TOP 5 REASONS TO OUTSOURCE YOUR SERVICE DESK - Getronics

The Help Desk Institute (HDI) is the world’s largest membership association for internal and external IT service and support professionals. HDI is member-focused and remains vendor-neutral. They have identified the following parameters as some of the most compelling reasons to either maintain control of your service desk or to seek out a qualified service provider to manage these services for you.

1) Economies of scale for the provisioning of connectivity and technology;
2) Lack of in-house technical expertise;
3) Ability to scale for organizations faced with frequent acquisitions and mergers;
4) Reduce and control operating expenses;
5) Reduce and control operating expenses.

Insurance Start-Up Quickly Succeeds Thanks to Back-Office Outsourcing Provider

By Gary N. Bowen, Business Writer

Many new businesses, especially those in the insurance and financial sectors, quickly encounter a basic question: Do we build a complete vertical organization internally or rely on outsourcing?

For one, Universal Insurance of North America in Sarasota, Florida, the answer was a no-brainer. Outsource.

Today Universal’s U.S. Property and Casualty Group offers residents in Florida, South Carolina, and Texas a variety of services including homeowners, dwelling, fire, condominium unit owners, tenants’ policies, and flood insurance, and is now entering personal auto and personal umbrella liability coverage markets.

None of this would have been possible without outsourcing.

Its parent company, headquartered in Puerto Rico, wished to expand its footprint into the United States in 2004. In order to get from aspiring entrant to profitable venture quickly, Lora Rees, senior vice president at Universal, knew there was only one logical avenue. “We had to outsource virtually all our back-office support.” She directly cites Universal’s partnership with CGI, a provider of information technology and business process services, as a wise move that pays dividends. “That’s because we needed an experienced partner that was willing to fully collaborate and grow with us,” she adds. “We had the products and services; they had the organizational expertise.”

Rees, along with Universal Insurance president Rick Espino, brought previous experience with outsourcing providers to their new positions. That background was well served when first deciding on the back-office outsourcing approach, then crafting what would be an intricate, but solid, service level agreement (SLA) with CGI.

Russ Pass, a partner at the Chicago-based management consulting firm Bridge Strategy Group, suggests that open and useful discussions between outsourcing partners occur when specific metrics produce honest give-and-take toward shared success. But he adds, “Both parties need to focus on the long term and areas where they can build expertise and competitive advantage.”
A carefully crafted SLA defined the partnership

The seven-year agreement valued at between $45 and $75 million finds CGI providing policy and accounting business process services (BPS) for Universal’s personal lines of homeowners, dwelling-fire, auto, and umbrella liability coverage in Texas and Florida. Specific services include data entry and management, Web front-end and IT processing, template underwriting, customer service, and cash processing payables and receivables. “About the only things we’ve completely retained in house are financial reporting, non-template underwriting, and risk management,” says Rees.

Both sides went into the relationship with eyes wide open and an understanding of what they needed to do in order to have a functioning organization in place within a year. But that didn’t make things any easier or less intricate.

Rees’ previous insurance outsourcing experience came in handy in developing the SLA and its definition of both parties’ roles. “I was involved in a Managing General Underwriter (MGU) relationship. It ended up being a case of that provider housing and managing all the data but not being in a position to capably share much of it. We had to avoid that trap.”

That memory produced an SLA that was quite extensive and took a lot of time to craft. “It involved more than just a few bullet points,” Rees adds.

George Schwab, vice president of CGI, also notes that the intricacies didn’t end with the SLA. The very nature of developing a universal database that is now the bedrock of all product, service, and management tasks from the ground up was first a tedious chore, then a rewarding breakthrough.

“We had to convert a lot of data,” he admits. “But we were also developing a process that we would replicate for Universal as more states and products came online. We needed about seven months to get them up and running.”

“It ended up taking longer than we had hoped,” counters Rees. “But it was much less than the 12-18 months it would have taken had we done it in house. There were about 60 days of pain. We knew there was going to be some. But it was worth it in the long run and, to be fair, because CGI did have experience in setting up legacy systems, the pain was less than it could have been.”

Today, Rees sees that period as an investment because not long ago Universal entered its third state, South Carolina. Total ramp-up time shrank to 110 days.

“It’s easier to bring other states and products on line because we took the time to do it right back then. So in retrospect it was a good trade-off,” she says.
Efficient outsourcing provider of back-office “Web workers”

With an engagement that is entering its third year, Universal and CGI have settled into an efficient rhythm. There are two data and customer centers in Tampa, Florida, and Ft. Worth, Texas, which provide redundancy.

Furthermore, where appropriate, CGI recently began decentralizing some of its workforce for Universal. A growing number of its workers serve Universal from their homes or small satellite offices, the latter practice known as “office hoteling.”

“At the end of the day, you’re creating a service that you’re offering to the customer,” says Sridhar Rajan, a senior manager with Deloitte’s Outsourcing Advisory Practice. “So the question is, ‘What kinds of services can you really take out of your four walls?’”

This innovative method of service by CGI creates a strong impression on Rees. “Their ability to have people in lots of different locations has underscored our feeling that in some cases, a centralized office isn’t always necessary,” she says. “They have people working on our accounts not only in centralized locations but less traditional environments. It certainly proves that it’s not important where they do the work so much as it gets done.”

Schwab’s explanation is simple. “There’s no drop-off in productivity, and it helps us keep our costs down, which in turn helps reduce Universal’s costs.”

He also feels that communication is key in an outsourcing partnership. “When you’re just a supplier, you’re not involved in decisions that affect your service. But they gave us responsibility for the back office from day one as well as the respect that a partner deserves.”

Further expansion in product and service lines as well as additional states is in Universal’s plans. According to Rees, CGI has earned the right to grow along with Universal. “We structured our SLA to account for this expansion so we don’t have to go back and get pricing. Plus, it makes better sense since things are now moving so smoothly.”
Lessons from the Outsourcing Journal:

* Diligently crafted service level agreements (SLAs) are important in outsourcing relationships because they include clear metrics by which to measure performance against objectives. They also facilitate productive outsourcing relationships and can create a sense of shared purpose between partners.

* When creating an entire back-office management structure in a new business or new market, balance speed to market with an ability to replicate those newly created processes because eventually you may add more lines of business to the engagement. This can, in many cases, shrink incorporation time from months into weeks.

* BPO providers and buyers are learning it doesn’t matter where the provider fulfills the services. This is giving rise to the explosion of the remote worker in many areas of outsourced processes for service fulfillment.

Publish Date: March 2008

When it Comes to Outsourced HR and Payroll Systems Management, One Size Rarely Fits All

By Gary N. Bowen, Business Writer

Interdean International Relocation of Suffolk, England is an international moving and relocation specialist that works with personal and corporate clients to move families throughout the world. The 50-year-old firm has 45 offices in 33 countries and employs over 1,500 people in Europe.

When Alan Cartwright became the firm’s UK finance director in 2003, a general process review revealed several operational deficiencies, primarily in Interdean’s payroll and personnel management areas. Cartwright, now the company’s group operations director, did not like what he saw.

“We were outsourcing two inefficient DOS-based processes,” he says. “Both were expensive. The one for payroll created a disproportionate amount of work at the end of each month. The previous finance director had to spend way too much time inputting and reentering financial information. Physical reports were also difficult to generate. It was neither time nor results efficient.”

Cartwright continued scratching his head upon further discovery that his firm was paying almost as much for the administration of the payroll for the small executive team as it was for general payroll.

Christa Degnan Manning, research director at AMR, suspects why this relationship ended. “This is likely an example of an engagement that the buyer rarely reviewed. It’s not surprising that ‘new executive blood’ found an opportunity to reevaluate the options for payroll; it’s the kind of relationship no one typically fixes because it’s not apparent it’s broken.”

So Cartwright reached for his broom, gave the incumbent provider notice, and contacted Patersons HR & Payroll of Salisbury, UK, an ASP provider specializing in HR applications and hosting. He had worked with the provider before at his previous engagement with Netscalibur, a pan-European internet service provider, so he had a very good idea what to expect.

His faith was rewarded as the new solution produced not only clear financial savings, but a smoother running payroll and HR Management System (HRMS) which the supplier developed, managed, and modified when necessary with Interdean’s specific need’s in mind.
A provider that’s more like a friendly neighborhood tailor

Interdean needed a “holistic” provider that would permit Cartwright to use his firm’s own best practices and procedures rather than being shoehorned into a one-size-fits-all solution. He wanted a collaborator, not a supplier, to call only when there were problems. And that provider had to offer an easy management structure for all HR and payroll data, remote ASP access, enable HR and other directors in the business to scrutinize reports in real time, and help with periodic modifications in order to remain leading edge.

“We build systems for clients that are configured to order,” says Martin Stockton, group vice-president. “It’s like having a suit made. A gabardine suit can be as different as the wearer. Think of it as a tailored suit. The client’s needs produce the specifications or patterns. Then we build and deliver what the client wants, reasonably quickly, not off-the-rack.”

The work began late in the fall of 2003 and involved four primary steps. First, the supplier set up applications to reflect the appropriate level of user and security access that the employee groups required for reporting and company structures. Then the two established standard reports to meet the requirements of the finance and HR functions.

Next, the supplier populated the application with HR and payroll data for January 1, 2004. Finally, Patersons carried out a parallel run of the January payroll. The parties audited the data and made any necessary manual adjustments.

To everyone’s delight, it worked perfectly. The only additional tasks involved adding some enhanced integration and user functionality. The new service produced a stable, robust, organically-integrated system that Cartwright sought from his provider. It generated enthusiastic support from both HR and finance management and offered ongoing user training/support. None of this typified the recently sacked provider.

“Payroll services are becoming more commoditized,” adds Manning. “Good providers improve technology delivery like adding enhanced reporting and other support services needed to produce additional buyer benefit throughout the engagement.”
Benefits of a relationship that’s about more than just the service

Many benefits typify this now mature outsourced service. The first is the the approximately £10,000 annual cash savings over the previous inefficient provider, according to Cartwright.

“The main thing surrounds our time,” he says. “It allows us freedom and better data access. We also aren’t dealing with payroll from a position of weakness. The saving on internal resources is tremendous when it comes to recovered time and reduced back-office expenses. We no longer need to physically print reports, for example. It’s easy to factor in an extra 200 percent in total savings over the cash.”

“Respective to our platform, we have to match our own processes to the client’s needs,” says Stockton. “Cookie-cutter solutions, even with IT processes, seldom work on a long-term basis. When it’s time to customize and modify, just like having a suit periodically altered by that tailor, ongoing review and collaboration are a necessary partnership staple.”

Stockton continues. “Today, organizational requirements are not so much linear as circular. That means you have to revisit more aspects of the buyer’s HRMS service process such as recruitment, payroll, and training in order to assure they continue to get the optimum benefit of the outsourced service.”

Over time, this professional relationship has led to a finer association that is not limited to just the services themselves.

“Being both providers and buyers in the outsourcing world,” notes Cartwright, “from time-to-time we informally get together to chat with their senior level people because we like to compare notes on some of the outsourcing challenges and solutions one or the other might have learned. It’s not just about our service engagement.” But he does admit that an occasional idea surrounding their engagement can take root at such gatherings to sprout later.

“Deeper personal relationships between provider and buyer can just as often lead to deeper professional relationships,” says Manning, “especially if the outsourcing provider continues to innovate and improve services for its buying partners.”
Lessons from the Outsourcing Journal:

* Outsourcing relationships that buyers don’t consistently review run a danger of being terminated. Changing needs of the buyer require both partners to continually revisit how well the engagement is meeting the buyer’s requirements.
* Cookie cutter solutions, even with outsourced IT processes, may not work on a long-term basis. When it’s time to customize and modify, ongoing review and collaboration are a necessary partnership staple.
* Deeper personal relationships between provider and buyer can just as often lead to deeper professional relationships, especially if the outsourcing provider continues to innovate and improve services for its buying partners.