The CFO insider s guide to outsourcing

Transcription

1 The CFO insider s guide to outsourcing Insider insights on running cost-effective customer contact centres and back-office processing services from the CFO at leading business process outsourcing provider, Serco Global Services Australia.

2 Key points With increasing pressure on costs, reduced budgets and a continual drive to improve efficiency, outsourcing business services including finance and accounting, back office administration and customer contact centres is an option all CFOs need to seriously consider. Mark Howden Commercial & Finance Director Serco Citizen Services Level Bourke Street Melbourne VIC 3000 Australia t Mark is a Chartered Accountant with more than 25 years financial and commercial experience in outsourcing solutions across maintenance, construction, business processes, telecommunications, labour hire and contact centres. Mark is an integral member of the Serco Citizen Services leadership team and is the Chief Financial Officer responsible for directing the Serco Citizen Services financial processes in alignment with company growth, revenue targets and service offerings. As Commercial & Finance Director, Mark manages the commercial governance framework that supports Serco Citizen Services financial objectives and enables Serco to operate competitively in the business process outsourcing industry. Mark s commercial expertise makes him well placed to provide strategic guidance on tender preparations, contract reviews, contract negotiations and strategy development. The CFO insider s guide to outsourcing 2

3 What is the CFO s role in outsourcing? Generally, organisations are looking for a lower cost base while improving their ability to service their customers. The CFO will need to ensure the outsourcer can deliver the required service and achieve the financial and operational business objectives. The cost of outsourcing also needs to be carefully considered. There will always be a cost to an organisation as they go through the process of transforming their business you need to be sure the transition cost will be outweighed by the benefits that will be achieved. The CFO also needs to ensure the contract is appropriate for the services that are being delivered. There is no point going to the great expense of outsourcing (say) the Finance and Accounting Department without an appropriate contractual document in place. The desired objectives need to form part of the contract actually written in. These generally are expressed as KPIs that form part of the contract. Consider using a consultant who has the experience with outsourcing contracts in your industry. Ensure you know why you are outsourcing. As a general rule, if it s only a cost saving exercise then you may be disappointed. Ensure you have the whole of business at the front of mind when you are considering your options. What are the main internal obstacles you are likely to encounter? Self-interest from internal stakeholders - Change is always hard and the impact should not be under-estimated. Internal stakeholders need to be engaged early in the process so they can be involved in the process. I ve personally seen an example where the Procurement Department engaged a consultant to run a tender to outsource an internal contact centre. During a site visit it become obvious that the Contact Centre Manager (CCM) had no idea what was going on. Awkward! The CCM was very professional and gave a great tour of their facility but I m sure that there were some stern words exchanged after we left. The perception we will lose control - There is a belief that outsourcing will result in the loss of control of that particular function. That could be true but it doesn t have to happen. This is mitigated with the scope of services carefully drafted so that both parties know what the service delivery expectations are. As a CFO, what should be your key considerations before you outsource? Every CFO should be able to answer these two key questions: Why are we doing this? What do we expect to achieve (financial, operational)? You can take some comfort from the fact that Business Process Outsourcing (BPO) is a mature discipline and you will not need to reinvent the wheel. Other obstacles - include political sensitivities, loyalties to current employees, and data security concerns. To overcome these within your organisation you need to identify, review and assess all the risks associated with the proposed outsourcing. Data security is a major concern to all organisations and you will need to determine what security is appropriate for you. You should understand whether there is a requirement for the outsourcer to store your customer data and then understand whether the outsourcer is storing that data onshore, offshore, or uses cloud based solutions, and if using cloud based solutions then where the actual location The CFO insider s guide to outsourcing 3

4 data is stored. Any outsourcer worth their salt will have appropriate data security measures and adhere to all Privacy legislation requirements. At Serco we work with all of our clients to ensure that data is secure and that only employees working on a particular client have access to that data. Looking after your employees is generally the most difficult emotional hurdle to overcome. Once you have made your decision to outsource you need to stick to it. While you may wish to ensure that your employees are looked after, and work with the outsourcer to offer jobs to your existing employees. You need to be aware that this approach will have implications to the cost for the outsourcer as they will have to employ those staff on the same terms and conditions as their current employment instrument. There is a possibility that the employees length of tenure with their current employer may have to be recognised as well. Again, if you plan ahead these issues can be avoided. You may also find it prudent to obtain industrial relations advice from your legal advisors. When is it better to outsource a business service and when is it better to keep it in-house? There will always be a case for both. It really depends on the objectives you wish to achieve. Some will say that but it s only a small centre, 5 people, so why outsource? Many outsourcers will be able to easily blend a small centre into their existing operations and generally provide the cost benefits from the scale of their operations. What should a CFO look for in an outsourcing provider? Stability and experience - make sure your provider can demonstrate a long and successful track record of both. How do you make the transition from insource to outsource painless? Ensure a detailed transition plan is created and agreed to before any work commences. A comprehensive transition plan should be part of any tender process and agreed upon during the negotiations. When outsourcing, you need to nominate a Project Manager to manage the programme of work so there is a single point of contact for your team. How do you continue to drive value from an outsourced provider? Treat the outsourcer as a partner rather than just a supplier; work together. My experience over the years has shown me that working together is the best way to achieve continuous improvement. You need to be careful of the definition of driving value don t confuse this with just driving cost down change may result in an increase in cost however the benefit to you and your customers will outweigh the additional cost. Talk with your outsourcer about technology developments and ask them to provide guidance on what improvements can be made. For example, changes in how consumers are using technology are having an impact on call volumes and the average handling time. As consumers use mobile technology such as smart phones, they can obtain the simple answer information from your website. This leaves the more difficult, complex calls coming into your contact centre resulting in longer handling times. How to measure the success of your BPO provider to ensure they continue to provide the best service to your customers Regularly review their KPIs. Conduct quarterly review meetings. Annual business reviews set out the objectives for the next 12 months. Just like completing annual business planning reviews for your own business, you should be conducting reviews with all your business partners as well. Who is the owner of the outsourcer? Sit down and ask them: are they/we still achieving all the desired outcomes and objectives? 4 The CFO insider s guide to outsourcing

5 The pitfalls to avoid A lack of planning! If the transition to an outsourcer is not planned and managed correctly, it is highly likely it will not achieve the desired outcomes/objectives. Lack of commitment from the executive team and key internal stakeholders getting buy-in up front is key. Clearly define the vendor selection criteria. Cover technical and data requirements. And, just as when employing staff, ensure the vendor fits into the culture of your organisation as well. Look at their culture and values and assess against your own. When to review your current BPO provider the red flags that mean a review is needed Not delivering the contracted services. Not meeting KPIs, regularly, despite assurances that things are changing. Actions speak louder than words observe what the outsourcer is actually doing. The CFO insider s guide to outsourcing 5

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