Outsourcing Partnership

Shared Perspectives

IntroductionJames Brodie

Test Manager/Service Delivery Owner

NFU Mutual

IntroductionThis is a presentation based around an outsourcing project I have participated in within the last year.

This isn’t a sales pitch for a vendor.

This IS a talk about the challenges I have faced from inception through to the day to day running of the relationship.

This will be useful for anyone who is about embark on their own outsourcing/ relationship journey

What are you looking forOutsourcing? Partnership?

•How much appetite/ capability do you possess for managing a day to day relationship?

Why are we doing itRemove constraints on skill and Full Time Employee FTE demand

requirements to address additional testing areas (e.g. non functional testing)

Gain a greater and more efficient access to tooling and automation

Gain greater and more efficient access to test consulting

Allow internal capability to focus on the Intellectual Property (IP) of running the NFUM core business and move their contribution up the value chain

To provide flexibility to address variable demand across a number of testing phases/requirements for additional testing areas

Achieve long term cost efficiencies for additional testing areas

What are we doing Assess

Tangible and measurable results of alternative approaches

Robustness and flexibility to stand the test of time

Measure Performance of the relationship using KPIs (e.g. productivity,

quality, timeliness, reporting, Others – downtime, support effectiveness, effectiveness of knowledge management, etc)

Ability to meet common or specific business need

Validate Phased approach driven by maturity levels to minimize risk and

disruption, but significant enough to deliver benefit (i.e. not a body shopping exercise)

How are we going to do itUsing all the work done to date formalise the activities to achieve an informed and tangible closureCreate a simple capability assessment document, this should also include details of any Proof of Concept (POC) dates and potential size etcIdentify a specialist suppliers that could work in partnership to help develop the best strategy moving forward.Use existing capability statements to help develop the understanding of viable models and help formulate an initial strategyFormalise engagement with these specialist suppliers, and in collaboration allow them to demonstrate their tangible capabilities evidenced by maturity in the models by using real life examples (in the insurance space)

An implementation plan for formalised POC(s) with a selected supplier

Verify the selection based on results of the POC(s)

Our JourneyThe selection process

Qualifying selection

Living the relationship.

The Selection ProcessA simple scoring matrix to gain hard and tangible results

A simple commercial assessment model to compare one partner with another etc.

Evaluation criteria should be developed prior to engagement to ensure honest and independent evaluation of partners

Set common challenges for suppliers to overcome via the capability statement, which can then be used for tangible evaluation

Suggestions of common challenges faced elsewhere.

StatusOct 08Oct 08 Oct 15Oct 15 Oct 22Oct 22 Oct 29Oct 29 Nov 05Nov 05 Nov 12Nov 12 Nov 19Nov 19 Nov 26Nov 26 Dec 03Dec 03 Dec 10Dec 10 Dec 17Dec 17 Dec 24Dec 24

Overall GovernanceOverall Governance

Activity Initiation

Capability Statement

Establish Contractual & Commercial Framework

Stakeholder Engagement

Kick-off Meeting 25/10/07

Pipeline Demand

Selection Timeline

Supplier NDAs *Supplier NDAs *

Start to issue Supplier H/L* CapabilitiesStart to issue Supplier H/L* Capabilities

Supplier Assessments

Identify POCs

Set Customer/Demand Makers Expectations

Collate Commercial Information

Selected Supplier & POCs

Detailed POCs Plans

2007

LOI*/Heads LOI*/Heads of Termsof Terms

Detailed Service Descriptions

Checkpoint Go/No Go 21/12/07

Communication

Current and Future Business Risk Profiling

Team Supplier Meetings

Relevant Client Case Studies

Identify Relevant Clients 29/11/07

Team Client References

Request For Proposal (RFP)Project ScopeProcedureBenefit RealisationSupplier History & CapabilityRequirementsRelationshipCommercial ConsiderationsExit StrategyContractual RequirementsAdd Value And InnovationFormat And Presentation Of ResponsesAudit And Control

RFP From The Vendors Perspective

• Understanding the needs of the Client• Technology• Domain• Testing requirements

• Value addition• Relevant prior experience• Key personnel• Key differentiators that the client can take away

Proof Of Concept (POC)

ObjectiveOutcomeScopeBackground InformationMethodologyTimelinesMetricsSLAsSuccess Criteria

POC – Vendors Perspective• First impression is the best impression •Delivery

• On Schedule• On Budget • To the required standards/ quality

• Showcase• Understanding• Talent• Experience• Knowledge

• Go beyond stated client needs•Gain an understanding of client pain points and organization

POC Scoring Matrix

Microsoft Excel Worksheet

Governance

• Effective framework to manage the relationship• Key personnel• Escalation mechanisms• Conflict resolutions• Identifying key metrics• Account review mechanisms• Reporting mechanism• Change management

Governance – Vendors PerspectiveOnsite Account Manager

First point of escalationReceiving all sourcing requirements from NFUMCoordinating to get the right fit resourcesCoordinating with NFUM Group IT Testing team to seek clarity on exact skill requirements, etc. and organize any interview that needs to be doneEnsuring agreed SLAs are met for resourcing

Relationship managementowns the business case

Program managementDrives the vision and strategic intent to a project level

Project Managementensuring the management of project delivery on everyday basis

Operational managementensuring the technical and quality compliance during delivery of the project

Key principles Transparency at all levels and forums Periodic checkpoints, timely escalation and quick decision making

Living The Relationship

Procedures Ensuring that you have your own procedures documentedEnsuring the procedures are explained and understood PRIOR to a piece of work starting.The vendor needs to know of any unique conditions of employment.

Service Level Agreements (SLAs)Agreeing the terms of the SLAWhich of the SLAs will have the biggest impact on the businessWhich of the SLAs will you deal with most commonly?Have the SLAs been communicated to all the major stakeholders?

Living The Relationship

Integrating the teams Moving away from us and them Team buildingGoing as far as vendor staff managing NFUM staffKnowledge retention/transfer

Between vendor and NFUM Between vendor staff

Moving up the value chain and away from pure  staff augmentation Moving beyond Testing Service

Living The Relationship

Issue ResolutionTimely raising of issuesWillingness to work together

Confidence BuildingMetricsReviewing of work

Impact on other relationships (e.g. contractors/agencies) Communicating potential change to other parties

Living The Relationship

Management overhead The need for a relationship owner to deal with day to day issuesEscalation pointsJuggling business as usual with vendor management

Management liberation The ability to hand over a piece of work with confidence.

GovernanceEnsuring you follow the disciplines set down in the governance documents.Being able to work to the spirit of the document rather than relying on it to resolve issues.

Living The Relationship

Moving offshoreStaff may worry about their jobsConnectivity IssuesEnsuring communication procedures are in place.Quality reviewsMetricsReporting structure agreed.

Living the relationship - measurement

Microsoft Office Excel Worksheet

The Vendors Perspective

Cultural Integration

NFUM specific knowledge

Speed

Process expectations e.g. Lack of formal capacity planning

Critical Success Factors

Investment in knowledge transfer

Investment in designated people for relationship management

Budgeting for initial teething problems

Periodic checks and balances

Key Objectives To Takeaway

Honest addressing of both teams’ questions will give you a far more productive environment

Agreeing which metrics both companies use ensures expectations are understood and agreed, and it allows you to implement SLAs.

Communication is the key to any engagement. By initially having some tough talking it allows both sides to work within agreed parameters.

Questions

Contact Details

Company Website www.nfumutual.co.uk

Email: james_brodie@nfumutual.co.uk