Question: When companies establish a relationship with an external provider for IT or business process services, at what point do they face the biggest risks? Answer: At the very beginning.
Whether it involves IT or business process services, the new delivery model that comes with externally sourced operations will have an impact on people and the broader organization. One of the riskiest points from the perspective of change comes in the first few months, during transition.
Throughout this period, people are moving from one way of working to another, and sometimes from one company to another. Processes and tools are being redesigned, retooled or standardized, and services are being delivered in new ways.
A rocky transition phase can slow implementation of the delivery model, preventing a company from getting the anticipated value from the new services arrangement quickly enough. People can lose confidence, which could result in lower morale and higher turnover; customers may not be served at the levels they were previously. According to one CIO report, a poor transition period can be identified as the root cause of a failed buyer-provider relationship two-thirds of the time.
How to prevent negative impact
The most successful buyer-provider relationships emphasize the management of change. The discipline of change management helps leaders to direct an effective transition, driving greater acceptance of change at all levels and aligning the entire organization with the new operating model to ensure value is realized. Both the company and its service provider need to work diligently to understand and manage the range of impacts on their people—both those working for the new services organization and for the retained workforce.
For example, the Accenture High Performance BPO research study found that almost 90% of companies involved in a high-performance business process services relationship regard the management of change as an important capability; only 62% of typical performers share that attitude. And 77% of high performers characterize themselves as successful at executing change management plans, something claimed by just 34% of typical performers.
5 keys to success
Based on Accenture research and experience, the following are keys to executing a successful transition to an outsourced service model:
- Use best people and best practices. If you staff your transition program with just “whoever’s available,” you will get what you (don’t) pay for. The ability to plan and execute comprehensive change programs and transitions is an area of specialist expertise, no less than that offered by your finance or analytics professionals.
- Identify your most critical stakeholders and involve them as advisors and sponsors to the transition. A groundbreaking finance services engagement at a US-based software giant demonstrated this point well. A combined team from the client and the service provider created global, functional and subsidiary-specific communication and transition plans to engage with the various affected stakeholders. Each transition event had no fewer than five major milestones that were tracked, starting with a country-level launch event and ending with a formal handoff to operations.
- Focus as much attention on the retained workforce as on creating and supporting the new services model. In addition to putting in place world-class processes for the externally sourced IT or business function, companies need to transform the retained organization that is responsible for managing the service. Part of this work involves clarifying roles, responsibilities and needed skills. Our High Performance BPO survey found that half of high-performance businesses have engaged in modification of their retained organization to optimize the new services operating model, compared with only 29 percent of typical performers.
- Support behavior change, not just new attitudes. During transition, people at all levels in the new organization and among the retained workforce need to act differently, not just think differently. But that requires methods and approaches shown to be successful at driving behavior change.
- Measure progress and results delivered. Using advanced tools and methods, companies can measure progress during the transition— and throughout the ongoing externalization program—as well as gauge how effectively change is being accepted and adopted.
So, in addition to avoiding transition cost overruns that can result from not managing change carefully, service externalization programs that invest in change management activities during transition and beyond can more quickly and effectively align their people, organizations and leadership to the new mode of service delivery. Critical functions and processes can be more readily adapted to the new operating model and companies can begin realizing the business case faster, with less disruption.
Ultimately, those benefits can translate into realizing more value from the new services program during the initial months and in the years to come.
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