Complex Outsourcing Relationships

18 Pages·2016·2.01 MB·English

Complex Outsourcing
Relationships:
Managing the Million Dollar Honor
Code
Assurant
Abhishek Breja
Vice President: Global Delivery Office
Akash Gupta
Director, Sourcing Strategy
EY
Sudarshan Choudhury
Senior Manager
sig.org/eval
Complex outsourcing
relationships – managing
the million dollar honor code
Presentation
19 October 2016
Presenters
Abhishek Breja Akash Gupta
Sudarshan Choudhury
VP ⎯ Global Delivery Director ⎯ Global
Senior Manager –
Office & Transformation Delivery Strategy
Advisory Services
Strategy
Assurant Inc.
Assurant Inc.
Ernst & Young LLP
Managing the million dollar honor code
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Assurant Inc.
Assurant provides specialty protection products and related services to safeguard
against risks. With a strong commitment to service, sophisticated technology and
an array of flexible tools, Assurant builds solutions to meet customers’ needs.
Assurant is a global company with approx. $30b in assets and $6b in revenues.*
Housing: Working with mortgage lenders, property managers, manufactured
▶
housing firms, auto finance companies and insurance agencies, Assurant Specialty
Property provides client-centered solutions to protect homes and personal property.
Lifestyle: Specializing in providing extended service contracts and other risk
▶
management solutions, Assurant Solutions offers a wide range of products that
protect appliances, electronic devices, mobile phones and family finances through
preneed insurance.
Assurant has leveraged outsourcing as a key
pillar of its operating model and has an annual
spend of approx. $200m on outsourced services.
* As of June 2016
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Managing the million dollar honor code
Ernst & Young LLP
Building a better working world
150 41k $7.3b
countries Advisory revenue
professionals
Americas EMEIA Asia-Pacific Japan
14,000+ 18,000+ 5,500+ 1,000+
Advisory Advisory Advisory Advisory
professionals professionals professionals professionals
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Outsourcing is core to Assurant’s operating
model for serving its customers
Background
Assurant works with global service providers to source multiple services
►
(e.g., IT, customer service, core insurance processes).
Global delivery model is a key component of Assurant’s operational strategy.
►
Challenges
Vendor proliferation
►
Non-standardized, non-centralized and opaque governance
►
and sourcing strategy
Adoption of leading edge practices for operational innovation
►
(i.e., robotics, analytics and digital)
Rigor on value realization
►
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Outsourcing strategy and governance group
(Assurant): overall charter
Manage risk
Compliance risk
▶
Contractual risk
▶
Financial risk
▶
Strategic/
▶
relationship risk
Performance risk
▶
Global Vendor
Effective
sourcing selection and
governance
strategy contracting
Protect economic value
Maximize value
▶
Enterprise-wide Vendor selection Monitor, measure
from outsourcing
sourcing strategy and deal structuring and control
Reduce cost
▶
in collaboration aimed at mutually vendor and
Modernize deal structure
▶
with business beneficial relationship deal value
Optimize service level
▶
agreements (SLAs)
and KPIs
Value tracking and
▶
business case mgmt.
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Target “803 : 80% visibility > 80% under
governance” > 80% fully governed
Current status Target (2016)
▶ Spend amount?
Visibility
▶ Vendor metadata?
$140m $160m
(Spend knowledge) ▶ Service profile?
▶ Client profile?
▶ Compliance risk
Under governance
$60m ▶ Contractual risk $128m
(Risk governance) ▶ Financial risk
▶ Performance risk
▶ Maximize deal value $102m
Fully governed
$30m ▶ Modernize deal structure
(Value governance) ▶ Optimize SLAs and KPIs
▶ Value assurance
Cost Benefits
Typical savings:
Mature governance at an annual cost
▶ 10 to 30% for existing deals
< 6% of spend under management
▶ 25 to 70% for new outsourcing
4% enterprise sourcing office (ESO) + 2% all other spend. Industry benchmark
is 6–12%. -EY Experience
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Value leakage in outsourcing contracts
due to ineffective governance
Value leakage due to ineffective governance
Lost
Efforts
productivity and
duplicated
unnecessary
change orders
Issues not
managed Performance
below
Service
expectations
providers
aligned to
wrong goals Opportunities
10–15% value loss untapped
Operational challenges
15–25% value loss
Performance challenges
5–10% value loss
Portfolio mgmt.
challenges
A B C D E F G H
Total potential Net value
value gained gained from
from outsourcing the outsourcing
relationship relationship
-EY Experience
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Tenets of effective outsourcing governance
Tenets of effective outsourcing governance

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Innovation, optimization and transition management
Governance can help achieve cost savings and add value beyond contract
compliance by access to data and information to further transform the relationship
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