Palladium - ServiceFrame™

New Blog

2009-07-21T07:33:00.000-07:00

Please note that our new blog is at Managing and Monitoring SLAs

Please click to get all the latest information on SLA Mangement and SLA Templates.

Controlling Service Provider Costs

2009-03-31T05:07:00.000-07:00

In the current economic climate cost control has become a key topic on the table of every management team. In order to make informed and clear decisions real information on the level of service provided is necessary - you can then decide whether your company is getting value from its providers.

In a boom time companies tend to accept service provider costs - particularly where income is growing and it is more productive to focus on revenue growth. As this changes companies will increasely look to get a clear picture of what is driving cost within their organisation. In most cases it is faster to drive a reduction in your external cost base than in your internal one.

If you are looking at your external cost base we recommend that you pull together a clear list of all your service providers (facilities, canteen, IT, HR, etc.) Then start to actively monitor the level of service they are providing. If clear Service Level Agreements are in place then you have a head start. If not, you probably should ask your providers what the expected level of service should be?

When it comes to cost reduction you have two simple options. A) renegotiate based on current level of service - times have changed and cost levels should be going down - providers will not be surprised by this. b) decide whether you can accept a lower level of service - this is a very fast route to getting a lower cost of service. In all cases you should make sure that you are actively managing SLAs into the future - whether manually or using an SLA Management tool.

Additionally - ensure that you can get clear visibility of metrics which trigger commerical penalties. This can be tricky when manually tracking services - an SLA Management tool will make it mcuh more straightforward. Also think about awarding bonuses for achieving performance levels - rather than trying to claim credits where performance is below acceptable levels - this is a much more client friendly solution and means you will only pay for what you get - rather than trying to complain when service levels are unacceptable.

Businesss Performance Management in Outsourcing

2009-03-26T04:13:00.000-07:00

Business Performance Management in Outsourcing

As outsourcing becomes more mature as an industry, structures and best practices are being developed. Organisations like the ITSqc are defining best practice models around sourcing, and management tools are being developed. Business Performance Management is one of those tools. It is a systematic approach to performance improvement, and is increasingly being used in outsourcing.

BPM provides a ongoing picture of how the outsourcing deal is performing – and importantly gives the same view to both the service provider and client. To do this we need to establish a meaningful SLA. The key step are:-

Establish strategic performance objectives
Break down the engagement into vital processes that advance those objectives
Identify important variables in those processes
Define acceptable performance levels at each variable
Craft a service level agreement (SLA) that details processes, key performance indicators (KPIs) and targets
Monitor those key performance indicators
Address any areas where quality is falling short

The process of including business objectives is covered in another article. The process of measuring the performance of the SLA, is one that ServiceFrame specialises in. Serviceframe is a web based service which allows an organisation to track its SLAs, and more importantly, the supplier performance against the SLAs. Serviceframe can be set up and running for an SLA within 30 minutes and is very easy to use.

You can see a demo of Serviceframe here or start a free trial here.

Using Business Objectives to Drive SLAs

2009-03-23T08:37:00.000-07:00

This article originally appeared on the ServiceFrame website - http://www.serviceframe.com/BusObjinSLAs.aspx

Service Level Agreements need to change. Service Level Agreements, or SLAs as they are sometimes more commonly known, where traditionally seen as a convoluted document which a Chief Information Officer (CIO) would use to prove that they are providing a satisfactory service. They would make little sense to people outside the IT department and would only see the light of day during their annual review, if at all. However, with the growing trend in outsourcing, they are being utilised more frequently within industries not readily identified as IT-centric. With the emergence of more IT-based solutions to solve non-IT issues, it is becoming more common for more business-centric functions, such as HR, to be described in a SLA.
An SLA is an agreement document used in a sourcing agreement between the service-provider and the client which formally outlines the service that will be provided. The relationship could be a traditional outsourced relationship where the service is provided by an external entity or it could be an “in-sourcing” relationship, with the service provided by a different entity within the same organisation [Hyder]. As mentioned previously, these documents were often IT-centric, with system availability metrics and associated contingency plans. Although they do offer guarantees to business on the system performances, they offered little business benefit to the organisation. This view is verified by the problem CIOs are now facing in that they constantly have to defend their patch while at the same time witnessing the benefits the IT function is providing to the business behind the scenes. Bespoke projects implementing new systems and functionality are not captured in the SLAs and so not typically considered in the service review meetings.
In relation to SLAs in other industries, the service provided often utilises technology to provide the service. A common metric to find in HR SLAs may be how quickly the service provider can upload an employee’s details in the centrally stored employee record systems. Because technology is used to provide the service the temptation is to measure the performance of the technology. But HR has traditionally been a business-centric function. Just because the service is now being provided using an IT-based solution should not mean that the performance of the function should be measured using IT based metrics.
SLA metrics should take the business objectives for the function into consideration, if not reflect them directly in their measurements. This is applicable to IT functions as well as business functions. One of the keys to having a successful outsourced function is to have appropriately defined business objectives for the function from the outset. These could be the overall organisation business objectives such as reduce costs, however it should be applied consistently to the function. For example, functions are often outsourced to reduce cost, in that the service provider can provided the function at lower day-to-day costs. However, all of the costs of the relationship should be examined, such as the cost in transferring the service and possible losses as a result of the relationship such as Intellectual Property.
Measuring business objectives has another benefit in that an Executive can directly relate to their meaning. Executives often talk in objectives, the majority of the time they create them and encourage their accomplishment. Having metrics that directly show the performance of an objective has major benefits over metrics showing system availability performance.
Shifting towards SLAs with more business objectives also leads to what could be perceived as simpler SLAs. More often than not, business objectives are described in simple business language. This can help to set the tone of the SLA and move away from the convoluted technical documents they previously were. A simpler document is more easily read and with useful business objectives at a basic level they could be reduced to a number of bullet-points. This way more people in the service chain can understand them and see how they are providing or receiving benefit. However, basic metrics are still required to measure the service performance.
People are slowly coming to the realisation that the current face of SLAs is not providing business benefit. In their current state they offer few advantages apart from documenting the relationship for legal reasons. Greater transparency is needed to gain the full benefit of the SLA and the outsourcing relationship. Another reason to change the face of SLA is in how they are monitored.
According to Jim Longwood of Gartner, a hamper to the evolution of business-oriented objectives in SLAs is that there is a distinct lack of “dashboard” and “fuel gauge” tools to manage the performance [Colquhoun]. Tools are needed that can clearly show the achievement of the SLAs but to get to this level the content of the SLA needs to be examined. Measuring the performance of SLAs that make little sense to the client is not going to provide value just because it is being measured in a clear way. Once clear SLAs that incorporate useful business objectives are created, tools to measure these SLAs can be investigated.
A place to start in simplifying SLAs is to look at the breaking the content of the SLA down to Service Lines. Service Lines are lists of services under a grouping. For example, Risk Management could be a Service Line within a Project Development SLA. Within this Service Line there would be a number of Services, such as Risk Identification and Risk Mitigation. Within the Services you would then have Service Levels that would measure the performance of that particular service, for example in Risk Mitigation the Service Level could be “% of acute risks mitigated”.
Going back to the Service Line, within the SLA document you could discuss how successful Risk Management helps in achieving the business objective of “Reduce costs”. If Service Providers that you employ achieve the mitigate risk Service Levels above the required level it doesn’t just show that your Service Levels are being reached, it also illustrates how this is contributing to achieving your business objectives.
In relation to Jim Longwood citing the distinct lack of appropriate tools, although there is a lack of them, it does not mean there are none. If you decide to take the approach of breaking your SLAs down into Service Lines that can relate to your business objectives there is a tool on the market that can help: ServiceFrame™.
ServiceFrame™ is a web-based solution the captures the services being provided to your organisation along with gathering metrics on the performance of these services. It presents these metrics in up to date information using a traditional traffic light model, through a dashboard and customizable reporting engine. The information is presented to the client arranged by SLAs, giving you a view of all of the current SLAs that are held by your company. Within the SLAs the services are arranged according to Service Line, Service and finally Service Level. There is also the option to view “My Services”, which gives a view of all the Service Lines currently being used by your organisation. This is then broken down into Service Levels and the SLA the Service Line is associated with. These two different views allow you to view your Service performance information from two aspects: from each SLA and from the range of services you utilise.
The web-based approach also makes it very easy for service providers to update your metrics, all is required is a browser and internet connection. They also receive notifications of when an update is required. These two factors combine to ensure you have the most up-to-date metrics possible, helping you measure your business objective performance.
You can see a demo of Serviceframe here or start a free trial here.

IAOP European Summit - Cost and Talent

2008-10-17T00:13:00.000-07:00

Palladium and Serviceframe have been exhibiting at the IAOP European Summit in Barcelona. We have been lucky that Barcelona is a city that starts late - as we have had a couple of long, detailed and very interesting days - which only spill out into the city as it starts to get moving somewhere between 9 and 11pm!

One of the hot topics this week been using outsourcing to access talent. It has shown up a difference between clients andservice providers. While the service providers have presented strong cases for harnessing global talent, and focussing on moving up the value chain, the clients still maintain a primary focus on cost reduction.

This was expanded by research presented by the Offshore Research Network, showing that clients considering offshoring consider cost far above any other factor. Client currently involved in offshoring still maintain cost as the primary drive - but it is closely followed by other factors including quality, innovation etc.

This provides the outsourcing advisor community with a challenge. How do we help clients considering offshoring to choose the right partner, and to structure the right deal? It seems that it is almost impossible to sell offshoring on anything other than a cost reduction business case - but we also know that once the deal is in place, the significance of delivery ability increases.

One option is to find providers who can flex cost and quality as the client evolves. This takes maturity in terms of contracting, and the scale to be able to operate, and switch between cost arbitrage and value add.

The Nirvana is to find a provider who can deliver both quality and cost reduction. We see this happening on a small subset of providers who can tap very specifically into a vertical - providing sufficient scale to generate real economies of scale, and real world class service into a specific niche. These are few and far between, but provide a truly innovative, partnership approach. For more details please feel free to contact me directly - daniel.berman (at) palladium.ie

Aran jumpers, memes and outsourcing best practice

2008-05-22T05:57:00.000-07:00

Flying back from the most recent eSCM training in Paris, a note in Cara magazine caught my eye. It stated that ‘Aran sweaters were originally knitted in the 1920s to be work by boys for their First Holy Communion. The idea that drowned Aran fishermen were identified by their sweaters is a misconception based on a passage in JM Synge’s Riders to the Sea’. I know that I have spread the Aran fishermen stories – and always believed it to be true.

Urban legends have become such a part of our consciousness that I wonder when we will start to have reverse Urban Legends – all it will take will be to drop the idea in the right place, that the fact that the Wright brothers invented the plane, that Einstein played the Violin, or that Ireland were involved in the last Rugby World Cup was an Urban Legend, and soon it will be written out of history.

We live in world of shifting, moving information – a sort of cambrian explosion in the meme world. And this makes it harder and harder to find stable information to structure your business around. During the training session this week we had lots of war stories, lots of examples, and lots of different views – all valid and useful, and many of them entertaining. However war stories are a little like Urban Legends – we don’t really know what is true, what is legend, and what is true but sounds like it should be legend.

eSCM provides a set of best practices for outsourcing based on experience. It is a set of war stories – but validated, researched, interpreted and tested – like finding your Urban Legend Published in Nature! This is the toolset to use when IT enabled sourcing is a key part of your business, either as a service provider or as a client.

As for Paris... what can I say? Unlike Traoloch’s experience in Amsterdam, we were in a vibrant but un-touristy location, the sun shone, the brasseries were packed - and as the song goes....

Lets stop learning from our own mistakes......

2008-05-19T03:25:00.000-07:00

Last week was a challenging one. I spent a few days on the next module of an ongoing training course in a sourcing quality standard called eSCM. Making use of outsourcing and shared services effectively can be a tricky business. Lots of people know a little bit about it. Very few people have any real experience managing either in an outsource environment or managing the transition to an outsource environment. This creates several problems. The major one is that people struggle to find expertise to support them in their outsource and so tend to run the project themselves from 'first principles'. Many capable and smart people do very well. There is no reason why they wouldn't - the issue is that there is more risk and effort involved than anyone would like to admit.

At Palladium we have experience and expertise - the problem we had was that communicating that expertise and experience can sometimes be difficult - especially as we are basically just saying - 'look we have done this before, we have made the mistakes and we have some greaTt people and some good tools to help you'. Use our experience and save yourself some time, money and sweat. Most people want independent validation. We would too. Hence eSCM.

So what is it? It is a quality standard. It is a set of best practices. It essentially says 'Look if you were perfect and know everything about outsourcing and shared services here are the 158 things you would be doing'. where is the value? Well if you are starting off on the sourcing journey it gives great visibility of some of the key capabilities you need to have in your organization and some of the key activities you need to undertake to source successfully.

The point is this - if you are seriously considering sourcing - whether it is outsourcing, shared services or any other form of outsourcing then you don't need to learn from your mistakes. Invest in Sourcing Education to ensure that your arrangements deliver the promised benefits. Building capability around the eSCM best practices is definitely a good place to start.

The Tandem Parking Space Rule

2008-04-29T02:57:00.000-07:00

I've been working on outsourcing contracts recently, and was reminded of an experience I had buying my first apartment.

We negotiated a very valuable second parking space (parking is at a premium in Dublin) - in a 'tandem' configuration, i.e. one very deep space which takes two cars. Once the solicitors were involved, we stressed the need to make sure we were allocated the tandem space. They assured us that it was in hand.

When they received the title, we asked about the tandem space - they confirmed that there was tandem parking space.

Before we came in to sign contracts, we asked them to double-chek about the tandem space, which they duly did.

When we arrived to sign the contract, they showed us the location of our single parking space. In dismay we asked about the tandem parking space - to which they showed us the note confirming that tandem cycles could be accommodated in the bike racks.

They must have thought we were quite obsessed about our tandem cycle - but neither they nor I caught the slight difference in our wording, or clarified what our odd request meant. And it's a lesson for us now - in constructing contracts, statement of work, business requirements or functional specifications. Be careful with your language, Clarify then Clarify again, If in doubt ask - actually ask anyway, even if you think there is no doubt!

New ServiceFrame Website

2008-04-18T09:01:00.001-07:00

It's Friday afternoon and the new iteration of the ServiceFrame website is almost complete . We hope it will provide clarity on exactly what the tool does and how it might help all of you who toil with outsourcing metrics. If you don't have much time just look at the demo. All feedback is welcome.

Key activity for Palladium next week will be reviewing the Irish Regulators new guidelines on outsourcing. We expect these will mostly reflect the type of best practice that is captured in eSCM. The key driver is probably a genuine concern that our financial institutions retain effective controls to protect our money - no doubt accelerated by the recent European MiFID (Market in Financial Instruments Directive). We will be publishing some practical tips on how to be compliant to the guidelines when they are published.

Telecoms Outsourcing Conference, Amsterdam, April 2008

2008-04-15T06:58:00.000-07:00

Last week I attended the Telecoms Outsourcing Conf in Amsterdam. As always at these events there was a mixed bag of speakers and presentations. On balance it was worth the trip. As always it is a pity there wasn't a few more customer organisations speaking.

Most notable feature of the whole conference was the extent to which outsourcing 'chat' has now become grounded in reality. There was some talk about the 'size' of the outsourcing market and the extent to which it will 'transform' business globally. but I got a real sense that most participants were really just interested in the practical aspects. There was an acceptance that 'pure' outsourcing is a rarity - but that real benefits accrue from 'out-tasking' or even just adopting some of the best practices of an outsourcing business model.

Notably strong speakers at the event were Oliver Coughlan from O2 Ireland and VS Shridar from Tata Consulting. Oliver gave a refreshingly honest account of the decision making process within O2 Ireland in relationt to outsourcing. It was clear to all that a clear focus on 'core' activity was key to O2's decision. There was much less emphasis on cost than one might expect from reading popular media. Oliver also gave a very clear sense of the people focus that makes O2 one of Ireland's best employers. This focus on people's welfare was reflected in the approach they have taken to outsourcing.

On the Provider side VS really showed why India is a service powerhouse. Whilst his meticulous attention to detail might be difficult on a Friday afternoon - it demonstrated that these guys have no interest in 'chatting' about generic high level MBA type benefits. there is real expertise which can be used to improve speed of delivery and efficiency. VS is a guy who you can take seriously when he says they are trying to build value as well as just reduce cost. As he said when they win business there is no opportunity to cut cost - they must be remain competitive by adding value.

As for Amsterdam.....well lets just say it is a real pity to have fly across Europe and then have a conference in an airport hotel.

Traoloch