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How Transition Impacts the Value Chain in BPO Relationships
Abhinav Arya, Global Transition Manager
10.05.2011
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Have we met before?
4
The shape of Pearson
Penguin
19%
FT Group
16%
Profes
siona
l 5%
International
Education 18%
North American Education
42%
2009 revenues: £5.6bn
Content•Introduction to Transition
•Transitions impact on the multi-year BPO journey
•Maintaining the Transition Ecosystem
•Governance: Global, Regional, Local
•Key Learnings
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What is Transition?
Transition, in this context, refers to the transfer of activities i.e. scope of work, resources and infrastructure from the current delivery organisation to the future delivery organization.
Current Delivery Organization Transition Risks
Future Delivery Organization
Transition
Workstreams
Cha
nge
Man
agem
ent
Com
mun
icat
ions
Set u
p co
nnec
tivity
Set u
p pr
oces
s en
viro
nmen
t
Busi
ness
Con
tinui
ty
Plan
ning
Ris
k M
anag
emen
t
Con
trol &
Rep
ortin
g
Need a lot of joining up between different workstreams including Process Teams, HR, Change Mgmt., IT, Audit and Project Management
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Ramp-up of services
Transfer knowledge of existing processes to Service Provider. This process is conducted at the organisation site
Typical Transition Phases
Ramp-up of services until performance reaches agreed Service Levels
Go
-Liv
e
Tollg
ate
Design ‘’To-Be’’
Process Maps, Future Organization, Infrastructure
Design Stabilisation
8-12 weeks2-4 weeks
Tollg
ate
Knowledge Transfer
4-12 weeks
Phase 1 Phase 2 Phase 4
Tollg
ate
4-8 weeks
Phase 3
Pilot
Process Teams
Finalize to-be process Design & retained organization structure
Conduct knowledge transferGradually shift transactions over to future delivery org.
Support staff to ensure stabilization
ITFirm up technology Requirement
Build IT Infrastructure Helpdesk support established
HR & Change
Communication and Consultation
Conduct individual consultationDeploy and train retained organization
Provide support to retained organization
TransitionManage program planning, control and reporting Manage stakeholders & governance
Handover to Service Delivery
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Where does Transition fit in the Value Chain?
Transitions
Service Delivery
Re-Contracting/
Termination
Year -1
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5+
Second critical step in the value chain
Truly when rubber meets the road.
Relationships are established, tested and real expectations are set
Almost like putting a factory – all happens in transitionCreate plans -> Design Layout -> Install Machines -> Hire People -> Train -> Source Material ->
Start Production
Contracting or internal
agreements
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So if transition plays such critical part in the value chain, how can the transition team ensure that multi-year journey is a success?
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Why is the value destroyed so early in the process?
•Plans have contractual commitments tied to them.
•Most of the transition process becomes very mechanical.
•Some key elements are deferred to post-transition
•People shift mindset from lift-transform-shift or fix-
shift to lift-shift –
urgency to be operational
•Not enough focus on change management
•Retained organization design and roles clarity
•Stakeholders forget the basic reason to outsource
Do not rush into first transition go-live. Plan (and do) as much as you can.
It is worth the pain !
Source: EquaTerra
Advisor and Service Provider Pulse Survey Results -
3Q10
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Remind people time and again on the key strategic rational that lead to decision to outsource
Strategic Reason How will measure it? What should you do during transition?
Cost Cost per transactionTotal cost of ownershipBusiness case tracking
Baseline cost driversForecast pass-through costBe clear on IT costs
Compliance Compliance achieved Baseline non-compliance metricsAudit/controls teams are part of process design output
Focus on core competency
# of Retained staff Define retained organization structures with clear responsibilities. Do not retain any transaction processing.
Standardization/Harmonization/Efficiency
Process improvement productivity
Conduct global design workshops rather then regional workshops. Align on one global template –
manage by exceptionTransform before outsourcing or agree transformation timelines
Transition team can add value by structuring transitions in a way that enables the organization achieve final goal
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Operations during transition Recognise how the transition ecosystem can be maintained in partnership with the service provider
to ensure business critical services continue to run properly
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How can the transition ecosystem can be maintained in partnership with the service provider?
-What should you do to fast track the journey:-
Put key service provider resources in front of customers –
set expectations upfront-
Joint review of contract to remove ambiguity-
Deep dive:-
FTEs (partial FTE, Multiple locations single FTE)
-
SLAs (contracted vs
operational, measurement methodology)
-
Resource expectation (level of resourcing, resource interviews, ability to ramp-up)
-
Timelines (realistic, peak periods)-
IT expectations (infrastructure –
bandwidth, telephony, tools)
-
Cost tracking-
Action plan for natural attrition-
Continuity of service post go-live –
cutover plans
-
Escalation Process-
Plan for risks and ensure mitigation plans are in place
Source: EquaTerra
Advisor and Service Provider Pulse Survey Results -
3Q10
Resolution of conflicts is key Transition responsibility
Transition team is supporting the business to make (or break) the
relationship
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Governance Find the right balance for global, regional and local governance doing transitions.
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-Governance depends on the organizational culture-Study previous projects to see how organization behaves toward change
Transition Governance
Service ProviderPE
Global Transition Mgr.
PearsonGlobal PE
Global Transition Mgr.
Process LeadsProcess Leads
IT Lead IT Lead
ProgramBoard
TransitionTeam
Exec ExecSteering
Committee
Status MeetingsWeekly
Status Meetings Weekly orDaily
Status MeetingsMonthly
Service Provider
Pearson
Regional TMRegional TM & Ops Mgr.
Regional Steering Group
Status MeetingsBi-Monthly
TransitionBoard
HR & Change Lead
Finance Support
Transition BoardSign-off Meetings
As per Transition Plan
Change Board
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What is working and what is not?
What is working well What is not working well?
Governance model buy-in Some conflicts between globally defined vs. regionally required
Regular meetings established, agenda of meeting is clear
The escalation path does break at times
Decision structures are clear and team operating within the framework
Hard to maintain focus on end-goal –
some exec meetings become very operational
Number of meetings attended by an individual are minimum
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Learnings Know which learnings
can be applied to your transitions
given every business has a different operating model
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Key Learnings
√Importance of perspective & partnership
√Things will go wrong…..try to get buy-in into the process
√Role of Knowledge Sharing is critical
√Importance of Change Management
√Consider IT and HR teams your partners
√Never forget about retained team
√Keep eye on the business and business results
√Do a deep dive sessions on what you learned from first transitions and
reapply them to next waves of transitions.
