“The following article was nominated for the 2001 Editor’s Choice Awards. We felt it was a story worth sharing with our readers as an example of excellence in outsourcing.”
Burlington Resources, Inc., which is involved in the exploration, development and production of hydrocarbons, ranks first among U.S. independent oil and gas companies, in terms of proved U.S. reserves. It’s a company with the diverse global opportunities and financial strength of a major oil company, but it is also blessed with the entrepreneurial spirit, flexibility and responsiveness of an independent operator. If there was anything that might impede its ability to grow and remain competitive in its industry, Burlington would take steps to rectify that situation.
That is what happened in 1999 when the company recognized its internal desktop help desk had not been delivering the desired level of support for nearly a year. The internal help desk would get 40 calls, not log them or track the database, so they had to keep reinventing the wheel 40 times. They also had burnout problems and high turnover. At that rate, they would never be able to move the help desk up a level, as the company wished. Burlington remedied the problem by outsourcing the help desk function to Compaq.
“We wanted to go to a world-class support center organization,” says Frank Smith, Chief Technology Officer at Burlington. They considered several suppliers, but when they visited Compaq’s support center in Colorado Springs (the former facility for Digital), they were very impressed with what they saw and heard. “They have some very sound procedures and some big clients,” says Smith. But he hits the nail on the head as he explains that “when you get to a certain level with these vendors, there is not really that much differentiating them. What it boils down to is a relationship.” Burlington already had a longstanding relationship with Compaq as a provider of its desktop hardware.
He adds that buyers often stumble in choosing a supplier because they place too much emphasis on the pricing aspect. “We, as buyers, often think we are world-class companies. But the truth is, if we were that good at doing something, we wouldn’t be considering outsourcing it. So then the biggest challenge is to get the best of breed.” He explains that it may cost more to outsource a function than to do it in-house but, in terms of value, that’s the way to go. “Our costs are up by 20 percent,” he says, “but the value we have achieved is more than 50 percent.”
Rolling it Out
Burlington’s strategy was to roll out the outsourced services to its various locations one at a time. “We were so cautious on rolling it out one division at a time because we couldn’t afford to roll it out everywhere and have it fail. You only get one chance to make a first impression.” So they managed it very carefully – and successfully – starting with information gathering and knowledge management before the actual transition. A Burlington employee was moved to Compaq’s support center for a while to get a real feel for what goes on there, and a Compaq employee visited people in each of Burlington’s locations.
They also did a variety of social outings aimed at developing relationships with the team leads on both sides. “That makes it better,” says Smith. “It’s hard to yell at somebody you know and respect. So instead of throwing our hands up in the air and saying ‘this isn’t working,’ we say, ‘ok what can we do to make it better.’ That’s the key.”
Compaq faced holidays and Y2k activities during this period of time but was still able to roll out the first Burlington location, Fort Worth, on schedule in February 2000. The other offices — Houston, Farmington, Midland and London – were subsequently rolled out one each month, with the last four sites ahead of schedule.
Once they move beyond the break-fix point, the goals for 2001 will be to reduce bottlenecked traffic, some R&D and some training. It’s a three-year contract with two one-year renewals. They talk every day and listen to each other’s suggestions.
Smith says that the biggest challenge of all has been its internal relationship with its current customers. Prior to outsourcing, Burlington developed its software and supported everything in-house. “We did everything ourselves. We took care of people and gave them our best efforts; and that was almost always enough.” He says they explained to customers that there might be a short-term drop while transitioning to outsourcing but that they would be better off in the long run. “But anytime you go from a highly customized environment to a standardized support center, you will have some clients that are very resistant to that change.” It has been a very difficult hurdle for Burlington to get over. “We didn’t really think the clients would care that much, but we found out how much they cared,” comments Smith. “It’s an emotional attachment of some kind. So the better job Compaq does, the easier it is for me to convince our clients that we made the right decision.”
As they move forward an inch at a time, Smith says their situation has stabilized. Service expectations are being met, and Burlington is building a knowledge database. Before outsourcing, Smith says he could not have told anyone what the help desk’s number one calls issue was. Today he gets a list of the top ten calls and knows how much time is being spent on them. That knowledge database can be utilized even beyond the relationship with Compaq. “It has also helped us to identify areas where we did not have tightly controlled procedures for how to close calls, and it has resulted in documented procedures for problem resolution and call escalation procedures.” In addition, Burlington and Compaq are jointly working on an ongoing project for scripting and resolving user problems on the first contact. Their first-call resolution rate is already increasing.
Lessons from the Outsourcing Primer
- At a certain level of expertise, services and pricing, the one thing that differentiates vendors is relationship skills and attitude.
- If a buyer has been providing a highly customized environment, there will be some resistance to a standardized support center. It’s an emotional attachment, and the outsourcing needs to be “sold” to the internal people who had received the customized treatment.