05.26.08
Posted in Best Practices, Governance, Information Technology at 2:09 pm by Gary M. Zeiss
In an article in today’s India Daily, (link) Hrithik Ratnagar suggests trouble for the Indian IT outsourcing segment. According to Mr. Ratnagar, this trouble is caused by the slowdown in the US economy, the weakness of the dollar and the strength of the rupee, the US political climate, and internal factors within the Indian IT outsourcing community.Â
No doubt, these are all significant factors in the market. However, I think that the Indian IT market may be selling a product that it’s US consumers are beginning look away from. Why? Several reasons.
Read the rest of this entry »
Permalink
05.07.08
Posted in Best Practices, Governance, Information Technology at 9:00 am by Gary M. Zeiss
Yesterday, Ephriam Schwartz published an interesting article in InfoWorld (http://weblog.infoworld.com/realitycheck/archives/2008/05/outsourcing_bre.html). The article talks about the challenges faced when breaking up a large deal into component pieces.
Ultimately, the problem is one of management - the same affliction faced by many outsourcing deals. Whether it is “one throat to choke†or many “moles to whack,†the bane of most outsourcing deals - and the reason for their relative failure - is inconsistent and often poor management by the customer combined with opportunistic behavior on the part of the vendor. In my opinion, however, large “aircraft carrier†deals do not solve the management problem - high-quality management does.
Read the rest of this entry »
Permalink
01.12.08
Posted in Best Practices, Governance, Outsourcing, Posts at 10:02 am by Gary M. Zeiss
Much of the monitoring of an outsourcing deal is based on specific metrics. There are good reasons for this approach — after all, metrics are “hard numbers†and are relatively easy to measure. No doubt, meeting metrics is also a very important part of any quality outsourcing deal. But are metrics everything? I don’t believe so, nor do I believe that a single-minded focus on metrics is the best way to manage an outsourcing deal.
Read the rest of this entry »
Permalink
12.30.07
Posted in Best Practices, Governance, Negotiations, Outsourcing at 6:22 pm by Gary M. Zeiss
Here is my annual list of New Year’s Resolutions for those of us in the outsourcing industry.
For Outsourcing Customers
1) I will dedicate adequate resources to managing my outsourcing deal.
2) I will send out RFP’s only to vendors with a chance of earning the business.
3) I will set service levels that reflect my true business needs, not pie-in-the sky service levels that cannot ever be met.
4) I will avoid the end-of-year search for pricing concessions to cover up my own bad budgeting.
5) I will listen to my outsourcing vendors for ways that I can improve my business and its interface with my outsourcing vendors.
6) I will pay regular attention to my outsourcing deals and proactively work with my vendor to solve problems.
7) I’ll refrain from blaming the vendor for things that are my company’s fault, but I will be honest with my vendor when it is their fault.
… And for Outsourcing Suppliers
1) I will make quality customer service my highest priority.
2) I will only offer pricing that is fair - and will not sell outsourcing services as loss-leaders with the expectation of “making it up later.â€
3) I will accept responsibility for my actions when performing the services.
4) I will resist the urge to overdiscount.
5) I will listen to my customers for ways by which I can improve my services.
6) I will manage my outsourcing deals to optimize customer service, not short-term revenue.
7) I will take real measures to reduce turnover and keep my workforce happy and interested in the work.
… And for Outsourcing Advisors
1) I will reduce the complexity of deal structure.
2) I won’t “ride†deals to maximize my profitability (at the expense of my client).
3) I will actually watch expenses and costs.
4) I will “think outside of the box†to help my clients develop flexible deals that will bend without breaking.
5) I will reign in runaway projects an keep my staff under reasonable control.
6) I won’t make hyperbolic, self-serving public statements about future trends.
7) I will provide my customers with deal summaries and other information that will help them manage their deals.
And for all of us…
Let’s drop the hype and focus on real business and real deals! 2008 will be as good as we make it!
Permalink
12.08.07
Posted in Best Practices, Governance, Outsourcing at 11:45 am by Gary M. Zeiss
The life cycle of outsourcing as a trend is following the same pattern as recent business fads. Certainly, the U.S. domestic deal flow, which has been weak at best, is showing its age. I expect that European outsourcing, which was the major hot growth area in 2007 - will face a similar fate in 2008 (late adoption does not necessarily result in late abandonment). This doesn’t bode well for those of us providing services in this industry, although it may bode well for the global economy in the long haul.
Read the rest of this entry »
Permalink
09.18.07
Posted in Best Practices, Governance, Information Technology, Outsourcing at 2:58 pm by Gary M. Zeiss
A September 17, 2007, article in CIO magazine entitled “How to Measure Real Outsourcing Success (Hint: It’s Not the SLAs)†pointed out some interesting statistics about outsourcing and outsourcing happiness. Starting with the premise that SLA statistics are not a measure of happiness, the article described a process built by Dr. Paul Roehig at Forrester Research, to better measure outsourcing happiness.
Let me start by saying that I honestly believe that there are portions of a relationship that defy measurement. This is true in a marriage, in a friendship, in an employer-employee situation and in an outsourcing. But these things are often the “mortar†that hold the relationships together – they are neither discreet nor clearly measurable. Certainly, I can look at a building and count the number of bricks used to build it with efficient precision. However, determining the amount of mortar that is holding those bricks together is a little more difficult.
Read the rest of this entry »
Permalink
08.28.07
Posted in Best Practices, Governance, Information Technology, Outsourcing, Posts at 8:09 am by Gary M. Zeiss
There was an interesting short article in Computer World on Monday, August 27 (link here) that described a trend in which outsourcing customers are bringing disaster recovery back in-house. Having witnessed this debate on an ongoing basis several times, I read this article with a combination of cynicism and intrigue.
Read the rest of this entry »
Permalink
08.02.07
Posted in Best Practices, Governance, Outsourcing, Posts at 5:01 pm by Gary M. Zeiss
TPI’s Peter Allen, in a recent blog posting in “The Dealâ€, asked whether it was better to offshore a business process using a captive or third-party model. Interestingly, the article offered no real conclusion to the question of which is better, but did highlight the most important aspect – and the biggest shortcoming – in many outsourcing relationships: The client’s inability to get past the labor-arbitrage model and, instead, focusing on outcomes.
Read the rest of this entry »
Permalink
07.17.07
Posted in Best Practices, Governance, Healthcare, Information Technology, Negotiations, Outsourcing, Posts at 7:02 pm by Gary M. Zeiss
Claims processing is one of the cornerstones of outsourcing in the insurance industry. This primarily back-office task is often seen as a great opportunity to save money – as it is primarily ministerial, not customer-facing and based on specific rules and guidelines. Many insurers have grasped this concept and moved their processing to lower-cost offshore locations.
Read the rest of this entry »
Permalink
05.23.07
Posted in Best Practices, Governance, Outsourcing, Posts at 7:18 am by Gary M. Zeiss
Addressing Complexity
Complexity is the first thing that we must change to facilitate the development of governable outsourcing deals. We have all been taught to believe, axiomatically, that “more information is better information.†Current outsourcing deals generally reflect this approach, drawing “every leaf on every tree†to describe the outsourced and retained services.
More information is not necessarily better information, however. Better information would not only clearly describe a process, but also provide a better analytical framework for describing future processes.
Read the rest of this entry »
Permalink
05.20.07
Posted in Best Practices, Governance, Outsourcing, Posts at 2:18 pm by Gary M. Zeiss
Why do we create ungovernable deals?
Outsourcing deal documents fail to support governance for many reasons. Chief among them is that the deal paper is simply too complex. These documents go on for literally hundreds of pages, are full of arcane language and do not provide adequate information to permit a Customer to govern the relationship. In addition to complexity, the deal documents are often inflexible – requiring significant legal effort through amendment to reflect the growth or change in business.
The reader may wonder how a document can span hundreds of pages, yet still include insufficient information to permit quality governance. The answer is simply that the documents contain the wrong information – information that does not provide a basis for quality governance.
Read the rest of this entry »
Permalink
05.16.07
Posted in Best Practices, Governance, Outsourcing, Posts at 3:46 pm by Gary M. Zeiss
Like most outsourcing attorneys, I have experienced the telephone book-sized outsourcing deal. Truth be told, I even created a couple in my day. Being in the relatively unique position of in-house outsourcing counsel, I also had the opportunity to deal with the other end of the process – governance. While these documents were good, sometimes great, from a purely legal standpoint, many of them failed as business resources, too complex and impenetrable for mere mortals (e.g., non-lawyers) to use in their day-to-day operations.
Read the rest of this entry »
Permalink
04.16.07
Posted in Best Practices, Governance, Outsourcing at 11:00 pm by Gary M. Zeiss
A short entry in Baker & McKenzie’s March 2007 Outsourcing LegalBytes entitled “Governance: A Key to Offshoring Success” offers an interesting perspective on the importance of governance:
A comprehensive study by A.T. Kearney offers surprising insights into the reasons for successful offshoring. Results from offshoring varied widely among surveyed companies, with cost savings ranging from zero to 75%. Overall, performance tended to improve, but some individual metrics actually declined. According to the study, this surprising variation was not a reflection of differences among industries or particular functions. Instead, the study found that performance was more likely to improve with greater management attention. Companies that invest more in managing their offshore programs achieve significantly better performance. The best performers among the surveyed companies cited CEO commitment; a strong offshore management team with centralized, dedicated resources; and high quality, detailed implementation plans as key drivers for success. The best performers erred on the side of more management resources rather than less.
Permalink
11.30.99
Posted in Best Practices, Governance, Information Technology, Negotiations, Outsourcing at 12:00 am by Gary M. Zeiss
Today, I was once again reminded of the fact that in-house managers rarely learn enough about the legal aspects of the deals that they manage. A well-negotiated, well-lawyered deal often contains significant cost or margin protection, as well as obligations to perform duties that may be “out of the ordinary.”
Read the rest of this entry »
Permalink
