Great Governance for Outsourced Services: Leveraging New Technology for Breakthrough Performance
By: Expense Management Solutions Printed in: EMS Newsletter - June 2008
If you have responsibility for any major corporate service function, chances are you manage at least one relationship with a provider of outsourced services – maybe more. Depending on the size of your organization, outsourcing even one function can become quite complex when multiple geographies, multiple business units, diverse regulatory environments and even multiple service providers may be involved. For many companies, this is just the tip of the iceberg since the reality today is that most are managing a portfolio of complex outsourcing relationships. The good news is that the marketplace is responding with new technology to help relationship managers push beyond basic oversight of outsourcing relationships to achieve breakthrough performance and deliver increased value that contributes directly to the corporate bottom line.
Performance Challenges
Many factors inhibit breakthrough performance. Two locations reporting on their relationship with the same food services provider may not use the same reporting format or tool, resulting in information that, although useful at the location level, is not consistent or comparable at the enterprise level. Two business units relying on the same facilities management service provider may focus on different key performance indicators, again resulting in incomplete data and an inconsistent picture of performance. Other communication challenges may include inconsistent frequency of reporting across the organization, or the inability of an organization to coordinate the input of multiple stakeholders in a timely manner.
Another factor inhibiting breakthrough performance is the sheer complexity of some outsourcing relationships. Take, for example, a globally integrated corporate real estate services contract which, in addition to facilities management, may include transaction management, lease administration, and project management in addition to reception, security, mail services, and food services. The relationship management team can easily become overwhelmed with the volume of data, often delivered in different formats, from different locations, at different times, all of which must be compiled and analyzed to assess the performance of the service provider. Many complex corporate services contracts also contain complicated formulas for calculating at-risk or performance-based compensation, which must be calculated and awarded within specific time frames.
The potential benefits of outsourcing corporate services are as enormous as the challenges of managing these relationships are daunting. Millions – even hundreds of millions of dollars in annual savings are possible, but few companies are achieving the breakthrough performance that will allow them to maximize the value of their outsourcing relationships.
Technological Evolution Falls Short
Recognizing the potential for customer dissatisfaction and marketplace backlash, many service providers across the outsourcing spectrum have developed reporting platforms that are integrated into their solutions. Such a global platform for reporting and communication solves problems of consistency, standardization and frequency across the relationship. Although this is an important step, each of these solutions are specific to the service provider offering them, and the client is burdened with learning and managing multiple systems that do not talk to each other or provide a comprehensive overview of an organization’s complete portfolio of service provider relationships. Furthermore, these systems generally provide little in the way of the collaborative reporting and performance report cards that many sophisticated outsourcing relationships employ today.
Leading providers of sourcing software include some aspect of supplier relationship management with their offerings. Primarily designed for sourcing products rather than services, these modules can be highly successful for tracking and managing supply chains, and although they do provide a common platform for managing transaction activity within a portfolio of supplier relationships, they are often a poor fit for managing complex service relationships with complicated performance metrics, many of which may have subjective components.
New Technologies Enable Breakthrough Performance
Expense Management Solutions has spent over a decade developing and refining sophisticated performance management strategies and tools that our clients have used to successfully manage billions of dollars in outsourcing contracts. But as outsourcing contracts have become more complex, we recognized that a new breakthrough was required to take relationship management to a higher level of performance and value generation.
We have been working closely with a new company, Hiperos, to integrate our knowledge and expertise into a new software platform that was developed specifically to manage outsourced services relationships across a wide variety of corporate services and functional areas. This new solution, The Hiperos Relationship Portal, or R.Portal™, is an on-demand, browser based platform that is built to incorporate the complex communication, data management, reporting, and collaboration required to manage an entire portfolio of outsourcing relationships, from the straightforward to the most complex.
Since late 2007, we have had the opportunity to work with several of our clients to implement this new technology and its potential is impressive. The R.Portal’s™ core functionality is to support performance and compliance management. The system is highly configurable so that each client and service provider stakeholder has access to only those aspects of the relationship that are relevant. It is collaborative, with input, reporting and communication capabilities for client and service provider alike. The functionality has been enhanced with actionable content, including useful documents, templates, news and market data that increase speed to implementation and enhance the effectiveness of critical aspects of relationship management. R.Portal™ also incorporates tools that allow internal and external teams to work together and share best practices, knowledge, and ideas, fostering a truly collaborative community.
Over the last two decades, outsourcing has come a long way. Companies that rely on outsourcing strategies to achieve competitive advantage have often struggled to achieve the ROI they anticipated. Although technology is no substitute for a well designed and rigorous supplier relationship management program, it can help overcome many of the roadblocks that inhibit success, leading to successful supplier relationships and enabling true breakthrough performance.
Click here to read an article about how Expense Management Solutions implemented the Hiperos R.Portal to transform facilities management at CA.
Click here to read an article about how Expense Management Solutions implemented the Hiperos R.Portal, enabling relationship management on demand at State Street Corporation.
Click here to find out more about Expense Management Solutions' strategic relationship management (SRM) services.
If you would like to speak with an Expense Management Solutions representative about SRM, new enabling SRM technologies, or how we have helped our clients save millions of dollars in corporate services expenses, call us today at (508) 460-7014, or send an e-mail to solutions@expensemanagement.com.
