The practice of outsourcing business processes is gaining favor with top executives at corporations around the world, leaving them satisfied with the service they’re receiving, free to focus on core activities, and looking carefully for new areas to outsource.
Anthem, Inc., a carrier of health insurance, was in the middle of an outsourcing contract when they decided to conduct a benchmark on price and service levels last spring. The reason for the company’s decision was simple. They suspected that they were paying too much for their current service. That proved to be true.
The benefits of outsourcing traditionally have been described in financial terms. With progress, however, cost reduction benefits have become ‘table stakes’ as even more significant advantages are realized from outsourcing partnerships. Leading organizations have discovered that in addition to cost benefits, outsourcing presents an opportunity to improve the level of service.
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.
When Halliburton decided to outsource its benefits administration, one of the objectives was to improve the level of employee satisfaction with the benefits administration process. In addition, best practices would be sought in each area of operation.
In information services, it’s easy for executives to throw away money buying technology for the sake of technology. What the client needs to understand is how those technological benchmarks equate to business benefits — and that means looking beyond the easy-to-measure, quantitative service levels to the customers’ perceptions of the service being delivered.
For many organizations, measuring the performance of the information systems divisions is a frustrating exercise. The problem centers around confusion over what should be measured and how, as well as uncertainty over how to define value.
Negotiating Effective Service Level Agreements (SLAs) (continued): SLAs are now part of outsourcing’s alphabet soup. In recent years, outsourcing consultants and lawyers have heavily emphasized the importance of including SLAs in contracts. That trend comes from experience gained when many customers learned that they had little ability to influence the outsourcer’s performance without an SLA.
The information technology (IT) outsourcing industry was launched by an explosion of rapidly changing technology and companies’ needs to access benefits of that technology at the lowest possible costs. The bottom line was cost containment. Today, that line is a bit blurred. Although cost containment continues to be a major issue, many companies have other goals as their primary reasons to outsource.
Are you getting ready to negotiate an outsourcing contract? If so, place flexibility high on the list of negotiation goals. Many customers involved in long-term outsourcing contracts in the past have learned the hard way that the restrictive and static nature of normal contract terms can tie their hands in the rapidly changing outsourced IT environment.
Long-term Information Technology (IT) relationships have always been fraught with challenges. Today, long term relationships patterned after those of the past don’t have a prayer for success. Why? Because the static nature of the agreements dooms them to failure.
International Outsourcing: Executives at Grupo Nacional Provincial (GNP) know all about the value of research. Statistics and other research information are part of their day-to-day business as the largest insurance company in Mexico. Therefore, when the company was considering outsourcing part of their Information Technology (IT) functions, the first step logically was research.
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