Contracts and Procurement

The purpose of this paper Is to highlight an area In a financial organization that may be outsourced and prepare an executive summary document that focuses on the cost savings of the outsourcing/contracting process for the business process that Eve decided to outsource.

This analysis will justify my decision for the business process outsourced by the followings: * Establish the preliminary performance targets/level of service that will be required from the selected vendors * Establish the type of entrant that you will use for each contract * Determine the evaluation criteria you will use to select the preferred vendor(s) * Identify the number of vendors that you will select to provide the services to be outsourced * Construct a timeline that summarizes the bid activities and time duration for each contracting process.

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Current Situation First National Bank has been considering outsourcing some of their business processes In order to reduce cost. I am the CIO and will evaluate the following business processes and choose which process(s) will be the right candidate to outsource.

Finance and Accounting * Investment and Asset Management * Human Resources * Procurement * Logistics * Real estate management * Miscellaneous (energy services, customer service, mailbox, food processing) I am to prepare an executive summary document that focuses on the cost savings of the outsourcing/contracting process for the business process(s) that will help Increase profitability and efficiency within our bank Institution.

Outsourcing versus In-house I’ve chosen to focus on outsourcing the Human Resources process out of the seven processes that exist within the First National Bank. Below are the outsourcing pros and cons for the Human Resource process. I’ve made the strategic decision to outsource the following HER functions: * Payroll * Transaction Processes * Call Center Operations By outsourcing these three functions it will help keep our bank competitive and help us save volcanically.

I made the choice to outsource all of our transaction processes because we cannot Invest our time or money to develop the software In house to keep up to date with the leading edge technology. The pressures from our competitors also call for us to take immediate action to outsource this function hat our costs are internally from our Finance and IT is charging us along with various vendors and sub-contractors.

Outsourcing Payroll has been a neutral swap from a cost perspective.

We would of paid our HER internally exactly what we will pay our new vendor over the course of a five -year contract period. Functions we will retain in-house include talent management, performance and compensation, equity and engagement, and learning and development. The advantage to outsourcing our Call Center Operations is we can get top-level service from a vendor that specializes n this process to make this process operate more efficiently.

Vendor Considerations I propose we use two vendors to perform the Job for the bank; One vendor for our call center operations and another for our transaction and payroll functions. This is the appropriate number because research has concluded that if we use one vendor is can lead too greater chance of experiencing poor quality of work.

Also, I strategically want one vendor for our call center operations because we will be reducing cost substantially.

The bank needs the focus of our selected vendor to be solely on this function and specializing in this function rather than a more “multi- unction vendor” which leads to one or more of the functions suffering from lack of attention. We will use multiple performance targets to track against each vendor. Response times will be used to track how fast vendors respond to queries and issues. This is important because we need to ensure that the delays in responses to issues are kept minimal to enable our entire HER process to run smoothly.

We will also focus on: * Levels of completeness and accuracy * Turnaround times- How long will staffing actions take to complete * Service Availability unction will consist around the following key areas: * Amount of money the service provider has invested in technology * Corporate Values * The focus and core competence of the service provider * Reputation of provider from past service history * Cost of outsourcing * Willingness to guarantee service levels Contract issues that we have identified that could arise in the short and long-term outsourcing include: the risk of poor performance by the contractor; unforeseen fees or charges; property damage or data loss; potential liability to staff and the public rising out of an act or omission of the contractor and employment liabilities (both in terms of incumbent staff affected by the transfer of services and staff employed by the contractor).

Contract Structure Payroll Processes The vendor for our payroll processes will have a fixed-price contract over two years with a SLAB stipulation that requires them to maintain a 99. 9 accuracy rate which limits them to less than 100 mistakes a month. This is significantly better than our accuracy rate has been recorded at over the past five years. I choose a two -year entrant because it’s important to constantly measure the performance of our vendor to make sure they are doing the Job they are supposed to at the service level agreed upon.

We do not want to be bound to any contract with a service provider that is not meeting our demands and need to option to opt out and find another vendor if needed. Call Center Operations The vendor for our call center operations processes will have a fixed-price contract.

I choose a fixed price contract because it gives us a strong incentive to control cost and it’s less work for us to manage. This contract will have SLAB’S for the following recesses: * Responding to customer phone calls- Phones will be answered within 20 seconds with solution/feedback within 24 hours. Calls will be monitored with software.

* Resolve errors for inbound benefit interfaces- Interface reports are received from vendors; errors are researched and resolution sent back to vendor. Error reports from interfaces, communications with vendors, employees and payroll will be monitored to ensure errors are resolved before the next payroll processes. Hours of Operation- Daily hours of operation are 8:30 am to 5:00 pm Monday-Friday, Working hours may be adjusted due to system/power outages, emergency situations, or disaster. Transaction Processes The vendor for our transaction processes will have a fixed-price contract over two years with a guarantee discount off our current baseline expenses of our bank. This our income statement for cutting cost and increasing our profits. There will be a SLAB ensuring that when service levels are exceeded an incentive payment will be made to provider.

In return, if service levels are poor or frequent par service that we have the right to termination of the vendor services due to material breach.

Evaluation Criteria The following criteria has been proposed to be included in the REP for our Payroll Processes: * Adherence to local, state, and federal standards * cost * Compliance with desired technology I choose this particular set of criteria for the payroll processes because we must insure that the vendor abides to the local, state, and federal standards so we do not face legal action from prosecutors due to illegal activity. This also will ensure that our employees will not be the victims of illegal activity due to our negligence to hold our vendor accountable to abide by these standards. Along with focusing on quality of service, cost plays a major role on what vendor we will be signing a contract with. We will be focusing on a vendor who proposes a twenty percent reduction in service cost compared to our In-House HER that is currently processing our payment processing processes.

The vendor must comply with the desired technology of our choice The following criteria have been proposed to be included in the REP for our Call Center Operations. * Cost * Compliance with Desired technology * Compliance with minimum requirements Cost will play a valuable role in our decision of what vendor to choose for our Call Center Operations. Specifically we are looking to cut cost by fifteen percent. Vendors must comply with the desired technology of our choice. Our bank needs to been up to date with the latest technology to ensure our call center operations are operating efficiently with minimum errors to ensure customer satisfaction.

Retaining customers will help minimize financial losses and increase the percentage of new customers that come into the bank.

The following criteria have been proposed to be included in the REP for our Transaction Processes: * Percentage of functional requirements met with least amount of customization * Adherence to local, state, and federal standards * Compliance with the desired technology Timeline The timeline to complete the four processes in procurement planning will take a total processes with an explanation as to why I choose that timeline for those processes. Plan Procurements Timeline The timeline for Plan Procurements will be conducted within the first twenty days of the project. This allows sufficient time to thoroughly walk through the plan purchases and acquisitions and plan contracting process. Plan Purchases and Acquisitions: Includes determining what to purchase or acquire for the project and determining when or how to do so, identifies which project needs can best be met by purchasing or acquiring products, services, or results outside the project organization, and which project needs can be accomplished by the project team during project execution.

2. Plan Contracting: Includes documenting products, services, and result requirements and identifying potentially sellers. Conduct Procurements Timeline The estimated timeline to request seller responses and select the seller will take went-five days to complete. Twenty-five days allows us to review all information, quotes, bids, offers and proposals so we will not rush our decision on the correct seller to choose. 1 .

Request Seller Responses: Includes obtaining information, quotations, bids, offers, or proposals normally invited from prospective sellers on how project requirements can be met. 2.

Select Seller: Includes reviewing offers, choosing among potential sellers, and negotiating written contract with each seller. Administer Procurements Timeline In order to manage the contract and relationship between buyer and seller, viewing and documenting how a seller is performing or has performed to establish required corrective actions, it will take twelve days to ensure that the seller’s performance meets contractual requirements and that the buyer performs according to the terms of contract. Close Procurements Timeline This process will take fifteen days to complete. Fifteen days is sufficient enough time to complete and settle the contract, including the resolution of any open items, and closing each contract applicable to the project or project phase.

This includes verification that all work and deliverables were acceptable or – if an “early orientation” must be managed – the mutual agreement concerning the conditions of the early termination.