OLM50 Overview: Outsourcing Success by Design

By Dawn Willis

OLM50 delivers structured processes to support every step of your outsourcing journey.

Outsourcing success is determined by two things – outcomes achieved and effectiveness and satisfaction with the journey to achieve these outcomes. One without the other has proven time and again to be insufficient. OLM50 is founded on this wisdom. It delivers a practical framework that guides you through every phase of the outsourcing life cycle, from initial contemplation through final implementation and ongoing contract execution and governance. Whether you are a client or provider of outsourced services, seeking to:

• Procure or deliver optimized services;
• Enhance your relationship with your client or service provider; or
• Improve business outcomes, win new business or find creative ways to be more successful together ...

OLM50 provides an essential guide to outsourcing. It promotes client self-sufficiency and ownership of outcomes, enabling clients to efficiently and effectively design, procure and manage their outsourcing and it supports service providers in delivering winning proposals to client solicitations. OLM50 is elaborated in a three-book series.

• Book 1 – OLM50 Overview introduces OLM50 and its components including five (5) governance dimensions, fifty (50) governance disciplines and ten (10) lifecycle phases.
• Book 2 – OLM50 Governance elaborates on the five (5) dimensions and fifty (50) disciplines of the OLM50 governance model.
• Book 3 – OLM50 Lifecycle elaborates on the ten (10) lifecycle phases of OLM50 and more than 100 deliverables produced in these phases.

• Language: English
• Publisher: Tellwell Talent
• Release date: Jul 29, 2020
• ISBN: 9780228835479

Dawn Willis

Dawn has developed, contracted and managed IT, ITO and BPO solutions for almost five decades for many private sector organizations and government departments. This includes providing advice and consultation to clients for more than two decades on strategy, design, procurement, negotiation and continuous improvement of multi-million-dollar outsourcing contracts and relationships, successfully applying and continuously improving her OLM50 structured outsourcing methodology.Prior to establishing her independent consulting practice, Dawn was North American Practice Lead and outsourcing subject matter expert for a global company, responsible for leading, advising and assisting more than two dozen organizations across North America with their outsourcing initiatives. Before that Dawn developed, contracted and delivered outsourced services to government as a Partnership Executive for three large multi-national outsourcing service providers for almost a decade. This was preceded by more than two decades establishing, managing and delivering strategic, tactical and operational services in all areas of Information Technology to private sector organizations, hospitals and municipal government.

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OLM50 Overview

Outsourcing Success by Design

Dawn Willis

OLM50 Overview

Copyright © 2020 by Dawn Willis

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.

Tellwell Talent

www.tellwell.ca

ISBN

978-0-2288-3546-2 (Hardcover)

978-0-2288-3545-5 (Paperback)

978-0-2288-3547-9 (eBook)

Dedicated to…

This book is dedicated to my husband Garth and my children Jason and Jody and stepchildren Shelby and Amber who were a constant source of strength and inspiration. Without their support and encouragement this book would never have been written.

Table of Contents

1 Preface

2 Introduction

3 Why OLM50

3.1 OLM50 Governance

3.2 OLM50 Lifecycle

3.3 Outsourcing Timelines

4 Outsourcing Today

5 About Outsourcing

5.1 Information Technology Outsourcing (ITO)

5.2 Business Process Outsourcing (BPO)

5.3 Knowledge Processing Outsourcing (KPO)

5.4 Emerging Sourcing Models

6 Contracting Approaches for Externally Delivered Services

6.1 Strategic Sourcing

6.2 Selective Sourcing

6.3 Who Manages the Mix?

7 The Decision to Outsource

7.1 Identifying the Outsourcing Opportunity

7.2 Selecting a Business Partner

7.3 Trust

7.4 Win/Win

7.5 Flexibility and Responsiveness – Managing Change

7.6 Focus

7.7 Incentives

7.8 Information Access and Protection

7.9 Micromanagement versus Abdication

7.10 Value

7.11 Long-Term

7.12 Termination

8 Challenges Encountered with Outsourcing

8.1 Complexity

8.2 Planning

8.3 Technical Viability

8.4 Operational Viability

8.5 Financial Viability

8.6 People/Skills

8.7 The Contract

8.8 Transition

9 OLM50 Governance Dimensions and Disciplines

9.1 OLM50 Relationship Management

9.2 OLM50 Organization Alignment

9.3 OLM50 Process Integration

9.4 OLM50 Management Framework

9.5 OLM50 Performance Management

10 The OLM50 Lifecycle

10.1 OLM50 Strategize Phase

10.2 OLM50 Analyze Phase

10.3 OLM50 Design Phase

10.4 OLM50 Procure Phase

10.5 OLM50 Select Phase

10.6 OLM50 Negotiate Phase

10.7 OLM50 Transition Phase

10.8 OLM50 Govern Phase

10.9 OLM50 Transform Phase

10.10 OLM50 Renew/Rebid/Repatriate Phase

11 Summary

1

Preface

Over the past two and a half decades, Dawn Willis has guided organizations on their outsourcing journey, transforming outsourcing strategies and visions into successful outsourcing contracts.

With almost five decades of IT and business development, management and consulting experience, Dawn has a deep understanding of the many challenges that clients and service providers face as they embark on their outsourcing journey. She understands what works, what does not work and why, and has an in-depth knowledge of industry leading practices influencing the development and ongoing management of outsourcing initiatives.

Based on this experience, Dawn created her signature OLM50 outsourcing methodology, and is proud and excited to share what she has learned as an outsourcing expert, advisor and service provider. OLM50 integrates this knowledge and experience to deliver a practical framework that threads its way through every phase of the outsourcing life cycle from initial contemplation through final implementation and ongoing execution and governance, for small, mid-sized and large organizations. Whether a company is seeking to realign their focus with core business, increase business flexibility and responsiveness, reduce overhead costs, or temporarily access specialized human capital resources, OLM50 provides an essential step-by-step guide through the outsourcing process. It promotes client self-sufficiency and ownership of outcomes, enabling clients to efficiently and effectively design, procure and manage their outsourcing and it supports service providers in delivering winning proposals to client solicitations.

From establishing strategies and vision, defining service requirements and scope, establishing roles and responsibilities, detailing service levels, setting pricing frameworks, and soliciting and evaluating vendors and service offerings, OLM50 delivers.

OLM50 is elaborated in a three-book series.

1.Book 1 (this book) – "OLM50 Overview" introduces OLM50 and its components including the five (5) OLM50 governance dimensions, the fifty (50) OLM50 governance disciplines and the ten (10) OLM50 lifecycle phases.

2.Book 2 – "OLM50 Governance" explores in more detail and elaborates on the five (5) dimensions and fifty (50) disciplines of the OLM50 governance model.

3.Book 3 – "OLM50 Lifecycle" explores in more detail and elaborates on the ten (10) lifecycle phases of OLM50 and the more than 100 deliverables produced in these phases.

Special thanks to Shelby for the beautiful book cover she created and a smile for my wonderful granddaughter, Kayla, who thought perhaps the book should have more pictures.

Thanks to Lyn for all the editing she did and to the folks at Tellwell for showing me how to get this book out to you!

This three-book series is the culmination of a journey that has spanned my entire work career. I am thankful for everything I have learned along the way and the opportunity I now have to share this with you. Life is good!

2

Introduction

Outsourcing has become a consideration for virtually every company seeking to improve its bottom-line. While not always a viable option for every aspect of every business, almost every organization will find some areas where outsourcing can add value.

Over the past several decades it has become clear that process contributes significantly to the overall cost of doing business. Inefficient processes can waste money, while efficient processes can save money. The jury is in and the verdict is definitive. Introducing structure, repeatability and ongoing optimization and improvement of processes reduces business costs and improves reliability and effectiveness pertaining to business results.

The response to this realization has been the introduction and evolution of a wave of structured quality improvement programs, each of which adds value in its own way.

•Information Technology Infrastructure Library (ITIL) delivers a set of processes/practices that focus on delivering quality IT service management (the day-to-day operations of IT) and aligning IT services with the needs of a business.

•Control Objectives for Information and Related Technologies (COBIT) provides a framework of controls that focus on value creation through the improved management of information using key enablers.

•International Standards Organization (ISO) standards ensure that products and services are safe, reliable and of acceptable quality, reducing cost by minimizing waste and errors, and increasing productivity.

•Information Systems Audit and Control Association (ISACA) focuses on IT audit, security and risk management.

•Capability Maturity Model Integration (CMMI) delivers a process model that promotes behaviors leading to improved maturity of great products and services.

•The Project Management Body of Knowledge (PMBOK) offers a rigorous and structured project management approach to ensure project deliverables meet standards and criteria identified, align with project budgets and schedules and project reporting and communications meet expectations and requirements.

Each of these tools, when used appropriately, delivers distinctive value to any organization. Together they contribute to deliver superior quality results.

With this in mind OLM50 was created to provide a set of mature, structured and repeatable processes to support the development and management of an outsourcing contract from initial contemplation through its final implementation and ongoing execution and governance. It is based on leading industry practices and incorporates governance into every phase of the outsourcing lifecycle process.

The visual below represents OLM50’s ten (10) lifecycle phases (the outer circle) revolving around its five (5) governance dimensions (the points of the star) and fifty (50) management disciplines (circles within the star). Each are designed to contribute to the success of any outsourcing initiative. Each are introduced in this Book 1 – OLM50 Overview.

3

Why OLM50

OLM50 can be used by clients and service providers alike to design, manage and improve their outsourced environments and offerings respectively, no matter how unique they may be. It incorporates ten (10) lifecycle phases revolving around fifty (50) distinct management and process disciplines spanning five (5) governance dimensions. It provides a solid foundation upon which any outsourcing contract can be built. OLM50 can add value to outsourcing clients, outsourcing advisors and service providers delivering outsourced services and can be readily applied to virtually any area of business.

Each of the ten (10) lifecycle phases and fifty (50) governance disciplines of OLM50 present unique challenges and opportunities. There are significant advantages in leveraging the experience of professionals who have successfully navigated their way through outsourcing, to avoid some of the pitfalls and land mines that typically arise along the way.

OLM50 offers a comprehensive yet practical guide to outsourcing. It introduces discipline and repeatability to the procurement of outsourcing and to the ongoing governance and management of resulting outsourcing contracts and relationships. It is integrated at every level, leading clients through a series of rigorous processes that enable them to optimize the design of their outsourcing contract and get the most out of their relationship with their service provider.

While industry advisors will always have a place assisting clients with outsourcing initiatives, OLM50 can improve client self-sufficiency and ownership of outcomes, which in turn, contributes to greater outsourcing success.

OLM50 also provides valuable information to assist service providers in developing their outsourcing offerings and promoting their offerings to potential clients who are in the market for their services.

No matter where you are in the outsourcing lifecycle, OLM50 can guide you through the process and help you: specific to what you should know, what you should do, and how you might do it.

If you …

•are planning to outsource but are not sure what makes the best overall business sense for your organization in terms of what to outsource;

•are not sure what the best outsourcing service delivery model is for your organization and would like to explore your options;

•need help framing the guiding principles and processes that will govern your outsourcing relationship;

•are setting up and resourcing your outsourcing center of excellence and need help getting started or making improvements to your approach and tools;

•need help or guidance to establish or enhance your procedures, methods or content to improve your outsourcing self-sufficiency;

•would like to establish a comprehensive measurement program for your services, regardless of whether they will be delivered internally, sourced externally or use a hybrid of both delivery models;

•are looking for a comprehensive end-to-end sourcing process with proven supporting tools that can help you step through the process carefully and with confidence, effectively using and developing your own resources and minimizing the cost of the process;

•need experienced assistance to guide you through the preparation of your outsourcing procurement documents, contract and supporting documents;

•need experienced assistance to guide you in the process of developing your evaluation approach and evaluating your options and possible outsourced partners;

•need assistance to design your service management approach and service level agreements;

•need guidance to determine the content, format and wording of your contract and supporting schedules to most effectively govern your sourcing;

•have an outsourced environment that is not working well and would like some ideas on how, and where to focus your time and energy to turn this around;

•are a service provider (or planning to become one) and would like to fine tune your service offering to improve your competitive advantage and create winning responses to client solicitations;

•are new service provider seeking to create a winning service offering and service delivery model that you can take to market – that is competitive and comprehensive with the right balance and controls;

•feel