transition Mgr.
Process Legal/ Change Management
HR IT Finance
Owners Procurement & Communications
Global NN NN NN NN NN NN
Europe NN NN NN NN NN
MEA NN NN NN NN NN
India NN NN NN NN NN
China NN NN NN NN NN
APAC NN NN NN NN NN
North
NN NN NN NN NN
America
South
NN NN NN NN NN
America
Figure 1
TRANSITION APPROACH
Service providers offer their standard approaches to transition as part of contract proposal and negotiation. These
approaches often appear very similar, using the same words and phrases. However, the quality of supporting
documentation, methodology and content may vary significantly. Independent of the provider’s methodology, the quality
and experience of the assigned provider transition manager tends to have the greatest impact on how the project will be
approached and managed.
Although the provider has overall responsibility for the transition project, the approach taken by the client to its part of the
project has a major impact on success. The transition organization above needs to have a mechanism for working on a day-
to-day basis.
One multinational global company recently had up to six regional finance and accounting transition projects running in
parallel. They required a common, repeatable transition approach that provided global leadership, yet allowed for local
variations in detail; this became known as “Transition Out of the Box.” The content of such a “Transition Out of the Box”
includes, at a minimum:
Partially completed project definition/charter document for a regional transition project; this includes pre-agreed
objectives, deliverables, organization structure, etc.
Project plan template, complete with primary activities required to be completed
Project status reporting pack
Project briefing pack
Contract training material
The regional transition manager is responsible for completing the definition document and plan, by adding regional specific
information and scheduling activities as necessary.
In addition to this project management approach, client transition team members should to be fully conversant about the
contract with the service provider. Typically the contract is negotiated and agreed with a small client team (often under
nondisclosure agreements). The transition team will consist of many people who were not involved with the negotiation
and, therefore, come “new” to the contract. To enable meaningful contract awareness among team members, the
following activities are recommended:
Modular contract training sessions, focused on the needs of the team (e.g., pricing details for finance team members,
service-level details for regional transition managers)
Contract handbooks that describe key parts of the contract in business language
Contract wall charts that can be used as reference material in offices and project rooms
Contract deliverables and obligations analysis highlighting what each party has committed to deliver and when. This is
used in transition governance to track and monitor key provider deliverables (including critical deliverables listed in
the contract). An extract from such as analysis is shown in Figure 4.
Figure 4
Figure 5
Figure 6
Service-provider- driven Service provider contractually responsible for transition to their control
transition Service provider driven to time and quality – makes it happen for the client
Service management & Strong, but lean organisation, put in place to manage on-going provider relationship
governance - ready in Ensures performance delivery, service level achievement, savings and contract
waiting assurance
Figure 7
Business processes delivered with low risk of Clearly defined scope of engagement
interruption by the change Well managed interface with the client
Harmonization and improvement of business Clarity of responsibility and accountability
process delivery Newly skilled delivery centre staff
Service levels that are measured and achieved Defined cost base.
consistently
Reskilled retained staff
Reduced costs
Following completion of the transition, a lessons-learned exercise and review of achievement of the transition objectives
shown in Figure 2 will highlight opportunities for improvement should there be a next time — which there usually will be if
the transition is successful.
We conclude with a quote by Paramahansa Yogananda from the book “How to Be Happy All the Time.”
"People of success are those who have nerve enough to make an indelible blueprint in their minds of whatever they wish to
build or produce upon this earth. They then employ as the financiers their creative ability, as the builders their will power, as
the carpenters their detailed attention, and as the labourers their mental patience – and thus materialize their dream."
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