Financial Services Purchasing Forum Best practice SRM the supplier s view

Transcription

1 Financial Services Purchasing Forum Best practice SRM the supplier s view 23 June 2008 Peter Fawcett, Director, Financial Services

2 Contents SRM : Market trends and challenges The supplier view: Alsbridge Supplier Survey Achieving alignment How to influence your service provider Conclusion Emerging Themes 1

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4 The rise in importance of SRM: - Some key market trends Responding to fundamental market changes Ensuring sustainability after deals are signed Outsourcing and off-shoring - both experiencing very high growth Rapidly expanding customer base 1 st, 2 nd, 3 rd generation Rapidly expanding supplier base and areas of specialisation Commoditisation Multi sourcing Multiple specialisations with different standards, suppliers etc Smaller deal sizes but value and output driven New off-shore locations - slowly catching India Increased competition for scarce resources (captives struggling) Increasing prices as industry matures Environmental impact of outsourcing gaining in profile 3

5 Supplier survey: What suppliers think Key things suppliers want from their clients uncensored Mutual respect Focus on what the supplier is delivering, not how they do it Client commitments Clients need to deliver their side of the bargain, and commit to providing the resources needed Client management Need an appropriately skilled service/relationship manager different from a former delivery manager Communication Share the vision, let the supplier know what is going on so that they can react to change Governance Respect the agreed governance process, don t try to side-step it for short-term advantage And they wanted to be paid on time! 4

6 A Supplier s View of Key Principles One supplier s view, again uncensored Mutuality Both sides should feel the same as to how things are going, pain or happiness Symmetry If client wants a penalty when there is a problem, I want a bonus for over performance The deal s the deal If the client wants to change something, then anything else is back on the table 5

7 In-source or out-source? If Organisation has the management time and resources to manage a major project has strong local expertise and resources in the country where the delivery centre will be located is confident in its ability and track record of designing and implementing enterprise solutions is confident it can manage the project to meet time and cost parameters, including external resources already has or believes it can easily implement enabling technologies such as scanning, workflow etc then an in-source option is probably best. The business case will probably be better so why outsource? If Organisation believes it will need extensive assistance for the project is not strongly represented in the delivery centre location has no real track record of success in this type of project needs a degree of certainty as regards cost and timeline management has little or no experience in developing or implementing enabling solutions for remote operations an outsource option is probably best. The business case may not be as good, but will benefit from the experience and commitment an outsourcer can provide. 6

8 Reality is messy HRO Process Area Typically retained in HR (or with Managers) Typically outsourced Copyright 2007 Alsbridge plc. All rights reserved. HR Contact Services (Employee and Manager HR Queries) Workforce Administration (HR Data Management) Benefits Programme Administration Compensation Planning and Administration Performance Management Expatriate and Relocation Services 5% Provision of HR policies, and FAQs (knowledge base content). 95% Employee grievances. Prepare employee communications. Policies on data items to be held. 5% Enterprise master data, e.g. cost centres. 95% 10% Choice of Benefit Vendors. Eligibility rules. 90% Rate rules. Job and compensation structures. 30% Set budgets for increases. Set deployment rules for increases. 70% Manager decisions on compensation. Assessment policies and rules. 30% Employee assessments / evaluations. Decisions on awards / bonuses. 70% Engagement with employees. Assignment polices/rules. 20% Decisions on assignment types. Approval of exceptions. 80% Sourcing (third party) tax advice. Set payment rates, overtime rules etc. Payroll 5% Approval of payroll totals / Treasury funding. 95% Travel Expense Administration Workforce Development (Learning / Training Administration) Approvals at key control points. Service management/governance Provide Centres of Expertise. Key decision making. Define / manage process strategy. Process policy definition. Travel expense policy. 5% Expense claim approvals. 95% Learning needs analysis. 25% Training curricula and content sourcing. Eligibility rules and approvals. 75% Sourcing specialist training delivery. Defining positions / roles and Recruitment 25% requirements. Final selection of candidates. 75% HR intranet / portal content management. HR Contact Centre for Tier 1 queries. Process Employee and Organisational Master Data changes. Pensions and retirement plan administration. Benefit programme eligibility / enrolment. Surveys / benchmarking. Salary increase budget calculations. Administration of objective setting. Administration of performance appraisals. Assignment cost planning. Relocation admin. Immigration assistance. Maintain Payroll Data. Collect Payroll inputs. Build-to-Gross. Gross-to-Net. Processing of expense claims. Receipt matching. Tax calculations. Training curricula and content management. Training bookings. Logistics / fulfilment. Posting of positions. Application tracking. Candidate screening and eligibility to work. Issue employee communications. Employeesatisfaction surveys. Time and attendance. Vacation tracking. Absence reporting. Benefit Vendor interfaces/management. Employee Life Event changes. Administration of salary increases. Deployment of performance bonus budgets. Relocation Vendor management. Expat. payroll build-up. Employee payments. Third-party payments. Tax/Regulatory filings. Financial interfaces. Management of advances. Corporate Card management / payment. Logistics / fulfilment. Employee surveys. Vendor management. Offer management. On-boarding admin. Contractor workforce administration. Any required escalation of unresolved queries to Tier 2 subject matter specialists. HR reporting for Managers / Budget holders. Vendor invoice preprocessing / approval. Employee payments. Administration of awards / recognition. Payroll adjustments. Incentive calculations. Administration of bonus allocations. Payroll adjustments. Relocation accounting and cost allocation. Repatriation / localisation. Balance sheet reconciliation. Payroll Management reporting. Financial interfaces. Balance sheet reconciliation. Management reporting. General training delivery. Administration of succession planning. Administration of employee referral programmes. Vendor management. Manage and resolve Tier 2 (Subject Matter Expert) Employee and Manager queries, process issues. Any required escalations to the Retained HR Centres of Excellence. HR IT HR in/outbound interfaces. Hosting of HR application systems. Operate HR systems. HR legal changes, upgrades and enhancements. 7

9 Routes to transformation Differentiators between options Transformation Fix then shift Fix as shift Lift, shift then fix Time taken to achieve change are there any drop-dead requirements? Speed at which benefits are realised Investment required Management input required Risks to business-as-usual from extended period of change Transition Are there feasible intermediary changes? Is incremental change possible? 8

10 Are we in alignment? Transformation (Advantage) Reward Enhancement (Effectiveness) Utility (Efficiency) Risk 9

11 What s driving the value equation? Outsourcing Value { } = Cost + Service + Business + Retained Reduction Model Flexibility Organization Contributing factors: To be aligned to organisational priorities. Balanced. Benefits realisation: Living business case. Specific realisation tasks to be managed. Resource: Labour arbitrage. Efficiency savings. Wider business, e.g. Retention benefit. Recruitment. Talent Management. Balanced against: Transformation effort and costs. Transition effort and costs. Process scope: Single / specific processes. Full-scope. Outsourced process boundaries. Standardised. Transformed. Organisation scope: Countries / territories. Business units. Service Delivery: Global / Regional SSC. In-country v. SSC. Full v Foundation. Volume fluctuations: From fixed to variable costs. Volume changes: Mergers and Acquisitions Divestitures. Market expansion or contraction. Initiatives: Additional project capacity. Charging: For above flexibility Costs of inflexibility. Accountable: For end-to-end service. Strategic focus: Value creation. HR Partners. Process Owners / Centres of Expertise. New roles, new skills. Governance Service Management. Contract Changes. Change Orders. Financials. Strategic planning. New roles, new skills. Cost reduction is not the only source of value from outsourcing but is expected 10

12 How to influence the Service Provider For influencing service provider behavior, escalation, communication and remuneration get high marks Escalating issues within service provider Communications / forums Money (add-work, SLA Credits) Reasonable approach with service provider Knowing / using contract levers Escalating issues internally 3.31 Public notice of service provider s work Hard-line approach with service provider scale, 5 = highest importance, 1 = least importance 11

13 Extended enterprise in action Each segment must work well in its own right, and all must be effectively orchestrated to work well together. Onshore Organisation Local insight Business acumen Bespoke service Demand Rules (business logic) Roles Responsibilities Relationships Regulation (external) Knowledge management Collaboration (projects) Change management Interdependencies Offshore Organisation Global standardisation Process expertise Scale and efficiency Supply Governance framework 12

14 Conclusion Emerging Themes Fairness Deal has to feel like it is working for both parties (beware over-selling, undercontracting, win-lose positions ) Communication Suppliers can t deliver if they don t understand what you want, or how it changes over time Retained organisation Clients must retain the right skilled resources to manage the supplier and communicate with the business; both sides must dedicate time and resources Economics Supplier must be able to make money, client must meet its financial objectives It takes two End to end process management is critical; and perspectives differ - clients always focus on supplier commitments, but suppliers focus on client obligations 13

15 Our Charter for Sustainability Client We will dedicate quality time, and take decisions promptly We will be open and honest about the baseline costs and services We will be realistic about future service improvements and how they are created and delivered We will recognise the economics and expect a fair rate for the services We will recognise the negotiating process requires flexibility from all parties Alsbridge Charter for fair and sustainable deals based on partnership and trust in the contracting process Alsbridge & Advisors We will enable full, collaborative and non-restricted interaction between all parties We will promote a fast, efficient and effective process without excessive tender documentation We will encourage the supplier to co-design the solution We won't waste the supplier's time We will promote interest based not adversarial negotiations Suppliers We will not promise what we will not contract for We will be clear and complete about the service and pricing We will involve delivery staff early and put the solution before the deal We will ensure deal economics are aligned and sustainable We will recognise the negotiating process needs give and take 14

16 Predictions are not all equally wrong 15