In the first three articles in this series, we discussed planning, selecting a vendor, and the documents necessary to launching a successful outsourcing initiative. Now we’re ready to talk about Implementation.
Implementing an outsourcing initiative involves transitioning the outsourced process from in-house to the provider. This is an area where effective management of change is essential on both sides. Research indicates that unmanaged (or mismanaged) changes are the biggest problems clients face in outsourcing implementation.
It is critical, therefore, to completely capture and communicate all critical elements of the project. Both the organization doing the outsourcing and its selected outsourcing partner will need to:
1. Assign a dedicated Project Manager
These project managers will help manage all phases of implementation at each organization, including project planning, task assignments, issues and resolution procedures, and status reporting. It’s key that the project manager on each side stays in close communication with his or her counterpart.
2. Jointly complete a Requirements Study
This study should detail the systems, processes, and personnel requirements necessary on both sides in order for the project to meet the organization’s expectations. Also included should be how the requirements will be implemented in the new environment (at the outsourcing partner) and supported (by the outsourcing organization), as well as a full description of the work process and customizations required.
3. Establish a project timeline with designated milestones and sign-offs
At key points throughout the implementation, the organization should sign-off on the completion of major milestones. These sign-offs serve to indicate an agreement between the organization and the outsourcing partner that the specified deliverable has been completed to the satisfaction of both parties.
4. Complete a transfer of knowledge
This includes procedure documents, definitions, and other training type documents with the provider to ensure critical elements are not overlooked when the provider begins work.
5. Develop reporting
Both parties should jointly develop the reporting necessary to determine the success of the initiative based on the organization’s expectations.
6. Schedule regular meetings
This is the most important at go live. It is important to communicate feedback or resistance within your organization so that it can be addressed quickly, and before it escalates.
7. System testing
Before going “live”, a test should be made to ensure that the new solution works correctly, is complete, and meets the organization’s specifications as previously outlined in the definition of project requirements.
Staff-Related Risks in the Implementation Phase
It is important to be aware of the following staff-related risks since they can result in delayed implementation or even a failure of the entire project. Any of the following should send up a red flag:
The Organization’s implementation team is not in place or has a poor understanding of the contract and project requirements
Throughout the implementation phase, and going forward, the organization must commit an appropriate level of management staff, knowledgeable in all aspects of the initiative, to the project. Their focus should be to manage the relationship with the provider, ensure that the implementation process moves ahead as planned, and to handle any disputes and escalations. A process for resolving misunderstandings should be defined and in place, as well.
The Organization’s team lacks the required skills
It’s been stated that 60% of staff assigned to manage the implementation and operations of an outsourcing project have no prior outsourcing experience. And, 80% of companies initiating outsourcing don’t provide their team with enough ongoing training. It helps to understand if the provider will be staffing with all newly brought in workers, or if there will be seeding of tenured employees.
Resistance within the outsourcing organization’s staff
Employees affected by the outsourcing initiative may be threatened by the changes it involves, worried about their job security, or resistant to new technology and processes. These issues can inhibit the project’s success. Fully defining an employee transition plan, keeping staff “in the loop” about the project and its objectives, and making them part of the team effort can eliminate these fears and help to ensure success. Each milestone should be communicated. This will mitigate any fears they may have concerning the project, encourage “buy-in”, and may very well generate valuable suggestions for improvements to specific processes.
Signing an outsourcing agreement doesn’t waive the abdication of the organization’s responsibility for the business activity. Effective management of the relationship with the provider and the implementation process, along with essential communication with all parties directly and indirectly involved, will be key to the success of the project.
Phase 5 – Measuring Success
Browse through our other outsourcing articles below:
- Nine Earmarks of the “Right” A/R Outsourcing Partner
- Managing an Outsourcing Initiative-1
- Managing an Outsourcing Initiative-2
- Managing an Outsourcing Initiative-3
- Managing an Outsourcing Initiative-5
- Receivables Outsourcing
- Using Targeted Outsourcing to Increase Cash Flow
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