Solutioning: The blueprint for successful process migration

Business process outsourcing landscape is changing everyday. It is gaining acceptance across industries as a strategy to counter threats such as competition. In addition, many processes that were considered core are now increasingly being outsourced.

Financial services industry has been one of the earliest adopters of outsourcing. The financial securities industry has outsourced activities such as printing and record keeping since the 1970s. Not surprisingly, the prime reason then was cost saving. This historical factor still remains one of the reasons for outsourcing, except the fact that it is not the prime reason. Moreover, outsourcing has gained momentum because it is now a competitive necessity. In the new wave of business process outsourcing, banking sector played the role of an innovator, closely followed by the insurance companies.

Solutioning – the mantra for outsourcing success
Business process outsourcing has its own caveats. If not delivered successfully, it may result in loss of reputation and revenue. Therefore, it requires meticulous charting of processes and activities encompassing the entire life cycle of outsourcing. In addition, it requires identifying all possible deviations and corrective measures. This will not only provide clear guidelines on carrying out the transition of processes and its day-to-day management but will also minimize the risks associated with the offshoring exercise.

Solutioning is the development of a blueprint for execution of the outsourcing initiative. It involves pre-empting challenges, anticipating issues that may arise during the course of the outsourcing exercise, and devising solutions for them. It also requires scheduling of certain initiatives for continuous and significant improvements in efficiency and productivity. However, the task of developing a process solution is highly complex and constitutes a multi-disciplinary approach.

Considering the stakes involved, putting together the blueprint is an important exercise. It helps organizations make a confident move instead of 'throwing the dice'.

1. Opportunity Identification - the alpha of Solutioning
Opportunity Identification—the first step in Solutioning scopes various business processes for outsourcing, from a feasibility standpoint.

The evaluation of a process is based on various parameters such as process flows, complexity, skills set requirements, risk in outsourcing, utilization of IT systems, linkages and maturity of processes and the complexity in defining performance metrics.

Different weights are assigned to the parameters. A continuum of processes, ranging from “most fit” for outsourcing to “least fit”, is charted based on their aggregate scores. From the continuum, the processes are segregated in two broad categories: "for outsourcing" and "not for outsourcing". Processes "for outsourcing" are further divided into phases or waves, with processes with least level of complexities falling in the first wave basket and the others in subsequent waves.

2. The solution
Once Opportunity Identification provides a process schedule, the next step in Solutioning is to provide a blueprint for the entire life cycle of outsourcing. The blueprint is a roadmap to comprehensive documentation of every activity at program level and process level, on a timescale.

1. Program Level
   Program level solution focuses on the interdependent activities, critical decisions to achieve consensus, mitigating risks, and facilitating communication between teams. The program management office has the task of establishing a consistent framework for the outsourcing initiative by defining how projects will be planned and executed.
2. Process Level
   Process level solution focuses on planning, execution and monitoring strategy for successful (on time, on budget, quality) delivery of specific deliverables for a single process, which are mutually agreed-upon and clearly laid out in the SLA (Service Level Agreement).
   EXL Solutioning team has identified the following components of a solution:
3. Cost benefit analysis
   Once the outsourcing life cycle and the blueprint are laid out with cost specifications, the subsequent challenge is to assess the financial viability of outsourcing. It begins with pricing, as defined in the Solution stage. Pricing is based on various assumptions such as manpower cost, FTE count, productive hours, and attrition rates, among others. Financial benefit analysis compares the investment required and the benefits desired from outsourcing. The benefits to the client include process improvements, cost savings, gained efficiencies, reduced turnaround time and improved productivity. The processes meeting the desired criteria of "return on investment" graduate to processes selected for outsourcing.

Who does the Solutioning?
Solutioning is not an individual effort. It is a specialized initiative that requires various departments to work closely towards the organizational goal of outsourcing. Some of the organizations that have already taken outsourcing to a mature level may find a champion within the organization to spearhead the initiative. The champion will typically be a C-level executive, who will form a formal group by sourcing people from various functions, i.e., operations, technology, finance, human resources and legal. Some others would hire the services of an outsourcing advisor. Yet others rely on the expertise of a mature service provider who offers a combination of migration and domain expertise.

Solutioning minimizes execution failures
The instances of outsourcing running into bad weather are most often due to poor planning resulting in failed execution. Solutioning provides an approach to win the outsourcing game from start to finish. It may not be an overstatement to say that Solutioning is a 'shield' to ward off outsourcing failures.