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Knowledge Knowhow in Outsourcing


The Knowledge Knowhow in Outsourcing event was introduced by NOA Board Member Adrian Quayle, who detailed the afternoon programme and introduced Jim Reed, Director of Procurement from the University of Nottingham.

Jim described the process of Knowledge Management throughout the Outsourcing Cycle. In his presentation Jim described how he promoted outsourcing knowledge in his role as director of procurement. In order to establish effective knowledge knowhow during the lifetime of an outsourcing contract promotion must begin during the draft and creation phase of a contract.
Before Outsourcing

End users must have an accurate picture of their business and what software and hardware they employ. Applications management must be up-to-date with a comprehensive understanding of architecture. SLAs must be in place and monitored while contracts with 3rd parties should be understand with reference to the new outsourcing contract and how this could implicate 3rd parties.     
Users must know the current cost of providing the service and market research should be carried out in order to have an update view of the market, allowing for cost service delivery comparisons with the rest of the market. End-users must identify their experts on the contract and then ensure that the experts remain to give advice and guide the deal. Most importantly problems related to the contract must be known and either fixed or fixable so that users are aware as to how long and how costly the process will be.

During the course of Outsourcing

Knowledge must be continually gathered during the lifetime of the contract so that users understand their estate and how it is being run. The outsourcer must be kept up-to-date and understand and have access to the same knowledge that the end-user is using. 

Software must be consistently monitored and assessed in order to ensure that uses are aware of what they have purchased and deployed and where efficiency and cost savings can be made. Effective benchmarking should be employed, so that service cost and performance is known and that gaps between your experience and that of others can be revealed and explored.

During Transition, Renewal or Exit

Effective exit plans should be put into place and tested, this should be carried out prior to the signing of the contract. This should be coupled with an understanding of any lock in clauses and any relationships with tier 2 suppliers.

Robin Young, COO and Martin Taylor, Director of Business Change and Technology introduced Mitchells & Butlers Change Programme: Good to Great, detailing the history and transformation of the company over 150 years and the value of data.

Developments of technology and culture have shaped the transformation of the business. Technology has become integrated, open-application and faster with IT now front-of-mind for CEO’s. Data acquisition has become more influential and advances in control methodology have created an image of a more relaxed approach, which is in keeping with the desire to retain control and data value while empowering suppliers.

Influencing the business strategy

Cost profiles should be migrated from a fixed to flexible cost profile with the ability to rapidly scale up or down according to acquisitions or disposals.

Mitchells & Butlers employed a new approach:

• Running cost optimisation > increased profitability
• Scaling flexibility > increased adaptability and innovation
• IT back-end standardisation > delivery support
• Transformation from fixed capacity and fixed cost > Increase power and allow for flexible costing
• Employment of small scale IT teams > increased accountability for business outcomes

Third parties should be monitored to ensure value and business outcomes should inform the creation of outsourcing contracts while front of house solutions should be customised to reflect customer requirements. IT capabilities and asserts of third parties should be explored in order to drive expertise and capability.

Mitchells & Butlers revealed their experiences of the programme and lessons learnt:

• Martin and Robin advised that an early start is advisable with an end goal in mind, along with an understanding as to what ‘Great’ feels like
• Resource needs should be assessed and gathered , this process should not be underestimated
• In order to maintain strong supplier relationships both sides should exchange extensive cross company knowledge
• This should include the acknowledgement of limitations of existing information such as out-dated contacts
• The implementation of a successful transformation project should not impact upon the customer experience

Stuart Mills and Adrian Chiffi from Logica presented The Good, The Bad and The Ugly, presenting a best practice overview focusing on both positive and negative outcomes, lessons learnt and what to avoid during a the lifetime project. The presentation looked at the transition of a Service Centre Service from northeast England to Wales within three months.

The project was achieved in the time frame while retaining knowledge, service levels and client perception. The ‘Good’ included the rapid transition, 90 per cent retention of all Centre SLAs and a reduction in complaint volumes. ‘Bad’ aspects were that the signed contract differentiated from the initial scope of the project proposed, documentation was irrelevant and the budget failed to meet requirements.

A dependency on third parties, unwillingness by the client to release control of services and assumptions in regard to the state consisted of the issues that were regarded as ‘Ugly’. Knowledge transfer was ineffective because a set budget was not specified upon in the bid, a delay in software delivery also prevented knowledge transfer, while key staff were unavailable at key planning stages.

Short cuts and risks should not be taken in key phases, in this example compromising over communications and knowledge. Forward planning and flexibility is needed with attention to detail and execution remaining critical to the success of a contract. 

Sarah Riding from Mills & Reeve presented a legal perspective of knowledge management during the outsourcing lifecycle. She identified that a failure in planning was a guaranteed way to prepare for failure and that micromanagement can be effective in knowledge transfer.

In the exit phase it is not a case of one size fits all with knowledge transfer in the exit, variables including the circumstances of the exit and the replacement can all affect the process.




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