What Can Derail the Progression of Your Outsourcing Initiative

and The Steps You can Take to Turn it Around?

John Ferrie Vice President, Shared Services

Realogy

Agenda

• What Causes Outsourcing Projects to Derail?

• Outsourcing Challenges

• Derailment Prevention

• Derailment Cures

• Review

What causes outsourcing projects to derail?

• Determining go-live date before planning the project

• Ignoring vendor’s advice

• Pushing vendor beyond its limits

• Vendor’s desire to appease clients

• Knowledge deficiency on vendor team

Outsourcing projects derail before team members realize it

What causes outsourcing projects to derail? (cont.)

• Inadequate or erroneous documentation

• Inappropriate project team and/or committee staffing

• Failure of committee members to engage subordinates

• Poor/non-existent change management

• Failing to impose mandates when appropriate

Many problems can be avoided

What causes outsourcing projects to derail? (cont.)

• Lack of participation by critical stakeholders

• Implementing multiple systems simultaneously

• Insufficient testing

• Bad contract

• Unforeseen events

It’s amazing that any outsourcing projects are successful!

Outsourcing Challenges

• Stakeholders’ needs

• Company’s culture

• Condition of key processes

• Availability and quality of in-house documentation

• The contract (limitations, service levels)

• Technology integration

• Communication and training

Outsourcing projects require the synchronization of a lot of moving parts

• Information Technology Dept. (vendor and in-house)

• Subject Matter experts (vendor and in-house)

• Operations (vendor and in- house)

• Finance

• Senior Leadership (Execs and Steering Committee)

• Customers

• Sales and Marketing

• Human Resources

• Legal

Derailment Prevention

Stakeholders and their needs

Risk is tied to the number, diversity and engagement of stakeholders

Derailment Prevention

Stakeholders and their needs (cont.)

• Identify all stakeholder organizations

• Establish project champions (owners) for each group

• Require participation and information sharing

• Conduct periodic meetings and informal monitoring sessions

• Contact non-champions to ensure dissemination of information

• Plan to retain teams beyond implementation (“swat teams”)

A communication failures with stakeholders jeopardizes success

Derailment Prevention

Company’s Culture

• Characteristics of successful organizations– Centralized, top down management– Structured, disciplined, uses service levels– Flexible – recognizes opportunities afforded by change

• Characteristics that require special consideration – Lacks service levels – everything is “on demand”– Rules apply to others– Inflexible and resistant – “My way is the best way”

Success is tied to discipline, flexibility and communication

Derailment Prevention

Processes

• Understanding and document all processes – Facilitates knowledge transition– Source of info for Go-Live checklist– Source of info for Change Management plan

• Determine service levels (quantity and quality)– Establish ongoing service levels– Prevents revisionist history and “professional amnesia”

• Develop contingency plans for critical processes

No one ever failed from having too much process documentation

Derailment Prevention

Processes

• Review processes surrounding those being outsourced

• Be careful of “concierge” processes – break into pieces

• “Customer service” has many flavors document yours in detail

• Should we be outsourcing this process?

• Document future state

• Stabilize processes before going for financial goals

Over-emphasize process because it is difficult to recover from bad ones

Derailment Prevention

In-House Documentation Availability

• Process documentation with volumes and service levels

• Cost Benefit Analysis

• Operations Manuals

• System Documentation

• Training Manuals

• Detailed Design Documentation (current state and future state)

Documentation is essential to effective knowledge transition

Derailment Prevention

The Contract

• Segregate service aspects from other contract language

• Set expectations with retain team and internal customers – Syndicate current processes and service levels

• Solidify ownership by retain team and internal customers – Jointly establish high-level processes and service levels with vendor

• Vendor has limits and do not push to exceed them

Early, meaningful engagement of key participants leads to success

Derailment Prevention

Technology Integration

• Design interfaces early to have time to overcome challenges

• Future technology decisions (i.e. java versions) must take vendor’s systems into consideration

Integration may not be easy and vendor’s technology is your technology

Derailment Prevention

Change Management

• Establish a dedicated change management team

• Begin change management when the project begins

• Develop communications and training plans– encourage “feedback”

• Require training for key employees– Unbeknownst to them demands on employees’ have changed

• Include contingency plan discussions in training

Change Management prepares your organization for their new reality

Derailment Prevention

Change Management (cont.)

• Conduct executive information sessions to “head-off” problems

• Communicate critical information directly with all stakeholders

• Over communicate, do not over sell

• Poor change management can cause a successful project to “fail”

• Do not cut change management if over budget

In some cases change management is as critical as processes and interfaces

Derailment Cures

Actions to be taken if project derails before going live

• Determine the impact of the issue on “go/no go” decision.– Is this a critical deliverable?

• Identify alternatives with team and executive leadership:– Fix now and meet requirements?– Challenge requirement and implement what’s available (risky)– Devise temporary alternate approach and implement requirement later– Address issue immediate and delay/modify less critical deliverable

• Be decisive and take action you have a limited timeframe

The relationship of an issue to “go/no go” determines the course of action

Derailment Cures

Actions to be taken if project derails after going live

• Reduce team size and focus on critical issues

• Keep morale high and avoid assigning blame (blame can come later)

• Activate “swat team” empowered to “make things happen” include:– Project team member from stakeholder organization– Appropriate in-house and vendor operations employees – Appropriate in-house and vendor information technology employees

• Consider incremental gains even if some rework is ultimately required

Inevitably their will be challenges have contingency plans and a swat team

Derailment Cures

Actions to be taken if project derails after going live (cont.)

• Establish daily work sessions with key contacts in:– Customer Service, operations and information technology

• Establish issues log and review with appropriate teams daily– Determine exposure associated with each issue– Assess opportunity for quick, temporary fix vs. ultimate solution –

sometimes it’s better to unwind new processes and redesign them – Determine “time to market” for each solution – Prioritize solutions (balancing exposure with “time to market”)

Daily interactions help keep team members focused

Derailment Cures

Actions to be taken if project derails after going live (cont.)

• Promptly and frequently engage executives of impacted areas– Executives tend to be more forgiving when not “blind-sided”– Present issues, solutions and proposed timing– Solicit feedback on employee communication plans– Always deliver your own bad news

• Seek additional guidance/resources from vendor– they want a win

• Increase customer service – a good experience can go a long way

When a crisis occurs control the information flow to executives and tap vendor

Review

• Plan diligently and engage appropriate parties early and frequently

• Do not skimp on the documentation – it is too valuable

• Emphasize process – a bad foundation process makes recovery difficult

• Change Management must be performed

• Be decisive and take action – customer forgiveness drops over time

• Deliver your own “bad” news - embrace executive stakeholders

• Communicate throughout the project

Go For It - Good Luck!