Entrust - Microsoft
A complex $200m global BPO partnership with Microsoft sees Arvato process 90% of Microsoft’s global revenues. The innovative managed service model agreement won BPO Contract of the Year at the European Outsourcing Association Awards in 2012.
Open Outsourcing spoke to Kyle Christensen, Sr. Director, Customer, Program & BPO Operations, Microsoft and Debra Maxwell, Global BPO Director for Arvato, to understand what makes this partnership so successful.
Open Outsourcing: what were the drivers at the initial contract stage?
Kyle Christensen: We wanted to reduce the number of vendors we worked with globally to fix fragmented processes and improve our customer and partner experience. But we knew that getting down from seven vendors to one was going to be a challenge. Risk was a key factor that the Microsoft and Arvato teams were conscious of throughout the tender and contract phases. While there might be other outsourcing contracts within Microsoft that are bigger in size, there are none with more inherent risk. Could we really trust one vendor with 90% of our global revenues?
We needed to choose a reliable partner we could work with, and the company’s long history with Microsoft meant Arvato was a known entity – one with a reputation of flexibility and commitment. Arvato’s pragmatic approach during the tender process also helped – it was important for us to be able to separate out the sales pitch from real insight and practical advice.
Debra Maxwell: Our approach to the tender and contractual discussions wasn’t any different to how we tackle the day-to-day. It’s all about listening, understanding and delivering, together. We understood Microsoft’s concerns and worked with them to share the risk associated with a single vendor strategy, building the managed service model into the contract. Alongside this defined structure, we also knew the importance of speed and flexibility.
During the tender process we were asked to sign a non-disclosure agreement. Thanks to the way Arvato is structured – around our clients’ needs – I was empowered to review and get back to Microsoft in a few hours rather than a couple of weeks.
How did you get the engagement model right from the start?
Kyle: The transition phase was a big test of the initial agreement. We had to deliver 12 ‘green’ transitions in 12 months – involving the set-up of two new facilities in Manila and Monterrey, and the transfer of more than 750 employees to Arvato from six incumbent vendors across five countries. This alongside the day job!
The changes we made to both businesses, to mirror hierarchies and create new governance models, really helped us get things right from the start. And the way the managed service model focused Microsoft to define ‘what we wanted to achieve’ and Arvato to focus on the ‘how it should be done’ meant everyone in the team concentrated on what they were good at.
Debra: One of the best aspects of the managed service model is that Microsoft really empowers us to help them, rather than dictating every detail. The level of senior engagement and our visibility of Microsoft’s strategy mean we can more readily anticipate and support changes. Using a cooking analogy, if a client has been baking cakes for years and asks you to bake the same cake, using the same ingredients, bought from the same shop and following the same recipe, there’s really only so much you can do!
Should an engagement model evolve or stay the same through the relationship?
Debra: Change is the only constant in this business and the contract must be a living, breathing document – not set in stone. As a true partner, you can’t sit back and say ‘hang on, we never agreed to do that in that way’, especially if the new approach is going to benefit both parties. Flexibility to transform is part of any good engagement.
Speed is also critical. It’s no good sitting around a table to discuss why your house is burning down if no-one has responsibility for putting out the fire. Such a complex relationship means we have to handle change requests with agility. The level of trust we’ve developed means we can do this without having to be too bureaucratic about it.
Kyle: I agree with Debra, there’s no doubt that engagement models have to evolve. Although much of the managed service contract was formalised because of the risk involved, that hasn’t made it inflexible, thanks to the way we work together.
In the transformation stage of our contract, the model has had to evolve to deliver differently. It’s less about delivering results within silos and more about getting a wider group of people to see the big picture and connecting our business. Change management has been key.
We definitely moved the goalposts in some areas and there had to be open discussions about if and how this could be accommodated without impacting on the core numbers we had to achieve as a team.
How is the engagement model measured – what does good look like?
Debra: It’s difficult to measure relationships because it’s intangible and down to how people feel, rather than facts and figures. But, I think the model is best measured by the values you place on it. Is there honesty? Is there trust? Without those, the key performance indicators (KPI) can be meaningless, even if you hit them.
You get what I think Kyle calls the ‘watermelon effect’ where the relationship appears green on the outside – i.e. the targets are being hit – but red on the inside, indicating there’s something wrong.
Kyle: Yes, hitting targets has to happen – it’s a given in a partnership like ours. But if the wider business wants something more you need an honest discussion about what needs to change. It’s this level of flexibility, the ability to deliver and then re-define success in a continually evolving business that makes the difference.
For me, there are three key ingredients to bake the best cake: aligned goals, a supportive joint framework or governance and trust!