This excellent paper by the Everest Group's Outsourcing Centre, describes best practices regarding the communications methods component of a governance agreement. The structure of informal and formal communication methods employed by 63 highly successful outsourcing relationships, each nominated for the Outsourcing Journal Editor's Choice Awards, were studied for this paper. From that research, both common patterns and innovative approaches were culled to determine the 12 best practices presented in this paper. (PDF file, 16 pages, 353 KB)

Request this document for free by email:   ► Show all documents 

Unformated preview of the document: '12 Best Practices in Managing Outsource Relationships' (Part 2):

has a strong
working relationship with his counterpart at Accenture. This peer
relationship has developed over more than 10 years.
The Medicaid director for the state of Delaware, which is outsourcing its
Medicaid systems and processes to EDS, meets for an informal lunch with
the EDS project manager every other month. In addition, two or three times
a year, the staffs of both entities in this outsourcing relationship participate
in "team building" sessions. One year they deployed a buddy system
process as a result of the sessions. These sessions are an effective
resource for training, but they also use them for fun activities. Both
companies collaborate on designing the fun activities as well as the training
ideas to be used in each session to help strengthen their team approach.
In a relationship involving BP with service provider
PricewaterhouseCoopers (PwC), BP's vice president of Business Unit
Resources gets together with PwC's senior executive for an informal lunch
or breakfast at least once a month, where they catch up on all sorts of
issues.
May 2002
Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships
©Outsourcing Center. All Rights Reserved
6
Best Practice #3: Frequent Informal Communication
Some companies structure their outsourcing relationships around a
strategy that ensures frequent informal communication on a day-to-day
basis. This is most often seen in instances where the service provider's
employees are located on the buyer's premises, and the buyer places
emphasis on making sure the service provider's employees are treated as
though they are part of the buyer company's staff. In these cases, the two
parties interact often on an informal basis without scheduled meetings.
This is the case in Colombia, where BP outsources its IT processes to
Getronics Colombia. In addition, BP's digital business manager (similar to
an IT manager) and its service manager enjoy informal lunches with their
Getronics counterparts every month. They also meet formally each month
to discuss new ideas or issues that arise from time to time.
In addition to monthly operational meetings and cost savings meetings, as
well as quarterly performance review committee meetings, GM Powertrain
and FedEx Supply Chain Services have established a Circle of Colleagues.
At these monthly meetings, all of the buyer's Powertrain employees and all
of the service provider's people onsite at the buyer's premises participate.
They can place any item on the agenda for discussion and also get
updates on what is happening within both companies.
May 2002
Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships
©Outsourcing Center. All Rights Reserved
7
Best Practice #4: Establish a Special Entity
In complex relationships, especially involving very large or multinational
corporations, best practice strategies usually involve the establishment of
special boards or committees.
BP and Accenture, for example, formed a Joint Review Board that meets
on a quarterly basis. Members from the BP team are the global CFO, the
U.S. regional downstream business CFO and the day-to-day relationship
manager. Accenture's team is comprised of the client partner for the
downstream business, the partner responsible for the contract, and
Accenture's counterpart to BP's CFO.
In their two-part agenda, the BP/Accenture Joint Review Board first reviews
service level performance data over the prior quarter, discusses any
problems and is updated on actions taken as a result of previous meetings.
The second part of the agenda is much more strategic and involves
discussions around new ideas, marketing, innovation and how they can
help each other achieve goals.
GMAC, which outsources its Web portal call center and customer
relationship functions to Edcor, is using the outsourced processes partially
as an experiment and catalyst to change the way marketing dollars are
handled on an enterprise-wide basis. To that end, they established a User
Involvement Committee. Membership is comprised of partners from each of
GMAC's business units. Their agenda is to ensure an enterprise-wide view
in discussing new issues as they arise.
Parsons Corp., which outsources its IT to Perot Systems, established a
Technology Review Board. The CFO and CTO head the group, which
oversees all technology decisions for Parsons.

Unformated preview of the document: '12 Best Practices in Managing Outsource Relationships':  Part 1, Part 2, Part 3, Part 4, Part 5, Part 6