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Making Preparations for Getting Underway Outsourcing Solicitation Project Planning

By Fran Morton, Director of Outsourcing Kathryn Douglass, Managing Partner, WillowTree Advisors

OCTOBER 2009

Contents Getting to the Starting Line

Getting to the Starting Line Executive Instructions Data Gathering Project Planning Selecting the Team Managing the Project All Systems Go 2 2 4 4 7 8 9 In many cases you will find out that youve been designated the outsourcing Project Executive after the key executives reviewed the opportunity, did some back of the envelope numbers and talked about what it would take to make outsourcing a reality thats when your name came up as being the best person to direct the project. Please do spend some time feeling pleased that they thought of you and have confidence in your capability to lead this important project to a successful conclusion. However, there is a lot of work ahead along with some potential roadblocks, pitfalls and problems. This chapter is designed to help you get off to a strong start (one of the best contributors to overall project success). Your executive team has paid you the compliment of appointing you Project Executive they are now standing aside to let you begin. There are three key areas you need to attend to right now to position the project for maximum success: Understand your charter Plan the project Select the project team

The very first thing is to understand your charter as Project Executive clearly. This will give you key information that enables you to do all the other initiation activities with confidence and to frame your relationship with key stakeholders in a way that will be helpful and productive when the inevitable problems arise.

Executive Instructions
When the senior executives of your company gave their approval for the outsourcing project, they had in mind some high level structure, functions and roles to apply to project process. If you were either present during these discussions or you

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have documentation outlining their expectations and instructions, you start ahead of the game. For those of you who lack this insight, here are the key things you need to know on the executive charter and expectations for your project: Who makes the final decision on provider downselect and who signs the contract? At the end of the RFP review, your team will make a recommendation to downselect one or two providers for contracting, and, a key project milestone is contract signing. You need to know now who (person or group) will commit on behalf of your organization at these critical points Who will make up the executive sponsor group? As the project progresses, you will present periodic executive level reports to the sponsor(s). You will also rely on this group for early warning, problem escalation, insight into stakeholder reactions to the project and confirmation of continued/unchanged organizational support. Some organizations will designate an individual for this role. All things considered, it is probably to your projects advantage to have a sponsor group Who will the project (and you) report to directly? This can be a make-or-endanger decision. For best chances of success, you should report to a member of the executive sponsor group. Decision making authority? Be sure to take the time to understand and document the roles and responsibilities with respect to decision making, approvals and inputs of all stakeholders. You dont want to be shocked to find out that someone who is key to the decision has been left out of the loop.

What are the corporate objectives for this project? Before you begin the executive team needs to formulate clearly their high level objective statement of how they will know whether the project has been a success Executive commitment to keep you informed of critical developments affecting the project. A major outsourcing project is a strategic undertaking of the organization. As the director of this project you need to be informed of any developments in the internal or external corporate landscape that may affect the projects direction and ultimate success Your role in selecting and managing the project team. Ideally you should be able to select the project team that best fits the needs of the project. In practice, you will likely have some selection latitude but not complete freedom. An equally important issue is whether the team will be 100% committed to the project (very desirable). If not, project needs must trump other responsibilities What happens to project team members after the project? Some project team members and SMEs may find themselves on the in-scope employees list as a result of their work on the team. The executive sponsors must make a commitment on this topic before the project kicks off. You need a project team whose only concern is doing their best possible job on the project. Often we see a blanket commitment to finding internal positions for all project

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team members at the end of the project Once you have the information weve outlined above, you can begin. Normally we find organizations and executives are not immediately able to answer all of the questions above. At a minimum you need answers on the following in order to start your planning: Definition of success at the top of the house Your role in team selection Post-project commitment to team members

Determining how to parse existing data into the categories needed for the RFP Validating and verifying data

A quick look at Chapter 6 will give you the overall categories and uses of data in the RFP. As you begin project planning and scheduling youll need to put some dates around key activities including data gathering. It will be a big help to planning to have at least a preliminary idea of where data resides, how it is now assembled and reported and how flexible the mechanism is to reporting in new ways. Key places to alert right now along with typical information you might need are: Finance information on vendor payments, overhead costs, corporate charge-backs for internal services Human Resources severance policies, rosters for in-scope employees, payroll and benefits costs, average salaries for various job families IT number and frequency of transactions, system up-time stats, reporting, system specs, equipment costs, systems integration requirements

With this information in hand, you can begin the process of planning the project and drawing up a list of team candidates. The executive team needs to understand that you will need answers to the rest of the issues soon certainly before the project can kickoff.

Data Gathering
As counter-intuitive as it sounds, you should begin the data gathering process now. Over the years the most consistent lesson learned we have heard on outsourcing projects is we needed more time and focus on data gathering. We concur. Data gathering is probably the most complex, time-consuming and challenging part of the outsourcing project. You will find data from multiple sources both formal (HRIS, workforce stats, finance) and informal (manual counts, department databases, individual data captures). You will need custom collected data (in-flight projects, analysis of current vendor contracts). You will need data cut in special ways (current state costs by unfamiliar categories, per transaction costs and volumes). In our experience the most challenging parts of data gathering are Locating sources for specialized data

Regardless of what the in-scope areas/processes will be for outsourcing, youll need a lot of data from Finance, HR and IT departments. It will repay your effort to get a good feel for what data they have, how it is collected and kept, any data requests they find tough to deal with, when theyll need extra amounts of lead time, their self-assessment of data quality. You should also begin to establish solid working relationships with the people youll be calling upon during the project.

Project Planning
Since youve been selected as director for your companys outsourcing project you probably have all the general project

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management skills and capabilities needed to plan and run the project. If you need a brushup on project management, there are plenty of good books out there. The Project Management Institute http://www.pmi.org/Pages/default.aspx is a professional organization that specializes in teaching and supporting that skillset. For our purposes, well assume that you are a pro already. In most respects project planning and documentation for outsourcing projects is pretty much the same as for any other large scale multi-month effort. Any of the standard project planning applications and tools will do what you need to document and control the project. A look at Chapters 5 and 6 will give you a good overview of the content of your outsourcing project. There are a few characteristics of team utilization in outsource projects that you should be aware of as you start to develop your plan: The Core Team will be active for the entire project. They will be supported from time-to-time by some/all of the following: o Subject matter experts (SMEs) o other authorities on the content of the areas to be outsourced o HR team to develop the HR approach to the in-scope employees o IT team for input on IT implications of outsource approaches o Finance team to prepare the current state business case and evaluate pricing approaches o Legal counsel (in-house or external) to prepare the final contract and participate in negotiations o In some cases procurement is involved in

managing the RFP response process Number of providers to be invited to bid generally recommend no more than 3-4 because of extensive responses and resulting time commitment for reviewers Outside Advisor see Chapter 4 for role and functions

Because you will be working with a number of different internal organizational groups during the project, it is wise to block out the project by phases and then start by determining which groups need to participate in each phase. For example: Initial data gathering -- the core team as well as SMEs; other content experts; HR; IT; Finance Preparing the RFP document the core team, some SME support Developing the response process (from RFP distribution through receipt of provider responses) core team, procurement (or whatever group will be managing logistics for sendout, questions and response receipt) Response review and analysis core team, SMEs, other content experts, HR, IT, Finance Evaluation and downselect core team Due diligence -- core team, SMEs, other content experts, HR, IT, Finance Contracting core team, legal counsel In our experience, you will likely start the project under pressure to get the RFP out the door ASAP. That is a milestone everyone can identify with and represents evidence that the project is truly active and on the way to accomplishing its goals. Our advice resist pressure to shorten the timeline beyond what you determine is reasonable. In RFPs as in systems the old adage garbage in, garbage out definitely

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applies. Below are some Dos and Donts that weve developed to underline the importance of doing a careful job on creating the RFP. DONT. . . Assume that the bidding providers will understand what you really mean tell them directly Treat the RFP development as a fill-inthe-blanks exercise make yours an opportunity worth their A-team Omit or down-play the hard parts (the issues you struggle with) providers are problem solvers, enable them to tell you how they can help DONT. . . Skimp on data collection/verification data is critical to providers solutioning

DO. . .

Spend as much quality time on drafting the RFP as needed to create a document you are proud of Include as much detail as possible particularly on description of the current state Involve all the relevant people (both management and SMEs) in developing the SoW (Statement of Work) and SL (Service Levels) statements Manage the process and draw team members from the in-scope function Put real effort into the data collection and verification go back as many times as needed to dig out detailed, quality data

The focus and concentration of the core team members on this project as their most important, priority-one responsibility is essential to your ability to work to a project schedule and to produce a quality result. We have seen recently an increasing pressure by companies for the Core Teams to do the project in addition to their day job. Our advice is to resist this approach. It can truly endanger the project in several ways. First, there is a fixed limit to the number of productive hours in a day the more ways you split each individuals focus the less productive they are at any one assignment. Second, if the Core Team members remain assigned to their day job department that creates a real conflict of interest issue. Come time for raises and promotions, it will be the day job manager that gives those out. This means your project will always get second best after the needs of their real jobs have been satisfied. Third, scheduling and managing to the project timeline will become a nightmare for you. To the extent that peoples day job managers understand that they can preempt their employees commitment to the outsourcing project, the more often you will have last minute meeting no-shows and conference call drop-outs. What suffers most in these schedule wars is you and the outsourcing project plan. If you cant get the commitment to have the Core Team full-time for the length of the project, youll need to build contingencies into the project timeline. Our advice is to be totally open about what youre building in and why. Sometimes weve constructed two project schedules -- one where the Core Team is full-time and one where they split focus between the project and their day job. Ultimately the decision will be made on an organizational basis. Whichever way the final decision goes, the organization has advance notice of the potential impact on the outsourcing effort. The draft project plan is the first really tangible output from the outsourcing

In summary. . .

The higher the quality of the RFP. . . the higher the quality of the provider responses
The project planning process will flush out any mis-understandings regarding the time commitment required from the Core Team.

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project. You need to use this opportunity to get to know the people you will be working with and reporting to on the project. We recommend taking a draft project plan around informally to each member of the Core Team, key SMEs, the project executive sponsors team and important stakeholders. This approach will be time-consuming, but we have found that the resulting personal relationships will be important in the future to your ability to run a successful project. The project update timing is important to keeping the project on-track and implementing mid-course corrections quickly and accurately. There are two sets of updates that you must schedule for: The internal project team The project executive sponsors Normally internal project status meetings/conference calls are held weekly and executive sponsor updates done monthly. This frequency is only a guideline to be modified based upon need. Remember, the purpose of the status updates is to keep the project running smoothly or to get it back on track quickly from a schedule problem. If you need to do internal team updates on a daily basis to work through a difficult period, our advice is do it! Changing the schedule for executive sponsor updates is more difficult logistically since their calendars generally book further in advance, and, you need to be sure that you truly need executive sponsor attention and assistance before you ask for it. Bringing a trivial or insufficiently researched problem to them only calls into question your project management performance.

Good knowledge of the in-scope processes and activities Good perspective of the larger corporate context in which the outsource provider will have to deliver services Ability to get things done within your corporate culture

Recognized by the company for success in prior special project assignments One additional point here you dont want your Core Team members to double as your subject matter experts, you want them to be able to help you choose SMEs, work well with and evaluate accurately the information coming in from the SMEs. The size and scope of your particular project should dictate how many people you need on your Core Team. The determining factors here should be project scope content areas and geography (National, Regional, Global). Here are some guidelines for you to use in establishing an initial estimate of the size of Core Team you need. But first, several important definitions: Definitions Tower department(s) or functions to be included in the outsourcing, i.e. Finance, IT, HR, Procurement Process areas within a Tower the in-scope areas, i.e. procure-topay; accounts receivable/payable; applications management; payroll/benefits Comprehensive BPO scope includes all /most outsourceable processes within a Tower Core Team composition Single Tower, comprehensive scope weve seen two approaches both based on the org. chart (1) a Core Team member for each major process within the Tower, or, (2) a Core Team

Selecting the Team

First select your Core Team members. These are the individuals who will be with you through the entire length of the project. You want the maximum possible latitude in selecting people for these roles. Your Core Team members need to have the following competencies:

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member for each Director/VP level position in the Tower. Approach (1) is purest, but may result in too large a Core Team to manage comfortably. Approach (2) allows grouping of closely related processes under a single Core Team member. For example: one Core Team member for Payroll and Benefits together, or Accounts Receivable and Payable Single Tower, selected processes in this case there should be a Core Team member for each process included in-scope

If your team absolutely has to be larger than 12, you need dedicated help in running the day-to-day and collecting/reporting status data.

Managing the Project

Once you have drafted the project plan and selected the team, then you need to consider what is the best/most comfortable way for you to manage the project and the project team, and, what level of support do you need to run the day-to-day project administration Making sure you have the right level of support in managing the day-to-day aspects of the project is key to your effectiveness and ultimate success as the Project Executive. With smaller project teams and single Tower selected process scope, companies can be tempted to leave you without dedicated administrative and logistical support. You need to resist this tendency if it appears. In our experience you will wind up spending too much of your time integrating calendars and finding conferences rooms. As one colleague terms it focusing time on the instantly urgent rather than the truly important. At a minimum you will need administrative/ logistical support to handle meetings, schedules, project plan updates, travel, status reports, e-room maintenance and the like. For larger, two-tier project team efforts you need something like a PMO (project management office) function. Even in the largest project, this will probably not be a full-time job for anyone. But, when folding this into an existing PMO function, make sure that your project will get the attention and priority that it needs to run efficiently.

Multi-Tower projects need to be organized and managed a little differently. Here you will need a Tower Lead for each in-scope Tower. These individuals will constitute your kitchen cabinet or senior project team that will work with you directly on a daily basis. They will be supported by Process Leads within each Tower. In these projects you will need to take special care with the Process Lead selection to guard against two potential problems: 1. The cast of thousands project team that is too big and unwieldy to work efficiently, and, 2. The process lead that is really a SME. Someone at too low an organizational level or with too specialized a viewpoint to fulfill the Core Team role Having said all of the above, the question is still out there what is the optimum size for an outsourcing project Core Team? We have seen the most effective project teams in the following size ranges: Single Tower projects 3-5 in addition to the Project Executive Multi-Tower projects 5-12 total in addition to the Project Executive

We have worked successfully as Advisors with teams much larger than this, but the effort required to get and keep the team functioning effectively multiplies exponentially above 12.

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Your key roles in project management are to: support the Core Team to assure any potential issues, problems or roadblocks are addressed and resolved promptly assure that the executive sponsor group remains aligned with the project goals, scope, timetable, and, that they keep you informed of any upcoming corporate events/ initiatives that could affect the project keep in touch personally with the project team to make sure they are aligned with project objectives, working to schedule and to surface any potential issues (project and internal team issues) lead the project to a successful outcome

possible for a project to go in your organization With the executive sponsor group that they made the right decision in choosing you as Project Director With the management(s) of the inscope Towers/ Process Areas that you understand their concerns and will work with their organizations and staffs sensitively (in-scope employees) and keep them properly informed as the project progresses

All Systems Go
You are now almost to the starting gate to get this project off to a positive start. Up till now, you have: understood your charter from the executive sponsor team Initiated data gathering Planned the project and drafted the project plan document Selected the project team Set up the project management mechanisms and support you need The last step is to plan and conduct the Project Kick-off Meeting. We cant overemphasize the importance of putting time, effort and focus on making the Project Kickoff Meeting sing. This is your debut as Project Executive. All eyes will be on you trying to get a fix on how this project will go. Everything you do in the Kick-off needs to reinforce: With the project team that theyve made the right decision in allowing themselves to be recruited With SMEs and other experts their expertise is valued and that this project will go as smoothly as is

There are several models for the Project Kick-off that we have seen and used in our projects. You will need to choose the model that best fits with your organizations culture, method of introducing large-scale projects and the relative size of the outsourcing project effort. Kick-off meetings generally fall into one of the following categories: Dog-and-Pony this is the big production number with formal presentations, addresses by all the VIPs associated with the decision to outsource and generally attended by so many people that you need the Auditorium to fit them all Lets-Get Started Right Now this is the Kick-off as working session model. Usually has one presentation at the beginning and a cameo appearance by one or more members of the Executive Sponsor Group. After the formalities, the team dives right in to work Non-Kick-off Kick-off this is the no frills working session model no presentations, cameo from Executive Sponsor Group done already by webinar or video. This is the first team meeting of the project

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Whichever model is more in-tune with your companys culture, there are several important content items that our experience says must be included to count yours as a successful kick-off meeting: A clear statement from you as Project Executive of the project charter, the role (and commitment) of the Executive Sponsor Group, what success looks like, expected impact on employment Detailed review and mark-up of the project plan. Even if youve already done this with team members individually, they all need another look at it together Re-confirming team members signing on to the project. This is an affirmation that all team members have committed to the project and to making the outcome the very best that they can collectively and individually do. (In the old days this was done by public oath). Youll know from the participation and meeting context whether everyone has signed-on. If you have any doubts about individuals, follow-up after the Kick-off to be sure. It is still not too late for a team member to opt out if they really feel they cant sign on Statement of intent from you as to how you plan to operate as Project Executive. What they can expect from you, what you expect from them Project decision-making, Issue and problem identification, review, solving and escalation Agreement on immediate next steps and commitment to near-term dates

The Kick-off Meeting is the official all systems go of the outsource project. The actual project start is when you have re-circulated the revised and approved project plan that all the team members signed-on to at the Kick-off Meeting.

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