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.

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

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.

"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

Supply Risk Maturity: Everyone thinks they are good at their jobs, right?

Supplier risk managers are in an interesting spot – they’re their own worst enemies. If they’re bad at their jobs, then the company is exposed to unnecessary risk. BUT if they’re good at their jobs, then risk becomes so well managed that stakeholders begin to take their efforts for granted, turning on them with “what do we need you for? Everything is going fine.”

Neither position is particularly good for job security. In both cases, however, having a disciplined way to account for your efforts and effectiveness will help you prove the value of your job. Documenting your efforts through a supplier risk management maturity assessment is one way to achieve this. This type of assessment will help you gain more clarity around how good you are at your job and enable you to have more productive conversations with stakeholders and explain your value beyond just “we lowered the company’s supplier risk.”

So, how do you demonstrate this maturity to your organization? Think about whether you have all the right pieces in place, then think about how well you execute all of those pieces.

Key Pieces To A Comprehensive Supplier Risk Management Effort: What To Do

The first part of justifying value to your organization is to explain the depth of what you’re doing. Effective supplier risk management involves a lot of moving parts, and listing all of the activities you do on an ongoing basis can go a long way in reminding stakeholders about the complexity of your role and the value it brings to your organization. 

The key activities include:

• Risk identification, categorization and assessment. Do you know what risks you’re looking for and do you have a model for integrating those risks into the broader corporate risk program?
• Supplier data. Do you have an ongoing process in place for capturing supplier data and the impact on your overall risk?
• Risk treatment. What would you actually DO based on your supplier risk identification and monitoring?
• Organization/team skills. Do you have the right people to manage supplier risk?
• Metrics. How do you measure the effectiveness of your program, what does success look like for your supplier risk management team?
• Collaboration with stakeholders. Do you have productive relationships with key stakeholders like senior executives, risk, compliance, legal, procurement, etc.?
• Reporting. Do you provide useful and actionable information to your stakeholders?

Execution Is The Most Important Part Of Supplier Risk Management: How You Do It 

        

Anyone can pull up a PowerPoint deck with lots of slides that show organizational diagrams and risk identification models. But how well does your company execute on the key pieces above? Maturity is almost always judged not by the existence of a program, but how well the program is executed. 

Critical factors in maturity include:

• Standardization. Does everyone who manages risk use the same approaches, tools, and processes? Transparency across the organization can only come when there is some way to standardize and give everyone the same view.
• Effective use of technology. Any manual process is likely an ineffective one. Using technology to capture, analyze and share data is a key indicator that a company has invested in maturing its efforts for supplier risk management.
• Compliance with the processes. Here’s the real jewel in the crown. Does everyone comply with your risk management program? You can have a beautiful approach, rich and accurate data, and books’ worth of action steps to take, but if no one actually uses any of it (or worse, actively tries to go around it) then you can’t consider your organization mature.

The next time you are asked to justify supplier risk management, consider putting your program to the test with a maturity assessment. You’ll be able to have a more productive and thorough conversation about exactly what you’re doing, and how you’re doing it, and you’ll be able to identify which parts excel and which need improvement. Most importantly, you’ll be able to capture and share the depth of your efforts.

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Written by Christine Ferrusi Ross, SVP, Neo Group & Supply Wisdom. Edited by Atul Vashistha. More details can be found at supplywisdom.com.

Criticized for Your Customer Service? Turn Adversity Into a Business Opportunity by guest blogger Matthew Park

Redefining Engagement to When, Where, & How Your Consumer Chooses

At a restaurant, the couple next to me wasn’t happy with the meal served. The lady took out her phone and started posting on a social media site ... Familiar?

This era is of the social customer … unafraid to use her voice. She understands the relative shifting of influence, and the vulnerability of Big Business. The social medium is instant and responsive, and positions businesses willy-nilly in places where potential customers already exist.

For businesses that incorporate social media as part of their omni-channel CRM programs, keeping up with social conversations is a two-fold process: You need a social CRM strategy, including relevant technologies, to ensure your social engagement with the customer. Second, you need a social customer service strategy that integrates your contact center and marketing or corporate communications department to not only address customer complaints, but do so holistically aligned with your brand experience objectives.

Also, if your social customer service strategy does not aim at integration of the social sphere with problem resolution, it’s bound to fail. A precise social customer service “solution” would pick up the initial social thread and seamlessly convert i t into a one-on-one interaction, for example with a Listen-Engage-Analyze-Resolve approach (as we do at Minacs) for a successful customer experience outcome.

Listen in to Social Conversation!
After the diner had posted her comment, an executive at the restaurant chain’s corporate office “heard” of it and wanted the unit manager to take care of it immediately.

In the social space, the customer expresses disappointment, or happiness, on social media. Apart from lost revenues, ignoring social chatter can result in negative social sentiment that influences other customers, prospects, and the public! But how do you keep up with these conversations? And where does your contact center come into play?

Social media centers listen into conversations about your firm, products, brands, competitors, or even special interest areas for you across social networks, like Facebook, Instagram, Pinterest, Twitter, and even blogs. Social complaints are categorized and prioritized for action and resolution.

Analyze the Issue With Social Tools! 
With the diner’s complaint now in the public domain, the restaurant’s management, after tracking her comment, understood the negative impact it would have on their business.

Businesses that evaluate social customer care experiences are three times more likely to retain their customers. This requires an analytics component to your implementation, and you need to configure it to filter and categorize the social mentions to recognize sentiment and trends. Tag the opportunities found upon analysis of mentions. They provide you with deep insights into customer behavior and allow you to adopt escalation procedures when issues need immediate attention.

Understanding customer aspirations and their business impact help you to draft an approach that identifies and predicts the types of customer behavior and their “unintended outcomes.” Social listening and sentiment analysis tools can be used to analyze the data being generated through customers’ and influencers’ social interactions.

Customer Engagement Is the Key!
Within 20 minutes, the manager was at the diner’s table, apologizing for the issue even after the waiter had apologized.

Though technology drives customer service, human and organizational factors must be evaluated. They still play an important role in engaging customers, where the key is to engage with customers in their channel of choice. Your strategy needs to move customers from generic, many-to-many social conversations to one-on-one, personalized engagements to solve problems quickly.

Social advisors need to engage customers by responding to their posts. If that requires escalation or multi-department facilitation, businesses should route communications and coordinate resolution with appropriate departments. Based on need, the social analysts or advisors in the social command center (listening and analyzing post) will transfer a case over to advisors in the contact center to facilitate such resolution.

Resolution Achieves Customer Satisfaction!
The manager removed the meal from the bill, comped the couple’s meals, and gave them a gift certificate for another visit. Generously, the diner agreed to take her negative post off social media. She probably narrated the restaurant’s response as well!

By paying attention to conversations in the social space, you resolve issues early. Apart from reducing costs associated with repeat contacts, timely resolution ensures sustained excellence in customer experience. A 360-degree, omni-channel strategy combines social strategy, technology, analytics, execution, and people into a 24x7 customer service operation.

An integrated social-to-contact-center solution means we take such conversations off social channels to provide the appropriate level of attention and problem-solving customer service to drive resolution. Contact centers need omni-channel engagement capabilities that provide the scale to open one-on-one communication channels with customers. But they should also be able to provide the required customer care, requiring seamless cross—departmental workflow automation and the ability to respond to socially-posted complaints.

You’ve Crafted the Science … Now Hone the Art!
CRM systems in contacts centers play an important role in delivering social customer service. Social CRM must be one component of your overall social customer service strategy. The CRM solution should utilize analytics information integrated to provide business intelligence solutions. Quite simply, “look out” to listen, “understand” to analyze, “decide” to engage, and “address” to resolve!

For an effective social customer service solution, you need to ask: Do we have well-trained, dedicated experts for our contact center program who can monitor social exposure daily and meet customer needs? Does our solution apply First Contact Resolution principles to resolve customer issues early to help reduce costs, not to mention the long-term and lasting impact to reputation? Does the solution monitor our social accounts and brand mentions across the world?

After all, 140 characters is all it takes to make, or mar, a reputation!
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Matthew Park, Manager, Solutions at Minacs

Supplier Risk Management - The Good, the Bad, and the Ugly by guest bloggers Dan Kinsella & Ajay Bolina

As clients continue to evolve their vendor relationships from broad based sole sourcing into integrated service portfolios and as vendors continue to evolve their service solutions to more technology dependent offerings, e.g. Cloud, Digital, we expect the level of complexity and the risk profile of these interdependent relationships to increase.  In the early stages of outsourcing it was quite common for an organization to be governing and managing a single vendor for each of their functional sourcing needs, with a limited Vendor Management Organization (VMO).  While this may have been convenient at the time, clients today are looking for more focused and specialized vendors who are able to effectively integrate into the Global Business Services portfolio. 

During the 90’s into the 00’s it was much more common for clients to have a sole source provider who provides all IT services, another who provides Finance and Accounting, and depending on the level of maturity there could be a whole host of other providers delivering services for functions like Procurement, Facilities Management, Printing, Asset Management, Human Resources, etc.

Today, however, focus is shifting from delivering single function services to delivering a range of services from a targeted mix of internal and external suppliers, while also asking some suppliers to work more collaboratively with each other for joint solutions.  This increases complexity in the ecosystem, including  Business Units, control functions such as information security and business continuity functions, tax, legal, sourcing, external vendors, captive delivery centers (near shore, onshore, global), and centers of excellence. 

Increased complexity requires deeper and sophisticated risk management policies and procedures, especially as regulators continue to issue more stringent guidance and scrutiny over Supplier Risk Management (SRM).  To date, clients have not been able to respond with effective and efficient SRM programs.

 

Key questions a VMO should be able to answer regarding the SRM program include:

• Do you know who all your critical suppliers are?
• Are you assigning the highest level of risk monitoring and due diligence to your riskiest and most critical suppliers?
• Have you reviewed and approved the Business Continuity and Disaster Recovery programs for your critical suppliers?
• Do you have controls in place to manage and approve the use of subcontractors by your suppliers?
• Do you know which suppliers have access to your data, including client data, and what types of data?
• What controls do you have in place to manage access?
• What information regarding SRM is provided to the risk committee?
• Have you evaluated whether your suppliers are Foreign Corrupt Practices Act (FCPA) compliant?  

If you do not have clear answers to these questions, and a broad SRM program in place, you may be exposed to risks which you may not have considered when you executed your supplier contract, and may remain unmitigated.

To gain a better perspective, we looked at the results of the 2014 Deloitte Global Outsourcing and Insourcing Survey, to try and understand how clients are thinking about Vendor Management, particularly as it pertains to supplier awareness (a sub-function of SRM).

The Good

Approximately 75% of respondents indicated they have a VMO[1]

At first glance you may think, well 75% is not great, and while there is still some room to improve, the fact that nearly ¾ of those surveyed in the market indicated they have a VMO is quite impressive.  This is a great place to start when trying to better understand the vendor landscape and to evaluate the true risks to your enterprise which may be hidden or sheltered as a result of your supplier agreements.  If the information is not available today, a well-run vendor management organization or procurement office should be able to access that information.

The Bad

Only 40% of respondents indicated that they are satisfied with their supplier risk management program and adequacy of third party compliance and controls

While this is not ugly it certainly does not appear to be good.  With over 60% of respondents communicating neutrality or dissatisfaction with their SRM capabilities, regulators will be equally concerned and are likely to take remediation action.

The Ugly

Only 20% of respondents indicated that they are above average in terms of their SRM & Third party Compliance program

This result is the most disappointing across all of the major VMO functions surveyed.  Given the potential scale of service disruption and brand and reputational risk we expected this percentage to be significantly higher.  In fact, only one VMO function scored lower: Document Management

Getting Started

Like all things, the best place to start when it comes to SRM is to first “Acknowledge the Gap” between the actual vendor risk and perceived vendor risk.  The next area to focus should be “Building Awareness”.  Select a few major vendors and dig deeper into the dynamics of the relationship.  Insolvency and bankruptcy risk is always an issue for niche vendors, however, the larger more strategic relationships should be reviewed to understand concentration risk and data risks which may be passed through to the client.  Finally, clients must leverage this information for “Taking Action”.

Critically important, when building a SRM capability, is to include stakeholders from the beginning.  Managing supplier risk must not be seen as an imposition, but rather as a value to the business.  However, it is too frequently built in isolation and enforced upon businesses.  If the program is not hyper-efficient, businesses will focus on the inconvenience of process, and not the risks that the process is intending to mitigate.

Summary

In summary, knowing your critical suppliers is an essential element of any SRM program - “trust but verify” is the key.  Do not rely exclusively on contract provisions and consider measuring and monitoring compliance.  And remember, without the necessary controls, stakeholders may be left to their own devices.

For additional information on Supplier Risk Management, please visit GBS Deloitte.

This publication contains general information only, and none of the member firms of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collective, the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication.

For more, please visit the website here. 

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. 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.

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Dan Kinsella is a Partner at Deloitte & Touche LLP
Ajay Bolina, Principal, Deloitte Consulting LLP

Copyright © 2015 Deloitte Development LLC. All rights reserved.

Member of Deloitte Touche Tohmatsu Limited

[1] Deloitte’s 2014 Global Outsourcing and Insourcing Survey: 2014 and Beyond, December 2014

Customer Service At The Heart of Your Business by guest blogger, Amit Shankardass

You spend a lot of money building and promoting your brand because a respected brand helps to keep existing customers loyal and attract new ones. But who is it that really defines your brand? I’m sure you might be thinking of the marketing team, but is this really how most customers form an opinion about your business? In many cases it is very likely to be the way that your customer service teams operate and interact with your customers.  Interestingly, this the same customer service team that used to be considered a ‘non-core’ part of the business?

I have been talking to a lot of people over the past year about the way that customer service is taking on a new strategic importance across companies in all industries. Of course, most executives have repeated the mantra the ‘customer comes first’, but I believe that many companies are now genuinely looking to their customer facing team for ideas, leadership and a competitive advantage.

Take a look at this recent blog featuring the CEO of Mercedes Benz USA, Steve Cannon, in which he suggests that the experience customers have when they interact with your company is now a part of the marketing process:

“Now with social media and the connected environment we live in, a good experience can lead to thousands of connections and a negative experience can lead to potentially more than that,” he explained. “When I started three years ago, Customer Experience was our No. 1 priority. We put a team together under a General Manager who reports to me and we empower them to take a more holistic look at Customer Experience and map the customer journey. This has to be the heart beat within our group.”

I believe we are now on a journey where companies and entire industries are about to be reshaped. The way customers interact with brands has fundamentally changed.  From a world where most communication was post-sale - and only if there was a problem - to the present, where customers expect an ongoing relationship with the brand, regardless of whether they are buying or not. And they expect to have a consistent experience and relationship with the brand across their journey with the the brand.

What this really means is that every customer-facing function within the organization needs to be synchronized with others. Previous silos such as customer service, marketing, advertising, sales, PR, and product management, need to be working together – because the customer is not interested in your internal politics. To the customer all these internal departments just represent your brand.

Customer service is now seen as the heart of a business. It’s where your team interacts with customers every day. It’s where prospective customers ask questions, people who are about to be customers clear up last minute doubts, and existing customers get support. All these other internal departments stand to benefit from a tight integration with the team that speaks to customers day after day.

And the customer service team gains too. Far from being a dead-end job, those who excel in managing customers now have their pick of where to progress within the business. After all, is there a better apprenticeship than talking to real customers about real problems with your products?

Mercedes has shown that they are one step ahead of the crowd in aligning their customer experience team with marketing, operations and sales. I believe that the next few years will see customer service teams take on a key corporate strategy role for companies in all industries.

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Amit Shankardass, EVP Marketing, Teleperformance

Size & Growth as Defined by the New Global Outsourcing 100 (Final Blog in a 4-Part Series)

Tah dah! We have arrived – our Global Outsourcing 100® blog series is coming to a close. Hopefully, it’s been as fun for you as it has been for us here at IAOP. So far in the series we’ve discussed Delivery Excellence, Programs for Innovation and Corporate Social Responsibility (CSR) in filling out the Global Outsourcing 100 application. If you missed either of these blogs, we’ve got you covered…you can check them out here (Delivery Excellence//Programs for Innovation//CSR).

In concluding the series, today’s blog will focus on “Size & Growth.”

This is the 4^th and final of four judging categories (Delivery; Programs for Innovation; Corporate Social Responsibility (CSR); and Size & Growth) in the Global Outsourcing 100. We’d like to also give a final shout out to those companies that have distinguished themselves by receiving half or full stars in one or more specific categories.

This judging area combines three questions on the application, which include:

• Size being given the highest of their score for revenue or employees for the current fiscal year.
• Growth being given the highest score for revenue growth or employee growth over the three-year period.
• Global presence, scored based on the number of countries in which the company has multi-client service centers (or offices with full-time employees (FTEs) in the case of advisors). 

Preset bands for revenue, FTEs and number of countries determine the score values; these tables are found in the publicly provided Process & Methodology document downloadable from IAOP’s website. Unlike the other judging categories, which may be influenced by the independent judging panel input, the Size & Growth score is determined purely on information provided by the applicant. 

 Companies are sorted by Size or Revenue into two judging groups:  Leaders or Rising Stars.   Leaders are above either a $50M revenue or 5,000 FTE threshold; Rising Stars are below.  The top 100 provider list is made up of 75 Leaders and 25 Rising Stars.  Most Size & Growth scores for Leaders falls into the 3.5 to 5.5 range, and Rising Stars are in the 2.5 to 3.5 range.  Advisors are in one group, and mostly came in between 3.5 and 6.5.

IAOP and its judging panel, led by Mike Corbett, IAOP Chairman, invite you to use this space to explain how and why your company is one of the highest rated in this judging category by sharing your examples of company Size & Growth with our members.

For more information on the Global Outsourcing 100 Process & Methodology, please visit IAOP’s website, here. 

Corporate Social Responsibility as Defined by the New Global Outsourcing 100 (Part 3 of a 4-Part Series)

Another day – another Global Outsourcing 100 Blog! So far in the series we’ve discussed Delivery Excellence and Innovation in filling out the Global Outsourcing 100® application. If you missed either of these blogs, don’t fret…you can check them out here (Delivery Excellence//Programs for Innovation).

Today we are going to focus on “Corporate Social Responsibility.”

This is the 3^rd of four judging categories (Delivery; Innovation; Corporate Social Responsibility (CSR); and Size & Growth). To those companies that have distinguished themselves by receiving half or full stars in one or more specific categories, you can’t hear it, but there is applause in the background.

With rising global awareness surrounding social responsibility, including Corporate Social Responsibility (CSR), it is of utmost importance to recognize service providers who have demonstrated exemplary leadership in, and ongoing commitment to, activities that foster community involvement, fair operating and labor practices, respect for human rights, attention to environmental impacts, consumer issues and good governance.

An increased number of organizations considering provider CSR capability when making an outsourcing decision has led to a maturing of the outsourcing industry’s acceptance of CSR.

This section of the application allows providers to share their company CSR programs as shown through outcomes that address such topics as:

• Community involvement and development
• Labor practices
• Human rights
• Fair operating practices
• Environmental impacts
• Consumer issues
• Organizational governance

These above-named areas are based on the ISO 26000 in Social Responsibility that provides guidance on how businesses and organizations can operate in a socially responsible way. Each must provide reasonable evidence of company compliance in each area, through independent third party reference sources, and/or a published and audited CSR report.

IAOP and its judging panel, led by Mike Corbett, IAOP Chairman, invite you to use this space to explain how and why your company is one of the highest rated in this judging category by sharing your examples of company CSR with our members.

For more information on the Global Outsourcing 100 Process & Methodology, please visit IAOP’s website, here.

Programs for Innovation in Outsourcing as Demonstrated Through the New Global Outsourcing 100 (Part 2 of a 4-Part Series)

Yesterday, we started this series discussing Delivery Excellence in filling out the Global Outsourcing 100® application. If you missed all of the excitement, check out the blog here.

Today we are going to focus on “Innovation.”

This is the 2nd of four judging categories (Delivery; Programs for Innovation; Corporate Social Responsibility (CSR); and Size & Growth). An extra pat on the back to those companies that have distinguished themselves by receiving half or full stars in one or more specific categories. 

The Programs for Innovation category of IAOP’s Global Outsourcing 100 program gives service providers and advisors the opportunity to showcase how they go about delivering innovation for their customers. It focuses not just on specific examples but on the programs that service providers and advisors have in place to identify and implement innovative solutions.

Some examples frequently cited by industry experts Mary Lacity and Leslie Willcocks are:

• A better forecasting tool that improves a retailer’s stocking, inventory levels and reduces errors
• Adding a predictive tool to a claims submission process that significantly reduces rework costs
• An improvement to an existing manufacturer ordering process that reduces both stocking costs and delivery delays
• A governance tool that results in more efficient and effective customer management in a multi-vendor environment

Selection process details and company strengths are featured in a special advertising feature, produced by IAOP, in the June 8, 2015, Fortune 500 issue of FORTUNE® magazine.

Defining and meeting service levels and costs is now a given. Today’s customers demand that— and innovation—from their top providers. The addition of this category to the Global Outsourcing 100 gives both providers and advisors an opportunity to showcase what they are doing and will help customers, providers and advisors better focus on this critical aspect of contemporary outsourcing.

Innovation in outsourcing can impact any outsourced process, in any business function and industry. While technology is often a key driver of innovation, innovation is certainly not limited to technology companies or technology services.

Outsourcing buyers understand there are multitudes of qualified service providers and advisors out there; what they really need to understand now is what makes each exceptional. As the outsourcing industry continues to mature, customers have come to expect excellent service that meets or exceeds agreed-to service levels at an agreed-to price. 

Today’s outsourcing environment demands more. It demands service providers and advisors who can work collaboratively with their customers to constantly break new ground, achieve unanticipated benefits and help their clients win both today and tomorrow in the markets they serve. In short, customers across all areas are looking to their providers and advisors to not only see, but to deliver these performance improvements as an integral part of their value proposition.

Finally, innovation in outsourcing is more than just an occasional breakthrough idea. Top outsourcing service providers actually set up company-wide, multi-client programs that encourage, facilitate and support the identification and implementation of improved customer performance through innovation.

Some companies establish productivity improvement targets with all of their customers and then work collaboratively to meet them. Others establish gain-sharing programs at the project-level, while others commit to ‘innovation days’ where customer and provider personnel come together to focus solely on ways to improve customer performance.

IAOP and its judging panel, led by Mike Corbett, IAOP Chairman, invite you to use this space to explain how and why your company is one of the highest rated in this judging category by sharing your programs for innovation with our members.

For more information on the Global Outsourcing 100 Process & Methodology, please visit IAOP’s website, here.

Delivery Excellence as Defined by the New Global Outsourcing 100 (Part 1 of a 4-Part Series)

Hip hip hooray...it's not the New Year but it sure does feel like it around here with the buzz and excitement of IAOP's 10th edition of The Global Outsourcing 100®!

The companies on the list are all top companies and we want you to know what makes them so special and how they got here in the first place. Each organization completed a rigorous, opt-in application (and by the way, hats off to those who applied – not everyone does and it shows your commitment to our industry!) based on 4 distinct areas: Delivery; Programs for Innovation; Corporate Social Responsibility (CSR); and Size & Growth.  Those companies that have distinguished themselves receive half or full stars in one or more specific judging category…kudos to you!   *Note - advisors only eligible for three stars.

In this blog, I'm going to focus on “Delivery Excellence."

Judging for the Global Outsourcing 100 is based on a rigorous scoring methodology that includes a review by an independent panel of IAOP customer members with extensive experience in selecting outsourcing service providers and advisors for their organizations. The Global Outsourcing 100 list is one factor that outsourcing customers need to use as a reference when selecting service providers and advisors. We encourage them to carefully consider all of the great companies out there in determining the right fit for them in making their own business decisions.

When filling out the application, outsourcing service providers and advisors practicing delivery excellence demonstrate it through:

• the value they create with that company’s top customers
• industry recognition
• relevant organizational certifications
• individual professional certifications 

This multi-part question asks applicants to provide information just as they might in a real-life request for proposal.

The question includes (and is in order of importance):

• Citing their top customers that best demonstrate sustained excellence in the delivery of services, and to provide published third-party sources, direct customer quotes and/or letters of recommendation. Receiving full credit requires both a well-documented discussion of the relationship—what was done, how long, what problem was solved, services delivered and results achieved—and well documented third-party or client executive endorsements, specifically about services and results (as opposed to “well done, thank you” letters).
• Providing the three most recent and relevant public recognitions the company has received that demonstrate business and outsourcing excellence, along with independent sources for validation.  These recognitions should be public and competitively judged by a third-party source; where there is an opportunity for a wide segment of businesses to qualify and be selected.
• Providing the three most recent and relevant certifications the company has received—or its individual professionals in the case of advisors—in the skill and knowledge sets that demonstrate excellence in its outsourcing business, with independent references for validation.  Certifications should be public and competitively awarded by a third-party source.
• Providing the number of IAOP Certified Outsourcing Professionals® they have on staff (aCOP or COP).

IAOP and its judging panel, led by Mike Corbett, IAOP chairman, invite you to use this space to explain how and why your company is one of the highest rated in this judging category by sharing your examples of company delivery excellence with our members.

For more information on the Global Outsourcing 100 Process & Methodology, please visit IAOP’s website, here. 

Excerpts from "Putting the 'Human' Back in HR"

How Viewing Employees as Customers Can Provide Greater Value

Today, when an employee wants to understand more about the programs, policies and processes related to maternity or paternity leave, there are many options to getting the information they need:
searching an employee portal, accessing a policy repository or coordinating directly with benefit providers.

Employees don’t think in terms of traditional HR functional silos, such as recruitment, learning, or payroll. They think in terms of key and impactful work/life events. Rather than having employees track down information from different departments inside and outside of HR, a focus on high-touch employee services offers a better way by providing thoughtful, end-to-end support.

Whether it’s for an employee who is transferring to an office across the country or a manager that is working to hire a new team member, the focus is on addressing personal and professional issues as seamlessly and efficiently as possible.

In the case of the employee going on maternity or paternity leave, the employee services-based approach addresses concerns and reinforces a feeling the organization has the employee’s best interests at heart. Meanwhile, the company maximizes the employee’s productivity before the employee begins their leave and improves the likelihood they will be engaged once they return.

While traditional HR processes supported by self-service technologies and HR functional expertise will continue to deliver the bulk of incoming employee inquiries, employee services will become
valuable as employees continue to bring their consumer expectations into the workplace. By viewing employees as customers who receive the benefits of personal, high-touch services during pivotal
“moments of truth,” companies can change employee and manager perceptions of the company while improving efficiency and productivity.

Read the entire article in the March/April 2015 edition of PULSE magazine.
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Original article written by Jill Goldstein, Talent and HR BPO Offering Lead, Accenture

5 Takeaways from the IAOP World Summit

Courtesy of Lindy Zars, CBE Companies

I am so excited to introduce you to CBE’s marketing manager in the outsourcing call center space, Mattie Brawner. Mattie focuses on discovering trends, hot topics and emerging needs and challenges in the industry, as well as helping our business leaders develop forward-thinking solutions to help solve those needs and challenges.

I attended the IAOP Outsourcing World Summit in Phoenix on February 16-18. Pegged “The world’s most important gathering of outsourcing professionals,” the Summit is a forum for sharing new ideas and approaches with other industry executives. It was a huge opportunity for me, a fairly amateur outsourcing professional, to gain perspective from some of the most innovative in the industry.

I left the Summit with a notebook full of notes and a mind full of ideas… I boiled down five takeaways in the slides below. I hope they spark some interest for you and inspire you to learn a little more.

Read the full blog and see the slides here: http://blog.cbecompanies.com/2015/03/06/5-takeaways-from-the-iaop-world-summit/
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Reposted from Lindy Zars blog at CBE Companies http://blog.cbecompanies.com/2015/03/06/5-takeaways-from-the-iaop-world-summit/