A new approach saves time and money while increasing client satisfaction.
By Brett Norgaard
Long and expensive client transitions that cut into profits and limit scalability are among the biggest problems facing information technology and business process outsourcing service providers. Yet much of what happens during the transition and client onboarding process boils down to a familiar set of standard services common to every organization whose business the service provider wins. By breaking up major tasks and performing them concurrently, clients get services faster and more efficiently while service providers pull revenue forward—a win-win situation for both service providers and their customers.
Why does it take so long?
After the sale, new clients of a service provider frequently complain about the time and cost of transitioning to the new service. Typically, transitions take two-to-six months to complete.1 Costs to the service provider range from two percent to 15 percent of the total cost of the first year and directly affect the time to profitability of new customers.2 If the period drags out too long, clients may see little evidence of progress and grow increasingly dissatisfied. Based on this perception, clients may even try to renegotiate or terminate contracts.
The source of the problem stems from the way the outsourcing services industry has evolved. In the early days of outsourcing, service providers took a cookie-cutter approach to their delivery of services. As the industry became more competitive and client-centric, customers increasingly demanded a more customized approach. Inevitably, these new demands increased the length, complexity and cost of onboarding clients and delayed the service provider’s time-to-value from the client’s perspective.
For example, one large service provider is currently trying to transition several hundred clients to a new service delivery platform. To date, a handful of clients have been transitioned to the new platform through a process similar to that outlined in Figure 1 — the traditional approach to transitioning clients to a new service. The figure illustrates the time required to create, validate and test individual service components on a one-off, or custom, basis. This service provider discovered that the process is taking several months and, at that rate, it could take years to successfully transition its entire client base.
There is an opportunity to approach this challenge differently. By developing a standardized and configurable process to activate these services as quickly and efficiently as possible, outsourcers can shave months off the transitioning process, focus on the high-value aspects of a service, and start delivering services to clients in weeks rather than months. This pulls revenue forward and helps service providers get off on the right foot with clients, which is often the most important single aspect of establishing a mutually beneficial outsourcing relationship.