Outsourcing- Effective Strategies for Outsourcing and Managing Vendor Relationships

Transcription

1 Outsourcing- Effective Strategies for Outsourcing and Managing Vendor Relationships

2 Peter F. Ransome MIT, LIT, CDIA Systems Integrator ECM 80 s,90 s GM Production/Sales for $150 M division BPO ISO 9002 Launched E-Commerce Strategies/Newco s- Ca Founded ADS Raliegh..CMO- BPO AIIM Pres Carolina s /Board Member

3 Agenda Outsourcing Myths Outsourcing Musts Case Study #1 Problem Solution Lessons Learned Case Study #2 Problem Solution Lessons Learned The Winning Formula Q&A

4 Outsourcing Politically charged topic 21,000,000 google hits 1.2 million Healthcare Outsourcing hits Experiment

5 Outsourcing Myths Outsourcing eliminates Jobs. Outsourcing = Off-shoring India and China are killing the US Job Market We lose control if we outsource.. Outsourcing only works for low level tasks.. Outsourcing will hurt us... Outsourcing is easy. Partners are a fancy name for Vendors.. All salesmen speak with forked tongue s

6 Robert James Ransome How does Outsourcing-Off-shoring impact the future generations?

7 Survey Says According to survey 81 percentage of the total executives mentioned they plan to increase their offshore outsourcing over next few years while only 4 percent mentioned that they will decrease it

8 Outsourcing Outsourcing (wikt: outsourcing) often refers to the process of subcontracting to a third-party.[1] While outsourcing may be viewed as a component to the growing division of labor encompassing all societies, the term did not enter the English-speaking lexicon until the 1980s. Since the 1980s, transnational corporations have increased subcontracting across national boundries. In the United States, outsourcing is a popular, especially durring election years.

9 Types of Outsourcing-(short list) Business process outsourcing-front and Back office Co-sourcing - Farmshoring- Homeshoring- Insourcing - Knowledge process outsourcing (KPO) Nearshoring Offshore outsourcing Supply chain

10 US Case Paper Packaging Co.. But PCMC has fallen on hard times. First came the 2001 recession. Then, two years ago, one of the company's biggest customers told it to slash its machinery prices by 40% and urged it to move production to China. Last year, a St. Louis holding company, Barry-Wehmiller Cos., acquired the manufacturer and promptly cut workers and nonunion pay. In five years sales have plunged by 40%, to $170 million, and the workforce has shrunk from 2,000 to 1,100. Employees have been traumatized, says operations manager Craig Compton, a muscular former hockey player. "All you hear about is China and all these companies closing or taking their operations overseas."

11 The Solution.. But now, Compton says, he is "probably the most optimistic I've been in five years." Hope is coming from an unusual source. As part of its turnaround strategy, Barry-Wehmiller plans to shift some design work to its 160-engineer center in Chennai, India. By having U.S. and Indian designers collaborate 24/7, explains Vasant Bennett, president of Barry- Wehmiller's engineering services unit, PCMC hopes to slash development costs and time, win orders it often missed due to engineering constraints -- and keep production in Green Bay. Barry-Wehmiller says the strategy already has boosted profits at some of the 32 other midsize U.S. machinery makers it has bought. "We can compete and create great American jobs," vows CEO Robert Chapman. "But not without offshoring."

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13 Why Outsource? Reduce Costs avoid Capex Speed Solution/technology deployment Gain Competitive Advantage

14 This.

15 Meet this

16 = this.

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18 Scanning Technology..

19 Case Study #1- The Opportunity A major Insurance company wanted to outsource Claims scanning and data capture to reduce internal operations costs. Issued RFP and a national well known company responded and was awarded the contract. Great Price, Big Name Company, future looked bright.

20 Case Study #1- The Honeymoon Implementation started: I know we said we would use $300k scanners to capture images but we are going to use $60k scanners. I know we said we would capture in Chicago but we think Kentucky is the same thing. I know we said we would hire displaced employees..do they want to move to Kentucky?

21 The Result Contract Terminated Second Place became First. Project delayed by 10 months Cost $900,000 tangible Intangible slower claims process, errors, etc.

22 Lessons Learned The lowest cost is not always the best solution! A vendor is not a partner unless they put the client first Culture, Large companies are not always better Cost of delay s are significant when you combine tangible and intangible costs of failure.

23 Case Study #2- The Opportunity A healthcare provider was implementing Allscripts and realized that the continued existence of paper charts and paper file rooms was preventing them from realizing full return on their investment in EMR/E.H.R.

24 Case Study #2- The Options Buy Scanners and hire temps. Scan day forward and leave the paper charts alone. Outsource to an Allscripts Partner with a proven track record. Outsource to the low cost provider.

25 The Background discussions.. What can be so hard about scanning.look at this scanners speed lets buy one and go! Lets look at the cost justification and if the cost are similar and we have the staff bandwidth..lets buy scanners Forget about it..scanning is miserable our people have jobs to do and we need to let them focus. The right outsourcing partner will save us money, minimize disruption, and get this done much more quickly that we could. One vendor came in and spent hours measuring and asking questions their price is 30% more than the other guy. The other guy came in looked in the room and gave me a price on the spot.

26 The Facts.. Charts are lost Charts are misfiled? Charts have tough documents. Color, long, All charts are not in the file room Charts will be needed as soon as they move offsite. There will be exceptions during the import that will need to be addressed because the patients don t exist in the EMR database. There are more documents than you think. Can stop doing your job to run scanners, it will negatively impact efficiency and effectiveness of the practice.

27 The Result Organization Chose the Vendor based on their solution architecture not price. The worked for a month on the pilot. They worked with their financial institution to finance the conversion. They then focused on building a production workflow that would result in lower costs and minimize disruption. They negotiated price to a mutually agreed upon number. Practice is Paperless!!! Mission accomplished.

28 The Golden Rules of Outsourcing Find a partner not a vendor Quality Program? Living or Rubber Stamp? Find a partner who provides thought leadership and could provide multiple services where appropriate. Assess, Solution, Pilot, Deliver Construct SOW s with granular detail. Build SLA s and penalties in when appropriate. Talk to references and ask for the vendor to discuss an engagement that did not go well and why. See how they responded in this environment.

29 Lessons Learned The lowest cost is not always the best solution! A vendor is not a partner unless they put the client first Culture, Large companies are not always better Cost of delay s are significant when you combine tangible and intangible costs of failure. Spend the time making the documents right. Actively Manage Expectations There will be bumps in the road good outsourcing partnerships work to solve.

30 QUESTIONS / NEXT STEPS