Strategic Outsourcing Professionals

In the BPO environment, a typical governance model will include a mechanism for managing key performance indicators (KPI) to ensure high levels of resource utilization and customer satisfaction (CSAT) while driving down operational costs. Most environments will define measurements that track KPI at an individual resource level, but will then average KPI by vendor, site location and/or line of business to measure success. The data is then traditionally used to identify opportunities for improvement and/or steer ‘spend’. Typically, enterprise-wide initiatives are developed for an entire program where only marginal benefit is achieved because the gaps are not enterprise-wide. What if you could monetize each resource in dollars and cents to understand impacts and/or benefits?

As ‘BPO 2.0’ moves forward, there is a need to measure individual resources with a metric of Earned Value (EV). This concept is founded on the principle that resources are variable; they perform at different and unique levels of efficiency and quality. The more adept a resource is at providing efficient and quality services, the less impact that resource will have on the overall operating cost of the organization. By measuring individual resources with earned value, this opens the door for aligning vendors more seamlessly to corporate objectives and goals.

Benefits of deploying an EV metric are as follows:

• Develop a performance monetization matrix that specifies impacts of resource specific operating costs within the organization
• Incorporate a framework for training development to promote resource grade classifications and drive towards higher quality, higher efficiency and lower costs.
• Develop value stream maps for process improvement and resource development
• Incorporate EV metrics into the scorecard to assess and target opportunities for improvement

Stop and think about the possibilities from both a negotiation and vendor management perspective as the model is developed. Vendor incentives could be negotiated where the best and most efficient resources are aligned to your account. Vendors have the potential to make higher margin; clients would be willing to pay slightly more for resources that are known to operate more efficiently with higher quality because earned value would quantify an actual cost reduction of lower FTE. By developing an earned-value metric, everyone has the opportunity to win. Let’s just hope my boss wants to play!