{"id":1286,"date":"2013-02-17T11:23:00","date_gmt":"2013-02-17T11:23:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/outsourcing_employee_021713\/"},"modified":"2013-02-17T11:23:00","modified_gmt":"2013-02-17T11:23:00","slug":"outsourcing_employee_021713","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/outsourcing_employee_021713\/","title":{"rendered":"If outsourcing were an employee, it would be fired… Part 1"},"content":{"rendered":"
\"\"<\/a><\/p>\n

Lee Coulter is… Lee Coulter (click for bio)<\/p>\n<\/div>\n

The first time I spoke to Lee Coulter, I was an analyst at the old AMR Research (now Gartner) and managed to get him on the phone, where I hoped to\u00a0convince\u00a0Kraft’s global \u00fcberlord of shared services, IT and outsourcing to spend a day at a roundtable I was organizing. \u00a0“You’ve got 5 minutes to convince me why I should invest my time with you”, was his response.\u00a0I knew straight away this was a guy who didn’t like to xxxx around.<\/p>\n

Since then, Lee has been a great friend in helping us\u00a0establish\u00a0the HfS Research organization three years ago, in addition to lending his time and support helping us assemble the most\u00a0irresistible\u00a0community of senior sourcing practitioners. \u00a0For those of you attending our dream<\/em>Source summit<\/a> this Spring, Lee and I will co-host a session entitled “If outsourcing were an employee, it would be fired<\/em>“. \u00a0Lee, who today has built and now leads shared services for heathcare provider, Ascension Health, caught up with us last week to talk about the session and why we called it just that…<\/p>\n

Phil Fersht (HfS Research): \u00a0<\/strong>Good morning Lee – a pleasure to get you on the line today. You\u2019ve been a well known figure in sourcing shared services and outsourcing world for quite a few years now.\u00a0 Can you tell us a bit about your background and how you got to where you are today?<\/em><\/span><\/p>\n

Lee Coulter (Ascension Health): \u00a0<\/strong>Sure, Phil, I guess it goes back quite a ways! \u00a0Originally, I guess I was starting my career in what wasn\u2019t really an outsourcing or shared services configuration. Actually as a delivery guy, I was a service engineer delivering services to hospitals and health systems. Twelve years, later I had moved from delivering services for diagnostic imaging equipment to delivering services for IT. And it was pretty surprising to me to find that the whole delivery process was a copy-paste, it was the same stuff<\/em>. \u00a0Today, I am in my sixth industry and I have managed every function in a company except marketing.\u00a0 And every time I come to look at these things I find the service delivery process is the same. So, shared services and outsourcing I don\u2019t really consider them to be different. There happens to be a second set of shareholders in an outsourcing relationship, but the dynamics<\/em> of establishing the service, the KPI\u2019s, the unit of service, the unit of cost, the drive to innovate and then retransform, all of those things… they are essentially the same<\/em>.<\/p>\n

So, I had an opportunity through my career to sit on a commercial outsourcer as well as a buyer and doing so with long-shore, off-shore, near-shore, in-sources, outsources I have kind of had a chance to do kind of all the major things within the industry.<\/p>\n

Phil:<\/strong>\u00a0 So, what\u2019s changed, would you say, in the last decade? Do you feel that the attitudes and approaches of enterprises have shifted at all, or do you think we are still going around in the same circles?<\/em><\/span><\/p>\n

Lee:<\/strong>\u00a0 One of the expressions I have been using lately is that the expectation of the business today is far more than simply to \u201csuccessfully transact\u201d.\u00a0 When you look at what typically gets included in the shared service or outsourcing scope, it is typically transactional or business-rules based work. If we look back to the 80\u2019s and 90\u2019s, it was really about \u201cgetting to OK\u201d. If you got \u201cOK\u201d, meaning you successfully reduced the cost of delivering it and you successfully met the very basic expectation of simply \u201cdo the transactions and do them satisfactorily well\u201d, that was the challenge. Today, that is no longer considered a challenge; those are now table-stakes.<\/p>\n

So for every practitioner, whether they live inside a commercial provider, or inside a company, the expectation is much bigger. It is around business process effectiveness, business process transformation, business insight through analytics, the addition of certain skill-sets that are created to help manage in a shared services or outsourcing environment, like project management and quality, Six Sigma and that kind of stuff. So, all of a sudden what used to be the objective has now become the table-stake. Now businesses are expecting a whole different level of contribution – I\u2019m not just saying performance, but contribution<\/em> by the shared services\/governance organization.<\/p>\n

And now you also introduce a couple of major disruptors, namely technology and cloud. And it\u2019s kind of funny, cloud has been around a very long time. When we go back far enough we could argue that AOL, CompuServe is where cloud and well, I guess in the strictest definition they were. \u00a0In the way we talk about cloud today, where you have applications-as-a-service and cloud-based service platforms which are location-agnostic, in terms of whether resources are need to be there delivering service, it really changes the game in terms of what level of contribution<\/em> you can have to an organization.<\/p>\n

Phil:<\/strong>\u00a0 We\u2019ve got new data<\/a> that shows the desire to standardize processes is very, very strong behind an outsourcing decision. How much is that playing into the hands of the providers who have good technology?\u00a0 Do you think that the ability to couple good platforms with the right process is now the way to go? \u00a0<\/em><\/span><\/p>\n

Lee:<\/strong>\u00a0 Absolutely, I would even offer a little bit more, which is the level of variation in core processes<\/em> is diminishing from organization to organization.\u00a0 What do I mean by that?\u00a0 Well, if we go into some of the tried and true world of shared services and outsourcing… let’s take F&A, AP – your basic hire-to-retire services. It used to be that there was a pretty enormous variation. But, over the last twenty years the adoption of things like SAP and other ERP solutions and the broadly available best practice operating models for running these parts of your organization, have resulted in less variation<\/em>. Well that means a service provider can build a technology platform and it used to be it was a pretty big leap in terms of process transformation to get a client from their existing process to what we\u2019ll call a best practice standard operating model<\/em>. \u00a0More and more companies, to the extent that has been possible for them, have already attempted to adopt these best practice operating models.\u00a0 So, it increases the speed and minimizes the amount of change and disruption from these transitions.<\/p>\n

Phil:<\/strong>\u00a0 Lee, we are delighted to have you lead one of our core sessions at our dreamSource summit<\/a> this year. \u00a0And, I am going to give you credit for coming up with the title \u201cIf outsourcing were an employee, it would be fired\u201d. How did you come up with that and what is the thinking behind it?<\/em><\/span><\/p>\n

Lee:<\/strong>\u00a0 So, let\u2019s say you have signed an employment agreement with someone to become and employee for seven years with some options to extend.\u00a0 Your employee starts and you put some objectives out there around getting control of the stuff and delivering these transactions.\u00a0 You have your annual review and they’re saying, \u201cI\u2019ve now got control of the process and I\u2019m transacting. \u00a0Pretty soon it will be stable and I will be consistently transacting these services\u201d.\u00a0 You get to the next year and you ask the employee <\/em>what are their objectives and your employee responds \u201cWell I am going to keep right on transacting\u201d. And the following year you ask \u201cWhat are your objectives this year\u201d and the employee responds \u201cWell, I am going to try and transact a little bit less expensively\u201d. And every year is the same conversation about \u201cWell, I am going to meet my SLA\u2019s, and I am going to try and not disrupt our business\u201d. \u00a0Is that the kind of employee you want working in your organization?\u00a0 It\u2019s really become the longest-lived most frustrating conversations around outsourcing in the nation.<\/p>\n

The framework of the relationship between outsourcing as an employee and the employer needs to be driven<\/em> to change, and the employee needs to provoke<\/em> that.\u00a0 For the folks that work for me, if they give me the same goals this year that they had last year, and their performance is simply a \u201cmeets expectations\u201d, well if I keep them around that long, my expectation is that we continually increase the scope of our objectives and that we look for ways to increase our contributions to the business and force ourselves, by virtue of establishing these goals, to do that.<\/p>\n

The vast majority of outsourcing relationships don\u2019t fit this model. All the FTE relationships that every single year has the same expectation \u2013 \u201cWell, I am going to transact and I am going to wrestle with you on forex and inflation to offset the price reduction you think we should get\u201d. \u00a0\u00a0That\u2019s not an employee I want, I don\u2019t know about you…<\/p>\n

Stay tuned for Part II<\/a>\u00a0(click here<\/a>) where we talk about how this industry can get out of its own way to evolve these rigid relationships…<\/span><\/em><\/p>\n

Lee Coulter (pictured above) is\u00a0Senior Vice President and Chief Executive Officer,\u00a0Ascension Health Ministry Service Center, LLC. \u00a0As a distinguished practioner in the fields of outsourcing and shared services he has held several senior operations leadership roles at Kraft, AON and GE. \u00a0Lee also serves on the board if HfS Research. \u00a0You can view his full bio by clicking here<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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