In the first portion of this series, we talked about the success factors that can be key to a managed services journey and helping leadership decide if they should take the plunge and move forward with a program to implement. If after examining the success factors leadership feels they should move forward with a managed services effort, there are several focus areas to include in their planning.
Four Fundamental Focus Areas for Managed Service Success
These are some of the foundational pieces that most organizations will want to include in an implementation plan. These should be included in program cost/effort estimates, in addition to the efforts to address any gaps identified in the earlier review of success factors. Depending on the organization, these focus areas will no doubt decompose into many sub-items, but they should include the following.
1. Define the “Why”
It is impossible to spend too much time here. The movement to managed services may appear to be an inevitable trend to industry leaders, but that sentiment will not necessarily be shared by the staff (or even the leadership) of many organizations. Therefore, significant effort should be put into defining and communicating the "why" around the initiative and very different messages need to be created for the different audiences.
- Executive/Leadership Audience: This group might seem the most straightforward to deal with - since they have profit and loss (P&L) insight and they (usually) have a full view of the bottom-line impacts of the changes. Good managed services implementations are not just about cost reduction as there is danger in only focusing on that aspect or having a one-dimensional approach to getting there (usually some flavor of labor arbitrage). Other potential values of managed services to consider bringing to leadership should include:
- Risk Reduction: Managed services can greatly reduce the chances of error, reduce audit/compliance risks, etc. because they usually take activities that are occurring in many different places and bring them together under one roof-surfacing inconsistencies in how they are performed, bringing a fresh perspective to spot gaps, and giving single-point ownership to what can otherwise be distributed activities.
- Consolidation of Fragmented Work: Every leader can appreciate the inefficiency of resources having to wear multiple hats; often because certain jobs need to get done but are not enough for a full-time/dedicated role, so several such jobs are cobbled together to create a position within a department. Individual departments within a company may be littered with these mash-up roles, but with managed services, these “mash-ups” can be pulled apart and consolidated into resources that support multiple departments.
- Expanded Work Hours: Most managed services groups have a share of their resources offshore and in time zones 8 to 12 hours off most U.S.-based locations. While this can present communication challenges, it can also bring a tremendous opportunity by adding more work cycles to each day and more easily providing off-hours coverage for U.S.-based stakeholders.
- Labor Savings and a Simplified Focus: Shifting the same work to lower-cost resources is an obvious gain in managed services and is often a major component of a business case. However, this is usually not accomplished via the managed services group charging lower hourly rates for their resources (that tends to be the domain of a staff augmentation effort) but rather the services partner creates a reoccurring charge to perform certain functions. Because of this approach (letting the leader ignore hours worked and solely pay for results), leadership can focus on the inputs to the process that will be shifted to managed services and how to measure the outputs coming back to them, but then they can leave the "how" of the shifted process to the managed services team.
- Staff/Non-Executive Audience: Unless the company has a robust profit-sharing program, the financial benefits/savings of a managed services effort will probably not be appreciated by non-executive members. Unless the company is losing money (e.g. all jobs are at risk without a change) any discussion of “savings” will more likely be counter-productive – raising accusations of greed and questions around ‘how much is enough’ for profitability. However, there are other compelling arguments for managed services that can resonate with this audience.
- Consistency of Processes: Allowing team members to be able to count on a process being done the same way, with the same service level agreements (SLAs) (instead of different things by different divisions) can make it much easier for them to then focus on their own core work.
- Process Excellence: A good managed services partner should be able to improve on the current SLAs offered by internal teams (and they might be the first to offer SLAs at all). They are experts who have been able to focus and build tools/knowledge/automation focused on this "one thing" – a luxury internal teams often do not have. Also, because of their often larger staffing pools and documentation rigors, they can offer failover and redundancy of skills that a smaller team cannot.
- Expanded Work Hours: Like executives, the concept of having partners who can work while the employees sleep provides significant value and can greatly shorten the turnaround time for requests.
- Freeing Staff from the Mundane: No one likes the feeling of essentially being "human middleware" and doing tasks that do not bring value, and if the service provider can take these tasks off the plates of employees that can be a great benefit.
2. Provide Ground-Up Organizational Change Management (OCM)
Managed services are often (rightly or not) painted as an attempt by executive leadership to squeeze margins and reduce the workforce. Because of this, many top-down communications plans, executive listening sessions, etc. are likely to fall far short of the Organizational Change Management efforts that are needed to get staff on board. Additional change channels to be focused on include:
- Change Champions: Finding and empowering change champions within the rank-and-file (selecting both those affected directly by the new managed services and those that are customers/stakeholders to it) and providing them with the tools and information needed to make the case, will create respected voices that staff will listen to.
- Addressing the Hard Questions: Robust FAQs that are built with the help of as many different viewpoints as possible are needed. They need to be made available via mechanisms that make them easy to access, and search, and need to support long-form answers and/or pointing to supporting info. Managed service solutions sometimes require tradeoffs (where one aspect may be a backward step, but is offset by three or four other gains) and the FAQ resources must help staff understand and see this bigger picture.
3. Create Transparency/Accountability Within the Implementation Teams
The most trusted sources promoting the future success of a managed services effort are the hallway conversations between members of the implementation teams who are interacting all day long with the partners who take on the work with the rest of the staff. Strong leadership by the program and project leaders – surfacing disconnects, holding all parties accountable for their pieces, facilitating team-building activities, etc. will be critical to building long-term trust.
4. Ensure Cultural Alignment (between the managed services group and the company)
While service level agreements (SLAs) will be the unbiased measure of a managed service group’s success, that success will be tarnished if the managed services staff (particularly if they are part of an external partner organization) are difficult to work with and always seem at odds with the employees. The company needs to walk the managed services group through their values (both written and unwritten) that define successful partnerships between teams in their organization and the managed services group, in turn, needs to make this a part of their staff onboarding.
Final Thoughts
Most managed services journeys are program-level efforts that encompass many (perhaps dozens) separate project efforts that are required to make them a reality. The fundamentals covered in this second part of our series require talented and dedicated resources that many organizations do not possess internally or require the backfill of their most seasoned members to allow them to focus on this effort. In parallel to this work are the analysis efforts to identify and detail the functions that will be transitioned, understand/address the staffing and org structure changes needed, establish new flows of communication, accountability, etc. Finally, depending on the organization’s state of maturity (as discussed in the first part of this series) other projects may be needed to implement infrastructure, reporting/data capabilities, and systems accessibility to facilitate managed services work.
Many leaders will focus on the analysis and infrastructure efforts right away once a company begins its journey. After all, they are quite obvious – and necessary – to success. However, if care is taken to fully address the focus areas covered here as well, an organization will have a much better chance of implementing the managed services within their planned timeframes - and with far less broken glass along the way.
In the final part of this series, we will look beyond the initial implementation and focus on how leaders can validate how they have truly made a successful transition and be able to sustain – and eventually even expand – their managed services gains into the future.
© Copyright 2024. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
