Best Practices in Office Services Outsourcing

1
Best Practices in Office Services Outsourcing
2
Todays Speaker
Frank is a graduate of the State University of
New York education system and has a Mail piece
Quality Control certification from the U.S.
Postal Service. Now in his fifteenth year with
The Millennium Group, Frank has extensive
experience in the office services and document
distribution facilities management industry. His
experience spans the entire lifecycle of a
facilities management engagement from program
development, justification and demonstrated
Return on investment, to daily services execution
to compliance and quality monitoring through
exiting strategies and competitive displacement. 
His focused expertise lies in outsourcing program
development including staffing, automated
procession systems, reprographics technologies
and cost recovery systems
3
Best Practices in Office Services Outsourcing
4
Outsourcings Continued Growth Big
5
and Small

• There are 146,000 outsourcing companies listed by
  DB.
• More than 70 of companies supplying outsourcing
  services have 9 employees or less.
• More than 52 of the companies reporting
  outsourcing sales indicate sales of less than
  500,000.

6
Criteria for Vendor Choice

• 1. Price (65)
• 2. Commitment to Quality (51)
• 3. Flexible Contract Terms (39)
• 4. Provider Reputation (34)
• 5. Available Resources (28)

Outsourcing Institute
7
From the Outsourcing Center
8
Outsourcing Best Practices
9
Why Best Practices?

• In a survey of the top 25 companies with
  outsourcing services in excess of 50 million
  dollars, 70 of them said they have had some
  negative experience.
• 1 in 4 of those surveyed indicated that they
  planned to bring something outsourced back in
  house because of that.
• Deloitte Consulting April 2005

10
1 Expectations - Partnership
11
Outsourcing is a partnership that mandates
continued management involvement from the buyer
to ensure success.
12
Key Points

• A complete hand off will result in challenges.
• No one knows your business better than you!
• Dont micro manage - manage contract compliance
  and services. evolvement not the suppliers
  business.

13
2 Core Business
14
Is the providers core business services centric
or are there other drivers that may compromise
services in the future?
15
Key Points

• Beware services as a vehicle for hardware
  placements
• Beware staffing firms without industry expertise
• Seek management teams with industry
  certifications.
• Core services providers bring value
• Future savings in ancillary service rate plans
• Off-site support, etc.

16
3 Technology
17
Technology is an integral part of an outsourcing
solution that balances staff technologies to
enhance services and reduce operating expenses
over the long-term.
18
Key Points and Examples

• Technology can reduce headcount
• Technology for all service components
• Digital MFDs
• Automated document management workflow
• Mail imaging
• Web based internal tracking
• Safety x-ray machinery, Safe mail opening

19
4 Technology Objectivity
20
A true services provider working on its clients
behalf will recommend and provide a cross section
of technology solutions from multiple sources.
21
Key Points

• Put your needs and requirements first
• Balance cost vs. performance.
• Have provider demonstrate that they have done
  this before.

22
5 Staff Development
23
A true services provider will be committed to the
staff that they place in an engagement
24
Examples

• HR programs staff benefits, etc.
• Prudent recruitment and screening programs
• Established training development programs
• Demonstrated levels of corporate support
• Low turnover!

25
6 BTO not BPO
26
The very best outsourcing programs transform a
service program as opposed to simply taking it
over.
27
Examples

• Introduction of new service offerings
• Color copy/print on site
• On premise imaging
• New security protocols package/mail screening
• Digital mail
• Re-engineer services program
• Off-site mail hubs
• Off-site printing
• In source/Outsource some processing

28
A Case Study

• Mid-sized Law Firm
• On site services staff of 6
• Fleet MFDs
• Copy/Mail Center equipment
• Over 90k/year in off-site services
• Pagination
• Color reproduction
• CD burning services
• Adequate services

29
BTO Results
30
7 Flexible Pricing Models Contract Terms
31
A true services provider can present multiple
pricing models based on customer need and
flexibility in its contract to account for
changes in its clients business.
32
Key Points

• Pricing Models
• Fixed Cost Model
• Cost-plus
• Contract Flexibility
• Separation of management services and technology
• Ability to modify staffing levels w/out penalties
• Ability to adjust a of technology

33
8 Service Level Agreements (SLAs)
34
A legal document within an overall master
contract for an outsourcing agreement. SLAs
contain a description of provided services and
are a MUST for successful services.
35
Key Points

• Establish the service baseline.
• Ensure accountability of the program.
• Measure services.
• Choose the measurement method.
• Establish the measurement requirement.
• Revisit and change the SLA frequently.

36
Example
Metrics In accordance with the terms of the
Agreement, Company agrees to comply with the
Service Level Standards set forth in this service
level agreement. Company will meet the below
Service Level Standards
37
9 Performance Metrics
38
A successful program is one that is continuously
measured.
39
Key Point

• Performance measurements.become more important
  than the contract as primary management tool in
  governing an outsourcing relationship.
• Accenture, Driving High Performance Outsourcing

40
Examples

• Monthly Operating Volumes
• Quarterly and Annual Business Reviews
• Customer Satisfaction Surveys
• Key Performance Indicators

41
Monthly Data Collection
42
End User Survey
43
KPI Scorecard
44
10Risk / Reward
45
A quality services provider should be willing to
put a portion of their fee at risk as a poor
performance penalty. Buyer should be receptive
to rewarding exceptional performance.
46
Key Points

• 59 of those in the Accenture study of 565
  companies use risk/reward to govern relationships
• Not a micro management punishment clause

47
Risk/Reward

• A metrics driven management tool.
• Establish baseline service commitments (SLA).
• X penalty for services below baselines.
• X of a bonus for exceeding those commitments.
• The Shared Savings Clause another option.

48
KPI Scorecard
49
Example
50
Example Copier Service Repair

• The Contractor agrees to provide a response to
  all calls for service, identify problems and
  communicate a plan for problem resolution for any
  copier machine within four (4) hours. For each
  response not within the response time
  requirement, the Contractor agrees to pay a
  liquidated damage assessment of ___.00 per
  occurrence.

51
Example Support Service Interruptions

• The Contractor agrees to provide adequate staff
  and equipment, including but not limited to
  Carrier Van, to manage and operate Central Mail
  room, Central Courier Service, and Central
  Switchboard. Upon any of these services being
  interrupted for more than twenty-four hours, the
  contractor agrees to pay a liquidated damages
  assessment of ___.00 per occurrence per day

52
Example Shared Savings

• Contractor may recommend cost savings
  opportunities throughout the contract period.
  Client shall compensate Contractor equal to 50
  of savings resulting from such recommendations.
  Such compensation will be agreed upon in writing
  and remain in effect throughout the recommended
  action and/or contract termination whichever ends
  first.

53
Summary
54
Summary

• Identify relevant best practices in all of your
  outsourcing endeavors.
• Not all best practices are relevant to all
  service lines.
• Make best practices part of your services
  investigation or negotiation!

55
Thank YouFrank FarnacciThe Millennium Group,
Inc.