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Multi-sourcing: When One is Not enough

The trend in outsourcing and BPO deals towards smaller deals continues. In managing smaller deals multi-sourcing offers significant benefits but there also challenges. The greater number of additional  vendors involved increases the level of complexity and management resources required to ensure the different parties work effectively together.

Businesses are no longer willing to sign up large outsourcing deals that span multiple years due to concerns over vendor lock in and the lack of transparency, among others, and best-of-breed solutions emerge as the better option. However, while a multi-sourcing model may offer benefits such as higher flexibility and less dependency on a single vendor, it can be extremely complex to manage and may require additional management resources that some companies may not have.

Additionally, outsourcing lets organisations convert a fixed cost into a flexible expense, and transfer risk and management to another party

Multi-sourcing allows organisations to employ the best vendor in terms of price and capacity for a particular activity. Multi-sourcing promotes competition among various providers.  Best-of-breed sourcing recognizes that providers have different strengths and weaknesses and carves out work best suited for each of several providers.

It can cut costs related to repetitive service contracts and improve quality. Vendors must bid more frequently because contracts are shorter, suppliers face more competition because smaller-sized deals mean that more vendors qualify to bid, and suppliers need to attract more customers in order to meet growth targets.

Scott Feuless, principal consultant with outsourcing consultancy Information Services Group, recently said, “The number of service providers each company uses will grow dramatically, driven by growing popularity of cloud in general and Software-as-a-Service [SaaS] in particular”.

These multiple companies need to be managed and monitored. The job is made more difficult if they are off shore and hard to travel to.  Governance requirements can greatly magnify in multi-vendor BPO and outsourcing environments.

In multi-provider environments the resources needed to manage outsourcing can cost between 4-15% of total contract value.

Organisations pursuing a multi-sourcing arrangement should craft strong internal governance strategies with regard to vendor relationships and share the details with all of their service providers to promote better cooperation and more seamless delivery of services across organisational lines.

There is more risk in depending on one or two providers as much depends on their capabilities and their financial strength, for example. With multi-sourcing the risks move into other areas, including cracks between service, security issues,  hidden costs with continued monitoring and renewal of contracts, and possible replacement of providers.

Multi-sourcing can limit the scope of innovation you can expect from an outsourcing relationship in regards to a particular business function or IT service. IF there’s a range of vendors who are focused on their small bit of the equation there’s unlikely to be enough incentive for any of them to view what they do from a broader perspective.

Partnering with a single provider who can assist in reshaping an entire business process from end-to-end, will offer greater scope for innovation. Rather than a series of smaller contracts focused on transactions.

Moving from a single provider to a multi-sourcing environment or vice versa requires some considerable adjustment to how you manage your outsourcing relationships. You must change your contract negotiation strategies, procurement practices, and the governance models for you outsourcing contracts.

I recently consulted with a client who had a single vendor for the lion’s share of the work that they outsourced. As additional projects were being outsourced they asked the vendor to become a ‘master’ vendor and manage (for a fee) the other smaller vendors. The problem was that they constructed a complicated and very legalistic contract that was never going to achieve what was intended. They basically set and forget and were relying on a legal document that ended up making the parties adversarial. In the end when it came around to renewal time the whole process broke down with the vendor having to be dragged kicking and screaming to the table to honour a deal that it was getting smashed on. Malicious compliance was the end result and it did not end well.

Multi sourcing provides companies with lower cost options to get their outsourcing service delivered. However multi-sourcing relationships’ must be maintained and closely monitored to deliver the best possible outcome.

Originally Published in the Sauce eNewsletter – theOutsourcing-Guide.com

theOutsourcing-guide.com is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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Creating an Amazing Mobile Experience

The evolution of smarter smartphones and greater access to data sources offers innovative organisations the opportunity to create amazing mobile experiences for their customers. 2015 is the year of mobility where organisations are starting to invest heavily in mobile and responsive websites as well as mobile applications. They are throwing money at the technology, but does that mean they are creating amazing experiences for their customers?

The 2015 State of Marketing Report from Salesforce, based on a survey of 5000 marketers globally including Australia, discovered that two-thirds of respondents have integrated mobile into their marketing strategy. That’s up from 48 percent in 2014 and 65 per cent plan to spend more on mobile push notifications.

Just having mobility as part of your marketing and customer service strategy is not enough. You need to get into the minds and shoes of your customers to understand their mindset and the sort of mobile experiences they are looking for from your brand.

Understanding the role of mobility in the customer journey and mindset

Mobile customers have less time than other customers. They may be walking down the street, on the bus on their way to work, shopping or waiting in a queue, or travelling on holidays. They are more demanding than normal online customers at a desktop. They have less time and are restricted by screen size and the lack of a keyboard or mouse.

When building your mobility channel and platforms there should be two things that you are aiming to achieve[i]:

  1. Allowing customers to find what they want and complete a transactions in the easiest, fastest and most convenient way possible
  2. Provide an experience compelling enough that they’ll come back again and again.

So rather than thinking of what marketing messages you can push out to them. Think of how you can improve the experience of dealing with your brand. How can you simplify the experience? How can you add value? Or even how can you make it more entertaining and fun?

Don’t try everything at once

Don’t fall into the trap of doing what everyone else (ie your competitors) are doing. And try to avoid making major investments that require significant resources and long implementation time frames. As Chris Luxford, Senior Partner from Experience Innovators, advises, “Instead of a few big and long investments that are predominantly still focused on “better service at a lower cost”. Innovate via a customer outcome mindset and lots and lots of smaller frequent changes across the entire customer lifecycle”.

This doesn’t mean that you shouldn’t have a long term strategy and plan. It’s the very opposite in fact. It’s about achieving short term goals and gains as part of realising your long term vision to engage your customers with amazing experiences.

[i] http://www.oracle.com/us/products/applications/tips-engaging-mobile-experience-1505010.pdf.

Originally Published in the Sauce eNewsletter – theOutsourcing-Guide.com

theOutsourcing-guide.com is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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Are you talking to me?

Despite being the channel customers love to hate IVR (Interactive Voice Response) is still growing and is predicted to be worth $2.78 billion by 2017, according to a 2012 report from Global Industry Analysts (GIA)[i]. The growth is being driven by outbound IVR to deliver important notifications and proactive customer service functions.

IVR has had a mixed history, on one hand reducing call wait times and improving overall efficiencies and service levels, on the other, driving customers to switch to competitors.

We’re all familiar with the experience of having to navigate through a complex and confusing IVR menu to finally be put through to the wrong department or service or for the call to drop out. The experience leaves you frustrated. Badly designed IVR systems may have contributed to bad customer experiences more than any other channel.

Key areas in IVR development in recent years, that are altering the previous negative perceptions of this self-service technology, have been in Outbound IVR and Visual IVR.

Outbound IVR

Outbound IVR allows organisations to proactively and automatically engage customers through a variety of channels such as automated voice calls, SMS messages, email or social media posts with personalised communications. Providing immediate, faster and real-time information and services to customers Calls can range from personalised, event-triggered notifications and two-way interactions to broadcast messages to hundreds or even thousands of customers.

It can be used in a variety of situations including:

  • Sending emergency notifications,
  • Personalised offers and promotions
  • Travel-related notifications
  • Problem reporting
  • Change notifications (account status, billing, rates)
  • Shipping notifications

Visual IVR

Steve Morrell, founder and principal analyst of ContactBabel, an analyst firm for the contact centre industry, highlights how smartphones and tablets can give companies the option of offering visual representations of their IVR menus[ii]. This can enhance the customer experience as most people find it easier to read and select options in text and visual format than to listen to it being spoken.

Visual IVR presents customers with a menu driven interface to the IVR system which is available from a website or mobile app.  Visual IVR can be used to send video or push other content. This content can be educational or for marketing purposes or to assist the customer’s self-service requirement in some way.

Visual IVR allows companies to connect their traditional contact centre channels to new mobile platforms, enhancing their ability to serve customers. Visual IVR can be implemented with existing DMTF technology and IVR systems, requiring few modifications.

Originally Published in the Sauce eNewsletter – theOutsourcing-Guide.com

theOutsourcing-guide.com is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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Let’s Work Together

By Martin Conboy

“Together we’ll stand
Divided we’ll fall
Come on now, people
Let’s get on the ball

And work together
Come on, come on
Let’s work together
Now, now people
Because together we will stand
Every boy, every girl and man

People, when things go wrong
As they sometimes will
And the road you travel
It stays all uphill “
Canned Heat

Canned Heat is an American blues band that formed in California in 1965.

Back then in the hippy era it was all about finding ways for people to collaborate with each other. It’s fundamental ethos — including harmony with nature, communal living, artistic experimentation particularly in music, spread around the world during the counter culture of the 1960s. A move away from the command and control environment of previous generations. The hippie movement has found historical precedents as far back as the Mazdakist movement in Persia that advocated communal living and the sharing of resources. In other words the movement grew because of a shared state of mind.

The world has moved on from those heady days however a lot of very valuable lessons were learnt. Fast forward to today and a key ingredient in building successful, innovative and strategic BPO relationships is collaboration. In other words, the ability for organisations to go beyond the typical vendor/client arrangement to work together for shared goals and objectives. If we want to change the status quo from the master/ slave relationships that largely exist in BPO relationships today we are going to need nothing short of a revolution in the way that we think and in the ways that BPO contracts are constructed.  Contracts cannot be so written that they give a disproportional level of power to one side or the other, as the dominant side may act arbitrarily in the absence of any constraints to the detriment of the other side.  We need to think of a contract more as a ‘living’ contract, in so much as it can be changed as required to make it work for all parties.

However for it to work it needs more structure that what was on offer during the hippy era. In part, this requires a governance model based on joint management structures and committees, but more importantly it requires the client and vendor to possess attitudes and behaviours that promote partnership and collaboration.

These days clients expect their provider to drive transformation and improve legacy processes, but, as Adam Cummins, Principal for Pace Harmon points out, letting go of old processes, approaches and perspectives and allowing the BPO provider to make changes to deliver improvements, efficiencies and savings can be a challenge[i].

The biggest challenge is that the client does not have the attitudes, behaviours or talent and skill sets necessary for collaboration. In all fairness these may also be lacking on the vendor side of things. Research[ii]from the London School of Economics and sponsored by Accenture, highlights that implementing joint operating, management, and executive committees, without having the right partnering attitudes and behaviours in place may inhibit rather than promote the success of a BPO relationship.

Governance structures are important, but the client must fully appreciate the provider as a strategic partner rather than as a vendor[iii]. A true partnership needs to display behaviours such as resolving conflicts fairly and protecting both parties’ commercial interests. Contract constructed around an adversarial approach usually only produce winners and losers, business environments change -likewise BPO relationships need the flexibility to meet shifting market demands and commercial realities. Thus contracts that allow for a team made up of executives from both sides to investigate the facts of a contract failure as opposed to an adversarial approach when one side wins may be worth considering.  After all a loser means that one side will have little or no interest in maintaining the contract.

Internal silos a barrier to collaboration

The inability for organisations to collaborate with a partner can stem from internal silos and reluctance to share information within the organisation. Client executives and leaders need to promote collaboration with their internal teams. Collaboration requires, first and foremost, a change in attitude and behaviour of people throughout the client organisation.

Client teams need to work with teams from the provider just as much as they need to work with other internal teams.

Trust and respect each other

Trust is the belief or confidence that one party has in the reliability, integrity and honesty of another party. It is the expectation that the faith one places in someone else will be honoured. The client and provider need to establish trust between their respective teams before they can effectively collaborate.

Teams that are suspicious or cynical of each other will not share information or collaborate effectively, and may even work to undermine each other.

Relationships develop and change over time. The ones that endure and stand the test of time are based on trust and  allow for a true collaborative approach rather than one that gets bogged down in the governance structures imposed by a contract.

Originally Published in the Sauce eNewsletter – theOutsourcing-Guide.com


theOutsourcing-guide.com
 is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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The Balanced Shore approach

By Mark Atterby

Most leading BPO and outsourcing providers are offering clients flexible outsourcing location options. Datamark research highlights that these location options include at-home; on-site; off-site within the same city; off-site at a lower-cost-of-living city; nearshore; farshore; and blends of these arrangements [i].

It’s all about finding the right skills at the right price and how you manage and integrate them to deliver improved services based on economies of scope. Each scenario has its benefits and disadvantages. That’s why most providers, certainly the larger and more established providers try to use a blended approach.

Global Delivery Model – onshore, nearshore, farshore

A global delivery model allows a BPO provider to access the best talent at the best price in relation to the tasks and processes that need to be managed. The more complex activities that need greater involvement or collaboration with the client may need to be managed by operations situated locally to the client. Tasks that are fairly straight forward can be offshored or nearshored to a cheaper location.

Nearshore options, though not as cheap as an offshore location, may still be cheaper than local operations where strong cultural alignment is necessary. Travel to a nearshore or regional location may also be easier.

Peter Monk, Country Manager from Concentrix, believes that you need to have local operations if you want to be a provider who wants to deliver true innovation and collaboration. To build the teams that need to work together from the different organisations, they need to be in fairly close proximity to each other.

Homeshoring

The deployment of home based agents or homeshoring has become popular over the last decade. It often means reduced costs for the BPO provider as home based workers often provide their own telephone equipment and computer systems. The provider also saves on the associated costs of office space.

Using home based agents that are local to the client and its customer base can overcome the prejudice that is sometimes created from regional accents, mannerisms and rates of speech. Regional government departments and local government may tend to favour providers who employ people in their region.

Home shoring gives people with disabilities, who may not be able to travel to a workplace, the opportunity to work.   Research has highlighted that employees with disabilities often have a higher staff retention rate, which saves recruitment and training costs[ii].

By leveraging the right balance of locations, allows providers to build high quality, flexible and innovative solutions for their clients, yet keep costs down.

[i] https://www.datamark.net/blog/10-business-process-outsourcing-trends-2015

[ii] http://www.dwa.org.au/advantages.htm

theOutsourcing-guide.com is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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Engaging the mobile customer

With the rise of mobile and social technologies, customers are now more powerful than ever. They’re always-connected status and ability to find information in seconds puts them in control of their own experience, and this trend has forced marketers to rethink how they engage and connect with their customers.

The 2015 State of Marketing report from Salesforce, involving the survey of 5000 marketers across the globe highlights the top five areas for increased marketing spend in 2015[i]:

  • Social media advertising (70% of marketers)
  • Social media marketing (70% of marketers)
  • Social media engagement (67% of marketers)
  • Location-based mobile tracking (67% of marketers)
  • Mobile applications (66% of marketers)

Globally, 38% of marketers plan to shift spend from traditional mass advertising to advertising on digital channels, where 84% of marketers will maintain or increase overall marketing spend in 2015. Social Media is the primary area of focus followed closely by mobility. But considering that 60% of social media time is spent on mobile devices rather desktops[ii], engaging the mobile customer becomes a number one priority.

As such marketing to consumers via mobility offers a level of intimacy and immediacy that can greatly enhance their experiences of your brand.

Mobility offers marketers a range of options and channels to choose from including SMS, mobile apps/website, location based tracking, in game ads, live chat, etc. To decide what mix of channels should be part of your strategy, you need to analyse how your customers use mobility. Are they transacting or using it to gather information? Do they play games or use their device for entertainment? Are they mostly on Android or iOS; smartphones or tablets?

[i] https://www.salesforce.com/form/marketingcloud/2015-state-of-marketing.jsp?nc=70130000000i5Ug&d=70130000000i5XL&ls=Blog&lssm=Corporate&lss=SFDCBlog.StateofMarketing2015&camp=701A0000000y214IAA&content=701A0000000y214IAA.

[ii] http://www.businessinsider.com.au/social-media-engagement-statistics-2013-12.

[iii] http://www.yankeegroup.com/about_us/press_releases/2014-02-06.html.

[iv] http://www.wordstream.com/blog/ws/2013/08/19/what-is-mobile-marketing.

[v] http://www.forbes.com/sites/steveolenski/2015/01/29/11-things-cmos-need-to-know-about-mobile-marketing-strategy-and-app-development/2/

theOutsourcing-guide.com is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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Building Out-Come Based Pricing Models

By Martin Conboy 

pricingThe continuing rise in the number of contracts containing outcome-based pricing models provides obvious rewards and benefits for BPO buyers and vendors. But there are dangers and challenges where the vendor can be expected to take on all the risks.

Traditionally, outsourcing buyers and providers have engaged in sourcing models that were safe but suboptimal. Contracts, arrangements and pricing based on providing staff, materials or fixed capacity service delivery.

In the past, buyers approached sourcing as a way to access the right skills at the right price at the right time, without exploring the full potential of their outsourcing relationships. Meanwhile, providers have tended to play it safe by sticking to time and material manpower-linked growth models that do not necessarily maximise value.

Outcome pricing has accelerated strongly in recent years, across industries, both as a response to rapid commoditization and as a strategy for increasing value capture and margins. Outcome based pricing mechanisms cannot only help to combat commoditization, but to create customer value.

For BPO and outsourcing relationships to help clients innovate and add value to their organisation, the contracts need to contain outcome-based pricing models. Outcomes based pricing means the customer contracts and pays for business results delivered by the provider, rather than for defined activities, tasks or assets. The contract focuses on the desired outcome of the work to be performed rather than how it will be performed.

What is Gainsharing?

Gainsharing is a system that includes (1) a financial measurement and feedback system to monitor company performance and distribute gains in the form of bonuses when appropriate, and (2) a focused involvement system to eliminate barriers to improved company performance. Gainsharing systems vary widely in terms of their design and the degree to which they are integrated into the regular operating systems of the company. Of course, the more they are integrated into the day-to-day operational systems, the more commitment there is to the Gainsharing system. And, the more commitment there is to achieving overall business goals (including the Gainsharing goals) the better the resulting performance is.

Shifting control and risk to the provider

This shifts control and risk to the service provider. But it also means that if the provider builds a more efficient way of delivering the same results, it will be financially rewarded for its innovation. Traditional input based pricing is safer and easier to manage and understand from the vendor point of view.

If the contract states that 50 FTEs will be provided for 40 hours a week for 12 months, to manage all inbound customer service calls, there is no incentive for the provider to innovate and provide better service with fewer staff. The model is built around a fixed cost per agent per hour with all of the know costs factored into that hourly rate. Thus rightly or wrongly KPIs like average handling time (AHT) become the main measure for success and efficiency.

The client doesn’t want 50 people answering phones as such, they actually want their customers to have their issues resolved quickly and efficiently,( First Call Resolution) but they do not have all of the necessary resources, skills and capacity to allow that to happen. It follows that if AHT is a key performance indicator many clients are going to not have their issues resolved to their satisfaction and consequence may have to call back to get more assistance, thus driving costs up as the BPO has to handle additional calls.

Leaving it up to the provider to decide how it will deliver on the customer requirements and being rewarded for innovation, means it has the incentive to develop and improve how the service is delivered.

With outcomes based pricing, however, the service provider must assume a great deal of risk since it does not have influence over all aspects that impact its ability to achieve the outcome. And the amount of risk increases significantly when the outcome is higher up on the value chain. In the above example the provider does not have control over every channel or interaction with the end consumers. Something the client does, or something generally in the market, or anything beyond the control of the provider could impact the delivery of the service.

A true partnership is required

For a pricing model to be successful, it should strike the right balance between the customer’s expectations of quality, timeliness and price, and the service provider’s cost and operational efficiency. Customer engagements may not be successful with one type of pricing model every time. it’s a journey for both the parties to explore based on best fit for the scoped services and engagement models

For outcomes based pricing to work the two different organisations need to know more about each other and trust each other as partners. The vendor needs greater understanding of the industry and markets the client operates in, as the vendor is now potentially exposed to the threats and challenges of the clients business.

A deeper partnership approach to outsourcing relationships is required. Outcome based sourcing engenders a greater level of dependency on the service provider. The buyer needs to understand the level of risk that the provider must accept to help the customer achieve the desired business outcome.

Buyer and provider need to work closer together in a partner relationship where there is strong governance and relationship management. This will entail greater collaboration and longer contracts that can change and adapt over time. Both organizations must work towards a position of Interoperability and have the ability of making systems and organizations work together.

The days of a client simply throwing their BPO challenge over the fence and making their problem someone else problem for a cheaper price are well and truly over.

Originally Published in the Sauce eNewsletter – theOutsourcing-Guide.com

theOutsourcing-guide.com is the ultimate reference guide for the BPO and outsourcing industries and it will become the most comprehensive resource for organisations looking to engage BPO and outsourcing providers. As well as providing a range of eBooks, articles and whitepapers explaining the various aspects of BPO, theOutsourcing-guide.com provides an online directory of providers segmented by category and location.

theOutsourcing-guide.com is a vehicle for vendors and service providers to showcase their organisations and the outsourcing services they provide. Visit theOutsourcing-guide.com for more information.

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