Developing an Outsourcing Strategy for Shared Services
Outsourcing back-office processes that are often found in a Shared Services center continues to grow in popularity as external service providers improve the quality of their services. It is important that Shared Services leaders develop a strategy related to outsourcing so that they clearly understand how this alternative fits into the overall strategy. In addition, having a formal outsourcing strategy will help protect Shared Services by ensuring the evaluation for how to best source services is completed by those who understand the processes best, rather than being based on a “best guess” by senior company management in response to an unsolicited bid from a service provider.
As part of a recent Peeriosity PeercastTM on the topic of “Developing a Shared Services Outsourcing Strategy”, a major consumer products company shared their experiences in not only developing their outsourcing strategy but also what they learned in executing that strategy. While the full details of their presentation, including the recording of the PeercastTM, are available on demand to Peeriosity members, the following is a list of some of the key learnings that were shared with the other companies:
- Define scope, document assumptions and changes
- Prioritize requirements and “stay the course”
- Business Orientation for Suppliers
- Ensure that providers understand your business, scope, and complexity. Define what differentiates your company from other clients.
- Prepare thoroughly for provider informational and deep dive workshops
- Due Diligence
- Define selection criteria upfront – including cultural and partner compatibility
- Conduct reference calls and on-site visits to provider service centers
- Project Resources
- Staff the project with experienced resources
- Engage outside consultants to supplement internal knowledge with outside expertise
- Project Management
- Large project with multiple streams of work and milestones
- Project Planning and management are key to achieving milestones
The feature company also placed great emphasis on the importance of proper change management, with an extensive list of learnings to keep in mind in this area when carrying out an outsourcing transition project.
A supporting iPollingTM question asked about the overall strategy related to outsourcing Shared Services processes. By far, the most prevalent response was “Captive with selective outsourcing”, which was the strategy of 50% of the participating companies. This was followed by 20% of the companies preferring a solely captive approach, with no outsourcing component, and an additional 15% that utilize a hybrid model that is trending towards more use of outsourcing. Interestingly, only 10% have embraced the large-scale BPO approach where almost all work activities are outsourced.
Has your company developed a formal outsourcing strategy for its Shared Services operation? How prepared are you to make an informed decision if your company receives an unsolicited bid to outsource major components of Shared Services?
Who are your peers and how are you collaborating with them?
“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.