Infrastructure Considerations and Challenges

I learned that there are 4 varieties of infrastructure and these are:

• Hardware infrastructure 
• Software infrastructure 
• Knowledge infrastructure
• Training and support infrastructure

Hardware Infrastructure

We need to consider in hardware infrastructure underlying the BPO project of whose systems to use.

Despite this common circumstance, the decision to use the vendor’s hardware system should not be based on technology maturity alone. Buyer and vendor must also consider other factors when determining whether to shift processes to the vendor’s hardware.

There are also three critical considerations regarding with the decision of whose system to use.

• Intent of the BPO agreement 
• Buyer’s interest in developing and retaining new capacities 
• Location of the systems

Outsource primarily to save costs should leverage the vendor’s systems. BPO buyer’s interest in developing and retaining new capacities in the outsourced process is “of whose hardware to use in the BPO project”. When a BPO buyer decides to use the vendor’s hardware, that hardware is often located off the buyer’s site.

There is a need to Conduct an Infrastructure and Architecture Audit for us to be able to imply the following:

Avoid needless duplication of systems and services.

Pinpoint gaps in infrastructure capability.

Ensure infrastructure/business alignment.

Ensure adequate scope of information technology (IT) components to accommodate service enhancements.

Assess security issues associated with data and knowledge sharing over networks.

Re-engineer processes that are obviously inefficient or anachronistic.

Software Infrastructure

I learned that if there is a greater gap between buyer and vendor software maturity, the greater the challenges in database integration and data sharing. It is reasonable that the burden will be on the vendor to manage database integration.The cost, however, is likely to be borne, at least in part, by the buyer.

Knowledge Infrastructure

Knowledge infrastructure refers to the practical application of the analyzed data and information.

I also learned what is the difference between Data & Information and Knowledge. Data and information are generated by raw transactions. Knowledge is generated by analysis and reflection on aggregated transactions.

Training and Support Infrastructure

In developing a BPO-related training and support, there are factors that organizations need to consider:

• Developing a clear set of standard operating procedures (SOPs) 
• Training programs that revolve around the SOPs 
• Conducting multiple training sessions: 
• Train in a group setting. 
• Train while working alongside employees during their workday. 
• When answering questions, always refer back to the SOP. 
• Final training should be completed after 60 days (refresher). 
• Not taking training lightly

Managing BPO-Related Change

        Change is intrinsic to the BPO transition stage. It presents organizations with opportunities that must be maximized and risks that must be avoided.As such,the transition must be carefully managed through a far-reaching project management plan and a strategy that respects the roles of leadership and management;the need for honest communication with employees; a recognition of the indirect impact BPO can have on non-affected business processes; an appreciation of the lingering fears and concerns that can occur during job loss and management changes; and the value of establishing and maintaining business continuity.

       The impact of these changes is further complicated by the arrival of a new relationship between BPO buyers and vendors. Like the transition itself,this must be carefully managed,and can be mastered only through an ongoing focus on business benefits expected by both parties.This requires negotiation,communication,and business skills,and must be characterized by trust and the alignment of values. By understanding and pursuing the fundamental traits of a successful BPO relationship,buyers and vendors can make the critical decisions necessary to achieving project success and, potentially, forge partnerships that outlast the current initiative.

        I learned that misunderstanding and mistrust can arise when a BPO buyer initiates a project with a vendor whose organizational culture and operating style are vastly different from its own. Such differences can and often are bridged. But what matters is whether the two firms recognize the differences and take proactive steps to deal with them. Of course, it is impossible to uncover all cultural differences during vendor selection; some will only become manifest in the operating phase.The project management plan should include inducements for each side to identify and detect problems that are a direct result of cultural differences.

          BPO agreements must be designed to provide for adequate flexibility in order to withstand changes in the business environment and the pressures inherent to such a contractual agreement.Typically, contract agreements are crafted on certain key assumptions pertaining to technologies, business conditions, personnel, and other relevant issues. But these assumptions will likely change with time. No matter how detailed the contract or favorable the terms, BPO agreements cannot anticipate all of the changes that occur in a dynamic, global business environment.

Dimensions of a Healthy Relationship

• Flexibility. Defines a bilateral expectation of the willingness to adapt as circumstances change.
• Information exchange. Defines a bilateral expectation that buyer and vendor will proactively provide information useful to each other.
• Solidarity. Defines a bilateral expectation that a high value is placed on the relationship and prescribes behaviors directed specifically toward relationship maintenance.

Relationship Risk Factors:

• Lack of appropriate buyer control
• Cultural differences
• Inflexibility in BPO agreements
• Inadequate SLA specifications and/or metrics
• Inadequate governance
• Lack of goal alignment
• Lack of integration

Vendor Selection Contracting

I learned that it is a need to know how to identify and select the right vendor for a BPO project. It is crucial to choose the best BPO company for a certain project so that there will be lessening of unnecessary costs and dilemmas. To do so, we need to develop a list of potential vendors. There is a proper way of selecting the right vendor and these are:

1. Appoint a vendor selection team
2. Establish qualifications
3. Develop a long list
4. Distribute the request for information [RFI]
5. Distribute the request for proposals [RFP]
6. Evaluate Proposals
7. Select a short list
8. Select a vendor

For the Vendor Selection Team (VST), it is important to have the essential members or key staff members. Like Senior Management, Legal staff with contract expertise, Technical staff and Information  Systems Analyst, End Users, and Financial staff. In a VST, there should be a VST charter. A VST charter helps the project to be on track because it properly states what is needed and has specific details (sets out goals and objectives).

In finding the right vendor, it is a need to establish qualifications to what is needed by the project. Here are what is mostly needed:

- Quality
- Performance History
- Warranties and claims policies

- Facilities and capacity

- Geographic location

- Technical capability

In customer service, at first, BPO buyers should maintain a "customer" mindset to able to see the most value of the BPO's services to avoid making concessions on provisions it has established as necessary for the project. And the mindset of "partnership" comes after if the vendor is selected. In this stage, mutual cooperation is expected.

Gathering many potential BPO vendors and determining which is better than which is a great technique to evaluate and to be certain of what kind of vendor is needed with the project. A common technique is to send a scope of work or SOW outline specification and request for information or RFI. The SOW should contain the broad of intention of the outsourcing proposal and the time frame of responding. The RFI is a questionnaire type survey intended to establish the level of vendor competence and interest.

Request of Proposals

The objective of developing an RFP is to create a document that details the services, activities, and performance targets required for the BPO project. But the RFP is also a sales document designed to interest vendors who can add value to the BPO buyer organization. 

Cost Management

               I learned that cost is one  of the three primary elements of the decision to outsource along with productivity and mission identify. Project cost management is traditionally a weak area of IT projects. IT project managers must acknowledge the importance of cost management and take responsibility for understanding basic cost concepts, cost estimating, budgeting, and cost control. The various costs associated with outsourcing are not always easy to forecast or identify. I also learned the two types of cost which are the Financial cost and Strategic cost. Financial cost is about Assessment of the outsourcing initiative, launching  the initiative, maintaining the initiative. While Strategic cost are associated with BPO talk about the potential loss of organizational learning that results when an in-house process is moved to an external service provider. The major strategic component of a BPO relationship is the relationship between the buyer and vendor. The costs that are involved in establishing and maintaining such a relationship are relationship cost.

                There is also this "Total Cost Management" which means the process of identification, forecasting and development of mitigating tactics for the costs associated with any project.

I learned that the BPO life cycle consists of the following phases:

- Analysis of the opportunity
- Vendor Selection
- Contract development
- Transition
- Operation

Note that the life cycle doesn't only limit to five, but could be more depending on the situation.

Selecting a vendor:
After the BPO opportunity has been identified, the organization needs to decide whether to hire a third party to assist with the vendor selection. And the developmental of contracts whereas the primary cost of this phase are to do with the negotiating a contract with the vendor. It is not advisable to cut costs in this area where there is too much at stake because services, deliverable and remedies have to be specified.

It was also mentioned that the following are the common people involved in a Business Process Outsourcing company:

- BPO Analysis Team (BAT)
- BPO Consultants
- Market Research Specialist
- Change Management Consultant
- Project Manager
- Vendor (Third Party)
- Buyer (The Company)

Identification and Selection of BPO

Identification and Selection of BPO

                I have learned that identification and selecting a BPO has a risk to handle. Finding the right BPO vendor is a critical step in an organization's outsourcing initiative and one of the most difficult to manage.  When an organization enters into a BPO relationship, it is assigning a third party the responsibility of managing part of its business. When such a a decision is made, the organization is assuming additional risk. 

I have also learned that there is actually an eight-step process for properly selecting the right outsourcing partner. Here are the steps:

- Appoint a vendor selection team (VST)
- Establish qualifications
- Develop a long list
- Distribute the request for information (RFI)
- Distribute the request for proposals (RFP)
- Evaluate proposals
- Select a short list
- Select a vendor

This is the systematic process for identifying a BPO vendor. I learned that BPO vendor relationship can be strategically important to the BPO buyer over the long term. Getting the right vendor from the start can accelerate the realization of strategic benefits associated with an effective BPO relationship. For example, the decision about which vendor to select will ultimately be based in part on how well the buyer and vendor firms relate to one another. It would be unwise to select a BPO vendor that is offensive or whose organizational culture is a clear mismatch with the BPO buyer's culture.

What I learned

I have learned different things. I learned what is outsourcing and what are the advantages and disadvantages of Outsourcing. Outsourcing involves the contracting out of a business process to another party or organization. Making the right decision is one key to achieve success. I also learned that services are one of the common processes that are outsourced. I may not have noticed that sales/marketing is actually one of the outsourced processes. Connecting one organization from another to reduce cost and maximizing human resources by letting the other firm do the work for you according to their specialization. But outsourcing also has its risks. Like having inexperienced managers, and unmotivated labor can create problems.Not clearly defining goals and objectives before starting the outsourcing process. Here are some advantages and disadvantages of outsourcing:

Advantages

- Swiftness and Expertise. Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output

- Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing

Disadvantages

- Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat.

- Lack of customer focus: An outsourced vendor may be catering to the expertise-needs of multiple organizations at a time. In such situations vendors may lack complete focus on your organization’s tasks.

And lastly, I also learned that there are ethical issues in outsourcing. Here are some examples:

- Do no harm to indigenous cultures

- Do no harm to the ecological systems

- Uphold universal labor standards

- Uphold basic human rights

- Pursue long-term involvement

- Share knowledge and technology