Issue link: https://www.e-digitaleditions.com/i/73199
Strategic Sourcing additional cost as well. At present, there is a simple "no" and nobody understands why not; in our future state, everything will be transparent and understandable: This is our service package, these are the costs. Ahold learned that a very thorough and structured approach is necessary for successful strategic sourcing. The first phase is crucial to get a proper understanding of the current situation in comparison to market best practices. After that, it is important to define the HR strategy and the most efficient HR operating model. Only with this information can the end state of HR services be described and agreed upon. Of course, it is good to look at other, preferably comparable, organisations, but Ahold also learned that no situation is the same, particularly with respect to starting points and history. Ahold also learned that the market for HR BPO is very much in development and is not fully matured yet. Service providers are reconsidering their strategies; standard, off-the-shelf services do not exist yet, and service providers are willing to work in strategic partnerships with other providers. The main service providers still need more large international HR BPO deals to standardise their services, to extend their geographic coverage, and to increase the efficiency of their services. John de Waal is Ahold Europe's HR services manager. Answers to Strategic Sourcing 1. What kind of sourcing options exist? Sourcing is not just outsourcing. There are different forms of sourcing: SSC, decentralising, automation, outsourcing, joint ventures, etc., and different levels of sourcing: knowledge, capacity, execution, and result. 2. For which type of organisations would outsourcing (BPO) be a good option? All organisations can consider BPO (irrespective of the industry, size, global presence, complexity), but the question of whether it is preferable depends on the corporate strategy, the objectives of sourcing (costs, quality, flexibility etc.) and the preconditions. 3. What is the current market situation regarding HR services/BPO? The current market situation regarding HR services BPO is dynamic and changing all the time. The landscape depends on the processes in scope, the complexity, the presence (global vs. local), and the restrictions of procurement. 4. What kind of trends do we see in the HR services BPO market? Trends in the HR services BPO market are specialising in niches, on the one hand, and developing into "flat world" consultants, on the other. 5. Which type of organisation is ready for BPO? "Ready" for BPO—if one can ever speak of being truly ready—means that you have a good idea of what you want (requirements), why you want it (the business case), and how you can control the outsourced situation (governance). 6. Which types of processes and activities could benefit from BPO? In essence, every HR process could be outsourced in the current market. 7. What are the market trends? What processes and activities are currently outsourced? HR has a tradition of having a lot of suppliers, especially in high value processes such as training and development (capacity sourcing) and labour relations (knowledge sourcing). Lately, HR has also taken the step towards more result sourcing, mainly in the transactional HR processes (HR administration, HR IT). One of the areas where sourcing has not taken place as extensively is HR advisory, which makes perfect sense. 8. Which processes and activities can be outsourced in the future? In the future, partnering with external parties will help HR to be more innovative and think beyond the current situation. Until now, we have [42] HRO TODAY GLOBAL | SPRING 2012 seen that outsourcing is mainly taking place in the peripheries where HR does not add significant value. However, in the future, partnerships will force HR to add value. 9. How do you evaluate the efficiency, knowledge and skills from service providers vs. the internal organisation? Performing a maturity analysis of the current internal HR processes, actors, analytics, organization, and culture—and benchmarking these with the external market. 10. How do you benefit from larger economies of scale than your own organisation can provide? Larger economies of scale can be realised by various means: 1) a vendor performing similar standardised processes for other clients as well; 2) partnering up with other similar organisations yourself; or 3) establishing a cross-functional shared service centre where different processes are further bundled (e.g. finance, facilities, IT). However, the more important question one should pose is: Why do you want greater economies of scale? 11. How do you organise a service provider selection process? A service provider selection process is both important and elaborate. Important elements include the gathering of requirements, involving the business, good project management, the underlying business case, risk, impact and financial analyses and, even more important, taking the time to get to know the suppliers. 12. What conditions should be set for a proper RFP document? A proper RFP document should comprise all business details, as well as levels of services to agree upon, and should give suppliers the space to outperform each other while giving a uniform and comparable response. 13. What are the criteria for selecting suppliers for the long list? Suppliers for the long list should have a good track record and references, and the willingness to understand the specific requirements of the organisation. Let an external party help you to make the selection, as the landscape is very complex and large. 14. What are the most important evaluation criteria? The most important evaluation criterion is the performance of the suppliers in meeting your objectives and business. But it is even more important to have the feeling that you are selecting a partner as opposed to a supplier.