The formal contract between BPO buyer and vendor has been signed and sealed. The BPO contract is a detailed document that includes service level agreements that specify the level of expected performance on defined organizational processes.
These form the basis for developing metrics and for the system of rewards, penalties, and remedies that govern the buyer-vendor relationship.
At the same time, the BPO contract does not provide the flexibility and responsiveness required to manage an ongoing project.
For that, we recommend development of a separate document that we call the project management plan.
The project management plan should be alluded to in the BPO legal contract, but it is too fluid to be spelled out in detail in that governing document.
The project management plan will need to adapt and change over time as the needs and competitive conditions of each firm change.
The project management plan will include change provisions to enable adjustments over time. It will also include standard project management details such as goals and objectives, timelines, milestones, and key term working definitions.
In essence, the project management plan provides a disciplined framework of execution to ensure that the BPO transition phase gives way to the operating phase.
One of the main objectives of the project management plan is to establish and identify roles and role players from each organization-buyer and vendor. These roles and role players will be responsible for project outcomes and accountable to the BPO steering team.
Many firms vest the responsibility for the BPO project in a single individual, whom we have designated as the BPO champion.
Others prefer to vest that responsibility in a project management team. The choice is nor merely one of preference; there are several factors to consider in deciding between an individual or team approach to managing the BPO project.
Individual or Team?
Developing a formal project management plan requires that the buyer and vendor each assign a dedicated team or, at minimum, a dedicated internal BPO champion to design the plan, manage the project on an ongoing basis, and implement changes as needed.
Although this function adds short-term costs to the outsourcing project, it will usually prove to be less costly in the long run because issues can be anticipated, managed, and controlled before they become major problems. In general, project management costs should not exceed 7 percent of total project costs.
Whether to use an individual or team approach to project management depends on several factors.
For instance, a far more intensive, team-based approach may be necessary to manage an offshore outsourcing relationship than an onshore one.
Offshoring often brings a range of issues not generally encountered with an onshore relationship.
Cultural differences, language differences, and time zone differences are just three of the variables that distinguish an offshore BPO project.
These are not minor distinctions, and they generally require additional resources to manage compared to an onshore project.
Another major distinction in outsourcing projects is whether the buyer is managing a single or multiple vendors.
Complications arise in managing multiple vendors. For instance, it may be necessary to establish more than one BPO champion or project management team to deal with each vendor.
This creates a further need to integrate the various project managers to make sure they are communicating and sharing best practices and lessons learned.
Nevertheless, a team-based approach can lead to problems of accountability if there are no one-to-one links between individuals and discrete project management responsibilities.
That is, even when a team approach is used, individual team members should be assigned clear responsibilities for particular aspects of the project, and they should have clear reporting channels.
A hybrid approach that may be used to alleviate the potential for the diffusion of accountability is to assign a BPO champion who has the responsibility of developing a project management team.
With this approach, the BPO project management responsibility remains clearly with the BPO champion, who is held accountable for performance of the project.
We recommend this approach, and we call the resulting team the project management team (PMT). This is the last of the various teams we have identified throughout the BPO Life Cycle.
The BPO steering team remains in ultimate control of the project. This team was constituted at the beginning of the BPO Life Cycle and retains its oversight role over the organization’s BPO project.
The PMT should consist of individuals representing a range of organizational functions, including individuals from each firm. Just as with the BPO analysis team (BAT) and vendor selection team (VST), cross-functional representation on the PMT ensures a diverse skill set.
This diverse skill set should range over financial, technical, and human resource skills. Issues that draw from each skill area are likely to arise during the transition and maintenance phases of the BPO Life Cycle.
The BPO champion is likely to be an individual who participated on the BAT, the VST, or both.
This person will generally have high visibility within the organization and possess skills in communications, negotiations, and business reasoning.
This person should have the additional capability to organize and manage a team. He or she should also be exceedingly familiar with the business case for BPO and be willing and able to articulate, discuss, or defend it within the organization whenever necessary.
Other roles that might be assigned to individuals on the PMT include facilitator, recorder, and liaison.
The facilitator is primarily responsible for setting meetings and arranging meeting locations.
The recorder is responsible for taking notes during the meeting and distributing minutes to each team member after each meeting.
The liaison role is delegated to individuals who are responsible for maintaining contacts between the team and other organizational units, to ensure appropriate communications are occurring, and to detect and address issues before they turn into problems.
The PMT is responsible for implementing the change management strategy for the organization.
Up to this point in the BPO Life Cycle, most of the skills required to manage the BPO project have focused on negotiations and analysis.
The required skill set widens during the transition phase to include leadership, communication, and cross-cultural management. Let us turn next to the principles of effective BPO-related organizational change management.