Monday, July 11, 2016

Why BPOs are Turning to the Cloud to Provide Flexible and Scalable Contact Center Offerings by guest blogger Jacki Tessmer, VP of Service Provider and Cloud Strategy, Enghouse Interactive

As companies’ omnichannel customer experience demands increase, savvy BPO (business process outsourcing) providers are turning to the cloud to provide flexible and scalable contact center offerings.

According to the latest CEM (customer experience management) research from Aberdeen, the top two themes keeping CEM executives up at night are:
  1. Customers are empowered with a wealth of information on many competitive products and services (indicated by 50% of respondents)
  2. Customers expect consistent experiences across all channels (indicated by 32% of respondents).
These concerns weigh heavily on organizations, especially when it comes to making decisions about their contact centers, which play a critical role in the customer experience. Legacy contact centers have fallen out of favor with CEM managers as they recognize that today’s consumers regularly communicate on multiple channels, from different devices and expect flexibility as well as a personalization of their interactions with the businesses from which they purchase products and services. This sentiment is becoming especially evident in the contact center outsourcing industry, which has long been known for experiencing greater provider churn than other outsourced business processes. According to research from outsourcing consultancy Everest Group, the churn rate for contact center outsourcers increased from 33% three years ago to 50% in more recent years.

So, the big questions are what is causing this growing dissatisfaction with outsourced contact centers and what can be done about it?

Discovering the underlying reason for the high churn rate is likely found in the greater expectations consumers have of their interactions with businesses. These higher expectations lead to an increased demand on contact center BPOs to meet the end customer’s expectations and to provide the type of experience desired.  Their clients are no longer content simply with lower costs; they want engagements that drive business outcomes. BPOs need to enable agents to more intelligently engage today’s empowered customers and to offer an excellent experience to their clients’ customers across all channels.

What Aberdeen found in common among businesses that were able to overcome the challenges impacting customer experience programs was their ability to leverage customer data to create a unified view of the customer. This is a vital capability as it provides all contact center agents with the complete picture of the customer, which makes it easier to deliver consistent messages across all channels. This is the first step in creating an omnichannel customer experience, which is defined as enabling the end customer to have a seamless sales or service experience with an agent via call, chat, or email from any device. BPO companies that get omnichannel right are more likely to achieve the ultimate balance of improving the customer experience; increasing revenue, customer retention, and operational excellence; and reducing costs.

Most BPO providers would agree with analysts about the importance of omnichannel and having a unified view of customer data across all communication channels and interactions between the customer and agent. Achieving this ideal in a legacy, on-premise contact center environment, however, is incredibly challenging for many BPOs — until they understand what the cloud has to offer.

How the Cloud is Improving Omni-Channel Contact Center Flexibility and Scalability
One way BPO providers are addressing the growing dissatisfaction with outsourced contact centers is by turning to the cloud for highly flexible, integrated and scalable contact center solutions. A broad set of contact center industry analysts report that cloud-based contact center seats have grown at impressive double-digit rates over the last several years. A strong indication that the adoption of the cloud model for the contact center is here to stay comes with the predictions that in the next 3-5 years the growth rate of contact center as a service (CCaaS) will continue at 17% to 25% percent, while implementations of traditional on-premise systems will be anemic. What is equally impressive is that among those that have already made the move to cloud contact center solutions, more than 90% reported being satisfied, highly satisfied or completely satisfied with their decision.

While there are myriad reasons for a BPO to consider creating cloud-based solutions over traditional, premise solutions, two major reasons are flexibility and scalability. Many legacy premise-based contact center solutions simply cannot keep pace with a BPO’s fluctuations in interaction volumes across their customer base as well as being able to adapt to changes within their contact center staff. In the traditional contact center model, a BPO has to decide up front how many agents it will need for the year, and it has to know its projected total call and interaction volume to effectively price its services. Once these numbers are locked in, it may be difficult to change those figures during lulls or spikes in business.

In a CCaaS environment, on the other hand, a BPO can easily remove or add agents and add new features and functions, effectively flexing to meet the changing needs of clients, without consuming IT resources on lengthy projects. Using a CCaaS platform provides the BPO an elastic and agile alternative to its legacy on-premise infrastructure, and it places less pressure on BPOs to have to predict the future.

Multi-Tenancy: The Key to CCaaS’ Ability to Deliver More for Less
A key differentiator with a cloud-based contact center solution is that it uses a multi-tenant architecture. Multi-tenancy allows a single instance of a software application to support multiple end-customers (i.e. tenants). Through virtual partitioning, each tenant retains its own data access and configuration parameters, while at the same time sharing CPU processing, memory, network infrastructure and data storage resources. Using shared resources creates efficiencies and economies of scale for the BPO’s IT and operations resources both in day-to-day management and administration and especially during system updates. Unlike the old way of installing contact center software on individual machines and dealing with disruptive and high-touch maintenance processes, a unified multi-tenant contact center platform is operated across multiple end clients.

The net result of a BPO operating a cloud-based multitenant solution for delivering contact center services is that it provides a lower TCO (total cost of ownership) than a traditional contact center infrastructure:

  • Ease in onboarding new clients as tenants on the platform
  • Agility to adapt to the client’s changing business needs with little disruptions when agents are added or new channels, integrations or features are added
  • Operational efficiencies, especially during maintenance updates or software upgrades.

Through the use of Web Service APIs (application program interfaces), CCaaS offers several integration benefits to BPO providers, also. One example is the ability to integrate communication systems and contact center technologies (e.g. email, chat, video conferencing), which is a key prerequisite for creating a true omnichannel experience. Additionally, BPO providers can use the same Web Service APIs to integrate their contact centers with their enterprise client’s CRM, ERP and other business applications. Web-based agent and supervisor interfaces can be used to extend the solution to the client’s management team, along with unified tools for reporting and agent management across all end-customer tenants.

Many BPOs find themselves in the predicament of having aging on-premise contact center infrastructure and high client turnover. They need to make much-needed technology refreshes, but multiple, lengthy and expensive upgrades to legacy contact center applications are not viable and short returns on investment are a must. A cloud-based CCaaS application platform is a smart choice that meets these needs with a lower IT resource investment and better long-term TCO. In addition to providing a unified, omnichannel customer experience, CCaaS enables BPOs to integrate their services with their customers’ enterprise applications, adapt to changes in their clients’ businesses and flex to changes in interaction types and volume. Empowered with contact center agility, the BPO can focus on providing additional business value and building stickier client relationships. As a result, client satisfaction increases and the end customer experience does, too — everybody wins.
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Jacki Tessmer is Vice President of Service Provider and Cloud Strategy for Enghouse Interactive.

Wednesday, June 29, 2016

The Who, What, When and Why of a Service Provider Selection Site Visit... by guest blogger Steven Kirz, Managing Director, Pace Harmon

Before outsourcing was mainstream among enterprises, the service provider site visit was an ultimate prerequisite to making a service provider selection. However, a perceived lack of benefit achieved on such trips in the past often means less emphasis on this important part of today’s selection process.

Many executives underestimate the value of performing due diligence site visits.  However, onsite due diligence trips, when done the right way and at the right time, play a critical part in the strategic procurement process, unearthing key information that helps organizations select the service provider best suited to their business.

Who Should Go? 
This onsite outsourcing service provider visit is not usually a trip for the CIO. Instead, the CIO should send the key IT staff members who are best qualified to evaluate the service provider team, tools, transition plans and solutions. This team should be the ones who will be tasked with making the outsourcing relationship work and who will be engaging with the service provider on a day-to-day basis (‘Evaluators’). Facilitating direct interaction between these two groups before final selection can help identify and anticipate potential issues before they arise.

What Should You Evaluate?
While Evaluators must address a long list of standard due diligence requirements (e.g., dual entry of telecom providers, backup power, physical and virtual security), the leading service provider contenders can often appear on par with one another. Evaluators can help differentiate between service providers as part of the onsite visit by focusing upon the criteria that are critical to a successful outsourcing partnership.

The Team
Regardless of the commercial arrangement, the service provider’s specific resources are critical to the success of the service provider’s services and solution delivery.  It is important to determine two things:  the service provider team members’ ability to collaborate on a plan based upon live feedback and their ability to demonstrate a desire, and moreover the capability, to go beyond a contract to address issues, add value, and deliver a ‘client first’ oriented service.

The Tools
Service provider tools can appear attractive in RFP responses.  However, during due diligence, Evaluators can watch how the service providers actually deploy and use these tools with their other clients.  Another way Evaluators can judge the value of tools is to learn if proposed team members have ever used the tools or received training for them; if experienced resources have never used the tool, chances are that the tool is not as critical to delivery as Evaluators may have originally thought. 
      
When Should You Go?
An optimal time for a due diligence site visit is when negotiations are almost complete (assuming negotiations are competitive among multiple service providers).  When the deal is within weeks of a start date, the service providers can realistically commit resources and the Evaluators are more likely to meet the bulk of their prospective team. Similarly, a lack of committed team members can be an indicator of service provider resource issues. Timed in this way, due diligence visits can accelerate the resolution of outstanding issues. 

Why Should You Go?
If your procurement process is competitive, pricing and essential requirements won’t be sufficient to differentiate the service providers as there is likely to be parity in these categories.  Therefore, the potential service provider teams, tools, transition plans and solutions should be the primary criteria that differentiate the top service provider from the rest. The best way to accurately differentiate key selection criteria among service providers requires traveling to their delivery centers.  Buyers that conduct a carefully planned onsite visit to the short list of outsourcing service providers that are competing for the business will tell you they can’t imagine having made the right decision without having made the trip. The alternative ­– not making the investment associated with due diligence ­– can lead to long term repercussions that far exceed the cost of the trip, even if you assume you would have selected the same service provider.
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Steven Kirz is the Managing Director at Pace Harmon.


Monday, June 06, 2016

What Are Technology Leaders Doing to Cut Run Costs and Fuel Innovation... by guest blogger, Atul Vashistha, COP, CEO, Neo Group

Neo recently surveyed a broad group of business leaders.  About 70% were senior management or C-level executives. They came from a wide range of industries, some of the largest numbers from healthcare, banking and financial services.

The goal was to find out what were technology leaders doing to cut run costs and fuel innovation. Most industries and business leaders are under significant pressure to reduce costs, especially run costs. At the same time, these business leaders are being asked to do more. They are being asked in many cases to lead the evolution to a digital enterprise, while in other cases, mine customer data to help build new products or identify new customer segments. Often, all this ask comes with no or limited budgets.

Here’s what we learned from surveying over 70 technology leaders:

  • The majority of respondents indicated that their cost reduction strategies are a smart way to do business and a means to fund new growth initiatives.
  • Run cost reduction strategies are mainly focused on optimization of product portfolios & applications and leveraging low-cost assets such as outsourcing and in-house low-cost centers. 
  • Multiple strategies are used to reduce run costs such as optimization of products and applications, moving to the Cloud, leveraging outsourcing and low-cost centers. However, results from the survey suggest that these methods and others are not being fully utilized and as a result more opportunity is available to reduce costs further. 
  • Respondents indicated that, during the next 12-24 months, their run cost strategies will stay the course and continue to be focused in multiple areas such as optimization of products and applications, moving to the Cloud, leveraging outsourcing and low-cost centers. 
  • However, respondents will continue to face challenges as they implement their run cost strategies. The survey data showed that the main hurdles to implementing successful run cost strategies were finding the right talent to drive change, buy-in from key stakeholders and company culture. 
  • The majority of respondents find that innovation is being enabled through the use of automation, big data and by encouraging their vendors to innovate. However, the results also indicate that these methods, as well as others, are still not being fully utilized.
  • Over 70% of respondents focus on enabling incremental innovation that keeps their existing offerings competitive. 
  • A top-down approach is used by the majority of respondents to enable innovation within their company.
  • Over 55% of the respondents stated that processes used today with their vendors to enable innovation are not effective.
  • The main reasons for an ineffective innovation process with their vendors is that there was little or no attention placed on it during contract development and when it was addressed in the contract the terms and expectations were very unclear.

The survey results indicate that the respondents are focused on incremental innovation that will enable them to keep their existing products and services competitive. They will fund the growth initiatives through smart cost reduction methods such as automation, big data/analytics, leveraging low cost centers and finding more effective ways to drive their vendors to help them innovate.
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Atul Vashistha, COP and Neo Group CEO; DoD DBB Board Member; Author
http://neogroup.com/

Friday, June 03, 2016

Do you have something relevant, witty and maybe a bit controversial to say?

IAOP is searching for guest bloggers!

Our PULSEblog features in-depth coverage of the industry, issues, trends and includes thought leadership and probing C-level guest bloggers; as well as exclusive and insider coverage of IAOP events, programs, awards, research, training and certifications and surveys.

PULSE connects you and your company with more than 120,000 of the world’s leading professionals in outsourcing and other collaborative business relationships today around the globe – customers from Fortune 500 companies, the world’s best service providers from all industries and leading advisors. Advertisers will gain access to the influential membership of IAOP – including deal-makers on the client side who are, on average, responsible for $60 million per year of outsourcing spending with some overseeing outsourcing programs in the billions of dollars.

PULSE is for dealmakers. More than half of IAOP’s members are C-level decision makers and more than a quarter are buyers. Providers represent more than 55 percent of our membership and advisors account for 16 percent of IAOP’s core base. Our readership and coverage is truly global and includes North America, Latin America, Europe, United Kingdom, Ireland, Russia, Australia, New Zealand, Africa, Middle East, India, China and the Pacific Rim.

If you have something to say, email your relevant, current, witty, insightful, edgy and maybe even controversial post to kate.hammond@iaop.org to be a guest blogger.

Tuesday, May 31, 2016

Women Empowerment & Opportunity in Outsourcing - A Survey - We Want to Hear from You!

IAOP, in collaboration with Avasant—a global management consulting firm—announced today, the launch of its Women Empowerment and Opportunity in Outsourcing survey. The purpose of the survey is to gather data on the perceptions of gender equality, empowerment and opportunities for women in the outsourcing industry and identify where and how outsourcing has internationally empowered the lives of women, both inside and outside the workplace.

The survey is brief and will be going to more than 50,000 outsourcing professionals around the world. The deadline to complete the survey is August 31, 2016.

*Please note this survey is for EVERYONE - it is not gender-specific.

“Women play a vital role in both society and the workforce, and we have reached a significant moment in a growing international movement toward women's equality and opportunity,” said Dana Corbett, IAOP Director, Research, Training & Certification. “We are proud to be joining this global movement in recognizing and valuing all women fairly, as their effective empowerment is a clear catalyst for progress.”

Findings from this survey will be presented in a powerful main session during OWS17, in February 2017. Participants receive a copy of the results as well as entry into a drawing for seats to OWS17, by submitting an e-mail request at the end of the survey.
This initiative does not end with the WEO survey; rather it begins to build the stage to make improvements and bring equality to the workplace in every corner of the world. Following this survey, IAOP and Avasant plan future programs and opportunities based on the results.

"The outsourcing industry has historically had an underrepresentation of women in executive and delivery positions,” said Kevin Parikh, Global CEO, Avasant. “At Avasant, we have adopted a hiring strategy to equalize this imbalance. We are thrilled to support IAOP’s WE initiative as a collaborative project partner, a board member and advocate for gender equality."

The survey is open to all of IAOP’s global members and affiliates, Avasant’s clients, and all outsourcing professionals across the field and around the world. Though this survey topic is focused specifically on women, everyone is encouraged to participate.

You can access the survey here.

Monday, May 23, 2016

#TrainingTrainingTraining - That's Right! The Training Edition of PULSEmag is Out!

At IAOP, our de facto training sets the bar and we've dedicated our latest issue of PULSEmag to #TrainingTrainingTraining!

Everything you want to know about IAOP's COP Master Class, Governance Training, getting certified and more is packed into this feisty issue of PULSEmag! Check it out today!

Training & Certification Has Come a Long Way 
A decade has passed since IAOP launched its Certified Outsourcing Professional (COP) program. Certification, the COP Master Class and Governance Workshops have attracted professionals of all ages and roles. While the foundation of the learning experience remains constant, the content continues to be refreshed to address technology and issues of relevance. Check out our training issue, here!

Fast Company: A Trio of OWS16 Stories
1) Automation: Speed of Adoption
2) Game Time: The Audience Wins
3) Memories: A Look Back in Photos

Hot Spot: Netherlands & Scandinavia: IT and Cloud Present Opportunities
With EOS16 taking place in The Netherlands this November, PULSE spoke with three industry experts in the region to get the scoop on the outsourcing industry in northern Europe.

Fresh Faces: Career Highs from our COPs
In this new column, we'll feature job promotions, achievements and other notables from the industry's Certified Outsourcing Professionals.

Tech Topic: As-A-Service --- Alignment, Innovation and Insight
A practical guide to begin the As-a-Service Journey.
Determining key outcomes is only half the journey. The real magic of As-a-Service comes with unlocking value by using the data and insights your operations yield to identify further benefits to your business, customers or product.

www.IAOP.org/PULSE

Wednesday, March 16, 2016

PULSEmag - The State of the Industry Edition - is Here!

Check out PULSEmag's State of the Industry Edition!

The State of the Industry Issue 
Race to the Top
Is there a race to implement SMAC (Social, Mobile, Analytics and Cloud) technologies? Many service providers are already well down the track, but some clients are still waiting for the starting gun to go off. Others haven't yet figured out there is a race. Learn all you need to know about the State of the Industry.

Fast Company 
Robotic Process Automation
OWS16 Panelists Debate RPA ~ Lessons from the Field ~ Humans Keep Value-add and Judgment-based Work ~ Key Terms & Buzz Words ~ Live Audience Polling

Hot Spot USA 
Domestic IT Outsourcing In Demand
The US is an ideal location for multinational companies - not only as an outsourcing provider to other parts of the world but as an onshore, nearshore and rural shoring destination.

IAOP Awards 
The Industry Salutes Excellence
Collaboration has always been the hallmark of IAOP and nowhere was it displayed better than at the OWS16 Awards Luncheon, where individuals and teams of customers, providers and advisors, were recognized for their excellence, with numerous awards and recognition.

Read it all here - https://www.iaop.org/pulse.

Thursday, March 03, 2016

OWS16 - That's a Wrap!

Industry professionals from more than 40 countries came together last month to chart the industry’s future during IAOP’s 2016 Outsourcing World Summit®. In the 19th edition of the Summit, outsourcing demonstrated its strength as a global platform to grow and transform businesses.

Focus on the first day of the event was exploring innovation and looking at where the outsourcing profession has been and where it is headed – a review of the 2016 State of the Industry survey pointed to the emerging technologies and drivers that are affecting outsourcing decisions.  While traditional outsourcing is still being practiced, there is a demand for leveraging the new environment of SMAC (Social Media, Mobility, Analytics and Cloud).

“One thing in particular that stood out to me at this year's Summit was the real sense of community we share,” said Debi Hamill, IAOP CEO. “With emerging technologies and disruption shaking our industry, we know we can count on our members, to come together, learn and grow. We've worked hard to get here and we are excited for the future as we plan the 20th edition, taking place in San Antonio. Early results of our post-Summit survey show that 96 percent of attendees found the networking ‘good to excellent.’ Thank you to all who contributed to its success!”

The focus of day two was Robotic Process Automation, which is changing how services can be delivered. While businesses can succeed from innovation, it takes more than talking about it – it takes a corporate culture and commitment to exploit innovation and make it a part of a business direction.

Day three was a hands-on, audience participation and problem-solving session. The discussion uncovered what is important to customers and providers and brought out what is working and what needs more work to make it work for customers and providers.  Audience participation created scenarios and opportunities for discussion which were addressed by “industry experts.”

Two hot topics during OWS16 that are driving the future of outsourcing are robotic process improvement and innovation. The next evolution in outsourcing will possibly have providers employing robotic processes to take the “robot out of human.” This could create a higher level of job satisfaction while delivering consistent results. Innovation in technology is also driving how outsourcing providers are delivering value to their customers. It is contributing to defining customer expectations on outcome results.This could mean that companies investing in robotic innovation will be the leaders and not those that are just leveraging current processes and technologies.

Outsourcing customers, providers and advisors from leading companies converged at the summit with some of the largest numbers of international attendees coming from Canada, Colombia, India, Nigeria and the United Kingdom to hear the latest strategies that are leading companies to success in the new outsourcing landscape.

Two Honored as IAOP Members of the Year
IAOP recognized MichaelNacarato, Managing Director, Union Bank, and Donald Mones, COP, Director, Business Transformation Group, Offshore / Outsourcing Risk Management, Union Bank, as “Members of the Year” for their work to advance the outsourcing industry.

MichaelNacarato chairs IAOP’s Texas chapter and is on the leadership teams for the association’s Financial Services, Governance and Voice of the Customer chapters. Donald Mones chairs IAOP’s training & certification committee, the New York chapter and is on the leadership team of the Vvoice of the Customer chapter. The two corporate members were honored during OWS16, for their demonstrated commitment to the growth of IAOP and their leadership in the promotion and delivery of the association’s programs.

Leadership Hall of Fame
IAOP® also honored Gregg Kirchhoefer,partner at Kirkland & Ellis; Bill Metz, Senior Director, Global IT Sourcing and Vendor Management, Walmart; and Christopher Stancombe, Chief Operating Officer for Capgemini Business Services, into its prestigious Leadership Hall of Fame.

Global Outsourcing 100
IAOP also announced its annual Global Outsourcing 100® and World’s Best Outsourcing Advisors lists. The official lists will be premiered in a special advertising section on outsourcing in the 2nd Quarter 2016 FORTUNE 500 issue of Fortune magazine, on stands June 6, 2016.  All companies included on the lists will have demonstrated their global excellence;  "stars" will be awarded for all companies distinguishing themselves in one or more judging category.

Global Excellence in Outsourcing
Teams from AbbVie and Merck were honored as winners of the sixth annual Global Excellence in Outsourcing (GEO) award. The AbbVie – Finance & Accounting team has received the award for the Innovation category and the Merck – Externalization CoE team has received the award for the Best Practices category.

Global Outsourcing Social Responsibility Impact Award
IAOP and Information Services Group (ISG) honored ISS (ISS.CO, ISS DC), a global leading facility services provider, as the winner of its fourth annual IAOP/ISG Global Outsourcing Social Responsibility Impact Award (GOSRIA). ISG will make a cash donation in the name of ISS to its chosen charity, FedCap.

IAOP also announced that its 20th annual edition of the world-renowned Outsourcing World Summit will take place February 19-22, 2017 at the JW Marriott Hill Country, in San Antonio, Texas. For more information and special introductory rates, see the IAOP website.

Monday, February 15, 2016

The OWS16 Edition of PULSEmag is out!

Looking for the inside scoop on everything OWS?

The Guide - Everything You Need to Know About OWS16 (page 22)
Make your time at the Summit a success with this guide to OWS16! Our program was developed by you - our expert members - to address the very latest issues on top of the minds of outsourcing professionals.

We also chatted with the soon-to-be-honored Leadership Hall of Famers...(they'll be honored at an awards luncheon this week, during OWS16)

View From the C-Suite (page 32)
Meet the New Hall of Famers
they come from different backgrounds and vantage points. Meet our latest inductees: Gregg Kirchhoefer, Partner, Kirkland & Ellis, LLP; William Metz, Sr. Director, Global IT Sourcing & Vendor Management, Walmart; and Christopher Stancombe, COO, Capgemini Business Services.

We've got some other hot topics for you, too, in this busting from the seams edition of PULSEmag!

Check out these stories:

Fast Company
The Evolution of Outsourcing
Although the concept of outsourcing has been around for centuries (think of supplemental staffing for building the pyramids), its current form is less than a half-century old. Yet, it has evolved dramatically in these five decades.

Hot Spot MENA
Nearshore and New Models Presents Opportunities
PULSE spoke with Fuad Abdelhadi, VP of Booz Allen Hamilton, serving the Middle East North Africa, about outsourcing's growth potential in this region.

Thursday, February 11, 2016

On the Ground at OWS16!

We are thrilled and excited to announce that we are on the ground at Disney World for OWS16! We have an action packed event that is sure to keep you on your toes!

Pay attention to our social media for the next week as we'll be bringing everything to you live... Look for hashtag #OWS16 to stay up to date on the IAOP Summit happenings!

Facebook.com/IAOP1
Twitter.com/IAOP
Instagram.com/IAOPinpics

See you all very soon!

Tuesday, January 05, 2016

Happy New Year from all of us at IAOP!

Welcome to 2016! We are beyond excited for this upcoming year as we have so many things in store for our members and all industry professionals.

We'll be launching new chapters, planning another European Summit, starting a conversation about Women Empowerment & Opportunity in outsourcing, expanding our member community - ConnectIAOP - and so much  more!

Stay tuned for an action-packed 2016!

Thursday, November 19, 2015

What’s the Deal? Getting the Most out of IT Vendor Management During a Merger or Acquisition

Mergers and acquisitions (“M&A” or “mergers”) are highly complex and disruptive activities, which often shifts focus away from ‘business as usual’ (“BAU”) activities and refocuses management attention on integration and synergy capture.  The primary responsibility of the IT organization during an M&A event is to successfully combine the acquirer and target organizations to ensure continuity of technology service operations through seamless integration of people, processes and technology.  While these types of events direct most of the attention towards the IT challenges of integrating services, platforms and operating models, one area that is often overlooked or downplayed throughout this process is the role of the IT Vendor Management Organization (“VMO”).

During a merger, the VMO should fulfill a number of different operational and strategic roles. If executed correctly, these roles directly contribute to the success of the merger in the following ways:
  • Demand Management – Throughout the integration process, clients often experience large influxes of demand for project related resources associated with new contracts and expansion of existing relationships with vendors.  The VMO can help to consolidate this demand by identifying vendors who are best positioned within the client vendor ecosystem to fulfill the required capacity.  While the project teams are expected to identify resource needs for both pre-close planning and post close execution, it may ultimately fall on the VMO to ensure that vendors are sufficiently ‘ramping up’ staffed capacity to support projects. The VMO may also monitor service consumption to ensure that labor availability with vendors is sufficient to meet peak demand – which often occurs within several months of the close of the merger.  In addition to tactical responsibilities, the VMO is strategically positioned to assist the sourcing function in identifying vendors to meet short and long term technology demand.  As part of integration demand planning, the VMO may also assist or lead business case development, risk assessment, benefits projection and tracking, vendor selection, quality of service delivery, escalations and issue resolution, and contracting.
  • Risk Management – New vendor relationships typically result from the merger, multiplying the number of vendors in the portfolio and increasing the associated risk profile of the extended enterprise.  When teams work towards very tight and expeditious timelines, it is possible and often highly likely, that stakeholders have limited time to fully assess and evaluate extended enterprise risks, including regulatory, financial, operational risks and risks related to information and data security.  Appropriate due diligence and analysis is required to evaluate any extended enterprise related exposure.  The VMO performs an essential role in identifying non-compliance with laws and regulations and detecting extended enterprise solvency issues, which might threaten a vendor’s ability to maintain service levels and cause disruption to operations. They may also reveal potential risks to extended enterprise service delivery arising from inadequacies in a vendor’s internal supply/distribution processes.  In addition, the VMO is vital to maintaining, inventorying, tiering and assessing new extended enterprise relationships; determining which are of high risk; and identifying those that require further attention to reduce areas of vulnerability.  If the risk requirements of the organization are expected to change after combination, the VMO should play an integral role coordinating with vendors to reassess and modify vendor risk profiles.
  • Relationship Management – In a perfect world, vendors would have one primary executive who coordinates directly with a client’s business unit executive resulting in an ideal ‘one to one’ relationship between the vendor and the client.  While in principle this sounds effective, the reality is that this dynamic rarely occurs in industry – relationships are more complex  - typically represented by  ‘many to many’ relationships between global service providers and their clients.  When considering this complexity during a merger, one could imagine that any vendor relationship challenges which existed before the transaction may be exacerbated by the fact that the number of direct vendor relationships are potentially doubled when organizations combine.  The VMO appears well positioned to help coordinate discussions and interactions amongst all stakeholder groups including the acquirer, target, BAU teams, and integration teams who may be engaging vendors on an ongoing basis – particularly during planning stages.  Leveraging the VMO as a primary facilitator with vendors, may be an effective way to control spiraling relationships and aligning opportunistic or concerned vendor sales teams.  In addition to managing the massive influx of new relationships, the vendor management team also helps to reinforce, measure, and monitor any transition service agreements (“TSA”) that may exist with the acquired entity.  Depending on the structure of the acquisition or merger, this function may be critical to ensuring that both the new vendor relationships and relationships with legacy operating companies are managed effectively.
  • Financial Management – Regardless of where costs are managed or controlled within the organization, whether within the business or within IT, the VMO should play an essential role in achieving integration related cost reductions and synergistic value realization prior to, during, and after a merger closes.  In the early stages of planning, the VMO is ideally positioned to investigate opportunities to combine or rationalize vendor relationships between the acquirer and target enterprise, in order to effectively achieve economies of size and scale, and maintain preferred vendor status with the most important and critical vendors. The rationalization of vendor relationships provides opportunities to analyze pricing, commercial and contract structures, and laying the groundwork for the establishment of post-merger vendor performance targets.  The development of realistic yet aggressive targets can promote accountability and encourage cooperation to support the new company’s success. In addition, the VMO can also support the organization to effectively use short term resource demand as an opportunity for longer term financial benefits by leveraging large spikes in capacity to lock in more favorable pricing for the duration of the integration – and beyond.  Throughout the merger, the VMO appears ideally positioned to leverage the total value of the relationship with the combined organization as a means to achieve savings targets.  Firms looking to perform financial management and contract management activities prior to merger close, should develop clean room protocols with the counterparty addressing the handling of competitively sensitive information for compliance with antitrust regulations.  The firms should consider engaging a 3rd Party Advisor, who can advise on the set up and management of a clean room environment and analyze sensitive information subject to the clean room protocols established. This is a critical step to remain compliant with antitrust regulations.
  • Contract Management – During BAU, new business demand, typically leads to technical requirements, which can lead to a new contract or a change to an existing contract. These activities are still commonplace during a merger; however, unlike business as usual activity, the stakes are greater and the timeframes are shorter. Regardless of these added constraints, the VMO remains the optimal function to perform vendor qualification, develop and initiate an RFP, negotiate with new vendors, and maintain agreements. Unlike BAU, mergers provide ample opportunitiesfor firms to make a shift in strategic direction or to incorporate new vendors into their portfolio – both as a means for meeting capacity or demand for skills.  Due to the large influx of additional contractual needs or contractual revisions, the VMO plays an essential role in ensuring that resources including services, labor, hardware, and software are readily available to meet an influx in demand.    Influxes in the demand for new contracts may also increase the demand for contract management services.  These services typically include RFP development and negotiation support.  The VMO may require external 3rd party support to augment VMO capacity and prevent shifting knowledgeable competency and skills away from strategic planning to tactical process oriented work.  The level of contractual support required from the VMO to support the contract management processes should not be underestimated.
While existing VMO operations are essential to achieving merger related benefits, a merger also provides an opportunity to not only strengthen vendor relationships but also to develop and expand upon existing VMO capabilities.  Often during BAU, it may be difficult to rationalize VMO investments, however, as part of a larger change initiative, like a merger, it is often easier to precipitate change by including VMO capabilities within larger organizational and operating model change.

A couple of key opportunities for consideration include:
  • Target Operating Model (“ToM”) - Are we structured properly? Understanding the acquirer and target VMO operating model can help to establish the ToM for the combined organization.  Key elements of the operating model include processes, methodologies, key contacts, operating procedures, and tools / templates which should be identified and inventoried for the new company (“NewCo”) in order to seamlessly integrate VMOs.  Additional questions worth considering regarding the future state operating model include:
    • Is the acquirer centralized, center-led, or distributed? Target?
    • What services (strategic sourcing, procurement, vendor management) does the acquirer VMO perform for their customers? What services does the target VMO perform for their customers?
    • How many personnel are currently supporting the acquirer VMO model?  Target?
    • How many personnel should be supporting the VMO model for NewCo?
    • Which processes / process groupings within each service does the VMO own? Support?
    • Which processes / process groupings should the VMO own? Support?
    • What are the gaps between the current model and the desired state?
    • Do we have a plan for closing ToM gaps?
  • Capability Maturity - How well are we doing?  Understanding the acquirer and target VMO capabilities, can help to establish lines of distinction between responsibilities for the business and VMO.  Identifying and assessing capabilities will help to define the VMO at the process level and establish areas, which may require further investment or attention.  Additional questions worth considering regarding capability maturity include:
    • How many functions (contract management, performance management, financial management, etc.) is the acquirer VMO performing? Target?
    • How well is the acquirer performing these functions relative to the market? Target?
    • What are the gaps between capabilities for the acquirer and target?
    • What capabilities from the acquirer and target should be leveraged for Newco? Which do we need to build / invest in for optimal ROI?
    • Do we have the processes, procedures, tools, templates, and people to effectively perform these functions?
    • Do we need to acquire people, process, or technology to enable these functions?
  • VMO Strategy - What can we do to be more strategic?  In addition to improving the overall VMO operations, mergers also provide an opportunity to increase the strategic value of vendor relationships.  Typically vendor value can be improved via vendor pricing concessions, value add / pro bono services, transfer of responsibility, reduction of administrative or relationship maintenance costs, thoughtware or intellectual property, and strategic vendor contributions. Additional questions worth considering regarding VMO strategic improvements include:
    • How much time and effort do stakeholders spend meeting with / engaging vendors? How many vendor contact touch points do we have on a regular basis?
    • How do we define vendors which have a strategic importance to our enterprise (i.e. either significant amount or spend or deliver critical product or service)?
    • Is it easier for our business customers to purchase products or services? Do we have sufficient cost transparency?
    • Which vendors go above and beyond to meet our needs? Which vendors are difficult to work with, resulting in additional administration or transfer costs?
    • Is our vendor environment sufficiently competitive? Where should we increase competitive pressures?
    • Do we have a full grasp of our total vendor footprint?
    • What can we do to redefine our vendor relationships, to increase our buying efficiency and improve vendor value?
    • Are we expecting our vendor relationships to expand or contract as a result of the merger? How do we plan on leveraging our projected growth? How do we plan to manage shrinkage?  Can we realize any additional economic efficiencies from vendor spend consolidation?
 A large merger or acquisition is a challenging and often polarizing activity for both the target and the acquirer – this is no exception for the VMO stakeholder.   During BAU, the VMO plays an essential role in ensuring that the firm’s resource capacity is met, vendor obligations are fulfilled, extended enterprise risks are mitigated, and that the strategic priorities of the business are accomplished. During M&A periods, however, the stakes are a bit higher, and therefore the role of the VMO is multifaceted – accommodating organizational changes, achieving the NewCo’s financial targets, and supporting the expansive and time sensitive demands of the business.  Mergers should be viewed as an opportunity to clearly demonstrate the value of existing VMO capabilities along with endeavoring to improve capabilities – particularly with regards to strategic vendor relationships, risk management, and the VMO operating model.

For additional insights on Deloitte’s M&A Methodology, Vendor Management services, and Service Delivery Transformation practice please visit Deloitte.com.
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Ajay Bolina, Principal, Deloitte Consulting LLP
Asish Ramchandran, Principal, Deloitte Consulting LLP
Joseph Greiner, Manager, Deloitte Consulting LLP

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Copyright © 2015 Deloitte Development LLC. All rights reserved.

Monday, October 26, 2015

Got Any Data Scientists? Talent Crunch a Factor in Corporate Real Estate Outsourcing by guest blogger John Forrest

Demand for top-notch tech talent is hampering corporate real estate strategy—and it's likely to escalate

In today's tech talent wars, data scientists are target number one across many industries, and that includes corporate real estate (CRE). In the past, the CRE sector kept most of its data in simple desktop spreadsheets. Today’s CRE teams are quickly adopting sophisticated data and analytics technologies and platforms. However, with technology talent in increasingly short supply, in-house teams will need to look outside to reach the next level of adoption.

The trouble is, there simply aren't enough data scientists to go around. According to a study commissioned by JLL, in-house CRE teams will soon be competing with service providers and the wider marketplace for the same tech talent.

Why CRE outsourcing is joining the fray

At present, 60 percent of in-house CRE teams consider themselves fairly well-equipped for data-driven decision-making. Tomorrow, however, is a different matter, according to a new JLL report.
Already, only 29 percent of CRE executives give "strong" ratings to their team's capacity to collect and use data and analytics. With more than half looking to become data-centric in the next three years, the need for data scientists who understand corporate real estate is likely to spike sooner rather than later.

Small pool, major demand

A new RJ Metrics report released this month reveals that the number of data scientists has doubled over the last four years. In fact, hiring for data scientists has outpaced hiring for software engineers and data analysts by 50 percent.

The field is attractive for the next generation of employee, with starting pay for entry-level jobs reaching upwards of $200,000. However, the talent pool can't fill up fast enough.

Tactics in the battle for better data science

So, how can this gap be filled as demand rises? One creative approach, as described in a recent Accenture report, is to divide the data scientist's role among members of a team. While each individual team member may not have the skills to perform all data collection and interpretation, as a group they could potentially perform them all.

But for some companies, the answer is outsourcing. Some of the largest real estate service providers have invested significant resources in developing sophisticated platforms for CRE portfolio management and business intelligence, site selection, market intelligence, workplace strategy, smart building management and other functions, while successfully recruiting the talent to create and master these tools.

With this in mind, CRE service providers have an edge. The larger companies can afford to pursue and develop data and analytics talent. In contrast, in-house CRE teams must compete for technology talent not only with the service providers and CRE technology start-ups, but also with divisions of their own companies.

It’s not just global companies that can tap into the innovative data platforms that the largest service providers are creating themselves. Even mid-cap companies can access sophisticated business intelligence and analytics tools designed for CRE decision-making by partnering with a service provider. The talent is out there. The question is, what is the best way to tap it?
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John Forrest, CEO Corporate Solutions Americas, JLL

Tuesday, September 01, 2015

IAOP Rebrands and Unveils New Logo: Spotlight on Collaboration

We are pleased to introduce you to IAOP's new look - the first significant change to IAOP's identity in a decade - and one that reflects the evolution of the association, our vision for the future and our ongoing commitment to meeting the needs of our members.

Created as a result of a year-long effort with you, our Strategic Advisory Board (SAB), staff and an outside design team, the new logo is a contemporary evolution of IAOP's previous logo with a more modern typeface that is crisp, streamlined and gives a nod to the global community.

Not only has the brand, tagline and logo changed, IAOP's value proposition has evolved along with it to focus on the core values that have helped IAOP become what it is today: the association for improving outsourcing outcomes by bringing together customers, providers and advisors in a collaborative, knowledge-based environment that promotes professional and organizational development, recognition, certification and excellence.

A lot has changed since IAOP launched in 2005. Organizations have become increasingly technology driven and interdependent through an array of ever-changing collaborative business models. Most generally referred to as 'outsourcing,' these approaches include multi-sourcing, global business services, offshoring, nearshoring, robotic process automation (RPA), cloud-sourcing and many other variants.

Both opportunities and challenges have emerged from these changes: new technologies like SMAC have moved front and center; partners have become sources of not just efficiency, but innovation; security and privacy have taken on new urgency; and even the most basic management principles have begun to give way to new approaches led by a new generation of business leaders.

IAOP's unique characteristic - core competency - is its ability to bring together this diverse, highly collaborative and passionate group of individuals and organizations. It is important that as an association, we embrace continuous change as the new normal and incorporate those ideas into all aspects of the new brand.

We hope you like them as much as we do. Thank you for being part of our global community.

Tuesday, July 28, 2015

"Insights and Strategy, Please" — Overheard in the C-Suite by guest blogger Maureen Ehrenberg

Corporate real estate leaders are taking a cue from IT and turning to insight-driven partnerships over tactical delegation


Keep the lights on in Toledo. Secure 20,000 square feet of space in LA. In the 1990s, corporate real estate (CRE) outsourcing strategy was primarily tactical, giving direction to whichever on-the-ground service provider was most fit for the job. Tactical service delivery just isn’t in demand today. Strategic, data-driven insights, advice and results are replacing tactics, and partnerships are replacing vendor relationships.

Introducing Outsourcing 4.0: We're in this together.

With a trusted CRE supplier serving and acting as strategic partner, corporate leaders are finding they can more readily develop a centralized system to supercharge every corner of the workplace, and real estate portfolio – and their people. They can harness cutting-edge technology, tap actionable predictive analytics, and optimize performance. They can even free up internal teams to focus on higher level work, such as enriching connections with HR, Procurement and IT for a more aligned workforce.

This new model might have a familiar ring to it.

These fresh CRE strategic outsourcing strategies are similar to progressive IT outsourcing that has transformed the role and impact of technology services across a corporation’s operations.

Likewise, new CRE outsourcing brings together quantitative and qualitative approaches, and incorporates close dialogue with other business units. CRE partners serve as managing consultants that impact much more than the physical space of corporate operations; they make the entire workforce stronger. By acting globally and integrating locally, portfolio strategy and facilities management are streamlined with central decision-making, while shaped for the specific needs of each location.  

Three signs C-suites are poised for outsourcing strategy revolution

"But that's the way we've always done it," is no longer effective in terms of outsourcing strategy and business results. Following are a few key indicators that corporate leaders are ready for change:

1.       Making companies “thin.” Corporations are increasingly adopting a “thin client” model in which one or two supplier partners serve all CRE needs, including infrastructure, personnel and the supporting software services. Centralized CRE outsourcing means more streamlined operations, focused inter-company decision-making and user-friendly client interfaces. Companies increasingly expect supplier partners to integrate across corporate sectors and innovate by using advanced data and analytics to pose creative ideas, solutions and innovate
2.       Expanding the definition of “real estate” to “workplace.” Corporations expect today’s outsourced partners to be holistic workplace experts, helping to create the employee experience and transforming the built environment this is much broader than traditional property matters. In top companies, the expanded purview of the CRE outsourced provider includes the delivery of the workplace environment and how the worker is enabled to operate within it. Collaborating with HR, IT and other shared services business teams, real estate professionals are now directly influencing worker productivity, employee well-being, recruitment and retention. In addition to physical space, CRE partners are involved in supporting “relationship management” at every level of a company’s operations.
3.       Prioritizing outcomes over metrics. While key performance indicators (KPIs) and service-level agreements (SLAs) continue to matter, the expansion of outsourced CRE roles has emphasized the importance of overall outcomes and standards. Employee satisfaction and productivity are, for example, a strategic imperative. And CRE suppliers are being engaged to a greater extent in support of corporate goals through new types of contracts. These contracts align them with the risks and rewards of company business outcomes related to the transformation of the portfolio and the delivery and management of the built environment together with their CRE partners within the corporation.

The desire to improve global positioning is no passing interest, either. An overwhelming 73 percent of CRE leaders say their mandate to centralize real estate functions on a global basis is stronger than it was just three years ago, according to JLL’s 2015 Global Corporate Real Estate Survey. Deep alignment is more necessary than ever.

Today's leading companies are seeking the kind of collaborative synergy that leads to improved innovation, productivity, profitability and employee engagement across even the most far-flung locations. Is it time for a new model? The answer is a resounding yes, and doing so will enhance every corner of the workplace: physical, psychological and digital. 
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By Maureen Ehrenberg, International Director, JLL Integrated Facility Management