Relationship building skills selection criteria for outsourcing

relationship building skills selection criteria for outsourcing

The importance of effective outsourced relationship management can't be your in-house team, ensuring skill and knowledge transfer, and developing However, selecting the right vendor is only one-half of building a successful As a result, vendor management oscillates between being a chaotic, ad-hoc process at. phase, selection and negotiation phase, the transition phase and the that do not apply a structured outsourcing process. However, commitment to the outsourcing relationship and a through transition phase In order to build a comprehensive model and identify the activities critical to the success .. terms of skills and. Top provider selection criteria in mature versus less mature outsourcing markets. 62 As in most types of relationships, non-technical skills count too. ' Intangible . Taking account of the more intangible factors that help build positive .

The norms, nomenclature adopted in this paper legal norms and relational normshave the power to reduce the political manipulation by the individual on their own interest, binding them not only to the laws but also to the description of jobs, procedures for activity performances, standards of quality, etc. Legal norms are normative elements in the IT strategic partnership; and P2b: Relational norms are normative elements in the IT strategic partnership. Hence, emphasis is on "the cognitive dimensions of human existence" Scott,p.

In ethnomethodology, Garfinkelp.

relationship building skills selection criteria for outsourcing

These descriptions are the knowledge shared and used by the collectivity members to communicate with each other Garfinkel,p. Hakansson highlights the importance of communication during the institutionalization of a long-standing client-supplier relationship, while Dey, Clegg and Bennett point out communication as a major risk factor to an ERP implementation.

In this context, Khan et al. In an interdependent relationship between the parties, typical of a strategic partnership, Sheppard and Sherman consider essential the capacity to exchange information. Sharing meanings and interpretations, or cognitive sharing, allows communication of a better quality Lander, Purvis, McGray and Leigh, and contributes to a framework of trust between the partners Lewicki and Bunker,p. It provides "the necessary basis to a non-opportunistic behavior", while avoiding the development of asymmetric power Hardy, Phillips and Lawrence,p.

Willcocks, Lacity and Kern mention the risks of power asymmetry development that benefits the supplier in the post-transitional phase of IT outsourcing, while Kwahk and Ahn point out the negative impact of client-supplier misfits due to different countries on ERP implementation success. Thus, the following proposition is posited: Common language is a cognitive element in IT strategic partnership.

RESEARCH METHOD The nature of this research is descriptive-exploratory through a single case study strategy, as the phenomenon under study is contemporary, not easily dissociable from its context and characterized as a "technically unique situation in which there might be many more variables of interest than data points" Yin,p. The case study "contributes in a unique way to the understanding of individual, social and political phenomena" Yin,p.

Ensuring Success in Customer Database Outsourcing

Further, this research follows both Miles and Hubermanp. The purpose of this licensing is the businesses processes automation of BANK's international branches. It will reduce costs related to the actual replicated structures of IT abroad; automate the businesses of BANK's international branches; redesign the management processes of these branches; process in a centralized way at BANK's IT headquarters, located in Brazil; standardize the actual different routines used by international branches; integrate the international branches with current BANK's processes, including not only its legacy systems, but also its management practices accounting, auditing, customer relationship, and policies for products and services ; and mitigate the actual operational risks with the current three ERP systems used by international branches, which have several deficiencies related to their obsolescence.

These systems do not provide strategic, economic, or technological benefits to BANK. Moreover, the licensing of an ERP system is a fast way for a bank to put in place the best practices in the banking industry technology infrastructure, businesses, electronic security, compliance to norms, etc.

These employees authorized the researcher to record the interviews, who transcribed them for analysis purposes. Table 1 shows the profile of the employees interviewed according to their departments, as well as the date, duration and the interaction form of the interview i. For the analysis of the data collected from the documents, interviews and researcher observation, this study applied qualitative content analysis technique through categorical analysis Bardin,p.

The unit of significance, or register, was themes thematic analysis. In this way, the categorization criterion was semantic and not syntactic aggregating verbs, adjectives, pronouns, etc.

The themes are clippings of units with variable length extensions, including several sentences. For the categorization of the themes this study developed a category-system, which was not sufficiently exhaustive to restrict the analysis Miles and Huberman,p. Regulatory, normative and cognitive institutional elements already presented in this study formed the category-system, which was the basis of the protocol used for data collection during the interviews, observations and documents.

The regulatory elements of the category-system are: The reliability of the study derives from the use of several sources of evidence, allowing data triangulation Yin,p. Moreover, it derives from the following criteria recommended by Tashakkori and Teddliep. The model is segmented into regulatory, normative and cognitive institutional elements, which are the ones for establishing a strategic partnership between BANK and its ERP system supplier " Although the analysis confirmed periodic contract renewal category, it is specific for maintenance services " error-corrections, procedural questions, recovery and backup information, and general consultation exist Thus, both client and supplier consider the importance of their relationship future.

The analysis of the pricing model category allowed the identification of three correspondent subcategories Click and Duening,p. This last form of pricing is typical in client-supplier strategic partnership involving IT outsourcing Lacity and Willcocks,p. There are four forms of pricing in the agreement negotiated between BANK and the selected supplier: If concurrent users, customer accounts, or Internet subscribers increase or decrease to certain levels established in the license agreement, BANK pays an additional license fee or receives a discount, respectively.

This study considers license fee and annual maintenance charges in the fixed pricing subcategory; customization charges in the unit pricing subcategory; and the possibility of BANK paying more or receiving discounts over the license fee levels of concurrent users, customer accounts, and Internet subscribers in the risk and reward sharing subcategory. The data analysis identified due diligence as a new category, meaning the inspection or auditing of the information provided by the supplier Click and Duening,p.

relationship building skills selection criteria for outsourcing

This category encompasses BANK's visits to the supplier's clients; the workshop when the supplier presented the functionalities and technical architecture of the ERP system and when BANK could identify gaps for its requirements; and ERP performance tests by specialized companies. A final regulatory category is the sequential implementation of the ERP system. This manner of implementation is adequate when the ERP system is not uniform in its functionalities to serve different countries Madapusi and D'Souza,as it is the situation of BANK's international branches.

Furthermore, it allows a controlled implementation tied to the payments by BANK to the supplier, which is an instrument for BANK's decision to continue in the relationship in case of dissatisfaction with the supplier services. The exploration of these categories, however, allowed for the identification of contract laws and arbitration rules subcategories linked to legal norms; and flexibility, information exchange, and solidarity, bounded to the relational norms.

The contract laws enforce the agreement's credibility. Besides the British law, the agreement considers the German, American, and Indian laws in regulating its long-term duration.

How to Establish a Good Outsourcing Relationship

In a different way from the German law, the British law does not give adequate support to client-supplier relationships Deakin, Lane and Wilkinson,p. In this way, contract laws and arbitration rules categories provide the legal norms for client-supplier solidarity.

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Based on Macneil relational norms, Heide and John identify three elements: Thus, the norms of quality certification are "standards through which structures or behaviors can be compared and valued" Scott,p. Thus, this study identifies the quality certification category as a new normative element, since BANK considers the importance of the suppliers having ISO and CMM-I certifications, which induces quality in their software development processes.

It represents the sharing of meanings that permits conversations during the communication process Lander et al. It links to the need of a common language to establish the communication between BANK and the suppliers' representatives. The suppliers' representatives did not speak the native language Portuguese of BANK's representatives, but spoke English.

Ensuring Success in Customer Database Outsourcing

In this context, one crucial requirement from BANK's side to exchange information with the suppliers was the use of the English language as a common language. Four new categories were identified in this study - function point metrics, requirements specification, project management model, and ERP and Technology Expertise.

Function point metrics are productivity metrics that allow projections of the cost and effort in the software development process Pressman,p. Thus, knowledge sharing with regard to the development efforts of the supplier for new functionalities in the ERP system allows the client to evaluate how fair the service is, avoiding situations of opportunism by the latter. Function point metrics supports unit pricing, being an example of the integration between regulatory and cognitive elements.

BANK already adopts function point metrics to estimate about inputs, outputs, data files, queries and external interfaces Leffingwell and Widrig,p. The supplier who signed the license agreement with BANK adopts this kind of metrics "We use the function point technique The requirements of the system are the criteria by who develops supplier an IS and who demands client it can assess the respective quality of the service Pressman,p.

Requirements are the client's needs or what the system must comply with Leffingwell and Widrig,p. They must be documented in such a way to facilitate a common understanding between client and supplier to assure deliverables by the latter according to the former's expectations.

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The supplier uses its own model of document to specify the requirements and share them with BANK for analysis and agreement purpose. Sometimes, requirements documents are exchanged several times between the supplier and BANK until they agree on them. The third new category identified - project management model - involves the establishment of a process to organize the communication between client and supplier.

This model must encompass a plan to follow up schedule, deliverables, staff allocation, etc. Nevertheless, a common set of documents, decision structure and meetings were established to facilitate a common follow-up of the project progress with the supplier.

On the other hand, it was observed that the client staff training on the ERP functionalities and this staff allocation with IT and business background skills linked to the ERP business processes and technology was a critical success factor, sometimes helping to compensate for the deficiencies of the supplier's staff skills.

Ilfinedo highlights the importance of the ERP external expertise to support the client during its implementation, besides the client having internally related skills. Those elements, studied from the perspective of the client BANKhave the power to afford supplier commitment to the relationship as well as client trust in the supplier.

relationship building skills selection criteria for outsourcing

In this sense, they are elements of a cooperative client-supplier relationship. Cooperation is the foundation for a successful client-supplier relationship Morgan and Hunt, in the sense of a partnership. Consequently, this study considers these institutional elements as key factors for client-supplier partnership success in IT outsourcing. Client trust has three dimensions, according to the institutional elements: The categories alternative suppliers, hostage, periodic contract renewal, reputation, long-term contract, pricing model fixed pricing, unit pricing, and risk and reward sharingservice level agreement, due diligence, and sequential implementation are regulatory institutional elements that contribute to the supplier commitment in the relationship with the client.

Also, supplier commitment is an inductive factor for calculative trust of the client in the supplier. The categories legal norms contract laws and arbitration rulesrelational norms flexibility, information exchange, and solidarityand quality certification are normative institutional elements, which contribute to the normative trust of the client in the supplier.

The categories common language, function-oriented metrics, requirements specification, project management model, and ERP and Technology Expertise are cognitive institutional elements.

The first allows information exchange between BANK and the foreign suppliers that participated in the ERP selection process; the second, permits BANK to foresee the real costs of the supplier services; the third, supports the management of the day-to-day interaction with the supplier regarding the follow-up of the activities going on and that must be set to achieve the project implementation, as well as resources allocation, services payments, structure of management, project status reports, etc.

The results of this study contribute to a client-supplier relationship in IT outsourcing, through the application of a multidimensional perspective based on the institutional theory. From this standpoint, it highlights elements from several theories and integrates them as drivers to the supplier commitment and to the client trust in their relationship, starting from the commitment-trust theory as a theoretical basis. The results also contribute to organizational practice, since it explores a contemporary phenomenon and identifies elements that serve as references for the successful institutionalization of the IT outsourcing in the context of ERP system licensing.

In this sense, it is important to posit that a successful ERP implementation from a technical and relational standpoint will have a positive impact on its use for business purposes Zhu, Li, Wang and Chen, ; Velcu, ; Law, Chen and Wu, The institutional elements here identified may improve the management processes to sustain an offshore client-supplier relationship in IT outsourcing.

From an international business perspective, Dunning and Lundanp. In a strict sense, the banking industry can benefit from the results of the present study in the IT offshore licensing processes. One of the limitations of this study is the impossibility to generalize its results, although it contributes to theoretical generalization Yin, Another limitation refers to the qualitative content analysis.

The identified categories may be subject to question, since the analysis of the content, as a whole, is not exhaustive Bardin,p. Nevertheless, its potential remains precisely in exploring the reduced corpus of data and establishing more discriminating categories.

Finally, this study suggests three opportunities for future research, based on the model of the institutional elements developed. First, quantitative research projects with part of its elements, as they are several, when the use of exploratory and confirmatory factor analysis may be of great relevance. The model may require some modifications to assure its suitability for the observations collected through statistical significance.

The second opportunity is the development of a similar model from the supplier perspective, as this work explored only the client perspective. The results may indicate a more holistic model to explain the client-supplier relationship in IT outsourcing. Finally, the third opportunity is to compare the results of this study with those of studies developed in a similar context.

relationship building skills selection criteria for outsourcing

Identification and classification of ERP critical failure factors in Iranian industries. Information Systems, 37 3 Create a detailed list of requirements with clearly defined objectives, schedules, and benchmarks. A consultant might help a company select the right database partner. Gartner Research identifies three different types of objectives that can be predefined, each with its own set of success measurement criteria: Efficiency—focusing on cost improvement, this objective should be measured by cost metrics and service level agreements SLAs tied to cost savings.

Enhancement—emphasizing improvements in operation, this objective is measured by how well new services improve operational effectiveness or the customer's experience.

Transformation—improving business performance is the goal here, and success is measured by increasing margins, opening access to new customers, or helping manage growth. A company may focus on only one of these objectives, or all three. Be realistic about resources. IT and marketing departments may have the technology and strategic skills to build a customer database, but do they have the time? Do they understand data quality and customer analytics?

Are they ready to take on the responsibilities of security and compliance? In addition, an organization should consider whether the project will divert it from core competencies. Also, consider who will train the marketing staff on the effective use of the technology. Can they support their customers-those in marketing-in every aspect in which they need help? Ensure provider candidates have the right skill set and experience. A provider should have proven success, ideally in the company's specific industry.

Beyond that, the provider should have the full range of database marketing skills needed to complement the company's resources and support its goals. Database skills are essential, but in particular specialized skills are needed in handling dynamic customer information including the security issues surrounding that information and the proven ability to capture and clean customer data from multiple channels and sources. Finally, and perhaps most importantly, companies should look for the extra services that go beyond the database itself to provide customer insights that lead to effective action, such as campaign management, analytics, and results measurement.

After all, the biggest driver of database marketing success is customer insight, and that is the real value a third-party expert can provide. About the Author Dave LaGreca is a corporate officer for Harte-Hanks, a worldwide direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities.