Doing it right - business process outsourcing

Businesses continue to increase their dependency on outsourcing to improve productivity, streamline processes and achieve efficiencies. Yet contracting with third-parties to provide specific back-office or knowledge-based services can be challenging when the new provider takes the place of processes (and people) that the contracting organization previously handled internally. Workflows, tasking and communication protocols must be defined, assigned and refined to ensure an orderly, seamless transition.

Besides the obvious benefit of off-loading certain organizational responsibilities to outside experts, the transition offers an ideal time to revisit current methods employed and to critically examine procedures, assumptions and goals. To those unfamiliar with the service being provided by the third party, it can be a challenge to know where to begin. And it can quickly become a perplexing puzzle if the service is one that the contracting organization has never done internally before.

The following questions may be useful in facilitating the adjustment from an internal to external business process:

The Rationale

• Who are the key stakeholders?
• What are our current strengths and weaknesses regarding this process?
• What are our goals in entering into this relationship?
• What is the current baseline?

The People

• Who owns it?
• What resources are required to be brought into this project?
• Is there an ongoing need for staffing? What is their function?
• Are there regional or divisional lines of responsibility?
• How is training in the new system provided?

The Data

• What information needs to be provided?
• How is it conveyed, by whom and at what frequency?
• Are there any considerations as to how the information should be organized and maintained?

The Result

• Who are the recipients of the output of the service?
• How is it delivered?
• How will success be measured?

In answering these questions, it can be helpful to sketch out a simple flow chart. See an example related to our own business of insurance compliance management. By identifying and subtracting elements of the current process that are replaced by the service provider, areas of the process that remain within the organization are revealed. It is those areas, and how they interact with the service provider, that must be defined.

All this may seem a little intimidating at first, but forethought and a little planning can go a long way. Tailored to your own culture and organizational complexity, asking these kinds of questions can make the difference between a third-party relationship that is smooth and efficient or one that fails to meet expectations.