Southern Company, an energy utility holding company, knows the importance of the HR department to an employee. Because of the physical and operational diversity of the $35 billion plus company, the electric company thought it might be a good idea to centralize the focus of it benefits administration by outsourcing, in order to improve efficiency for its 32,000 employees.
The process of choosing a viable vendor from the thousands on the market can be chaotic. And for companies that aren’t faced with outsourcing issues every day, a lack of knowledge on the protocol for selecting and integrating an outsourcer can lead to problems…
More and more, companies enter into outsourcing agreements as a strategy to remain competitive. But rapid technological advancements change the competition; hence, an essential element of an outsourcing agreement must be flexibility. G2R, which specializes in providing research and management consulting, assists end users and vendors in constructing effective sourcing agreements.
Two years ago, in January, 1997, ING Barings decided to outsource management and first level support of its help desk function in Hong Kong.
When ABB Power Generation Ltd. decided earlier this year to outsource the operation of the client server infrastructure for their total office environment, the Switzerland-based company’s reason was clear. They wanted secure access to resources and skills.
Mark Richards, manager network operations, for TransAlta, an investor-owned Canadian electrical utility company, views problems in outsourcing from a slightly different perspective than many others in the marketplace.
Outsourcing: All outsourcing relationships are adversarial in nature because vendors want to be paid as much as possible for delivering as little service as possible, while customers want as much service as possible for as little money as possible. That, in a nutshell, is how Dean Davison, analyst, Meta Group, sees the industry.
When a marriage falls apart, the problems frequently aren’t big ones. They are, rather, little things that build up until they threaten the relationship. The same is true in an outsourcing relationship, according to Dean Davison, senior research analyst with Meta Group.
Outsourcing’s maturation as an industry has created a substantial body of experience in ‘renegotiating’ and ‘restructuring’ outsourcing contracts. Today, these transactions — sometimes referred to as re-do — are more the rule than the exception.
American firms continue their rapid expansion of service and product outsourcing. Companies signed major new contracts for information outsourcing alone in 1994 worth $11 billion; in 1995, $20 billion; and in 1996, $33 billion, and all signs point to vigorous growth ahead.
Strategic outsourcing — what does that phrase really mean? Discussions on the subject usually are focused on two things: structuring a strategic relationship with one or more outsourcers and the process by which the outsourcers are selected. Such discussions, however, overlook an important element.
A couple of years ago, e-commerce was just knocking at the door of the IT marketplace. Today, companies have shoved that door open and are walking through to discover new opportunities and new ways of doing business more profitably and more efficiently.
Business process outsourcing now accounts for 30 percent of Affiliated Computer Service’s (ACS) more than $1.1 billion consolidated revenues. Jeff Rich, president and chief operating officer, said that figure is just one indication of a healthy industry.
While the promise of outsourcing is bright, outsourcing relationships often fail before they start. Improper guidelines, poor communication between the company and its outsourcer, and unrealistic expectationss frequently lay the groundwork for failure.
Why do some outsourcing relationships succeed and others fail? One key lies in the day-to-day management — and that management can be facilitated by defining effective communication mechanisms early in the planning process and including those mechanisms in the contract.
Dresser Industries was looking for an outsourcer who could maintain the customer-sensitive spirit the company’s computer services team had established. As Dresser began the process of documenting its existing services and service-level requirements, it was clear that there were several key objectives beyond the basic specifications.
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