Leading the Retail Procurement team at Australia’s largest energy retailer, Origin Energy, is Glenn Watkins. In this exclusive Matchboard interview, Glenn reveals lessons learnt in procuring business process outsourcing (BPO) services and offers some valuable tips to potential partners.
The energy sector relies heavily on outsourcing for customer management functions. What are the most critical factors in making an outsource partnership work?
The fundamentals of good outsourcing for Origin are probably not that different from most organisations. It’s vital that, from the outset, we have a clear vision and definition of success and then select a partner with the capability, cultural alignment and business model to achieve those outcomes. Whilst it’s not that uncommon for cost to form the key driver in decisions to outsource offshore, sustainable success in the long term requires more than the immediate ‘cost out’.
The energy sector is facing significant headwinds, with structural change to energy markets, a high level of political and media engagement and, of critical importance, customers are demanding better value and service from their provider. Offshoring supports our ability to provide cost relief to customers, however, if it isn’t accompanied by improvements in the customer experience and an innovation agenda, it will ultimately fail to meet our customers’ expectations.
My tips to ensure an outsource partnership is effective include:
- Carefully select the right partner who can deliver the outcomes you are seeking. If you get this critical decision wrong, the partnership will never work and the financial and customer impacts to repair are huge.
- Have shared goals, i.e. where the risks and rewards of commercial and customer outcomes for your organisation are shared. The partner must have skin in the game, but it can’t all be about SLAs and penalties if you want their ‘A’ team. Create a reason for them to exceed expectations.
- Create a culture of transparency, open communication and collaboration across both organisations. Without a governance and management structure that has clear responsibilities and interconnections across all stakeholders, confusion and a breakdown in relations should be expected.
- Integrate your values and brand into your partner’s operations. Maintain regular communication and connection with the front line -.after all, they are the people speaking directly with your customers and representing your brand.
What learnings have you gained through your journey of procuring BPO services offshore?
In the 10 years since Origin first outsourced BPO services, we’ve utilised a number of different partners for a variety of services in both the Philippines and India, with varying levels of success. Our most successful partnerships have evolved from well-planned tender processes where we seek solutions from the market to our business challenges. We iteratively evolve our requirements through the process with potential partners until we can contract an outcome that will directly solve those challenges.
Key learnings from our journey over the past decade include:
- Have a clear long-term outsourcing strategy to define those complex or critical services that provide competitive advantage by being retained in your organisation and those that are transactional or better performed by others. Be clear where services are better bundled together with one vendor to drive innovation and those better suited to models including champion challenger to drive sustainable high performance.
- Establishing a location strategy is as important as selecting a vendor partner. The Philippines is established as a voice destination for Australian companies but other countries including India and South Africa are also demonstrating niche capabilities and industry experience. With the right scale they offer viable option in your outsourcing strategy. Have a BCP plan as problems do occur and not always when and where you expect.
- Governing an outsourcing company relationship requires significant effort and collaboration: both internally and with your partner. Invest in programs that enhance cultural and brand affinity for front line teams and ensure BPO leaders are ‘in the tent’ as part of your management structure.
- Ensure you retain and maintain the IP of your systems and processes. An eternal dependence on your partner to perform a task is not healthy, particularly if great expectations are not achieved and there is a need to change tack.
What are your observations on the Philippines as a BPO location?
The Philippines, and Manila in particular, has long been the BPO destination of choice for Australian businesses, with a good combination of cost savings and voice skills suitable for Australian customers. The Philippines BPO industry is quite mature with many providers and an endless supply of agents. Australian companies benefit from a time zone that is only a few hours different to Manila which is far more family friendly for agents than the US accounts which dominate the local industry, and predominantly operate during the graveyard shift.
“This alignment in working hours allows Australian companies to attract and retain talented agents more easily than US companies.”
Our experience with agents in the Philippines is that there is a strong work ethic and commitment to their client and the customer. The culture is naturally very friendly and they have a genuine desire to delight our customers – which is particularly beneficial for service oriented roles.
The most challenging aspect is creating that cultural affinity that allows agents to speak with and be empathetic to Australian customers, in a tone that is familiar and effective. Cultural affinity programs done badly are as simplistic and as clichéd as Kangaroos, Vegemite and Aussie Rules football. For a great customer experience to occur, agents must be able to convey soft skills of human connection which requires deeper understanding and appreciation of the average Australian residential energy customer. Knowledge of ‘Australian English’, geography, politics, energy and environmental policy are some of the many complex barriers to a seamless experience and require ongoing investment to overcome.
What advice would you give vendors wanting to engage with Procurement at Origin Energy?
At Origin, we are always striving to exceed our customers’ and stakeholders’ expectations, which means we can never rest on our laurels and need to continually search for new opportunities to improve our business. One of the key priorities of our role in Procurement is to partner with the business to understand their challenges and search the market for new ideas and solutions rather than just tendering what we already do.
Engaging with new vendors is crucial to this ambition of tapping into world’s best practice, but it’s a competitive market and there is only one chance to make a good first impression. My advice to vendors is to do your research upfront on who we are and what we aspire to do. Ensure you have clarity on your unique selling proposition and how that can add value to Origin. Hedging bets by promising to be the best at whatever business is available doesn’t inspire confidence or serious consideration.
The vendors that progress to deeper conversations have market leading solutions, are patient, creative, innovative and able to listen and turn business challenges into solutions. They will have demonstrated experience, case studies and references as proof points of that capability.
Ultimately, sustainable business partnerships evolve from companies that are aligned, have common goals and teams willing and able to collaborate. Our purpose and values define who we are and how we operate, and vendors will be judged on their suitability to fit that definition.
There are many business process outsourcing companies in Australia, but it’s important to find the best-matched BPO outsource partner.