Consider the Source

Part II: Cloud Computing - The Next Big Step for Contact Center Services

by Tony Zmudzin, Director, TPI

Several weeks ago I posted the first installment of a 2-part blog that explored what the proliferation of Cloud-computing solutions means for contact center services, and I touched on the array of appealing offerings on the market today. Can the many potential Cloud-based solutions be beneficial for contact centers? Are truly virtualized operations achieveable? I encourage you to read part 1 if you haven't already.

Now I turn to several major factors to consider if you're contemplating the move to a Cloud Computing-based contact center model. The market offers something for every buyer, but you must take it upon yourself to conduct proper due diligence when considering whether the Cloud deliver practical and measurable results to your organization. Here is TPI's advice for how to frame your thinking:

Buyers should assess their operational considerations (many of them internal) as they consider moving to a Cloud Computing-based contact center model. If your agents will be remote from your facility, you will no longer be able to walk the aisles, hear the center’s “buzz” and be able to identify service or training needs first hand. You will need to establish a new management model, train or otherwise retool your management team to effectively manage remote performance and establish training competencies for your remote agents.

Security demands special consideration inasmuch as the buyer’s enterprise is extending its operations to third parties. Security components include public versus private or virtual private Cloud, physical facility security, desktop lockdown, browser cleansing, network security, encryption for data storage and transmission, network security (multilayer firewalling and network intrusion systems), data backup, application-level protection, and industry certifications such as PCI Data Security Standard (PCI-DSS) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Buyers should evaluate the ability to perform independent security certification and auditing of the service provider’s service solution.

Other general considerations include implementing multicarrier redundancy as part of the solution; eliminating single points of failure; and ensuring that privacy and security solutions meet industry and client requirements. You also should consider service provider plans and commitments for continual innovation and refresh of hardware and software components, provider solution integration with existing buyer applications, and responsibility for new interfaces to internal applications, ongoing integration management, and maintenance.

It is vital for any enterprise to view a Cloud implementation as a strategic decision. Small to medium-sized businesses are most active in exploring the total cost of ownership benefits offered by Cloud-based solutions. Enterprises that have large installed call center infrastructures should assess the fit and purpose of a Cloud-based solution against their current investment. Parallel model office, pilot testing or geographical location expansion are good approaches for larger enterprises to protect the brand and established customer relationships. Regardless, a wide range of business issues must be codified in the statement of work and agreement. These issues involve physical and logical security, platform availability, disaster recovery/business continuity coverage, data backup requirements, data ownership terms, pricing, reporting and terms that facilitate “easy” expansion and contraction of support for changing transaction volumes.

Finally, buyers should assess their governance maturity and competency. A multi-operational and/or multivendor environment requires a specific kind of governance structure and process set. Buyers enhance their opportunity for success by having the right governance talent, experience, tools and methods.
Cloud-based call center solutions represent the latest available option to consumers of contact center services and should be viewed as a real potential alternative to internal or available service solution market offerings from third-party providers. These solutions, as with any other buying decisions, must be supported by solid business and sourcing strategies. Buyers must remember that these solutions transfer responsibility for the services, operations or processes to a third-party provider in a big way. The provider is now an integrator — not a traditional service provider putting agents in seats. Buyers need to ensure they are ready to successfully manage on this new horizon, and then choose wisely.

In 2010, Orange Business Services surveyed 500 multinational corporations in 12 European countries across the financial services, healthcare, manufacturing, retail and transportation industries regarding those organizations’ “application management plans and attitudes among decision makers.” Survey findings revealed that only 95 of the 500 companies — or 19 percent — planned to virtualize their call center applications. The survey summary played down the number, but a different way to look at this is that if the 19 percent is applied against the US$300 billion internal and sourced global market, there will be much activity and leverage of this solution option.

If you are considering a Cloud-based solution for your contact center, our experts can help you every step of the way. Contact me at tony.zmudzin@tpi.net.

Surviving — and Thriving — in an “Overnight” Outsourcing Transformation

by Cynthia Batty, Director, TPI

 

Something is changing in the outsourcing universe. We suddenly see companies that have never outsourced before becoming deeply engaged in multiple concurrent outsourcing transactions. It is happening because these companies have an imperative to transform their organizations "overnight."

So they are undertaking these transformations by outsourcing functions such as information systems, transaction processing, Finance & Accounting and Human Resources — all within a very few months of each other. 

 

Rapidly transforming companies have learned from mistakes of the past and want to talk about Governance, but they assume that"Governance" and the roadmap to success are completely mature. This leads to a phenomenon of "Governance in an Hour" or its related cousin, "Governance on One Page," in which the speed of change overwhelms the ability of the organization to address fundamental decisions, structures and processes that will enable the transformation.

 

 

If you recognize your organization in this scenario, consider these TPI Top 5 tips for companies coping with overnight transformation through outsourcing:

 

1. Make sure you have established clear accountability for the outsourcing relationships at all levels of the enterprise. We see companies trying to matrix responsibilities as they design their Governance of complex transformations. That is understandable, but a matrix reporting structure can obscure accountability. The service provider is responsible to deliver the services; but YOU are accountable for ensuring that you receive the services. Identify a clear line of accountability from a service to an executive who is a genuine stakeholder in the outcome to ensure that the service accountability does not get lost in the transformation.

 

2. Establish enterprise roles and responsibilities early in your transformation. Corporate functions are significantly affected in outsourcing, particularly Procurement, Risk, Security, Legal, and Audit. Leaving role definition until later in the process can stall important development of the Governance approach and can impede the development of an Outsourcing Center of Excellence.

3. Invest in a Governance data and workflow system. Most companies that are more mature in multisourcing are still using Microsoft Excel and Access to manage their data and workflow at great human cost in both hours and fatigue. Resist this approach. Software to manage these areas is maturing rapidly. A true Governance data and workflow system will pay for itself in a year and free your Governance team to focus on work, not on spreadsheets.

4. Seek out and listen to experienced colleagues in other companies. To paraphrase a well-known quote about childrearing: "Once upon a time I had five theories about outsourcing, but no outsourcing. Now I have five service providers and no theories." Outsourcing will change everything about the way your company works, forever. Ask people who have been through it.

 

 

5. Follow your instincts to conduct meaningful organizational change management — and have a plan to look back. Companies undergoing rapid transformation have a very high risk of changing too fast for the organization to absorb the changes. Transformational outsourcing is not a popular choice for change; your program must include the vision of what your organization is changing into, the detail for the organization to see and live in the new world, and a program for following up to make sure the transformation stuck.

TPI Governance Advisory Services experts can help you achieve your organizational goals through objective advice, knowledge of your industry and experience with arrangements from simple to complex.

Contact Cynthia Batty, Director, TPI, to learn more. 

Cloud Computing: Taking the Next Big Step for Contact Center Services

by Tony Zmudzin, Director, TPI

Managers of contact center operations as well as their counterparts in information technology and other areas are looking to the next big horizon in service delivery: Cloud Computing. As they look to take that next step, the key question is whether the “rainbow” on that horizon is true virtualized reality for contact center operations.

The history of this move to the Cloud goes back nearly 20 years. Intelligent Internet use has provided multiple benefits to industry, especially since 1991 when the National Science Foundation freed the Internet for commercial use. As beneficiaries, business and individual users have been progressively moving from pushing atoms — paper letters, invoices and purchase orders — to pushing bits — e-mail, online ordering and billing, and electronic delivery of book content. Businesses have continued to extend their use of the Internet to include hub-and-spoke delivery infrastructures and telecommuting and virtual officing for a substantive percentage of the work force — including adoption of call handling by home-based agents. Both captive and sourced call centers have applied such leverage. Cloud-based services offer a logical and continued extension of the Internet infrastructure to further improve service options and reduce the cost of servicing customer contact.

Providers of Cloud-based services position this virtualized solution as less expensive than traditional solutions (total cost of ownership) and as easy to implement. Cloud-based services offer three primary benefits:

1.    Minimizing or eliminating capital expenditures
2.    Facilitating quick deployment
3.    Providing capacity on demand for volume expansion and contraction

We see providers of Cloud-based call center platforms define these benefits using different names. Common terms used to describe the benefits include flexible capacity, flexible financial commitments, instant deployment, quick response to changing business needs, ongoing innovation, low cost of ongoing maintenance, cost-effective disaster recovery, always-on availability, proven security and ease of integration. In the end, the main attraction is the ability to move away from a large capital expenditure to a periodic (monthly or annual) fee.

The market offers something for every buyer, from software-only solutions to “full” infrastructure (hardware and software) solutions providing greater than 99.99 percent availability, inbound call routing, workforce management, interactive voice response, chat and e-mail tools, outbound call handling and dialing, computer telephony integration, agent management, quality monitoring tools, and user-driven reporting and analytics. At times, these solutions are oversold by service providers, so proper due diligence is an imperative phase of a buyer’s sourcing process.

In my next installment I'll address several major factors to consider if you're contemplating the move to a Cloud Computing-based contact center model. Should you have questions in the meantime, please feel free to e-mail me.

Tension in the Cloud Offering More Choices for Outsourced Services Buyers

By George McLawhon, Director, TPI

My colleague Kevin Smilie recently wrote of the importance of an integrated, centralized IT Service Management (ITSM) system dedicated to demand management, capacity management and service integration in order to maximize the benefits of Cloud Computing. These elements will become even more important in the future as the very nature of Cloud Computing enables the growth of healthy new “tensions” in the sourcing landscape.

Sourcing alternatives are billowing up from some of the least likely places. Why? Classical sourcing approaches for data center and infrastructure services have typically been monolithic, with clients selecting a single long-term partner to provide these services. But they simultaneously turn to separate providers for their managed network services and to carriers to provide their transport services. While these three “buckets” of services have always had some overlaps (carriers providing more integrated Managed Network Services and infrastructure service providers also providing the same), Cloud ignites a new dynamic that promises more rumbling in the service provider space.

Data center and infrastructure integrators will remain strong contenders for Cloud Computing opportunities because they’re often already situated with the client and also because they have the resources and skills. These service providers have already begun to build their Cloud Computing offerings and demonstrate their value propositions.

Some integrators that focus on Managed Network Services have been making investments to build more of their wares into the Cloud, such as voice and firewall services. For example, Voice as a Service places investments related to call management, corporate dial plans, directories, etc., in the service provider’s space and minimizes the footprint of equipment and support required on the client’s premises. Extending this experience and capability to support other non-network-related Cloud Computing services is a natural progression.

Carriers have long provided transport and Internet access services, and many have built Internet data centers to support co-location requirements of their clients who have high-speed, low-latency Web applications. Some of these carrier-integrators have begun to build out their facilities to support Cloud Computing services. While some have been struggling to contract for and deliver Managed Network Services, the characteristics of Cloud Computing services may be in their sweet spot because these are well-designed and managed centers with close proximity to major network hubs and carry little if any additional network cost considerations for their clients.

The sourcing landscape for Cloud Computing services is shaping up to provide new alternatives for clients. While most will continue to seek a primary data center/infrastructure provider, a global Managed Network Services provider and one or more carriers for transport, that portion of the client’s workload that can more readily utilize Cloud-based services may be sourced from any of these service providers as needed based on a new competitive paradigm.

Is your company taking advantage of the competitive "tension" that Cloud-based services are fostering? What other newer choices are you investigating?

Getting Serious About Sustainable Sourcing

by Tom Olsen, Director, TPI

The increasing pressure of corporate responsibility — combined with the fact that the global information technology (IT) industry is on par with the aviation industry in terms of global carbon dioxide (CO₂) emissions — is driving companies to look for ways to reduce their carbon footprint. IT is an important part of the equation. The pressure to address sustainability is rising not only to address new regulations and customer demands, but also from a strong and inherent drive to realize economic benefits by saving costs on energy, travel and consumables.

Getting serious about sustainable IT requires sustainable sourcing. TPI clients increasingly demand sustainability in sourcing processes. Based on our experience, we suggest using these TPI Top 5 tips for incorporating sustainability into your company’s sourcing initiatives:

1. Articulate sustainable IT as an objective. Make it clear to your service provider(s) that sustainability is one of your key objectives.
2. Make solution sustainability an evaluation factor when evaluating service providers. Give sustainability an appropriate weighting to properly reward service providers for incorporating initiatives such as physical server and storage consolidation, virtualization, and thin clients.
3. Include sustainability in your statement of work. Be sure to describe functional and reporting tasks such as recycling, compliance with energy schemes, responsible asset disposal, and consolidation.
4. Define sustainability service levels. These levels will allow you to measure the performance of the sustainable services with a continuous improvement mechanism.
5. Include critical deliverables in the contract. Your contract should commit the service provider to implement critical deliverables within a certain time frame, such as an energy management system (EMS) within a specified timeframe and at least one emission reduction proposal per contract year.

Finally, make sure that during the process you ask service providers to describe how they will deliver sustainable IT services for your company and request information about their internal commitment to sustainability.

TPI’s seasoned strategy and assessment experts can help you achieve your global sourcing goals through objective advice, knowledge of your industry and experience with arrangements from simple to complex.

E-mail Tom Olsen, Director, TPI, or phone him at +47 41 66 36 66 to learn more about sustainable sourcing.

Key Findings from TPI’s New Multi-Sourcing Governance Study

By Cynthia Batty, Global Competency Lead, Service Management, TPI

In May 2010, TPI’s Service Management & Governance experts studied 12 organizations that had either substantial outsourcing activities in place with multiple service providers or that we knew had created an enterprise Outsourcing Center of Excellence (OCoE)  to bring  structure, competency and oversight to their enterprise multi-sourcing efforts. (An OCoE is an umbrella function that provides guidance and support to business units delivering outsourcing and services in an organization — a kind of “control tower” and centralized reporting function for sourced services.) We wanted to understand whether the trends we had identified in 2007 were continuing and how organizations now view their challenges with the passage of time. 

Here are the TPI Top 5 key findings from our recent study:

1, Companies with more modest enterprise multi-sourcing spend still use an OCoE. While the average outsourcing spend is US$500M and above (many in the multi-billion dollar range), we found that one-third of the companies had built their OCoE structure with less than $100M in spend – indicating that enterprise management and process oversight are providing value even in smaller multi-sourcing situations.

2. All OCoEs include Application Development & Maintenance (ADM) in scope. We knew ADM was prominent in OCoE management focus, but to find it in 100% of our subjects was notable. IT infrastructure and business process outsourcing (BPO) were tied at 75% of the responding organizations, with knowledge process outsourcing in 42% of respondents and HR in 33%.

3. OCoEs are providing sophisticated management frameworks to their organizations. Nearly every OCoE had created a sourcing life cycle, and to support this, processes for the business units doing outsourcing, policies, standards and guidelines. Fully 100% of them had created a “playbook” for the business units to support their outsourcing efforts.

4. The surveyed organizations see material value in their OCoE management structure. One respondent enthusiastically reported that, because of their proactive management efforts, they were able to “collaboratively partner with the business to provide solutions at a cost-effective rate in a standard manner to minimize risk – and got a perfect audit!” Another reported that, whereas the previous focus had been on cost and labor arbitrage, the organization is “now changing to a broader value view beyond cost – including productivity, innovation, etc., with more focus on transformation.”

5. The reporting structure of OCoEs is volatile. While all of the OCoEs we studied reported to a C-level executive (CFO, CIO, CPO) or higher, the reporting structure for half of them had changed in the last 18 months – in some cases from CIO to COO; in another case from CFO to CIO. This indicates the evolving understanding in organizations of the nature of the sourced services management discipline, and the ongoing search for where it fits in an organization.

Our multi-sourcing governance study results demonstrate in concrete terms that as companies mature their sourced services management capability, they are able to ensure overall service quality and improvement by building an internal capability and resource to fine-tune this process.

To learn more about this study or to discuss creating a Outsourcing Center of Excellence inside your organization, e-mail Cynthia Batty, Global Competency Lead, Service Management, TPI, or phone her at +1 201 978 0542.

 

Preparing your organization for HIPAA-compliant Cloud Computing

By: Jim Kane, Director, CIO Services

and

David McCament, Director, Healthcare/Payer Provider

 

Healthcare providers have an opportunity to take advantage of new, advanced technology in cloud computing.  Given the heavy industry regulation, it is important for health professionals to determine if cloud computing can provide them a secure, reliable, scalable, and inexpensive computing platform that can be used to facilitate healthcare customers’ HIPAA-compliant applications and data. HIPAA, which protects the privacy and security of certain health information, is a national standard that all healthcare providers need to be compliant with to secure “protected health information” (PHI).

Some key steps to preparing your organization for the cloud include the following:

1. Rationalizing, simplifying, standardizing and reducing your organization’s application portfolio
2. Implementing virtualization technologies at all levels to create a portable environment ready for the cloud
3. Developing a cloud computing strategy to help identify business value drivers, service impact, and service capability
4. Creating a corporate risk profile for cloud computing adoption
5. Deciding where to place healthcare applications and data taking into account characteristics such as business importance, data sensitivity, processing security, and regulatory constraints
6. Develop business case and determine the transformational roadmap to being the process of moving healthcare data to the cloud

As the “Great Healthcare Debate” continues the acceptance of cloud computing solutions – even in privacy and security-focused industries – is gaining traction. If implemented properly, the cloud provides a computing platform that can be used to facilitate a growing healthcare customers’ HIPAA-compliant industry and healthcare applications. In my next post I will address how healthcare businesses subject to HIPAA should carefully select a service provider with the capabilities to address HIPAA Privacy, Security, and Audit as well as provide secure, scalable, low cost IT infrastructure.

Technorati Tags: cloud computing,healthcare,HIPAA

Predictions for Driving Outsourcing Contract Awards in 2010

By: Paul Reynolds, Chief Research Officer, TPI Momentum

New data released yesterday by our research arm, TPI Momentum, predicts the number of outsourcing contracts awarded globally will rise this year as organizations seek new ways to optimize critical business functions in an improving economy.

The growing acceptance of cloud computing, increasing interest  in multi-sourcing and emerging focus on governance and risk management will fuel outsourcing contract volume this year. But these same factors will narrow the scope of individual outsourcing contracts, driving the value and duration down and intensifying competition among service providers. Some additional predictions and insights from the Report include:

1. Pricing of IT outsourcing services has continued to fall as a result of labor arbitrage and a trend toward:
   • Shifting some support functions to lower cost delivery locations,
   • Remote management,
   • Standardized platforms and tools,
   • Virtualization,
   • Competition from cloud offerings,
   • ITIL processes and self help tools.
2. Contract renegotiations will be big given about 422 contracts worth a total of $15 billion are expected to expire this year. Since many of these were mega deals signed in a stronger economy, we envision many of these deals will be broken up into smaller transactions providing a boost to contract value.
3. The role of captive centers in organizations has expanded beyond just delivery becoming more influential in setting client organizations’ operational strategies, including third party outsourcing decisions. Also monetizations of offshore captive units - driven by firms in the banking and financial services sector - are expected to continue, though service providers are becoming more selective about their captive acquisitions.

Each of these activities will be crucial to helping organizations drive strategic efforts and lower costs. Stay tuned for our next Momentum Market Trends & Insights report on Vertical Industries out in May.

Cloud Computing – How to Make Rain NOW

by Kevin Smilie, Partner, CIO Services, TPI

“Clouds, clouds everywhere, but what about the rain?”  We are awash in the “cloud computing” metaphor these days, but no one seems to be focused on why clouds exist in the first place ─  to move water from one place to another. What “rain” do we expect cloud computing to deliver? 

Cloud computing promises to enable agility and flexibility that can translate into competitive advantage. We heard a similar story before with utility computing.  But things are different this time. As we’ve already adopted cloud services into our personal lives with technologies like Apple’s iPhone, our mental map has shifted. CIOs are more willing to accept the evolution of cloud computing in the enterprise because they’ve seen the consumer benefits.

And the consumer push has created an infrastructure for service that is now delivering value to small and medium-sized businesses (SMBs) with software as a service (SaaS) applications such as Salesforce.com and Google Apps. Large companies are beginning to adopt certain of these while piloting other cloud computing services for broader uses such as development and test. What do you need to do now to get ready to put this rain to productive use?

Know how to channel the runoff. Develop a plan for how cloud services fit into your service delivery model and how you can effectively use them. The complexity and integration of your application portfolio will be a major point for consideration. You’ll also need a good knowledge of your local regulatory environment and your organization’s risk profile for moving services and data outside your firewall.

Don’t do a rain dance when there’s not a cloud in the sky. Understand the market and what it can deliver today. How are the services priced, and how does that compare to your current cost?  What are the available service levels and how do you get them to align to your needs? What constraints do your current agreements present, and what can you do to remove them?

Be the rainmaker in your organization. Set the expectations for what cloud will do for your company and when. Partner with your business customers to introduce new services and gain their support.  Be proactive about determining how cloud computing will be incorporated into your IT governance, and get agreement among your corporate leadership.

The weather forecast has everyone’s attention in 2010. We are currently working with clients on strategy sourcing engagements to extract the benefits of cloud computing in ADM, Infrastructure, even Network Services – and we can help your organization do the same. Ask yourself: When the rain is finished, will you be out on the water sailing, or cleaning up from the flood? 

Considerations for Financial Services Operations (FSO) Outsourcing

By John Clements, Director, TPI, EMEA

Although many of the considerations that apply to Financial Services Operations (FSO) outsourcing apply to any type of outsourcing, certain considerations are amplified because of the regulated environment in which financial services institutions (FSIs) operate.

Here are the TPI Top 5 considerations to take into account when outsourcing an FSO process.

1. Institute, maintain and demonstrate control

In most jurisdictions, FSIs will not be able to outsource their regulatory responsibilities when undertaking a material outsourcing project. Regulators are likely to require early communication about a potential outsource and will want to know how the FSI is going to maintain control in the outsourced environment. Therefore, it is important that structures and processes are put in place pre-contract to maintain control (e.g., your governance team, management information and reporting, compliance and audit plans, risk management, etc.).

2. Manage regulatory change

No organization can predict the entirety of regulatory change that may be coming down the road in an outsourcing relationship. Therefore, in an outsourcing agreement, a certain amount of regulatory change can be bought from a service provider via a contractual concept called “regulatory buyout.” This means that the service provider assumes the risk of making regulatory changes to its outsourced environment. 

3. Factor in the end-user experience

It is probable that the outsourcing of an FSO process will result in end-user contact (e.g., the people who buy or advise on financial products) being outsourced to a service provider. Therefore, it is vital that the end-user experience is a critical part of the contractual service level agreement regime, and effective process handoffs should be planned into transition so as not to impact the end-user experience. 

4. Actively manage operational risk

Operational risk can be introduced into an outsourced arrangement via a multitude of channels such as staff attrition leading to loss of key skills, data protection risks (particularly as customer data may be processed by a third party), cutover of operations to the service provider, unsuccessful system re-platform leading to the loss of customer data, and more. Therefore, an FSI must manage operational risk by instituting and enforcing an effective risk management framework that encompasses the outsourced environment.

5. Know how you will exit the arrangement

Understanding your exit strategy is a crucial part of any FSO outsourcing project — even before service transition has begun. This involves more than just ensuring that the service provider has contractual obligations to produce an exit plan. What are the trigger events for bringing a service back in-house? How would you bring the service back in? What team would you set up, and with what skills? How long would it take? How are you maintaining the knowledge that you have outsourced? 

TPI’s seasoned FSO experts can help you achieve your sourcing and goals through objective advice, knowledge of your industry and experience with arrangements from simple to complex. E-mail John Clements, Director, TPI, EMEA, or phone him at +44(0) 7879 424 075 to learn more.