Smarter Outsourcing
An Executive Guide to Understanding, Planning
& Exploiting Successful Outsourcing Relationships


By Jean-Louis Bravard & Robert Morgan
Financial Times / Prentice Hall
June 2006
ISBN: 0273705601
245 Pages, 6 ¼” x 9 ½”
$97.50 Hardcover


Outsourcing is now a central issue for companies large and small, and the market size goes on expanding. But, few executives really understand how to go about deciding what should be outsourced, how to do it, and how to manage the various stakeholders. This book fills a major gap in the middle-high-end of the market for a book that shows senior executives how to decide what to outsource and then how to do it, taking into account the “human side.”

The book aims to ensure that more outsourcing deals are structured for long-term success, and shows that this depends on initial and ongoing executive commitment and sponsorship by both the client and the providers. The authors are both global leaders in outsourcing consulting, have set out to write a fast, well-paced read appropriate for a variety of industries.

Contents
Contents
Structure of the book
Acknowledgments
Foreword: A letter from the authors
Outsourcing: the sharpest tool in the box
Outsourcing’s albatross
A question of understanding
From observation to road map
Power with responsibility
About the authors
Introduction: Why you know how to do this
What do you mean by outsourcing?
Our definition
Using your M&A skills to best advantage
Six principles for outsourcing success
Our approach in this book
1 Clear deal and strategy alignment
Seeing beyond the trigger
The wider picture
A secret shared
In a cul-de-sac
The decisiveness to move …
… plus absolute clarity
How bold do you want to be?
A question of emotion
Driving the deal
Talking to the enemy?
Internal v. external sourcing
Sourcing v. business process outsourcing
BPO v. business transformation outsourcing
A CEO self-test for BPO
2 Mitigating risk
The surrounding stakeholder context
Communicating the nuts and bolts of the deal
Preparing for the exit before the start
Reasons to split
Detailed risk factors: into the schedules
Protecting intellectual property
Managing multiple suppliers: ‘best of breed’
Defining the interconnects
The prime contractor route
Thinking the unthinkable: coping with meltdown
Risk questions for suppliers
Onshore or offshore: risk or economics?
Not a case of all or nothing
Offshore providers’ onshore presence
3 Clear shared value
A ‘free trade’ model – or protectionism?
Achieving a win/win
Building on trust through shared expectations and objectives
The root causes of loss
Staying in line
Avoiding ‘contract squeeze’
Understanding success …
… and not overselling it
Where has that A team gone?
Getting it in black and white
The value of consistency
Procurement v. relationship building
Third-party coaching: extracting value – or destroying it?
Pre-negotiation workshops
Evaluating the business case through M&A principles
Stress-testing the value proposition
Moving forward
4 Value-based negotiation
Procurement – or partnership?
Creating a clear two-way view of strategy
Unasked questions
Lining up the goalposts
Discovery: beware nasty surprises
Understanding assumptions and motivations
Regular project updates – as with M&A
Can you work with these people?
The human factor
Internal SLAs: a step in the right direction
Controllable, not autonomous
From the customer’s viewpoint
Avoiding legalese
Revisiting the value case …
… even to breaking point
Homeopathy or surgery?
Review – and review again
Alignment for a win/win
5 Moving to the new way of thinking
Openness or secrecy?
Setting the pattern of communication
A coherent story
The role of FAQs
Change + uncertainty = pain
Governance and controls: be holistic – and rigorous
Documenting the start and end state
Contract v. relationship
Avoiding winners and losers
Crystallizing the benefits
The supplier’s revenge
Maintaining the balance of value – and pain
What gets left behind?
Leaving dysfunction behind
Reasonable retention – not too much
Defining and monitoring roles
Making alignment resilient
Linkage with users’ interests
User perception is reality
Using intermediaries for early benchmarking
External industrial metrics
6 Realizing the benefits
Thinking ahead?
Defining the role of he retained team
Staying in command
Ten key competencies – correctly positioned
Clear responsibilities in a shifting environment
Building maturity …
… aided by continuity
Metrics for improvement
Becoming a well-oiled machine?
Benchmarking BPO: a do-it-yourself approach
SLAs: meaningful outputs
Towards metric-based gain sharing
A hierarchy of measurement
Relationship and contract management: the role of governance
Service beyond KPIs: the willingness to flex
A return to ‘grace and favour’ projects?
Brand damage: consequential losses – by another name?
Ongoing access to innovation
The power to escalate
Managing future risks through flexibility
Mutual openness for mutual benefits
The role of ‘trust brokers’
Suppliers’ executive: the need for maturity and vision
Towards a joint approach
Managing the investment markets
Executive challenges for suppliers
7 Conclusion: A smarter executive tool
A sourcing revolution?
At the frontier
Societies in competition
The philosophy of sourcing
The supplier of the future …
… and the sourcing ‘web’
Creating complementary flexibility …
… through the new generation of suppliers
Making strategy cut both ways
Hybris culture – not bastardized culture
From cost, to quality …
… to innovation
A structure for improving quality
Breaking the gridlock
Shared benefits from innovation
A sharper tool
From deal to life cycle
Underwriting the responsibilities
The future: strategy, sourcing – and shareholder activism
A global shift
Investor vigilance extends from M&A to outsourcing
Shoulder to shoulder
8Are you ready to outsource?
9 Are you ready to outsource?
Specialist section 1: Financial engineering
Specialist section 2: Legal issues
Specialist section 3: Communication issues
Specialist section 4: Human resource issues
Specialist section 5: Taxes
10 The outsourcing experience
Case study 1: Fin-Force
Case study 2: GECIS
Case study 3: J. Sainsbury
Case study 4: Aegon/GRE
Case study 5: BP
Case study 6: Nextel Communications
Case study 7: JP Morgan
Case study 8: BT/Accenture HR outsourcing

Author
Jean-Louis Bavard is Managing Director, EDS Global Financial Services Industry.
Robert Morgan is former head of Morgan Chambers plc, the outsourcing consultancy

Reviews
“A most comprehensive book guiding any executive or stakeholder through the complexity of outsourcing and transformation.”
Trevor Matthews, Chief Executive UK & Europe, Standard Life

“Bravard and Morgan explain persuasively, and succinctly, why any institution should consider outsourcing as a modern and effective management tool.”
Howard Davies, Director of the London School of Economics

"Striking the right balance between internal and external resources in all the major functions of your company is an issue all managers should really focus on today. We should dedicate our skills and energy to those areas where we can really make a difference. The rest is a distraction. This book will be very useful to help you with the decision-making process."
Olivier Fleurot, Managing Director, Financial Times

"....provides valuable insights for executives contemplating an outsourcing strategy."
Gay Haskins, Director External Affairs, London Business School
“We can benefit from the hard lessons learned by the trailblazers. Morgan and Bravard bring decades of practical experience to the table and provide a comprehensive view of the potential benefits, challenges and pitfalls of outsourcing”
Till Guldimann, Vice Chairman, Sungard
“This book is for the worried CEO and CFO, who are on the verge of making the final decision to outsource and pondering their first steps with trepidation.”
Emanuel Daniel, Editor, The Asian Banker

“Every once in a while a management book comes along that makes you rethink basic management tools. Smarter Outsourcing is one of those books and will sit on many CXO desks and board rooms “
Victor Chu, Chairman, International Chamber of Commerce (ICC) Commission on Banking and Insurance


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