06.20.08
Posted in Best Practices, Outsourcing at 9:39 am by Gary M. Zeiss
Topping my list of favorite companies are Apple, Southwest and Toyota. Why? Because they unerringly meet my expectations. That is what I expect out of a company, whether they insource everything or outsource everything.
What makes these companies great? Top quality products, for sure, but there is something else beyond the quality of their products that comes into play. It’s a sense of fit-and-finish to their products, I think, that takes them to the next level.
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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.
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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!
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12.23.07
Posted in Best Practices, Outsourcing, Posts at 8:21 pm by Gary M. Zeiss
In one of my favorite recent articles, Victor Gomez of the Dallas Morning News discussed the troubles faced by the big three Dallas-based outsourcing vendors, EDS, ACS and Perot. All are feeling the heat from Indian-based vendors, and are blaming the cost differential for their problems.
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12.17.07
Posted in Best Practices, Outsourcing at 7:47 pm by Gary M. Zeiss
In an interesting article appearing on cNet.com on December 13, Steve Tobak asks the question, “Would you pay more for better service?†In the article, Mr. Tobak implies that most Americans wouldn’t pay extra for domestically-delivered service (assumed to be superior) than they would for off-shored service (assumed to be inferior).
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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.
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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.
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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.
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08.20.07
Posted in Best Practices, Outsourcing, Posts at 7:08 pm by Gary M. Zeiss
Outsourcing has had a difficult year in North America. There are many explanations, some point to quality concerns, some to governance concerns, and some to a reduction in value caused by the combination of labor shortages and currency fluctuations. All of these represent a change in the risk-reward analysis that many are seeing with regard to outsourcing. The bad-news stories in the press continue to pump up the “risk side†of the outsourcing equation – particularly to Asia – while the currency fluctuations and tightening labor markets reduce the “reward side†of the same equation. The “plus side†of outsourcing is notably silent – there are simply no “good news†stories in either the press or the paid media.
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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.
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07.30.07
Posted in Best Practices, Outsourcing, Posts at 10:24 am by Gary M. Zeiss
In a recent ComputerWorld article, Gerry Clark of TPI offered his perspective on outsourcing trends. One of the most interesting things that Mr. Clark highlighted was the increasing effort provider markets take to distinguish themselves from other markets. He says:
Differentiation seems to be the direction that most are taking. The big attraction offshore used to be lower cost. Today, that is not good enough because they themselves are facing increased inflation in labor, real estate and infrastructure cost. Even countries like India have to think about what else they can do to be successful.
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07.24.07
Posted in Best Practices, Information Technology, Outsourcing, Posts at 8:48 am by Gary M. Zeiss
In an article appearing in Computer World on July 23, 2007 entitled “When to Fix a Broken Process,†Bart Perkins of Leverage Partners, Inc., explores a question that many ask – whether it is better to improve your process before or after you outsource. Mr. Perkins aptly points out that there are pros and cons to each approach – and that the ultimate answer, in large part, depends on the state of the customer at the time of the outsourcing.
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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.
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07.13.07
Posted in Best Practices, Negotiations, Outsourcing, Posts at 11:28 am by Gary M. Zeiss
According to a recent article found on ZDNet UK (here), more and more U.S. companies are participating in “do-it-yourself†(DIY) outsourcing. This has caused a slow down among outsourcing consultants and law firms – all of which suffer when companies take on outsourcing themselves. What is being gained and lost in this transition?
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06.19.07
Posted in Best Practices, Outsourcing, Posts at 6:24 pm by Gary M. Zeiss
The Wall Street Journal article dated June 16, 2007 and entitled “The Seven Myths of Outsourcing” (at this link) is a great survey of significant issues arising in outsourcing deals. While it points out certain major flaws in the deal-making process, however, it fails to scratch below the surface to the misaligned incentives that give rise to this deal structure. Understanding those reasons is important, too, as seemingly illogical behaviors often has perfectly rational explanations underlying them.
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