Provides quick overview of how SPOT Consulting LLC uses the Vested Outsourcing methodology to help our clients.

1.
Vested
Outsourcing
TM
Alton
Mar*n,
Founder
and
Chief
Execu*ve
Officer
Copyright © 2010 SPOT Consulting LLC

2. Alton Martin - Background
• Program
Faculty
for
the
University
of
Tennessee
Center
for
Execu*ve
Educa*on
– designated
subject
maEer
expert
on
using
Vested
Outsourcing
methodology
in
contact
center
and
BPO
opera*ons
• Founder
of
both
SPOT
Consul*ng
LLC
and
COPC
Inc
• Involved
in
the
contact
center
industry
since
1993
• Worked
in
over
30
countries
and
with
dozens
of
major
firms
in
scores
of
industries
• Note:
Vested
Outsourcing is
a
trademarked
term
TM
and
is
used
with
permission
Copyright © 2010 SPOT Consulting LLC 2

3. Keep This in Mind……
Vested Outsourcing Makes You Think!
“The significant
problems we face cannot
be solved at the same
level of thinking we were
at when we created
them.”
Copyright © 2010 SPOT Consulting LLC 3

4. Genesis of the Idea
• USAF
hired
University
of
Tennessee
Center
for
Execu*ve
Educa*on
to
study
services
procurement
in
logis*cs
and
maintenance
– Over
50%
of
the
USAF
spend
is
on
services;
logis*cs
was
one
of
the
top
5
spend
areas
– Concern
was
“is
there
a
beEer
way
to
buy
services?”
• Dissa*sfied
end
users
complained
about
poor
service
• Vendors
complained
the
contracts
were
unprofitable
or
low
margin
• USAF
not
convinced
they
were
ge^ng
the
best
pricing
• UT
researchers
studied
more
than
20
government
“deals”
– What
are
the
drivers
that
lead
to
success?
– Is
there
a
process
for
buying
services
that
can
be
replicated?
– How
could
the
USAF
ensure
they
were
ge^ng
“best
value”
Copyright © 2010 SPOT Consulting LLC 4

5. Genesis, con’t.
• USAF
wanted
to
ensure
they
were
compe**ve
with
private
industry,
so
they
extended
the
study
– Added
another
30
private
sector
outsourcing
deals
– Expanded
the
study
to
other
service
areas
• The
SAME
best
prac*ces
were
found;
researchers
codified
the
“Best
Prac*ces”
into
a
defined
methodology
– USAF
calls
it
“Performance
Based
Services
Acquisi*on”
– UT
researchers
coined
the
approach
“Vested
Outsourcing”
• UT
faculty
created
courseware
now
taught
by
the
Defense
Acquisi*on
University
• UT
and
faculty
launched
a
formal
agreement
that
encourages
faculty
members
to
consult
with
companies
and
help
ins*tu*onalize
the
Vested
Outsourcing
concept
Copyright © 2010 SPOT Consulting LLC 5

6. Vested Outsourcing Research Reveals
Bad Process is why Outsourcing Fails
The top 5 reasons outsourcing fails are not due to a bad supplier –
but due to bad outsourcing process
Buyers multi-supplier environment 3
Poor cultural fit 5
Poor performance 8
Not mutually beneficial 11
Poor communication 11
Poor governance 13
Misaligned interest over time 15
Unclear expectations 23
Note: 11% in “Other” 0 5 10 15 20 25
Percent of Respondents
* Source: Outsourcing Center Survey. Outsourcing Center
Copyright © 2010 SPOT Consulting LLC 6

7. What is Vested Outsourcing?
• A
game
changing
approach
to
outsourcing
that
– Is
a
hybrid
business
model
for
buying
services
– Leverages
“win-­‐win”
thinking
associated
with
Game
Theory
/
Behavioral
Economics
– Is
centered
around
buying
results
instead
of
tasks
and/or
ac:vi:es
with
the
conscious
effort
to
use
incen*ves
to
drive
process
innova*on,
which
prevents
many
perverse
incen*ves
of
conven*onal
outsourcing
– Creates
a
contract
that
follows
“Five
Rules”
– Uses
incen:ves
to
transform
the
work
to
achieve
“trade-­‐ups”
versus
conven*onal
cost/service
tradeoffs
• Transforma:onal
when
applied
– Endorsed
by
the
Outsourcing
Ins*tute,
Sourcing
Interest
Group,
Center
for
Outsourcing
Research,
and
the
Interna*onal
Associa*on
for
Contract
and
Commercial
Management
– Regarded
as
the
“business
concept
of
the
decade”
similar
to
Lean
and
Six
Sigma
Copyright © 2010 SPOT Consulting LLC 7

8. Commercial Companies Benchmarked1
Vested Outsourcing is Research Based and Fact Driven
Logistics / Property / Admin/ Other
Supply Chain Facility Mgmt Advisory/BPO
Companies • Dell • Microsoft • Microsoft • McDonald’s
Outsourcing • JetBlue • Edward • Oracle • Johnson
• Southwest Jones • Honeywell Diversey
Airlines • H&R Block • Boeing • Dept of Energy
• Lockheed Martin • Philips • Minn Dept of
• Boeing • P&G Transportation
• UPS
• Jaquar
Service • InSource • Grubb & Ellis • Xerox • CH2M Hill
Providers • Caterpillar • Jones Lang • AFMS • Flatiron-Manson
Logistics LaSalle • Accenture • Wipro
• CEVA • Colliers
• Unipart
Consultants • Expense Management Solutions
1. Partial list; over 50 contracts studied
Copyright © 2010 SPOT Consulting LLC 8

9. Vested Outsourcing’s 5 Key Rules
© 2010 Vested Outsourcing
Copyright © 2010 SPOT Consulting LLC 9

10. Based on Game Theory …
Cooperative Games Win!
• In non-zero-sum games, a gain by
one player does not necessarily Command Cooperate
correspond with a loss by another
• Win-win game theory emphasizes
the importance of cooperation,
sharing and over-all group success Lose Much-
Cooperate Win-Win
in contrast to domination and Win Much
personal gain
• All players are treated as equally
important and valuable Win Much-
Command Lose-Lose
Lose Much
• When both parties cooperate they
both win! When they don’t, they
end up with less or both lose! VO gets both Parties to the
Win-Win Quadrant
“The best result will come from everyone in the group doing what is good for himself
and the group. It is the only way we all win”
John Forbes Nash-Nobel Prize Winner
10

11. Vested Outsourcing
A Hybrid Business Model Approach
• The
core
purpose
of
outsourcing
is
to
enable
the
most
efficient
delivery
of
business
outcomes
• Vested
Outsourcing
– focus
a1en2on
on
outcomes
and
not
transac+ons
– encourage
the
service
provider
to
innovate
– ensure
that
the
selected
business
model
rewards
posi2ve
outcomes
– carefully
crag
collabora2ve
agreements
• Share
Value
Copyright © 2010 SPOT Consulting LLC 11

12. Overview of Outsourcing Models
Sourcing Relationship Focus Interaction Characterized by
Transaction Based Business Model
Standard Terms,
Simple Transaction Cost and Efficiency
Abundant and easy to resource, no need
Fixed Pricing,
Provider for a relationship, no trust
Automated Procurement
Blanket Agreement Managed by category locally and cross
Economies of Scale,
Approved Provider Ease of transactions
Negotiated Terms business sector, bundled for economies of
Pricing Agreements scale, common terms
Contract with SLAs Integral supply across business units,
Capability, Capacity and
Pricing Agreement/Discounts delivering added value and capability, not
Preferred Provider Technology
Possible Gain Sharing so abundant, a pain to re-source, limited
Simplified Transactions
Longer Term Contract trust
Outcome Based Business Model
SRM Governance Longer term relationship, integrated
Performance-Based Performance Performance Incentives communication, metrics focused,
Relationship Fees at Risk cooperative relationship
Vested Governance
Interdependent outcomes, aligned goals
Vested Outsourcing Framework,
Mutual Gain, and objectives, mutual gain, managed
Performance Incentives
Relationship Shared Outcomes performance, long term relationship, Win-
Margin Matching
Win relationship
Vested Agreement
Investment Based Business Model
Joint Venture Legally bound, formal strategic
Equity Partner Equity Sharing Asset Based partnerships, mergers and acquisitions,
Governance Framework asset sharing/ holding

13. Benefits of a Vested Outsourcing
Approach
• BeEer
compe**on:
not
just
suppliers,
but
solu*ons
– Supplier
buy-­‐in
and
shared
interests
– Variety
of
solu*ons
from
which
to
choose
– Supplier
flexibility
in
proposing
solu*ons
• Focus
on
intended
results,
not
ac*vi*es
– Increased
likelihood
of
mee*ng
corporate
goals
and
objec*ves
– Mutually
beneficial,
shared
incen*ves
drive
innova*on
and
cost
effec*veness
– Par*es
have
a
vested
interest
in
other’s
success;
shared
risk
and
reward
Copyright © 2010 SPOT Consulting LLC 13

14. SPOT and Vested Outsourcing
• SPOT
is
the
designated
Center
of
Excellence
firm
for
using
the
Vested
Methodology
for
contact
center
and
BPO
opera*ons
• Offerings
include
– Deal
Review.
Assess
current
“deals”
against
the
Vested
Outsourcing
criteria
and
provide
detailed
gap
analysis
– Cer2fied
Deal
Architects.
Assist
a
buying
organiza*on
on
how
to
structure
a
Vested
deal
with
one
or
more
suppliers
– Training.
Provide
seminars,
speeches,
and
structured
classes
to
teach
the
methodology
and
expand
awareness
Copyright © 2010 SPOT Consulting LLC 14

15. For
addi*onal
informa*on
info@spotconsul*ng.biz
or
go
to
our
web
site
–
www.spotconsul*ng.biz
Copyright © 2010 SPOT Consulting LLC 15