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FBG Services, has established a steering team that meets on a quarterly
basis. They not only determine overall guidance and budget expectations
for the day-to-day operational teams, but they also focus on shaping
opportunities for new business development opportunities that benefits
both entities.
The steering committee for Verizon, which has outsourced its benefits
process to Hewitt Associates, uses a formal agenda for the approach to its
bi-weekly meetings. They also employ a methodology of "output sheets"
that provide status notations of where they are on their "critical path."
Pinnacle Health System is the buyer in an outsourcing relationship with
Siemens Medical Solutions. In this arrangement, the Siemens onsite
relationship manager actually functions as the Pinnacle IS Director.
Thinking on behalf of Pinnacle (rather than his employer, the service
provider), he suggested the buyer establish an IT steering committee. He
chairs the committee, which is comprised of Pinnacle's group of vice
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Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships
©Outsourcing Center. All Rights Reserved
14
presidents. After receiving recommendations from the business units'
subcommittees as to what initiatives should be included and can be
supported by the buyer's annual budget, this steering committee designs
an IT Tactical Plan for the priority items among those initiatives (the plan
also maps to Pinnacle's strategic plan). The IT Tactical Plan is published
on Pinnacle's intranet and updated quarterly. The Siemens onsite manager
also presents a report card on the service provider's performance level to
the steering committee on a monthly basis.
Similarly, some large buyer organizations establish an advisory board to
work with the account manager and the buyer's C-level executives. The
board at Parsons Corp., for instance, meets quarterly and is comprised of
the president from each of the company's business units, the COO from
each business unit and the business development and financial managers.
Best Practice #11: Selection of Account Managers
More and more, buyer organizations are becoming involved in the selection
of which people from a service provider's company will be the key contacts
for the day-to-day interaction among the parties. In five of the outsourcing
relationships studied for this paper, the buyer's C-level executives were
involved in the interviews of all candidates considered for the service
provider's top positions in managing the relationship. This practice is
especially pertinent where the service provider's manager is onsite at the
buyer's premises.
An excellent example of this is Parsons Corp, which has outsourced its IT
to Perot Systems. The Parsons CIO is actually a Perot executive and
occupies an office next to Parsons' CFO/vice president. Because the Perot
executive performing as CIO is critical to the Parsons effort and also is the
person who built the service provider's IT team now resident at Parsons,
May 2002
Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships
©Outsourcing Center. All Rights Reserved
15
the buyer's C-level executives spent a significant amount of time
interviewing and getting to know the Perot executive before accepting him
as the buyer's CIO. Their outsourcing agreement includes a clause stating
that the Perot executive cannot be taken off the Parsons' account without
the agreement of Parsons' CEO.
Best Practice #12: Corporate Media Communications
Corporate weekly bulletins or newsletters are frequently used as a means
of mass communication for all employees as to what is happening in an
outsourcing relationship. This practice is especially popular during the
implementation and transition phases of a relationship, where employees
need to be educated or reminded of upcoming changes to internal
functions.
The state of Delaware, which outsources its Medicaid functions to EDS,
shares its newsletter with the service provider, as well as the state's
employees.
Corporate intranet Web sites also are an increasingly popular way to
disseminate information to top executives as to the status of projects that
are outsourced.
May 2002
Governing Attitudes: 12 Best Practices in Managing Outsourcing Relationships
©Outsourcing Center. All Rights Reserved
Unformated preview of the document: '12 Best Practices in Managing Outsource Relationships': Part 1, Part 2, Part 3, Part 4, Part 5, Part 6