ESSENTIALS of Business Process Outsourcing 2005 phần 7 pptx

Managing BPO-Related ChangeC H A P T E R 5 After reading this chapter, you will be able to: • Increase the potential for executing a successful BPO tion stage strategy transi-• Develop a

collaborative rather than competitive approach to negotiation In ing the contract, both parties should pursue precise language in thespirit that both reflects the strategic nature of their relationships andprovides mechanisms that anticipate and resolve future problems.

1 Joanne Wojcik,“Formal Process Advised in Vendor Searches,”

Business Insurance (November 16, 1998): 16.

2 Vaughan Michell and Guy Fitzgerald,“The IT Outsourcing

Mar-ket-Place:Vendors and Their Selection,” Journal of Information

Tech-nology 12 (1997): 223–237.

3 “Keys to Success: Stability of Partner, Maturity of Processes &

Industry Focus,” Insurance & Technology (August 2002): 28.

4 Charles A.Weber, John R Current, and Anand Desai,“VendOR:

A Structured Approach to Vendor Selection and Negotiation,”

Journal of Business Logistics 21, no 1 (2000): 135–167.

5 “‘Must’ Provisions to Consider for Your Outsourcing Contracts,”

Supplier Selection and Management Report (October 2003): 10–12.

6 Farok J Contractor,“A Generalized Theorem for Joint Venture

and Licensing Negotiations,” Journal of International Business Studies

(Summer 1985): 23–50

7 Mario Apicella,“Shaking Hands Is Not Enough,” InfoWorld (April

30, 2001): 49–50

8 Dai Davis,“Service Level Agreements:What Are They? Why Do

We Need Them?” Credit Management (May 2002): 36.

9 Laton McCartney,“How Do You Set Up an Effective SLA?”

Inter@ctive Week (September 27, 2000): 30.

10 Patrick Thibodeau,“Offshore Risks are Numerous, Say Those

Who Craft Contracts,” Computerworld (November 3, 2003): 12.

11 Bart Perkins,“A Reality Check on Going Offshore,”

Computer-world (June 16, 2003): 42.

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Supplier Selection & Management Report (April 2003): 2–4.

13 HIPAA Compliance, ASPs, Outsourcing, and Vendor

Relation-ships,” Medical Benefits (July 15, 2002): 11.

14 Brad Miller,“Outsourcing Aids Compliance,” Bank Technology

News (December 2001): 52.

15 Walter Mattli,“Private Justice in a Global Economy: From

Litiga-tion to ArbitraLitiga-tion,” InternaLitiga-tional OrganizaLitiga-tion (Autumn 2001):

919–947

Managing BPO-Related Change

C H A P T E R 5

After reading this chapter, you will be able to:

• Increase the potential for executing a successful BPO tion stage strategy

transi-• Develop an effective BPO project management plan, anddetermine whether the project should be managed by anindividual, a few people, or a team

• Recognize five principles that guide change managementand understand how they can be applied to support thetransition stage of a BPO initiative

• Identify three critical skills that serve as the foundation of asuccessful BPO relationship

• Better determine the depth and scope of a BPO ship, and make decisions as to whether to use the assets ofthe buyer or vendor and whose business culture to adopt

relation-• Understand what constitutes—and how to develop—a ing, successful buyer–vendor relationship

trust-• Minimize or eliminate the factors that can threaten the cess of a BPO initiative

suc-As the BPO life cycle moves into the operational stage, organizations willfind themselves facing important changes A great deal of time andexpense has gone into preparation, and at this stage it is critical to pro-tect that investment in two key ways: (1) by recognizing and managingthe risks that the BPO-induced change represents and (2) by managingthe often complex relationship that exists between BPO buyers and ven-dors An effective change management strategy—which should not beimplemented until the BPO contract is signed and the launch date set—can identify the tactics that contribute to a smooth BPO transition Aformalized relationship management strategy can solidify thevendor–buyer foundation, ensuring that both parties respect each other’srole and operate within the parameters of a well-designed project man-agement plan.

the BPO Organization

It goes without saying that any organization must assess its own uniquechallenges in undertaking a BPO project At the same time, there aregeneral issues that almost all organizations must confront, including:

• Establishing a vision of the future state of the organization

• Securing leadership as well as management of the BPO transition

• Communicating with internal staff about the BPO transition

• Managing organization culture beyond the process affected byBPO

• Managing job loss and changeover to new management

• Establishing business continuity and new performancebenchmarks

To deal effectively with these issues, organizations need an ing project management plan, an understanding of basic change manage-ment principles, and recognition of the numerous change-induced issues

overarch-likely to arise By paying attention to, and planning for, these mattersearly in the process, organizations can keep their BPO initiative on track.

Although signed and sealed, the BPO contract does not provide theflexibility and responsiveness necessary to manage an ongoing project.That requires a second document, the project management plan, that thecontract should allude to but not spell out in detail It needs to be fluidenough to adapt as the needs and competitive conditions of each firmchange, and include provisions to enable these adjustments At the sametime, it must contain basic project management details such as goals andobjectives, timelines, milestones, and key term working definitions

Individual or Team?

Developing a project management plan requires the buyer and vendor toassign a dedicated team or, at minimum, an individual (the internal BPOchampion) to design the plan, manage the project on an ongoing basis,

Know the Roles—and the

Role Players

Basically, the project management plan is designed to provide a ciplined framework of execution that ensures the BPO transition

objective as well: establishing and identifying roles and role players from each organization—buyer and vendor These roles and role players will be responsible for project outcomes and accountable to the BPO steering team.

a D Hodgson, “Disciplining the Professional: The Case of Project Management,”

Journal of Management Studies (September 2002): 803–821.

T IPS & T ECHNIQUES

and implement changes as needed.1Although this adds short-term costs

to the project, it will usually prove to be less costly in the long run becauseissues can be anticipated and managed before they become problems Ingeneral, project management costs should not exceed 7 percent of totalproject costs.2

The decision to use an individual or team approach to project agement depends on several factors For example, since an offshore out-sourcing relationship can bring a range of issues (e.g., cultural, language,time zone, etc.) not generally encountered onshore, it may require amore intensive, team-based approach Similarly, a buyer managing mul-tiple vendors instead of just one may have to establish numerous BPOchampions or Project Management Teams to deal with each vendor.Thiscreates a further need to integrate the various project managers to ensurethey communicate and share best practices and lessons learned.3

man-However, a team-based approach can lead to problems of ability if there are no one-to-one links between individuals and discreteproject management responsibilities.That is, even when a team approach

account-is used, individual team members should be assigned clear ties for particular aspects of the project, and they should have clearreporting channels Exhibit 5.1 highlights some of the issues to consider

responsibili-in decidresponsibili-ing whether to take a team or responsibili-individual approach to projectmanagement

Hybrid Approach

A hybrid approach that can alleviate the potential for diffusion ofaccountability is to assign a BPO champion to develop the Project Man-agement Team (PMT) In this method, project management responsibil-ity remains clearly with the BPO champion, who answers to the SteeringTeam and is held accountable for overall project performance (Exhibit5.2).This person is likely to have participated on the BPO Analysis Team(BAT), the vendor selection team (VST), or both, and will generally have

Factors Relevant to Choosing between a Team or Individual BPO

Relationship Manager

Single BPO Provider Multiple BPO Providers Cost reduction is primar y goal Strategic planning is primar y goal One process outsourced, with Multiple proccesses outsourced low probability of additional

outsourcing Onshore BPO provider Offshore a nearshore BPO provider

high visibility within the organization and possess skills in tions, negotiations, and business reasoning He or she should also:

communica-• Be able to organize and manage a team

• Be highly familiar with the business case for BPO

• Be willing and able to articulate, discuss, or defend the projectGenerally speaking, the PMT should consist of members represent-ing a range of organizational functions, including individuals from eachfirm, to ensure a diverse skill set that covers financial, technical, andhuman resource capabilities Other roles that might be assigned to teammembers include:

• Facilitator Responsible for setting meetings and arranging

meeting locations

• Recorder Responsible for taking notes during the meeting and

distributing minutes to each team member

• Liaison Responsible for maintaining communication between

the team and other organizational units

The PMT is responsible for implementing the organization’s change agement strategy Although much has been written about change man-agement—and there is no consensus as to what strategy is best for a BPOinitiative—one thing is certain: Well-chosen actions taken to managechange are less important than their consistent and well-communicatedapplication.4

man-This does not mean to suggest that all managerial interventions arecreated equal; consistently applying a poor technique will inevitably pro-duce poor results That is why “well chosen” is added as a caveat The

change management strategy should be the one that makes sense under the

circumstances It would be difficult for the PMT to explain and/or defend

its tactics if it were obvious they were inappropriate or plainly ineffective

In light of the recommendation that a consistent application of awell-chosen strategy, and not the strategy itself, is foremost in effectiveBPO-induced change management, one question naturally arises:Whatmanagement principles qualify as well chosen? Experience and scholarlyresearch generally agree that effective change management has five pri-mary requirements:

1.Compelling vision of the outcome of the change process

2.Visible leadership from top management

3.Extensive communication and opportunities for employeefeedback

4.Ability to deal with job loss and changeover

5.Ability to maintain business continuity and benchmark performance

Concept of Satisficing

Most change management scholars would agree that any attempt

to achieve optimum results is likely to lead to paralysis, as the

search for the per fect technique to match current conditions would be highly time consuming and fraught with endless debate.

The predominant concept today is satisficing—producing results

that exceed cer tain prespecified and, hopefully, measurable

concept not used often enough in organizational change ment It is a handy concept—handier than, say, synergy—that promotes action over inaction, results over paralysis, and consis- tency over trendy management theories As such, it should become a par t of the PMT’s lexicon and a pillar of efficient change management.

manage-aSidney G Winter, “The Satisficing Principle in Capability Learning,” Strategic

Management Journal (October/November 2000): 981–996.

T IPS & T ECHNIQUES

Creating a Compelling Vision

While there continues to be debate over its role in organizational

achieve-ment, vision can contribute to the process of aligning goals and individual

efforts In this context, vision can bring clarity to the outcome of a lenging project, helping people establish a sense of flow and ownershipthat can produce superior performance under difficult circumstances.5Assuch, it is instrumental to an effective change management plan

chal-Power of Storytelling

An effective vision is nothing more than a tale—a story—of what the

outcome of a project is expected to look and feel like to organizational

members Managers must create the vision to determine how muchdetail is required to tell a story compelling enough to drive high perfor-mance For skeptical listeners, more details and analogies might beneeded; for the already converted, the story may require less detail andmore encouragement to step out and take action

A good corporate story does not need dramatic characters or daringaction heroes It simply needs a word-picture of the expected outcomesand the likely impact for the people operating it.Those requirements can

be met by applying five basic elements needed to make storytelling aneffective technique for leading change (Exhibit 5.3)

Managing a BPO transition requires placing the project in the context

of the bigger picture, including the likely future state of the organizationand its people Developing and articulating a truthful story about thatfuture state will not eliminate every problem However, abdicating thatresponsibility will undoubtedly mean the organization will experiencemore, and more intense, change management issues during the transition

Leadership and Management Roles

The transition phase of the BPO Life Cycle is a true turning point.Theorganization is implementing changes that heretofore had only been

talked about The rumors and fears associated with the preoperationalBPO phases have given way to real changes in organizational workflow,personnel, policies, and procedures Despite their traditionally separatefunctions—managers spend their time on operations, leaders on vision—both are central to success at this stage Managers are needed to helpguide these new ways of doing things into the organization’s overallworkflow; leaders are needed to hold the organization together withsteadfast vision and courage.

opera-tional challenges, deadlines, and goals—yet they must motivate others toreach their goals In BPO, it is sometimes necessary to motivate others toperform when their jobs are being eliminated and/or the threat of job

Elements of Effective Organizational Storytelling

• Effective stories are context specific Research indicates that linking

an activity or project to a company’s strategic challenges improves the effectiveness of the initiative.

• Effective stories are level appropriate The stor yteller should frame stories so that par ticipants can see themselves in it and reflect on what they might do to resolve the challenges it poses.

• Role models tell effective stories Stor ytellers must be both highly respected role models and highly accessible coaches.

• Effective stories have drama The best stories focus on the stor yteller’s need to make tough choices, usually without per fect information or complete agreement among involved par ties.

• Effective stories have high learning value For a stor y to be effective

it must stimulate learning, and for learning to have impact it must produce changes in behavior.

E X H I B I T 5 3