New brooms sweep clean. And often, in business arenas, the broom has outsourcing on it, especially in company cultures where the practice already flourishes.
Interdean International Relocation of Suffolk, England is an international moving and relocation specialist that works with personal and corporate clients to move families throughout the world. The 50-year-old firm has 45 offices in 33 countries and employs over 1,500 people in Europe.
When Alan Cartwright became the firm’s UK finance director in 2003, a general process review revealed several operational deficiencies, primarily in Interdean’s payroll and personnel management areas. Cartwright, now the company’s group operations director, did not like what he saw.
“We were outsourcing two inefficient DOS-based processes,” he says. “Both were expensive. The one for payroll created a disproportionate amount of work at the end of each month. The previous finance director had to spend way too much time inputting and reentering financial information. Physical reports were also difficult to generate. It was neither time nor results efficient.”
Cartwright continued scratching his head upon further discovery that his firm was paying almost as much for the administration of the payroll for the small executive team as it was for general payroll.
Christa Degnan Manning, research director at AMR, suspects why this relationship ended. “This is likely an example of an engagement that the buyer rarely reviewed. It’s not surprising that ‘new executive blood’ found an opportunity to reevaluate the options for payroll; it’s the kind of relationship no one typically fixes because it’s not apparent it’s broken.”
So Cartwright reached for his broom, gave the incumbent provider notice, and contacted Patersons HR & Payroll of Salisbury, UK, an ASP provider specializing in HR applications and hosting. He had worked with the provider before at his previous engagement with Netscalibur, a pan-European internet service provider, so he had a very good idea what to expect.
His faith was rewarded as the new solution produced not only clear financial savings, but a smoother running payroll and HR Management System (HRMS) which the supplier developed, managed, and modified when necessary with Interdean’s specific need’s in mind.
A provider that’s more like a friendly neighborhood tailor
Interdean needed a “holistic” provider that would permit Cartwright to use his firm’s own best practices and procedures rather than being shoehorned into a one-size-fits-all solution. He wanted a collaborator, not a supplier, to call only when there were problems. And that provider had to offer an easy management structure for all HR and payroll data, remote ASP access, enable HR and other directors in the business to scrutinize reports in real time, and help with periodic modifications in order to remain leading edge.
“We build systems for clients that are configured to order,” says Martin Stockton, group vice-president. “It’s like having a suit made. A gabardine suit can be as different as the wearer. Think of it as a tailored suit. The client’s needs produce the specifications or patterns. Then we build and deliver what the client wants, reasonably quickly, not off-the-rack.”
The work began late in the fall of 2003 and involved four primary steps. First, the supplier set up applications to reflect the appropriate level of user and security access that the employee groups required for reporting and company structures. Then the two established standard reports to meet the requirements of the finance and HR functions.
Next, the supplier populated the application with HR and payroll data for January 1, 2004. Finally, Patersons carried out a parallel run of the January payroll. The parties audited the data and made any necessary manual adjustments.
To everyone’s delight, it worked perfectly. The only additional tasks involved adding some enhanced integration and user functionality. The new service produced a stable, robust, organically-integrated system that Cartwright sought from his provider. It generated enthusiastic support from both HR and finance management and offered ongoing user training/support. None of this typified the recently sacked provider.
“Payroll services are becoming more commoditized,” adds Manning. “Good providers improve technology delivery like adding enhanced reporting and other support services needed to produce additional buyer benefit throughout the engagement.”
Benefits of a relationship that’s about more than just the service
Many benefits typify this now mature outsourced service. The first is the the approximately £10,000 annual cash savings over the previous inefficient provider, according to Cartwright.
“The main thing surrounds our time,” he says. “It allows us freedom and better data access. We also aren’t dealing with payroll from a position of weakness. The saving on internal resources is tremendous when it comes to recovered time and reduced back-office expenses. We no longer need to physically print reports, for example. It’s easy to factor in an extra 200 percent in total savings over the cash.”
“Respective to our platform, we have to match our own processes to the client’s needs,” says Stockton. “Cookie-cutter solutions, even with IT processes, seldom work on a long-term basis. When it’s time to customize and modify, just like having a suit periodically altered by that tailor, ongoing review and collaboration are a necessary partnership staple.”
Stockton continues. “Today, organizational requirements are not so much linear as circular. That means you have to revisit more aspects of the buyer’s HRMS service process such as recruitment, payroll, and training in order to assure they continue to get the optimum benefit of the outsourced service.”
Over time, this professional relationship has led to a finer association that is not limited to just the services themselves.
“Being both providers and buyers in the outsourcing world,” notes Cartwright, “from time-to-time we informally get together to chat with their senior level people because we like to compare notes on some of the outsourcing challenges and solutions one or the other might have learned. It’s not just about our service engagement.” But he does admit that an occasional idea surrounding their engagement can take root at such gatherings to sprout later.
“Deeper personal relationships between provider and buyer can just as often lead to deeper professional relationships,” says Manning, “especially if the outsourcing provider continues to innovate and improve services for its buying partners.”
Lessons from the Outsourcing Journal:
- Outsourcing relationships that buyers don’t consistently review run a danger of being terminated. Changing needs of the buyer require both partners to continually revisit how well the engagement is meeting the buyer’s requirements.
- Cookie cutter solutions, even with outsourced IT processes, may not work on a long-term basis. When it’s time to customize and modify, ongoing review and collaboration are a necessary partnership staple.
- Deeper personal relationships between provider and buyer can just as often lead to deeper professional relationships, especially if the outsourcing provider continues to innovate and improve services for its buying partners.