REPORT 7 Questions for Smart Outsourcing - CUSN Library/7... · 7 Questions for Smart Outsourcing....

REPORT

7 Questions for Smart OutsourcingFilene Research Institute

Acknowledgments

Filene thanks Vicky Franchino for her edito-rial help Filene also thanks our generous partners for making this important research possible

wwwcms-cashmanagementcom

Table of Contents

4 EXECUTIVE SUMMARY

7 QUESTION 1

What functions is my credit union considering outsourcing and why

10 QUESTION 2

Does it make sense to outsource this function

15 QUESTION 3

Do I understand what I want and need from an outsourcing partner

16 QUESTION 4

Do I understand the challenge well enough to effectively investigate my outsourcing options

19 QUESTION 5

How does my contract protect my credit union and my members

20 QUESTION 6

How will I ensure proper oversight

22 QUESTION 7

How am I preparing for the failure of my outsourcing partner and the end of our arrangement

24 CONCLUSION

25 ENDNOTES

26 BIBLIOGRAPHY

29 LIST OF FIGURES

30 ABOUT FILENE

Overview

Traditionally outsour-cing has been viewed by many as a vehicle for cost savings Today many credit unions are outsourcing business functions to enhance strategic performance increase operational flexibility and access talent In this report we explore the key questions credit unions should be asking themselves as they consider various outsourcing arrangements

Think back to the successful companies of the 20th century GE General Motors IBM The prevailing business model for the first two-thirds of the century was ldquoa large integrated company that can lsquoown manage and directly controlrsquo its assetsrdquo But as we hit the 1970s and 1980s ldquointegrationrdquo turned to bloat for many and vast internal resources were often seen as a drag on efficiency and agility

Enter the idea of outsourcing Although it wasnrsquot recognized as an official business strategy until 1989 the idea certainly wasnrsquot new a quarter cen-tury ago Companies had long tried to find the right balance between what they managed internally and externally

Early outsourcing tended toward the non-coremdashback-office functions accounting and legal services But as companies dealt with international competition increasing pressure to cut costs and an intensifying regulatory environment many began to push the boundaries on what it made sense to do in-house vs out

A survey by PricewaterhouseCoopers found that todayrsquos outsourcing is the ldquoexplosive outsourcing of services increasingly defined down to precise functions that can each be performed in the most optimal loca- tion anywhere in the worldrdquo Although credit unions may not have felt an ldquoexplosionrdquo of this magnitude yoursquod be hard pressed to find a credit union that hadnrsquot increased its level of outsourcing in recent years

What Is the Research About

But what makes sense to outsource and how can a credit union find the right partners and manage them effectively To answer those questions Filene reviewed recent literature and spoke to credit unions of varying sizes The result of our efforts seven questions to ask yourself as you navigate your own outsourcing efforts

Question 1 What functions is my credit union considering outsourcing and why

Though cost tops the list for many organizations itrsquos not the only reason to look at outsourcing Access to talent and help with regulatory compli-ance are also common drivers of outsourcing

Executive Summary

PAGE 6 EXECUTIVE SUMMARY FILENE RESEARCH INSTITUTE

Question 2 Does it make sense to outsource this function

There is nothing that always or never makes sense to outsource The Federal Reserve encourages financial institutions to conduct a four-step risk analysis before taking the leap Consider how outsourcing fits with strategic direction the risks and benefits of outsourcing the availability of appropriate resources and how yoursquoll handle ongoing oversight

Question 3 Do I understand what I want and need from an outsourcing partner

Donrsquot just dig out an old RFPmdashdig deep Work with internal stakeholders to make sure you understand what you need from an outsourcing arrange-ment and how to structure it appropriately

Question 4 Do I understand the challenge well enough to effectively investigate my outsourcing options

Do I have the knowledge and processes in place to conduct effective due diligence Todayrsquos financial services environment is dynamic and complex Does someone on your internal team truly understand what you need help with and how to evaluate your options And do you have a process in place to help evaluate your choices Or is it time to outsource your outsourcing

Question 5 How does my contract protect my credit union and my members

A transparent thorough and carefully crafted contract is critical to the success of your partnership Make sure it benefits both parties have it reviewed by your legal team and then put it away

Question 6 What will I do to ensure proper oversight

Choosing the right outsourcing partners is just the beginning Your credit union will be held responsible for their actions so itrsquos vital to set up a monitoring system that reflects the risk level of the outsourcing and stays on top of changing conditions

Question 7 How am I preparing for the failure of my outsourcing partner and the end of our arrangement

Your outsourcing arrangement will come to an end Ideally it will happen amicably and with the opportunity to plan ahead But chances are fair to good that it wonrsquot Start your relationship with the end in mind to minimize downtime and transition challenges

PAGE 7 INTRODUCTION FILENE RESEARCH INSTITUTE

IntroductionIn a 1999 report more than 90 percent of surveyed businesses reported out-sourcing some or all of their noncore business functions Fast-forward to the present and outsourcing plays a role at almost every business and has typically moved into core functions A 2014 survey predicted outsourcing would see growth across all functions with information technology (IT) legal and real estate and facilities management leading the way

The Office of the Comptroller of the Currency (OCC) points out that banksmdashbut this is true for credit unions as wellmdashare outsourcing increasingly complex services and processes in the areas of bank functions (payments clearing settlement and custody) shared services (such as IT) and those that could significantly impact customer service require significant invest-ment or significantly impact a financial service provider if they failed The stakes have been raised

Our findings confirm that outsourcing has matured beyond cost reduction to become a way for organizations to better access talent and capabilities gain more flexibility reinvent their business model and drive innovation

~ PricewaterhouseCoopers

Deciding which functions to outsource can be tricky Itrsquos not just a matter of drawing a line between ldquocorerdquo and ldquonon-corerdquo And even when yoursquove decided outsourcing makes sense how do you find good partners

Itrsquos a complex topic and one that no two credit unions will evaluate in the same way To give you a first step Filene reviewed recent literature on the topic and spoke with three credit unions of varying sizes to get their insights From these resources wersquove developed the seven questions every

credit union should answer when considering outsourcing

PAGE 8 WHAT FUNCTIONS IS MY CREDIT UNIONCONSIDERING OUTSOURCING AND WHY FILENE RESEARCH INSTITUTE

QUESTION 1


Todayrsquos financial services environment is competitive complex regulated and dynamic Members demand more than ever beforemdashand their service expectations are just as likely to be driven by their experience on Amazoncom as they are by the bank down the street

There are so many new products services and regulations How can one organization keep up without outside partners

~ Linda Bodie Element Federal Credit Union

Itrsquos common for credit unions to outsource most or all of their information technology (IT) and portions of their lending (indirect auto loans and private student loans are popular choices some also outsource their credit card portfolio and mortgage lending) Other com-mon outsourcing areas include equipment (ATMs) and remittance and payment processing

7 Questions for Smart Outsourcing


(Remote Lockboxmdasha combination of remote deposit capture and traditional processing is gaining traction as a hybrid between outsourcing and internal management)

Other reasons why credit unions consider outsourcing include the following

rarr Theyrsquore concerned about meeting compliance and regulatory challenges

rarr They want a better way to manage risk

FIGURE 1

CREDIT UNION EXAMPLES

Credit Union What do they outsource What donrsquot they outsourceWhat did they outsource in the past that theyrsquove

brought back inside

Element Federal

bull $29 millionbull 4800 members

bull Core processorbull Data managementbull ITbull Bookkeepingbull Graphics marketing and websitebull Repossessions

bull Anything related to member servicebull Lending

bull Collectionsmdashfelt partner did not have the same commitment to results as internal team

North Peace Savings and Credit Union

bull $406 million bull 12400 members

bull Asset liability managementbull Marketingbull Strategic HRbull IT supportbull Hosting of banking systembull Facility services

bull Any services provided directly to members (loans investments)

bull Wealth managementmdash was not financially viable if offered through partners

GTE Financial Credit Union

bull $18 billionbull 213000 members

bull Mortgage analyticsbull Mortgage auditsbull Appraisalsbull Web sitebull Loan platformsbull IT security testingbull Legalbull Quality control

bull Capital market processbull HRbull Trainingbull Accounting


0 20 40 60 80

Lower costs 76

70

63

56

Gain access to talent

Farm out activities others can do better

Increase business model flexibility

FIGURE 2

TOP REASONS FOR OUTSOURCING

Source PricewaterhouseCoopers Global Outsourcing Survey 2007

0 15 30 45 60

Information technology services

Production or delivery of your coreproducts or services

Logistics and distribution

HR services

Sales and marketingmdashincluding 3rd party distribution channels

Innovation research and development

Procurement

Customer call centres

Finance and accounting

3957

4453

5051

1635

2733

1532

4130

4125

2024

Outsource it to a significant extent Outsourcing this item

FIGURE 3

OUTSOURCING IS INTENSIFYING


PAGE 11 DOES IT MAkE SENSE TO OUTSOURCE THIS FUNCTION FILENE RESEARCH INSTITUTE

QUESTION 2


As mentioned earlier donrsquot assume that certain functions ldquoalwaysrdquo make sense to outsource and that others ldquoneverrdquo do The Federal Reserve recommends doing a four-step Risk Assessment to determine where to outsource

Step 1 Will outsourcing this service be consistent with your credit unionrsquos strategic direction and business strategyAlthough Element Federal Credit Union in Charleston West Virginia is passionate about the benefits of outsourcingmdashand happily uses partners to handle core processing data management IT bookkeeping marketing and repossessionsmdashthere are two areas where it doesnrsquot see a fit lending and anything related to the member service experience

ldquoIf yoursquore dealing with A and B paper it can make sense to outsource your lending but wersquore working with C D and E paperrdquo said Linda Bodie chief executive officer and innovator at Element ldquoThen itrsquos all about relationships Making lending decisions based strictly on a credit report or a computer isnrsquot how we work We make loans that others wouldnrsquot and thatrsquos not something we can outsource And this is true for anything related to our member experience too No one will ever lsquogetrsquo who we are the way internal staff dordquo

Has your credit union positioned itself to embrace outsourcing In the Pricewater-houseCoopers survey 45 of respondents said their organization favored using in-house employees and that this was a barrier to outsourcing

Step 2 What are the risks and benefits of outsourcing this functionThe Federal Reserve lists potential risk areas to evaluate before entering into an outsourcing relationship

rarr Compliance

rarr Concentration (service offered by few providers or only in a limited geographic area)

rarr Reputational

rarr Country (for foreign-based outsourcers)

rarr Operational

rarr Legal


The National Credit Union Administration (NCUA) cautions credit unions to assess seven areas of risk during the assessment process

Itrsquos also important to try to understand the financial impact of an outsourcing decision A report by Booz Allen Hamilton found that savings werenrsquot a given when companies chose to outsource In fact almost 30 of companies in their survey reported savings

of less than 10 or an increase in costs (see Figure 4)

In a more recent study by PricewaterhouseCoopers 87 of organizations that outsourced services said the services delivered the benefits in the original business casemdasheither partly or completely When speaking specifically to financial services 46 said they completely met their goals Interestingly 48 of this surveyrsquos respondents said that the inability to prove a cost benefit was the main barrier to outsourcing at their organization

The Booz Allen Hamilton report stressed the importance of going beyond the ldquosimple stuffrdquo and to investigate

rarr Your savings (from outsourcing) from a net present value perspective

rarr Associated costs and effects on productivity

rarr Fixed costs that wonrsquot go away simply because you outsourced

rarr Administrative costs incurred to manage the outsourcing relationship

Please noteCredit unionsmdashlike all financial institutionsmdashhave a legal responsibility to ensure their third-party

providers take measures that allow them to meet the objectives of information security guidelines

and comply with the Gramm-Leach-Bliley Bill Section 501 (b) which specifies that appropriate

administration technical and physical safeguards are in place to

1 Insure the security and confidentiality of customer records and information

2 Protect against any anticipated threats or hazards to the security of integrity of such records

and

3 Protect against unauthorized access to or use of such records or information which could

result in substantial harm or inconvenience to a customer

Credit Interest Rate Liquidity Transaction

Compliance Strategic Reputation


Some of these might be difficult to estimate going in but itrsquos essential to make the attempt ldquoWersquove had situations where there were rich wonderful outsourcing options that had a lot to offer but at the end of the day it just didnrsquot make sense given the cost and the scope of our organizationrdquo said Mitchel Chilcott CEO at North Peace Savings and Credit Union in Fort St John British Columbia

ldquoWhen wersquore determining which services to outsource we look at a number of factorsrdquo said Kim Yarnelli vice president of member home loans programs and Home Loan Alliance at GTE Financial Credit Union in Tampa Fla ldquoThere are certain things that regulations require us to outsourcemdashfor instance because some of our loans are sold into the second-ary market we must have a third party monitor 10 of all loan categories We also consider costmdashcan we provide this more cost-effectively with internal or external resourcesmdashand the availability of appropriate providersrdquo

0

5

-10 or less -10ndash0 1ndash10 11ndash20 21ndash30 31ndash40 41ndash50 51 or more

10

15

20

25

30

1

10

17

27

24

8

10

4

Estimated Cost Savings ()

Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)

Almost 30 reported savings of less than 10

or a cost increase

On averagerespondents

saved 15 fromoutsourcing

More than 20achieved savings ofgreater than 30

FIGURE 4

STUDIES SHOW THE COST SAVINGS FROM OUTSOURCING HAVE BEEN MIXED

Source Industry Commission ldquoCompetitive Tendering and Contracting by Public Sector Agencies mdashOverviewrdquo Report 48 p 533 January 24 1996 Australian Government Publishing Service


Step 3 Are there service providers with the needed skills Finding an outsourcing partner can be difficult when the function is highly specialized or so new that few players are offering it Geography can also be a challenge especially for a function that requires some level of on-site assistance

ldquoWe are in a relatively remote area and we have run into this challenge on more than one occasionrdquo said Don McMillian CFO at North Peace

Step 4 Can you provide adequate oversight The Federal Reserve cautions companies to recognize that outsourcing does not eliminate responsibility and that oversight and controls have to be proportionate to the risks posed The board and senior management will need to establish and execute policies to ensure an outsourcing partner is chosen carefully and overseen appropriately The NCUA stresses that this is a dynamic process

The PricewaterhouseCoopers survey found this area to be a concern to its respondents 37 said they lacked the skills to manage outsourcing

ldquoWe are required by law to monitor the third party thatrsquos providing quality control

on our loansrdquo Yarnelli said ldquoWe have an overlay process that ensures our partner

is performing their duties effectivelyrdquo

An interesting side note Customers and providers tend to have different opinions as to the obstacles faced when outsourcing

Please note Special precautions must be taken if outsourcing will be related to required Suspicious Activity

Reporting or involve non-public private information


Customer cost-benefit

Customer lack of experience

Company values favor in house

Customer lack of skills

Clean up operations before outsourcing

Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60

Customers Service Providers

FIGURE 5

CUSTOMERS AND PROVIDERS DIFFER ON THE OBSTACLES


PAGE 16 DO I UNDERSTAND WHAT I WANT AND NEED FROM AN OUTSOURCING PARTNER FILENE RESEARCH INSTITUTE

QUESTION 3


To answer this question work with all internal stakeholders Have them weigh in to determine the following

rarr The performance requirements of the outsourcing partner

rarr How yoursquoll choose which companies to solicit

rarr The selection process

rarr How yoursquoll transition from internal to external (for an existing productservice)

rarr How you would transition back if you need to dissolve the relationship

Experts caution not to just dust off an old request for proposal (RFP) Start from scratch and create an RFP thatrsquos specific to this function

The growing importance of collaborative outsourcing

The traditional model of outsourcing involved an exclusive long-term arrangement with one provider

This continues to be true for many organizations and service categoriesmdashespecially those seen as

commodities But as outsourcing becomes more common and complex itrsquos becoming increasingly

typical for outsourcing to be set up as a collaborative partnership

The PricewaterhouseCoopers research found the following

rarr 50 expected to increase multi-sourcing

rarr 45 planned to increase use of joint ventures

rarr 35 were increasingly likely to use open public and collaborative business models

ldquoWe arenrsquot looking for a supplierpurchaser relationship we want to work with organizations that will

be a partner and who match our culturerdquo said Paul McAfee COO at North Peace

ldquoOur goal is to create relationships that lead to mutual gainrdquo

PAGE 17 DO I UNDERSTAND THE CHALLENGE WELL ENOUGH TO EFFECTIVELY INVESTIGATE MY OUTSOURCING OPTIONS FILENE RESEARCH INSTITUTE

If a prospective partner offers solutions that donrsquot line up with your RFP but seem like viable options it might still be worth considering them The Federal Reserve recommends using a process similar to that used to develop the RFP to evaluate material differences

between your RFP and their proposal

QUESTION 4


Proper due diligence is essential If yoursquore looking to outsource a productservice yoursquore currently delivering with in-house resources your team has some idea of what it takes to do so

But what if yoursquore looking to deliver something new and highly complex Then finding the right outsourcing partner can become a bit ldquochicken-and-eggrdquo If yoursquore hiring an outsourc-ing partner because a function is so complex that you donrsquot have the time resources or understanding to handle it yourself how do you determine who does

The PricewaterhouseCoopers survey found that external advisors are increasingly seen as an invaluable resource ldquoWersquove established a partnership with a third-party contractor to help us conduct outsourcing analysis in many instancesmdashright now for instance theyrsquore helping us select our processing systemrdquo Chilcott said ldquoThere are many situationsmdashespecially those related to technologymdashwhere nuances are critical and it would be nearly impossible to stay on top of themrdquo

ldquoYou need to have a good grasp of the big picture on any project but itrsquos helpful to have more people involved when something is outside your forterdquo said Paul McAfee COO at North Peace

ldquoWhether we need the help of our third-party advisor typically depends on the level of sophistication and the size of the projectrdquo said McMillian ldquoOn a smaller project we might reach out to peers to help us benchmark and evaluaterdquo


Please note The OCC cautions institutions not to ldquorely on their prior experience with the vendor as a proxy for due

diligencerdquo Each outsourcing project should stand on its own

Bodie who sees herself as a ldquoknowledge junkierdquo and embraces the chance to learn as she investigates service areas and prospective partners during the outsourcing process seconded the value of peers ldquoAs a credit union you have an amazing network of intelligence to draw uponrdquo

Bodie also benefits from her credit unionrsquos long-term relationship with a collaborative CUSO which is the organizationrsquos partner for much of its outsourcing ldquoThey offer us a vast range of resources and opportunities for networking and collaboration within their systemrdquo

Your evaluation checklist should address the following rarr How long has the company been in business Not just overall but in your

specific area of need

rarr What are their qualificationsbackground in this service area Review not just the overall company but the team that will specifically handle your projectmdashyou want the ldquoArdquo team If the service area is new to the company you need to dig deeper to determine their ability to meet your needs As the NCUA points out If a well-respected third party is diving into a new service offering you must verify the qualifications competence and training of the individuals that will be handling your program

rarr References Ask for themmdashand talk to them Too often companies gloss over this step and assume the existence of a list is sufficient Ask current customers about their satisfaction and experience with the provider

rarr Financial stability Review the providerrsquos annual report audited financial report and all other standard due diligence on the providerrsquos financial condition NCUA recommends reviewing all financial statements with an eye to outstanding com-mitments capital strength liquidity and operating results It also recommends gaining an understanding of off-balance sheet liabilities and the providerrsquos ability to meet these commitments

rarr Business strategy The OCC recommends investigating whether the provider has mergers or divestitures in the works Itrsquos also vital to ensure the companyrsquos busi-ness model and quality initiatives are on track with yours


rarr Business model The NCUA stresses the importance of understanding if the third party has the depth of resources they need to handle your outsourcing What are their sources of income and expense Are there potential conflicts of interest Is their fee structure appropriatemdashdoes it include exorbitantly high upfront fees or incentives that could compromise member service or portfolio quality Is their model flexiblemdashcan it accommodate a changing regulatory technological or economic environment

rarr Internal controls Review the providerrsquos physical and IT security standards operational policies and training What is the provider doing to ensure that poli-cies that look good on paper are actually implemented What steps are they taking to guarantee theyrsquore meeting all legal and regulatory compliance requirements

rarr Insurance Donrsquot wait until the contract stage to hammer this outmdashmake the abil-ity to meet insurance requirements (particularly fidelity and errors and omission coverage) part of the RFP and discuss it during due diligence

rarr Subcontractor controls Many third parties turn to subcontractors to handle the ebb and flow of business Determine if your credit union is comfortable with the use of subcontractors and agree ahead of time when and how theyrsquoll be deployed The Federal Reserve also recommends learning how your third-party provider determines a subcontractorrsquos financial standing in relation to their ability to meet the needs of their contract

rarr Foreign outsourcing Are you considering outsourcing services to a foreign com-pany Be aware that they may not be familiar with or able to meet your countryrsquos compliance and regulatory standards ldquoWe limit our partners to Canadian compa-niesrdquo said McAfee ldquoWe want our servers to be within Canadian borders to ensure wersquore complying with Canadian lawsrdquo

rarr Disaster recovery Ensure the provider is taking appropriate steps to monitor for and recover from a disaster

Please note The NCUA cautions credit unions to understand how cash moves between the credit union the third-

party provider and members and to be able to independently verify cash flows and match them to

related individual accounts

PAGE 20 HOW DOES MY CONTRACT PROTECT MY CREDIT UNION AND MY MEMBERS FILENE RESEARCH INSTITUTE

QUESTION 5


Once your due diligence has pinpointed a partner itrsquos time to negotiate a contract thatrsquos transparent and mutually beneficial As Chilcott stressed ldquoOur goal is to have a concise well-written contract that we never have to look at again A contract will only be productive in the long run if itrsquos balanced and benefits both partiesrdquo

Your third-party contract should address a host of issues including the following Please rely on the advice of the NCUA the Federal Reserve and your legal team to craft a contract that meets your needs and addresses the following

Scope of Service Insurance

Performance standards Member complaint resolutions

Security and confidentiality Dispute resolution

Controls Indemnification

Auditing Limits of liability

Reports Regulatory compliance

Business resumption and contingency plans

Special concerns for foreign companies

Subcontracting Cost

Ownershiplicensing Termination

Length of contract Dispute resolution

PAGE 21 HOW WILL I ENSURE PROPER OVERSIGHT FILENE RESEARCH INSTITUTE

QUESTION 6

How will I ensure proper oversightAs discussed earlier your credit union will be responsible for the actions of the third party which means ongoing monitoring is vital Experts stress that monitoring should reflect

rarr The risk level of the outsourcing Higher risk services should be monitored more completely and frequently

rarr Changing conditions Donrsquot just set up a monitoring process at the beginning and assume all is well Monitor your monitoring

ldquoAssign a staff member to actively monitor this relationshiprdquo Bodie recommended ldquoYou donrsquot have to be the expertmdashthatrsquos why yoursquore hiring the outsourcing partnermdashbut you do have to pay attention The partner is handling the day-to-day yoursquore verifying and checking and looking for anomalies You should be learning and growing from this partnership and gaining a better understanding of how to manage it over timerdquo

ldquoA lot of it comes down to using good project management techniquesrdquo Chilcott said ldquoDeliverables and milestones can be one way inrdquo

ldquoWersquove found that wersquore most successful when therersquos clear ownership of the partnershiprdquo McAfee said ldquoWhen outsourcing is clearly linked to the strategic plan and the operating plan itrsquos top of mind and therersquos more attention and focus We havenrsquot always done a great job of this for some of our base-level service contractsmdashwe do need to find a better home for thoserdquo

Please note When developing your monitoring process and procedures include a list of vendor events that would

trigger increased oversight and monitoring These could include financial concerns or failing to meet

agreed-upon performance measures or compliance standards


FIGURE 6

FOUR KEYS TO OVERSIGHT

The key elements of your service level

agreement and contract provisions

The financial condition of the provider

The providerrsquos internal and security controls

The impact of changes in the

external environment

The Federal Reserve

recommends your credit

union rate the risks

associated with each

third-party provider

and link the frequency

and stringency of

your monitoring with

the risk created by

the relationship The

NCUA stresses that itrsquos

important to be able

to demonstrate that

internal staff responsible

for monitoring have the

skills needed to do so

and maintain appropriate

documentation of their

efforts Your credit union

must establish on-going

controls and show that

data gathered from these

controls is being shared

and used to evaluate the

ongoing performance of

the partner

The Federal Reserve

cautions organizations

to monitor and ensure

the financial viability of

their third-party providers

at least annuallymdashand

more frequently if there

are areas of concern

or change The NCUA

recommends monitoring

capital strength liquidity

operating results and off-

balance sheet liabilities

Tools that can be helpful

in this area include

ratings from nationally

recognized statistical

ratings organizations and

SAS 70 (Type II) reports

The team responsible

for overseeing this

relationship should

share results with the

credit unionrsquos board of

directors or a designated

committee

The Federal Reserve

points out that itrsquos the

responsibility of credit

union management

to make sure the

provider adheres to the

policies procedures

and standards that you

established were in

place during the due

diligence process Your

management team

should review internal

and external audits of the

providerrsquos operations in

these areas

No organization can

escape the realties of

the outside world Stay

on top of changing

conditions and make sure

your outsourcing partners

are doing the same ldquoYou

should never be satisfied

with the status quordquo

McAfee said ldquoAs yoursquore

going to conferences

connecting with your

peers attending training

you should always be

looking for ways to

improve Talk to your

partners and challenge

them to go to the

next levelrdquo

PAGE 23 HOW AM I PREPARING FOR THE FAILURE OF MY OUTSOURCING PARTNER AND THE END OF OUR ARRANGEMENT FILENE RESEARCH INSTITUTE

QUESTION 7


Given the growing movement to use third-party providers for mission-critical services itrsquos become increasingly important for credit unions to prepare for both the failure of the partner and the end of the relationship

With this in mind credit unions should ensure that

rarr Your business continuity plan is written to reflect both stable partnership relationships and contingencies in the event of a partner failure

Term

inat

ion

P

lanning Due diligence and

Contract Ongoing

third-party selection

negotiation monitoring

Inde

pend

ent R

evie

ws

Docum

entation and Reporting

Oversight and accountability

FIGURE 7

OCCrsquoS OUTSOURCING GUIDANCE

Source OCC httpoccgovimagesimage-bulletin-2013-29--rmlcjpg


rarr All internal and provider staff understand their responsibilities should failure occur

rarr A back-up system is in place to minimize downtime should provider failure occur

rarr You have pinpointed the steps to restore mission-critical services and have an understanding of the timeframe to reestablish them

rarr You are prepared for the relationship to end The OCC recommends creating a transition plan for how the service will move back to the financial institution or go to a new third-party provider at the beginning of the relationship rather than waiting for a dissolution of your partnership

ldquoDuring due diligence we always investigate at least three prospectsrdquo Bodie said ldquoThat way if a relationship fails you have two options you can consider immediately It doesnrsquot mean that yoursquoll pick one of these two but past homework likely means you donrsquot have to start over completelyrdquo

ldquoI strongly recommend a review of your outsourcing partners If yoursquove been working with a supplier for 10 years and never done a review of the marketplace this could be a huge missed opportunityrdquo

~ Mitchell Chilcott North Peace Savings Credit Union

ldquoBuild a robust network of professional contacts and work to make sure your credit union brand is known and recognizedrdquo McAfee said ldquoIf you need help you want others to know who you are We are a relatively small credit union but wersquove established a presence and a reputation for innovation that can make us attractive to prospective outsourcing partnersrdquo

PAGE 25 CONCLUSION FILENE RESEARCH INSTITUTE

ConclusionAlthough each credit union will take its own path to effective outsourcing the basics will be the same regardless of the size of your credit union and the resources at your disposal As your credit union decides what to outsource and which partners to outsource with make sure yoursquove considered the seven critical questions

1 What functions are we considering outsourcing

2 Does it make sense to outsource this

3 Do I know what I need from a partner

4 Can I effectively analyze my options

5 Does my contract protect my credit union and my members

6 Can I provide proper oversight

7 Am I prepared for the end of this outsourcing relationship

And remember

Oversight is essential Outsourcing a product or service doesnrsquot mean yoursquore no longer responsible for it Ensure that your policies and procedures reflect this and that staff has the knowledge skill set and commitment to oversee the provider effectively The more risk an outsourcing partnership exposes you to the more oversight you need to have in place

You should prepare for the endmdashat the beginning Start off every third-party partnership with a clear understanding of how yoursquoll transition out of it Both sides are in a better mindset to address this going into a partnership rather than trying to navigate this at a time when your relationship is likely at its worst

There are no givensTherersquos no serviceproduct that it always or never makes sense to outsource Your decision must reflect the needs of your credit union and its members and consider the true costs and benefits of outsourcing

PAGE 26 ENDNOTES FILENE RESEARCH INSTITUTE

Endnotes

1 See for example Moodyrsquos Investors Service Rating Methodology Global Agricultural Cooperatives Industry (New York 2007) and Dominion Bond Rating Service Rating Canadian Provincial Credit Union Centrals Credit Unions and Desjardins Group and Related Entities (Montreal April 2011)

2 Robert Handfield PhD ldquoA Brief History of Outsourcingrdquo June 1 2006 Poole College of Management SCRC httpscmncsueduscm-articlesarticlea-brief-history-of-outsourcing

3 Rick Mullin 1996 ldquoMANAGING THE OUTSOURCED ENTERPRISErdquo (Journal of Business Strategy) Vol 17 Iss 4 pp28 - 36

4 PricewaterhouseCoopers ldquoOutsourcing Comes of Age The Rise of Collaborative Partneringrdquo 2007 httpwwwpwccomen_GXgx operations-consulting-servicespdfoutsourcingcomesofagepdf

5 Booz Allen Hamilton research httpwwwboozallencommediafile FINAL_Outsourcing_Brochpdf

6 Deloitte Consulting LLP ldquo2014 Global Outsourcing and Insourcing Survey Resultsrdquo May 2014 httpwww2deloittecomcontentdamDeloitteusDocumentsstrategyus-sdt-2014-global-outsourcingInsourcing-sur-vey_051914pdf

8 httpswwwffiecgovexamInfoBasedocuments02-con-501b_gramm_leach_bliley_act-991112pdf

PAGE 27 BIBLIOGRAPHY FILENE RESEARCH INSTITUTE

Bibliography

Baxter Missy ldquoATM Stress Prompts Outsourcingrdquo November 7 2014 Credit Union Times httpwwwcutimescom20141107atm-stress-prompts-outsourcing

Board of Governors of the Federal Reserve System ldquoGuidance on Managing Outsourcing Riskrdquo December 5 2013 httpwwwfederalreservegovbankinforegsrletterssr1319a1pdf

Booz Allen Hamilton ldquoThe Bottom Line on Outsourcingrdquo 2001 http wwwboozallencommediafileFINAL_Outsourcing_Brochpdf

Borowski David ldquo2012 Outsourcing Checklistrdquo BusinessFi-nance January 18 2012 httpbusinessfinancemagcomtax-amp-accounting2012-outsourcing-checklist

Deloitte Consulting LLP ldquo2014 Global Outsourcing and Insourcing Survey Resultsrdquo May 2014 httpwww2deloittecomcontentdamDeloitteusDocumentsstrategyus-sdt-2014-global-outsourcingInsourcing-sur-vey_051914pdf

Elan Financial Services ldquoInsource vs Outsource Whatrsquos Best for Your Credit Unionrdquo httpwwwelanfinancialservicescomnews_images Elan_Insource-vs-Outsource_July-2012pdf

Federal Financial Institutions Examination Council ldquoGramm-Leach-Bliley Bill Section 501 (b) Financial Institutions Safeguardsrdquo httpswwwffiecgovexamInfoBasedocuments02-con-501b_gramm_leach_bliley_ act-991112pdf

Federal Financial Institutions Examination Council ldquoIT Examination HandBook InfoBaserdquo httpithandbookffiecgovit-booklets outsourcing-technology-servicesaspx

Handfield Robert ldquoA Brief History of Outsourcingrdquo June 1 2006 Poole College of Management SCRC httpscmncsueduscm-articlesarticlea-brief-history-of-outsourcing


Hardiman Dennis ldquoMastering the Art of Outsourcing Your Lending Operationsrdquo CU Journal Oct 10 2014 httpwwwcujournalcomnewsmastering-the-art-of-outsourcing-your-lending-operations-1023304-1html

Levi Stuart D et al ldquoOutsourcing by Financial Services Companies Impact of the OCC and FRB Guidelinesrdquo Arps Slate Meagher amp Flom LLP amp Affiliates February 10 2014 httpwwwskaddencominsightsoutsourcing-financial-services-companies-impact-occ-and-frb-guidelines

Morrison David ldquoOutsourcing Helps Manage Growth Delinquenciesrdquo Credit Union Times Nov 5 2014 httpwwwcutimescom20141103outsourcing-helps-manage-growth-delinquencies

Mullin Rick ldquoManaging the Outsourced Enterpriserdquo Journal of Business Strategy Vol 17 Iss 4 pp28 ndash 36 httpwwwemeraldinsightcomdoiabs101108eb039792

NCUA ldquoEvaluating Third Party Relationshipsrdquo December 2007 httpwww ncuagovResourcesDocumentsLCU2007-13pdf

OSF-Global ldquoThe Extensive Outsourcing Checklistrdquo 2012 httpwwwosf- globalcomassetsuploaded_filesdeextensive-outsourcing- checklist-OSF-whitepaperpdf

Peterson Brad L ldquoTen Key Questions for Developing an Effective Service Level Agreementrdquo July 7 2014 httpwwwoutsourcing-centercom 2014-07-ten-key-questions-for-developing-an-effective-service-level- agreement-63376html

PricewaterhouseCoopers ldquoOutsourcing Comes of Age The Rise of Collaborative Partneringrdquo 2008 httpwwwpwccomen_GXgxoperations-consulting-servicespdfoutsourcingcomesofagepdf

Snodgrass Darren ldquoThe Competitive Advantages of Strategic Outsourced Servicesrdquo March 28 2014 CB Insight httpwwwcbinsightcom competitive-advantages-strategic-outsourced-serviceshtml

CRIF Lending Solutions ldquoOutsourced Underwriting for Indirect Lending Programs Is it For Yourdquo httpwwwcreditunionscomarticlesoutsourced-underwriting-for-indirect-lending-programs-is- it-for-you


MYCUMortgage ldquoWhy and When to Outsource Mortgage Lendingrdquo April 7 2014 httpwwwcreditunionscomarticleswhy-and-when-to-outsource- mortgage-lending

Wallace John ldquoVendor Due Diligence Outsource the Work Not the Respon-sibilityrdquo CUNA Mutual Group 2009 httpprtlimagescunamutualcomimageserverpublishedimagespublishcunamutual_comcatalogsportlet_folderpublicweb_contentproductsinsurance_protectioncredit_union_protectionmanagementmedia_filesdue_diligence__media_file__da_474240__2pdf

PAGE 30 LIST OF FIGURES FILENE RESEARCH INSTITUTEPAGE 30 LIST OF FIGURES FILENE RESEARCH INSTITUTE

List of Figures 8 FIGURE 1


9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7


PAGE 31 ABOUT FILENE FILENE RESEARCH INSTITUTE

About Filene

Filene Research Institute is an independent consumer finance think and do tank We are dedicated to scientific and thoughtful analysis about issues affect-ing the future of credit unions retail banking and cooperative finance

Deeply embedded in the credit union tradition is an ongoing search for better ways to understand and serve credit union members Open inquiry the free flow of ideas and debate are essential parts of the true democratic process Since 1989 through Filene leading scholars and thinkers have analyzed managerial problems public policy questions and consumer needs for the benefit of the credit union system We support research innovation and impact that enhance the well-being of consumers and assist credit unions and other financial cooper-atives in adapting to rapidly changing economic legal and social environments

Wersquore governed by an administrative board made up of credit union CEOs the CEOs of CUNA amp Affiliates and CUNA Mutual Group and the chairman of the American Association of Credit Union Leagues (AACUL) Our research priorities are determined by a national Research Council comprised of credit union CEOs and the presidentCEO of the Credit Union Executives Society

We live by the famous words of our namesake credit union and retail pioneer Edward A Filene ldquoProgress is the constant replacing of the best there is with something still betterrdquo Together Filene and our thousands of supporters seek progress for credit unions by challenging the status quo thinking differently looking outside asking and answering tough questions and collaborating with like-minded organizations

Filene is a 501(c)(3) not-for-profit organization Nearly 1000 members make our research innovation and impact programs possible Learn more at fileneorg

ldquoProgress is the constant replacing of the best there is with something still betterrdquo

mdashEdward A Filene

612 W Main StreetSuite 105Madison WI 53703

p 6086613740f 6086613933

Publication 357 (315)

Acknowledgments

Filene thanks Vicky Franchino for her edito-rial help Filene also thanks our generous partners for making this important research possible

wwwcms-cashmanagementcom

Table of Contents

4 EXECUTIVE SUMMARY

7 QUESTION 1


10 QUESTION 2


15 QUESTION 3


16 QUESTION 4


19 QUESTION 5


20 QUESTION 6


22 QUESTION 7


24 CONCLUSION

25 ENDNOTES

26 BIBLIOGRAPHY

29 LIST OF FIGURES

30 ABOUT FILENE

Overview










Executive Summary























QUESTION 1












FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


Table of Contents

4 EXECUTIVE SUMMARY

7 QUESTION 1


10 QUESTION 2


15 QUESTION 3


16 QUESTION 4


19 QUESTION 5


20 QUESTION 6


22 QUESTION 7


24 CONCLUSION

25 ENDNOTES

26 BIBLIOGRAPHY

29 LIST OF FIGURES

30 ABOUT FILENE

Overview










Executive Summary























QUESTION 1












FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


Overview










Executive Summary























QUESTION 1












FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


EXECUTIVE SUMMARY FILENE RESEARCH INSTITUTE






















QUESTION 1












FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


INTRODUCTION FILENE RESEARCH INSTITUTE









QUESTION 1












FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


WHAT FUNCTIONS IS MY CREDIT UNIONCONSIDERING OUTSOURCING AND WHY FILENE RESEARCH INSTITUTE

QUESTION 1












FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933







FIGURE 1



brought back inside

Element Federal















0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933



0 20 40 60 80

Lower costs 76

70

63

56




FIGURE 2



0 15 30 45 60




HR services



Procurement



3957

4453

5051

1635

2733

1532

4130

4125

2024


FIGURE 3




QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


DOES IT MAkE SENSE TO OUTSOURCE THIS FUNCTION FILENE RESEARCH INSTITUTE

QUESTION 2







rarr Compliance


rarr Reputational


rarr Operational

rarr Legal

















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


















and








0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933





0

5


10

15

20

25

30

1

10

17

27

24

8

10

4


Stud

ies R

epor

ting

Cost

Savin

gs fr

om O

utso

urcin

g (N

=200

)


or a cost increase




FIGURE 4




















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933



















Other priorities

Employee opposition

Offshoring ethics

Public reaction

NONE

0 10 20 30 40 50 60


FIGURE 5




QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


DO I UNDERSTAND WHAT I WANT AND NEED FROM AN OUTSOURCING PARTNER FILENE RESEARCH INSTITUTE

QUESTION 3
























QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


DO I UNDERSTAND THE CHALLENGE WELL ENOUGH TO EFFECTIVELY INVESTIGATE MY OUTSOURCING OPTIONS FILENE RESEARCH INSTITUTE



QUESTION 4





























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933
























QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


HOW DOES MY CONTRACT PROTECT MY CREDIT UNION AND MY MEMBERS FILENE RESEARCH INSTITUTE

QUESTION 5












Subcontracting Cost




QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


HOW WILL I ENSURE PROPER OVERSIGHT FILENE RESEARCH INSTITUTE

QUESTION 6











FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


HOW WILL I ENSURE PROPER OVERSIGHT FILENE RESEARCH INSTITUTE

FIGURE 6








The Federal Reserve






and stringency of


the risk created by




to demonstrate that













the partner

The Federal Reserve








or change The NCUA












for overseeing this

relationship should




committee

The Federal Reserve



union management

to make sure the


policies procedures


established were in



management team




these areas

No organization can



on top of changing











looking for ways to



them to go to the

next levelrdquo


QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


HOW AM I PREPARING FOR THE FAILURE OF MY OUTSOURCING PARTNER AND THE END OF OUR ARRANGEMENT FILENE RESEARCH INSTITUTE

QUESTION 7





Term

inat

ion

P


Contract Ongoing



Inde

pend

ent R

evie

ws

Docum



FIGURE 7





















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


HOW AM I PREPARING FOR THE FAILURE OF MY OUTSOURCING PARTNER AND THE END OF OUR ARRANGEMENT FILENE RESEARCH INSTITUTE


















And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


CONCLUSION FILENE RESEARCH INSTITUTE









And remember





Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


ENDNOTES FILENE RESEARCH INSTITUTE

Endnotes









Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


BIBLIOGRAPHY FILENE RESEARCH INSTITUTE

Bibliography



























9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933



















9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


LIST OF FIGURES FILENE RESEARCH INSTITUTEPAGE 30 LIST OF FIGURES FILENE RESEARCH INSTITUTE



9 FIGURE 2


9 FIGURE 3


12 FIGURE 4


14 FIGURE 5


21 FIGURE 6


22 FIGURE 7



About Filene









p 6086613740f 6086613933


ABOUT FILENE FILENE RESEARCH INSTITUTE

About Filene









p 6086613740f 6086613933


REPORT 7 Questions for Smart Outsourcing - CUSN Library/7... · 7 Questions for Smart Outsourcing....

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Transcript of REPORT 7 Questions for Smart Outsourcing - CUSN Library/7... · 7 Questions for Smart Outsourcing....