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    by Published on 18th April 2014 08:10 AM
    1. Categories:
    2. Methods and Approaches

    Assessing Outsource Service Quality

    When determining whether service delivery is meeting service expectations, it is useful to seek the views of the actual service users. One tool that we are making available on this site to assess outsource service quality is the OUTSOURCE SERVQUAL (or OUTSERVQUAL). This is a new approach available exclusively from this site as a service to the community.

    OUTSERVQUAL (Service Quality) is a self-administered questionnaire designed to measure how customers view/judge the service quality of suppliers and is based on the SERVQUAL approach by Parasuraman. Parasuraman et al (1994) defined service quality as the degree of discrepancy between customers’ normative expectations for the service and their perceptions of the actual service performance.

    Parasuraman made the assumption that customers judge service quality by making a comparison between their expectation of the service that they should receive and their perceptions of the service that they actually receive. This is a harsh measure of course as often we have perhaps overinflated expectations of what can actually be achieved for a certain price.

    Differences between expectations and actual performance are referred to as 'gaps'. The OUTSERVQUAL instrument can be used to measure any the following five gaps.

    Gap 1: Consumer expectation - management perception gap. This is understanding the difference between consumer expectations and management perceptions of the customer expectations (what they want versus what we think they want!).
    Gap 2: Service quality specification gap. Where the gap between management perceptions of consumer expectations and service quality specifications that are required.
    Gap 3: Service delivery gap. The difference of service performance between service quality specifications and the service actually delivered.
    Gap 4: External communication gap. The difference of communications between service delivery and what is communicated about the service to customers.
    Gap 5: Expected service - perceived service gap. The difference between expected service and perceived service from customers’ point of view.

    Based upon these gaps, five behavioural dimensions of service quality were identified and can be used in the SERVQUAL approach. For this survey instrument these dimensions have been adjusted (based on our research) to be more in line with the assessment clients make of their suppliers in delivering an outsource service.

    There are 5 Service Quality Dimensions.

    1. Tangibles - The physical aspects of the delivery that includes the use of up to date technology, facilities and software. This may also include issues such as robust DR in place.
    2. Reliability - Ability to perform the service to the required standard, at the right cost, accurate/error free work and stick to commitments
    3. Responsiveness - Responsiveness to client issues and the degree of good support provided to clients
    4. Assurance - Knowledge and skills of the vendor staff and degree to which vendor employees instil confidence in their ability.
    5. Empathy - Good account management practices, fair dealing, open working and attention to specific client needs.

    Users of the OUTSERVQUAL questionnaire will rate questions on a Likert scale (1 = strongly disagree to 7 = strongly agree). The instrument comprises 22 statements used to assess service quality across the five dimensions outlined above with each statement used twice - once to measure expectations and once to measure perceptions. There is also a question that assesses the importance of the five dimensions to you.

    I have set up two free on-line versions that 1stOutsource members can use for their own assessments - you can find them here:

    For Outsourcing: Outsourcing Vendor SERVQUAL Test
    Generic SERVQUAL: Generic SERVQUAL Test

    Clients can assess their vendors (if you submit the results you should get a nice short PDF report to download) and vendors can assess themselves by putting 'themselves' in the position of the client. Try it out and as the test is still underdevelopment some feed back as a reply to this thread would be useful.

    by Published on 18th August 2013 04:40 PM
    1. Categories:
    2. Research News

    Executive Summary

    This report summarizes the results of a major survey carried out by the National Outsourcing Association and Kingston Business School, on the impact of both national and organizational culture on outsourcing contracts. The survey results were supported by a series of interviews exploring the issues in relationship management which are also summarized in this report. Clients, Suppliers and Independent Consultants were included from both public and private sector organizations with over 100 managers taking part in the survey.
    The results demonstrate the complexity of evaluating a concept such as culture for all concerned, although a significant number of respondents do try to assess culture when negotiating contracts. In this study clients voted ‘service’ as the most important element of culture and this was reinforced by the interviews where slow decision making, misunderstandings and aggressive behaviors were cited as evidence of poor service orientation linked to cultural differences.

    Culture was assessed in the survey by comparison of self and partner across nine dimensions, including service, attention to detail, innovation and focus on end results. Clients and suppliers tended to rate themselves higher than their partners on most of the elements assessed, in particular innovation. Suppliers rated clients as more aggressive, a statistic supported by the qualitative interview findings where ‘bullying’ was a clear issue. There were differences in all responses between those who classed their outsourcing as a success and those who did not, but in particular communications and relationships were viewed as more problematic, and they were less likely to report that their partner had prepared staff for cultural differences.

    Over 75% of respondents stated that they would take more account of culture next time, rising to over 80% for those involved in off-shoring, indicating the importance of national as well as organizational differences. However it is also clear that some differences in culture are beneficial, and that it is critical to assess which cultural elements are important in what circumstances. An important outcome from best practice advice is that organizations need to assess their own culture and requirements as well as that of their partner, looking for potential matches or clashes. Holding cultural workshops, having metrics for communication and clear service expectations were also high on the list of ‘must do’ priorities. The overall conclusion is that a crucial aspect of successful outsourcing - service orientation - is impacted by perceptions of staff attitudes and behaviors, and that further work on development of a service quality measurement is needed. This report also includes a range of excellent best practice advice from leading experts and practitioners in the field.

    A full copy of the report is available here:
    by Published on 7th July 2013 09:55 AM
    1. Categories:
    2. Methods and Approaches,
    3. Templates,
    4. Project Tools

    SWOT (Strengths Weaknesses Opportunities and Threats) Analysis is a simple but surprisingly effective technique to assess an organizations positioning and begin the process of turning general ideas for market growth into actionable activities. This brief guide shows how to extend the simple SWOT concept into a tool for defining the actions needed to deal with external threats and internal weaknesses in the organizations capabilities.

    The process is best done within a workshop concept. So organize a team meeting of around 7 to 10 interested parties who are experts or knowledgeable in the domain to be considered.

    The process:

    Step 1 – First agree the area to be considered and the core assumptions. For example ‘we will consider the 'Softhouse' organization and the opportunities to grow the market in the States.

    Step 2 – Use a brainstorming technique such as nominal group and ask the team first to think about the area we have chosen and what the issues in delivering this approach are. They write down (on their own) what could be the barriers or carriers to entering the new market in the States onto post-it notes or just make a list on paper before them.

    Step 3 – They place their post it notes (or the facilitator) in turn onto the grid as shown in the diagram below – barriers to threats and carriers to opportunities.

    Step 4 – Brainstorm as in step 2 and consider the organization (Softhouse) and what are its unique strengths or capabilities and its weaknesses. The team on their own write down onto post-it notes their ideas as before.

    Step 5 – They place their post-it notes (or the facilitator) in turn onto the grid as shown in the diagram – strengths to strengths and weaknesses to weaknesses.

    Step 6 – The team then consider the crossing points of the SWOT for example between Threats and Strengths below (top left box) and as shown in the diagram think of specific actions to use strengths to counter any threats. These are written onto post it notes as before and placed in turn into the grid.

    Step 7 – The facilitator tidies up the board removing duplicates or clarifying actions that have been written down. The board actions are then agreed prioritized then transferred to a standard action plan template.

    Example Swot Action Analysis

    Here is an example taken from an early draft of a business plan to illustrate the completed board. From here the actions can be taken across to a standard action plan template and owners and timescales applied. Thus from an initial consideration of the external and internal environment we can quite quickly move to a position where we can see possible practical actions we can take to move the agenda forward.


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    by Published on 24th June 2013 07:53 AM
    1. Categories:
    2. Consulting Tools

    Developing the Business Case

    Some Notes on Business Cases and IT Strategy

    Strategic Justification
    This key deliverable, completed after final selection and confirmation of the IT Strategy, is the business case for the strategy as a whole, and an evaluation of its impact on the enterprise and its relevance to the enterprise's Major Business Programs & Directions.

    The key features are:
    • Risk,
    • Feasibility,
    • Levels of investment,
    • Tangible and intangible benefits,
    • Responsibility for the realization of both costs and benefits.

    Overall cost, benefit and resource plans are included. Policies for the future financial management of IT within the enterprise are also included.

    Benefits by Business Program

    This deliverable lists the tangible and intangible benefits that have already been identified as potential benefits in the Major Business Programs & Directions. They are quantified as far as possible and related to the achievement of business objectives in the major business programs. Benefit targets are defined and the responsibility for achieving them allocated. This will form the basis of allocating benefits to individual projects in the Cost/Benefit Analysis for each option being assessed.
    The deliverable includes:
    • Confirmed Opportunities
    • Benefits Related to Business Processes
    • Quantified Benefits Related to Business Programs
    • Benefit Targets and Responsibilities for Achievement
    Strategic Cost/Benefit Analysis
    This deliverable, developed for each of the options being evaluated, is a detailed statement of costs and benefits. It is a time phased investment and benefit/cash flow analysis. Costs are typically built up from the component level in the proposed IT strategy. Benefits are derived for each component as it relates to the achievement of business objectives in the Major Business Programs & Directions.
    It is supported by:
    • Cost Breakdown
    • Allocation of Benefits
    • Risk/Contingency Adjustments
    • Cash Flow Analysis
    • Sensitivity Analysis
    • Financial and Strategic Priorities

    by Published on 4th June 2013 11:50 AM
    1. Categories:
    2. Service Quality

    Service Credits in a SLA good or bad idea?

    In terms of a general principle it is not recommended to build into an SLA a so-called ‘service credit’ process. In such schemes, when the service measure falls below the agreed levels, a form of credit to the buyer is given.
    As an example, a payment schedule is defined for, say, a 98 per cent service level and, should service be 95 per cent, a lower price band becomes applicable – I have also seen SLAs with performance credits, with increased revenue for a supplier should the ‘standard’ performance be exceeded. There are several reasons why this is old-fashioned and bad practice.
    • First, the point of a service level is to define the required levels needed to support the business and no more. Improvement levels over time can be defined but the service needed is what the business should pay for – if it is exceeded you may have to increase your targets, but certainly not pay more for just doing the job.
    • Second, with a service credit clause you have no leverage over the supplier to fix the problem. The focus should be to restore the service to the agreed levels as soon as possible.

    Rather than a service credit clause, it is far better to put in place governance that forces the supplier to act to fix the issue, perhaps to the extent of the customer being able to call in independent consulting advice at the supplier’s expense to support service resolution. This use of an ‘independent’ adviser can be useful in monitoring the overall value of the outsource deal as it matures through its stages. It is important to include this in the SLA and agree the principles and ground rules for such an ‘independent’ with the outsource partner.

    Your staff will often see the problems much later down the line if you get it wrong, as one of our research participants said:

    Because the company have these people, they’ve got professionals who only write contracts, and they know how to work them, and the client haven’t got a clue, eventually they tried using some outside firm of solicitors, to read through the contract, but it’s too late then, and even they might not have been professional contract people. And they still got screwed in the end, and they still don’t understand, nobody, I haven’t met anybody who understands what the hell outsourcing is all about, has it saved them a lot of money, no it’s cost them more, have they got an improved service, no it’s much worse, why? Why have they done it? They say ‘oh well we are saving money on pensions’, you are not, you’ve transferred the pension money over, ‘we’re saving money on accommodation’ well you’re not really, ‘we’re saving money on pay’ well you might be saving money on some aspects of pay but look at how much money you are paying the outsourced companies to run these things, and of course the classic mistake they made is, they’re paying for a fixed sum of money, millions of pounds a year, for maintenance of the existing system, nobody mentioned, changes to the system, like, I don’t want the machine here any more I want it in the room next door or in the new building, ah that’s a change to the contract, it will cost you an extra x hundred thousand pounds, and I think the contract in the first six months was something like thirty million over the estimate because they are moving things all the time, closing buildings, building new ones, every time you get a change of hierarchy, it’s new broom, right we will change all this we’ll have the (Dept.) over here and that group over there, we’ll swap those two over, and they do it regularly and it all gets charged.

    by Published on 7th July 2013 10:27 AM
    1. Categories:
    2. Methods and Approaches,
    3. Templates,
    4. Quality Tools

    Here is a draft quality plan oriented towards a SME consultancy. In order to bid for a government contract you will need one of these in place. The first section is shown below:

    1. Purpose
    The requirement for the quality plan are driven by the need to achieve customer ...
    by Published on 20th June 2013 11:46 AM
    1. Categories:
    2. Methods and Approaches,
    3. Consulting

    Change Management Practice: Just do it - sometimes you have to act

    I was giving a lecture on change management the other day and the class and I were deep in discussion about involvement and ethical behaviour when one of the students asked 'but what if we don't have time for all this pink and fluffy stuff?'

    I was a good question that needed a clear response and to some extent my answer is a little surprising coming from a confirmed pink and fluffy person like I am - my response was 'sometimes you have to act'. When an organisation is in dire straits and on the brink of failure or when to enter a new market a new process has to be implemented then there is simply no time for long discussions to get people on board the change manager has to act and get on with it.

    What this means is we have to seize the moment and implement a new system or close down a department sometimes in the teeth of stiff opposition. The ongoing discussions needed to bring people with us or the time needed to make those in the process 'make sense' of the situation is just not available - we must act.

    But does this mean we need to be brutal or cavalier in the way we treat people? - well no - we do not have to behave in this way in order to get the message across. The key is to behave ethically and make the process transparent that needs to be gone through and explain openly how the change process will effect the persons concerned in a clear and relevant way. People respect managers who spell it out as it is without and prevarication or weasel words - 'Say it as it is'.

    What this means is, if say, a department is to be outsourced and there is a good chance that substantial people we be let go, you tell the full story. Concretely: 'Your department is being closed and moved to the new Company - you and several of your colleagues will have to leave'. You make clear the process that is about to unfold in clear words (the person will be in shock at this time) and tell them to think over what you have said and invite them back when they have had time to think it through to discuss their feelings and concerns. Expect defence and emotion, this is normal, but respond in a clear way - do not prevaricate - stick to the line explain the process and allow the person to internalise the consequences. When giving bad news as in this case leave no room for doubt of what is occurring avoid constructs like 'you may be selected', 'there's a chance that some of you may stay' and so on. This only raises an expectation that they will survive. In the same vein if you are asked 'will there be job losses?', say 'Yes I expect many will leave'.

    I know this seems hard but research has shown that when bad news is to be given out people are very resilient as long as it is clear they are not being singled out (a fair process is in place), that there is a valid reason, and the process is transparent and applied equally. What we as managers have to understand is it is our job to treat people fairly and ensure their self-esteem is protected and they are given the grounds they need to rationalise what has happened. Aggressive, perfunctory methods of change management do not work (so put away the phone no texts that people are sacked) and are a sign of management incompetence or inexperience - do it right and your people will respect you as a person who treated them fairly in difficult circumstances.