Workleaf

Implementing an outsourcing strategy is akin to a BPM implementation. Here, I am trying to draw a parallel between BPO and BPM. As with the BPM philosophy, an organization travelling the BPO road should -
1. Think big
2. Start small
3. Scale smart

… in that order.

The first step is arguably the most difficult one. Akin to a Business Process Reengineering project, the organization/business unit will need to build a Process Dictionary that consists of all processes that are candidates for outsourcing. A Process Dictionary is a list of all business process, the actors involved, inputs, outputs, process controls, triggers and business rules. The next step is to assign an order of priority to this list based on your business goals. This prioritization should, in a way, reflect the purpose that you are trying to achieve through outsourcing. It is important to note here that the prioritization activity need not necessarily reflect the value the process adds to the business. Rather, this priority reflects the importance of this process in achieving your outsourcing goals. For example, if one of the goals of your outsourcing strategy is to improve process efficiencies, then the highest priority should be assigned to the process that you believe is least efficient.

At this stage, the process dictionary will help you organize your team around the most important processes. Each process in this dictionary, should then be planned as an independant outsourcing project, with associated metrics to be measured, expected ROI, timelines, implementation plan, risk management plan and a vendor communication plan.

An Outsourcing Strategy implementation, then, follows the tried and tested Project Management Methodology. Note that there could be multiple iterations of each phase:

Initiate: By this time, the process to be outsourced is identified. An implementation team is assembled, which may also serve as the organization’s Outsourcing Management Office. Alternatively, the infrastructure and competencies of an existing Project Management Office can also be utilized. Not all team members will start to work on the project immediately, but their involvement is planned for at this time. It’s also critical to obtain executive support and explicit sponsorship. This is also a good time to identify and document all the business requirements in conjunction with the business and user community. The requirements here will include potential Service Levels that will need to be complied with and other qualitative terms of the engagement.

A subset of this phase – Analyze: This is the phase you rip the process apart and understand its details. This is also the phase to figure out how this will work as an externally delivered service. This may be achieved through case modeling, detailed process modeling and simulation, etc. This is also the phase where the vendors (or the team that will be delivering this process/service) become actively involved in understanding business requirements.

Design: In the design phase, the team architects the modified process as it needs to be delivered, keeping in mind the business requirements, and the interfaces to both internal and external systems. The “to-be” process flow determines the appropriate service providers, their interfaces, fault conditions and so on.

Implement: In the implementation phase, the team decides the environment in which the process will run. Often, this involves installing any Management Systems (e.g. BPMS) that helps orchestrate the run-time process. These systems also provide tools to make the end-to-end process development and implementation easier.

Transition: This is the rollout phase where the new processes are introduced as the old ones are phased out. Depending on the criticality of the process, the switch may be done over a weekend, or the old and new systems may run in parallel for a while until the new system can take over. The deployment is also monitored for a period to ensure smooth transition.

Monitor: Many implementations fail because organizations/business units go with the philosophy of “Out-of-sight = Out-of-mind”. If the process is critical to the enterprise, appropriate time must be allocated to monitoring the transitioned process(es). The aspects that need to be monitored are largely driven by the output of the “Initiate” phase. For example – one aspect of monitoring include the metrics identified in the “Initiate” phase that will measure the effectiveness/efficiencies of the new process.

Control: The new process then transitions into an operations and maintenance phase. Here, new requirements or changes to existing processes can be accommodated in a structured manner as the business continues to run.

Once a process reaches maintenance mode, the organization should focus on scaling the operations as governed by the Process Dictionary. The whole process is highly iterative where feedback from the initial processes outsourced dovetail into refining the Initiate/Analyze stages of the future processes.