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Successful Document OutsourcingPitfalls to avoid and questions to ask in choosing a document services vendor

You Want to Outsource...Now What?

ABSTRACT

In 2014, ninety percent of companies said that outsourcing is an important part of their overall business strategy, according to the author of The Outsourcing Revolution, Michael Corbett. When the right document services provider is chosen as an outsourcing partner, a company can benefit from improved efficiency, reduced costs and streamlined operations, allowing them to focus on their core competencies.

Outsourcing document production and delivery to a vendor that does not just duplicate current efforts, but instead understands the importance of process improvements and staying ahead of the technological curve, is vital to an organization’s success.

A qualified and trusted document services vendor will have a proven track record of providing solutions to encourage revenue growth while identifying ways to save clients time and money.

A one-size-fits-all methodology is one to steer clear of when looking for a transactional document solutions provider. The key is to find a consultative vendor that yields a customized and technology-driven business model, allowing them to satisfy today’s needs while preparing for tomorrow’s challenges. Once found, this vendor partner can work to understand strategic objectives and present ideas, workflows and cost savings suggestions.

Over 50% of businesses have indicated that developments in enterprise mobility, big data, hosted virtual desktop, business process as a service, and cloud computing will increase outsourcing.

-Deloitte’s 2014 Global Outsourcing and Insourcing Survey

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Successful Document Outsourcing

VENDOR DUE DILIGENCE AND RED FLAGS

2. Do they have a realistic Disaster Recovery plan? Disaster can strike at any moment, and there is nothing worse than depending on a vendor that is not prepared for unforeseen tragedies. Backup facilities and total redundancy are necessary components to business-critical document design, processing and delivery.

3. Do they satisfy today’s security requirements? In order to avoid data breaches, document services providers must be SSAE 16 and SOC II, Type 2 Certified. For the healthcare industry, HIPPA Compliance is also required.

4. Do they have high standards of quality control? Quality control is of utmost importance in the design, processing and delivery of business-critical documents. A vendor that has multiple automated checkpoints throughout the document lifecycle including mail scanning, 2D barcodes on each page of every document and unique Intelligent Mail Barcodes (IMB) will ensure each document is sent to the correct recipient at the right time. The more a vendor eliminates human touchpoints, the better.

5. Are they continually investing in the most updated software and equipment? A good document services vendor will not only have the latest print equipment, but will more importantly invest in ongoing technological applications in an effort to strategically align with each client’s business objectives, including increased eAdoption.

6. What kind of support will they provide? The most successful document services providers are consultative in their approach and identify ways to solve complex business problems. Look for a vendor that employs only PMP Certified project managers, as well as seasoned client services managers who can lend industry expertise and identify best practices.

Additionally, a vendor with self-serve applications puts control in the contracting company’s hands, thereby eliminating the need to rely on human interaction in order to make document changes.

Booz Allen Hamilton, a leading management and technology consulting firm, recently issued a report describing “a mixed report card on traditional outsourcing.” It did, however, highlight that companies that outsource services outside of their non-core functions experienced an average of 15% in cost reductions.

The outsourcing industry has grown from zero to a multi-trillion US dollar business worldwide over the past 25 years.

-Economic Policy Institute

When planning to outsource, choosing the vendor with the most competitive rates may be attractive from a cost standpoint, but the threat of lower quality, data breaches and customer dissatisfaction resulting in an overall negative ROI is very real. The following introductory questions will aid in qualifying vendors during the outsourcing search:

1. How long has this vendor been in business? The amount of time a company has been in the industry can shed light on their success, as well as provide a better understanding of their future stability.

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COST VS. PRICE

Most professionals know the difference between cost and price. Cost can be broad and touch many functions within a business, both seen and unseen. Price is the amount a customer pays for products or services.

The difference between the price that is paid and the cost that is incurred is the profit the business makes when the product or service sells, so to speak. When calculating the cost of products and/or services, a business must take into account the cost of everything necessary to produce that item.

Success in selecting the right document vendor for a company’s needs requires more than comparing outside vendor pricing to existing document solutions.

A best practice is to identify process improvements that will render the largest overall cost savings. Some of these process improvements include consolidation of all document production into a single process, implementing multi-channel delivery, utilizing color, managing return mail, and offering dynamic, targeted messaging capabilities.

Consolidation of all document production into a single process: This will not only provide consistency and a single-vendor solution, but also aid in volume discounts.

Implementing multi-channel delivery: While print documents are still necessary in delivering some customer-critical documents, it is important to consider the market‘s rapid shift regarding the ways in which they receive and respond to communications. The ability to offer customers options to receive their documents via email, SMS and the Internet will lower costs and increase eAdoption and response rates.

Utilizing color: According to a 2014 study conducted by the secretariat of the Seoul International Color Expo, 92.6% of consumers stressed the importance of visuals when purchasing products and 84.7% believe that color accounts for more than half of the various factors important to consumers when choosing which products and services they purchase. Today, color costs nearly the same as black and white. Incorporating color into business-critical documents improves brand recognition and loyalty, yields higher customer response rates and increases the probability of improved profits.

Eliminating return mail: A strong address management solution will significantly lower mail costs by identifying bad addresses prior to mailing. It will also increase customer response rates through the ability to send NCOA notifications to old and new addresses.

Offering dynamic, targeted messaging capabilities: Hotwire PR’s seventh annual “Communications Trends Report” discusses the cultural shift in communications from planned content to real-time interaction, and can be seen in new real-time apps like Snapchat, Periscope and Meerkat. According to the Global Web Index, Snapchat was the fastest growing social network of 2014, and it surpassed Instagram in daily interactions.

Customers are now expecting to feel as though they are receiving exclusive content while being a part of instant communication. This means they will be more responsive to segment marketing and dynamic communications on all print and digital documents, whether you provide messaging for retention, cross-sell, upsell, and/or utilize affiliate advertising. Coupling personalization with dynamic messaging that pertains to each customer segment at the right time will yield a higher ROI than basic blanket messaging.

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Businesses typically consider managing their customer-critical document design, production and delivery in-house because they feel they will have more control over materials and production costs. While these align with any successful business strategy, there are some common pitfalls to be aware of when it comes to in-house solutions:

•The cost of maintenance for document composition software.The upfront costs of document composition software, as well as annual or bi-annual software updates often negatively impacts a business’ bottom line. Staying on pace with the technological advances can add as much as 30%-40% to the cost. The alternative route is to forgo technological updates and fall behind the capabilities curve.

•How much space is dedicated to the print shop.This includes printers and warehouse space for consumables, as well as printed documents being stored for mailing. Paying for storage space can dramatically increase monthly expenses.

•The cost of parts, maintenance and consumables.A non-intelligent inserter will cost $50,000 new, and a fully automated intelligent machine with tracking can cost at least $1 million. Workflow software needed to control the daily management of printing equipment should also be taken into consideration. This software usually has a 3-5 year life expentancy and must be maintained regularly, which can add as much as 40% to the cost. It uses electricity, must be in a controlled environment, and requires dedicated space and trained operators. Printers maintenance, replacement parts, toner and paper should also be factored into the cost.

•Number of employees involved in production.The time dedicated to formatting documents, running printers, inserting and mailing documents, and managing return mail should always be factored into the cost of an in-house solution.

WHY RFPs FALL SHORT

A Request for Proposal (RFP) can be a valuable tool if it includes detailed information about the requesting organization’s current environment, as well as strategic requirements. However, RFPs can provide skewed results when vendors are strictly asked for pricing without being provided a benchmark to evaluate and reflect the real cost after process improvements are introduced. If the organization issuing the RFP desires to obtain a more accurate vendor assessment, simple Internet searches, referrals and phone conferences with prospective vendors will save time and money while providing an overall better comparison.

PITFALLS WITH IN-HOUSE SOLUTIONS

The percentage of revenue a company can

save by outsourcing transactional document

solutions to the right vendor

30%

•The cost of postage. When businesses turn to in-house document processing solutions, they typically do not possess the bandwidth or volume to take advantage of mail presort discounts. Alternatively, a good document services provider will maximize postal discounts and induct mail closer to its final destination, generating deeper postal discounts and enhancing delivery time.

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EIGHT STEPS TO OUTSOURCING SUCCESS

1. Define Strategic ObjectivesTypical in-house operations have stagnated over the years with fully depreciated equipment, dated technology and a staff that responds only to the daily demands of the business. Most evaluations begin with the premise that outsourcing should save money, but will it actually save if current processes are simply duplicated? The answer is usually “no.” Process improvements that only advanced outsourcing providers can offer are critical to rendering the biggest bottom line impact. Therefore, a different evaluation is necessary.

Start with an objective of improving the bottom line across all areas of the company by asking these questions during the vendor vetting process:

•Does the vendor provide opportunities to generate new revenue with personalized marketing, branding and third party advertising?

•Does the capability exist to improve customer retention with easier-to-read bills and statements?

•What are the most effective ways to improve cash flow with faster document delivery?

•Are the latest electronic delivery options available?

•Does the vendor understand how to reduce customer support, compliance and call center costs?

2. Outline Current ProcessesThis critical step gives the outsourcing vendor a picture of the existing business transactional document solutions. Highly skilled, consultative outsourcing companies will use this information to identify solutions for process improvements and cost savings. A good place to start would be to gather document volumes by cycle, marketing options – both in-document and in-envelope, special form requirements, color printing requirements, special handling and business rules, samples of existing documents, and targeted go-live dates.

3. Identify Highly Qualified, Reputable Vendors with Advanced Technology PlatformsThe best outsourcing companies embrace technology, software and automation in order to effectively drive down costs and maintain the highest level of quality. Given the complexity and large infrastructure costs in the outsourcing space, the most qualified vendors have a long history of success, as well as a strong client base that will attest to their reliability. Aside from an Internet search, a good way to identify the best business-critical document services vendor is to ask peers in the industry about their experiences with past and current vendors.

4. Embrace the Discovery Process and LearnA qualified business-critical services provider vendor will be consultative and a valuable source of information on new trends, electronic adoption and delivery methods and advances in equipment technology, and software. This process will demonstrate the level of knowledge, expertise and advanced capabilities of each vendor during the vetting process.

5. Obtain a Technology RoadmapOutsourcing requires long term agreements to protect both parties and the last thing you want to do is repeat the evaluation, selection, agreement and conversion process transition at the end of the initial term. Selecting the best vendor means selecting a partner that will grow with your business, invest in new services, capabilities, technologies and security, and have a track record of past improvements and enhancements. Obtain their Roadmap of future developments, including a well-articulated plan for electronic and mobile delivery.

6. Involve all Relevant Departments in Discovery Real process improvements require an overall strategy and direction, which may not be known across the enterprise. By giving each executive and key manager a voice in the discovery process, unrecognized benefits will be uncovered that ultimately contribute to increased margins.

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7. Perform Site Visits and Reference ChecksSite visits are a must in order to gain a full assessment of quality, stature and sustainability of a transactional document services provider. An organization can meet the vendor’s staff and view their production facilities, security, and quality standards. This is one of the most critical final steps in qualifying a business-critical document services provider.

8. Save Executive Presentations for the Best Choices It is common for vendors to receive requests for an hour-long executive level presentation with three or more other vendors. This may favor the most articulate speaker or the best PowerPoint slides, but after two or three hours of vendor company information, general capabilities and then high level questions and answers, the result is usually “they all could do the job.”

CONCLUSION

An overarching goal for any business is to minimize risk while achieving greater efficiency, profitability and agility. Outsourcing document production and delivery to a partner that does not just duplicate current efforts, but instead understands the importance of aligning with its clients’ strategic objectives will yield the best results.

It is recommended that expectations be defined by both the organization and the vendor in question at the very beginning of the vetting process.

This will allow both parties to identify limitations and gauge if the partnership makes sense. A clear understanding of the services required, coupled with the vendor’s level of proficiency in delivering those services to satisfy expectations, will foster a near seamless partnership, allowing the organization to devote more time and focus to its core competencies.

Lanvera is a comprehensive, single vendor solution for design, composition and delivery of all transactional documents. With over 30 years of experience, Lanvera’s expertise is in identifying complex business solutions that streamline processes, decreasing operational costs, tapping into new revenue opportunities, and mitigating risk for clients. To learn more about Lanvera’s solutions and discuss a potential partnership, email lanverainfo@lanvera.com.

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