Getting true value from outsourcing: the recipe for success


I first bumped into Jane Stafford, Executive Manager for Banking Process & Optimisation at Suncorp Banking during our Process Excellence event last year,  then again during Shared Services and Outsourcing Week. Jane certainly knows a thing or two about outsourcing – she’s been in the banking and finance industry for more than 20 years, spending years managing the optimal blend of insourcing and outsourcing strategies and implementation for business processes.

Jane’s current role is to manage Process Ownership for Suncorp Bank, monitoring, measuring and delivering business improvement strategies with a focus on process simplification, cost reduction and improved customer experience.  I recently caught up with Jane ahead of here workshop at SSOW 2014 to delve into the key ingredients for achieving an optimal blend – helping other organisations to maximise the true value of outsourcing.  Jane shared her insights on how the landscape has shifted, paving a new way for vendor relationships. Take a read below:

I’m absolutely seeing a need for outsourced providers to continue to be relevant by looking at providing services that sit outside of data entry. Automation is really kicking off in in our industry. We’re seeing far more centralisation of corporate functions (generally the higher value activities like analytics). That’s going have a flow-on effect into knowledge process outsourcing.

We’re seeing the impact of increased regulation occurring. That puts a squeeze on our margins and puts the spotlight on process innovation. The knock on effect to providers is they need to be able to innovate with end to end outsourcing and continue to drive down the cost that sits within that process through lean methodology or something similar.

A few years ago there was a lot of low hanging fruit for outsource providers, if they could do the data entry, they had business. However, client needs are changing as a consequence of a number of different factors that puts pressure on them to go up the value curve in terms of what they can offer from the service point of view.

There are a few fundamentals when looking to cement outsourcing and drive relationships that open up new levels of value:

Keep the ingredients fresh

The secret is building capability in-house to manage optimal blends. Optimal blends means that you are constantly looking at your landscape, making decisions around what is appropriate to outsource, automate and keep in-house.

It’s not as simple as locking in on those three things; it’s constantly evolving depending on what’s happening within your business, what’s happening within the environment and what’s happening in your innovation stakes. We have found most success in just having that management capability pool.

We’ve set up that infrastructure to manage an optimal blend for both onshore and offshore. My team are constantly monitoring dashboards to work out what’s on the horizon in terms of automation onshore or offshore. That involves rolling things back from time to time, and having a framework based on strategy rather than just reacting to what we had done previously.

Set the right temperature

Look at all the decisions that will need to happen to support the way you’ve decided to go. It starts by establishing your core competencies – all the decisions are based around that and people will be challenged if there’s no understanding of what they are.

Executive sponsorship is crucial. There needs to be an appetite to manage the people and cultural components, because every decision you make around in-house, automation or outsourcing has knock on effects that need to be managed throughout that change period. You won’t get your benefit if that isn’t addressed very early on.

One of the key things we learnt five or six years ago is that it’s okay to have a strategy that’s learnt during outsourcing, but if the business is not ready in its own maturity and its own journey, where you haven’t intervened enough to support a new culture, that culture will eat your strategy anyway.

Clean up as you go

Be clear on what your drivers are if you’re choosing to outsource. For us, it was about cost efficiency, labour arbitrage and accessing scale from the outset. But the more and more I get into it, the less important those factors are to me personally, the more I’m actually looking to have providers perform innovation, lean  and refine our processes to remove waste from them. If you don’t have that, your processes end up being old and full of waste.

There’s never a truer analogy of garbage in, garbage out, than when you’re doing an outsource transition…

Set the timer, watch it rise

There are some key areas where you can unlock huge value in the vendor–client relationship: 

  • Move away from master-servant relationships: We’ve tried to co-locate and second people from the outsourced organisation into our organisation, coming to an arrangement with our provider where we actually have contracted in someone from India to be in my team for 12 months. They are actively working in Australia, onshore, understanding the business end-to-end. It takes trust to open your books completely, but the sharing of information and depth of understanding about what we can achieve for our customers is far deeper.
  • At an operational level: Position your outsource provider as an extension of your current team, just sat in another location. Include them in your reward and recognition programme – our outsourcers tend to really enjoy that. It’s still a work in progress for us, but I think it’s the next big thing, to challenge both organisations to position themselves around the commercial structure. That’s where you’re really putting everything on the line.
  • Think beyond the service levels: Our commercials are still structured around SLAs, turnaround times and individual processes. That inhibits everybody from being free of worrying about whether or not a penalty is going to apply. The future is about contracting to end outcomes and saying, “You know what? We don’t care if it’s 24 hours or if it’s 48 hours, this is the outcome we are looking for”. The onus is on both sides, it takes trust and the other party to be willing to not take advantage of that trust too.

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