The focus of this three part series is to provide insight into managing a smooth and seamless transition for outsourcing claims business processes. Part 1 concentrates on the upfront gathering of current and future requirements, the Request For Information (“RFI”) and Request For Proposal (“RFP”) process, the selection of the “right” vendor, and a brief on contract negotiation. Part 2 focuses on the development, testing, and conversion that takes place between both organizations, and some of the pitfalls to avoid. Part 3 will focus on maintaining a productive, long term partnership with your vendor.
One of the biggest pitfalls seen in an outsourcing arrangement is the absence of a true partnership between the client and the vendor. In the absence of a partnership, the replacement is a customer-vendor relationship. In this type of relationship the customer is looking for one deal while the vendor is looking for another. This arrangement creates a lack of trust between both parties involved, that will eventually make the relationship sour because it becomes disconnected from the true business needs and requirements.
Secondary to the partnership but equally as important is the communication between parties. Communication ensures business interests are aligned and understood. Lack of communication throughout the life of the relationship creates tensions that will definitely hinder future value creation. Effective and continuous communication ensures both companies are responsive, deal with the facts and not assumptions, keep all stakeholders in the loop, and make decisions in the spirit of a partnership. Successful outsourcing arrangements, those that last for years, put in place a joint planning process between the client and vendor. Regularly scheduled joint planning meetings every six (6) to nine (9) months assure that both the client and vendor monitor the health of their relationship. By continuously reviewing the strengths, weaknesses and opportunities of the relationship, agreeing upon recommendations and placing those recommendations into action continually improves the relationship.
Most often seen in healthy outsourcing relationships is an effective governance methodology or framework. Both parties must agree early on to operate in a collaborative environment, as noted above. In the absence of a governance structure, the resulting implications could be devastating. This could lead to unclear roles and responsibilities between the client and vendor, challenges encountered that are not overcome and linger, problems not resolved in a timely fashion, and unmet expectations .
The worth of an outsourcing agreement is generated when both companies strike a mutual agreement that forms the foundation for a long term partnership. When both parties buy into these steps as well as avoid the pitfalls noted, the framework and foundation has been set for a long term successful partnership. By doing so, both parties have put in place the tools, design, contracts, and methodologies that will ensure success. Failure comes when anyone of the steps are short-changed, missed or are misunderstood by either or both parties involved. When your company makes that strategic decision to outsource, make sure you make the same decision to be successful by employing these best practices.