How to Build Partnerships with Offshore Vendors: A Formula for Success

1. How to Build Partnerships with Offshore Vendors: A Formula for Success Rebecca Goldthwaite Jack Mitchell February 14, 2011

2. Who We Are… • Rebecca Goldthwaite • Vice President, Strategic Partner Management • Cengage Learning • Jack Mitchell • Senior Vice President, Higher Education Division • PreMediaGlobal

3. What We’ll Cover… • Differences between transactional and partnership approaches • Advantages you can realize by building relationships • How to get started or improve on what you’re currently doing • How to build a solid framework for publisher outsourcing initiatives • How to offshore vendor teams are built for success • Critical success factors in offshore relationship management • The importance of communication and understanding cultural differences

4. TOC • A Partnership Approach • Speculate • Design • Cultural Differences • Implement • Maintain • One Last Thought • Q&A

5. 1. A Partnership Approach It’s Not About Transactions

6. The 4 P’s of Partner Management • Price • Volume discounts • Standardized pricing • Process • Process improvements • Best practices • Identify efficiencies • Ensure consistency & compliance • Performance • Establish standards & definitions • Distribute changes • Visibility into vendor operations • Implement metrics • Protection • Reimbursement for errors • Strict legal agreements

7. Possible Partner Management Functions PARTNER NEGOTIATIONS PROGRAM ANALYSIS & CREATION PARTNER MANAGEMENT BEST PRACTICES 3rd PARTY CONTENT PRINTPRODUCTION DIGITAL PRODUCTION PRINTING PAPER MEDIA REPLICATION

8. CL’s Partner Management Mission Develop partnerships and programs to support business excellence through innovation, value creation and best practices • We do this by… • Managing external partners • Building relationships with internal stakeholders • Negotiating competitive pricing • Defining and monitoring service levels • Supporting on-time delivery & improved speed-to-market where possible • Identifying process efficiencies for internal & external services • Managing risk to revenue and cost • Monitoring market intelligence • Effectively and transparently communicating • Building and leading effective teams to manage partner programs

9. CL’s Partner Management Values • Integrity • Professionalism • Reliability • Accountability • Clear & Honest Communication • Collaboration • Evangelism

10. Possible Procurement Strategy • Vendor Consolidation • Formal negotiations • Leverage volumes & multiyear agreements • Outsource / Offshore • Leverage scale • Utilize offshore rates • Outsource where internal resources are lacking or fluctuate throughout the year • Metrics & Standards • Volume • Compliance: formal buying policies • Clearly defined internal & external standards • Automation • Focus on automated workflows • Reduce number of transactions • Technology • Identify new technology & impact • Utilize technology to improve efficiency • Process Improvements • Recommend process changes to improve efficiency and/or reduce costs • Partner Management • Dedicated vendor management team • Clearly defined partner expectations

11. The Partner Management Process • Speculate: Program Opportunities • Identify program opportunities [cost savings, new technology, automation, etc.] • Research possible solutions & make recommendations • Design: Program Definition • Gather requirements • Establish baseline definitions, standards & service levels • Create initial pricing models • Vet vendor expertise & performance • Establish testing & ramp-up phases & metrics • Implement: Program Rollout • Rollout standards & baseline metrics • Training • Refine definitions; Continuous process improvements • Maintain: Program Management & Expansion • More comprehensive metrics • Standardized pricing, where appropriate • Specialized programs

12. 2. Speculate Know Your Options

13. Identify Opportunities & Challenges • Services currently outsourced onshore • Services not yet outsourced • Onshore vs. Offshore vs. Hybrid • Short-term vs. long-term plans • Cost savings & cost avoidance • Identify outsourcing objectives • Identify challenges & buy-in hurdles

14. Develop a Services Matrix • Art rendering • Assessment/test bank creation • Composition • Content development • Conversion [XML and eBook] • Copyedit • Design [cover] • Design [interior] • Digital production • Indexing [back-of-book] • Indexing [metadata, machine-aided] • Manufacturing/printing • Photo research • Project management • Proofreading

15. 3. Design Define Your Requirements

16. Define & Document Before You Execute • Success criteria for vendors • Success criteria for publisher • Verify objectives for outsourcing • Process documentation • Samples • Training needs • Policies, assignment goals • Pricing models and cost analysis • Identify potential volume within each service • Proposed metrics • Service level agreements

17. Sample Production Documentation

18. Sample Art Documentation

19. Identifying a Vendor Base • Vendor questionnaires • Webex presentations • Evaluation checklists [vendor success criteria] • Review publisher references • Evaluate current work and disciplines/difficulty • Review samples from other customers • Meet key personnel • Understand organizational structure & implications • Pilot/test actual content • Evaluate initial cost estimates • Share details on preexisting standards, workflows, expectations • Ramp-up and load testing/planning

20. Choosing Partners • Forward-thinking with stability • Shared vision of both companies’ directions and the industry’s direction • Committed key stakeholders at corporate level • Solid team-based staff • Proven track record and experience in appropriate areas • Scalability, both vertically and horizontally • Receptive to change and partnership improvement • Equal emphasis on both short- and long-term success • Collaborative approach in suggesting and opening new service areas

22. Negotiations • Cost-savings and cost-avoidance goals • Pricing model review • Consistent pricing models across vendor pool • Quoting based upon pilots/tests • Finalize pricing & volume agreements • Per-project, per service category/definition • Cost tracking tools • Legal agreements

23. Monitor Forecasting & Loading • Monthly reports that forecast out 12 months • Should include scope/complexity/specs/workflow/etc. for appropriate resourcing decisions • Regularly review assignment changes • Know how load is balanced [or not] • Evaluate staffing plans against forecasts with partners

24. 4. Cultural Differences They Aren’t Insurmountable

25. True or False? • Offshore teams are not fluent in English • Offshore teams are only experienced in hard disciplines, such as mathematics and physics • Offshore teams have working hours that make project implementation difficult and relationships complicated to build and maintain

26. Trust is Everything • Saying Yes – the Customer is not always right • Instructions will be followed implicitly – what happens if you’re wrong? • Language barriers • Working hours/shifts • Holidays • Insist on automation • Allow partners to identify efficiencies • Vendors do this for a living – you just think about it for a living – become partners and help each other succeed • Relationships are important

27. Exchange Programs • Partner and Publisher exchanges • Learn about processes • Share best practices • Establish stronger relationships • Shadowing • Specific program training • 2 weeks to 4 months • Include ongoing education • Have a sense of humor [about your own and other cultures]!!

28. 5. Implement Make It Happen

29. Building a Team • Dedicated, consistent resources • Easily accessible and current contact information for both partners and publisher • Formal escalation process • Identify working hours • Communicating publisher requirements • Training [hybrid vs. offshore differences] • Author, editorial, production introductions • Rollout standards & baseline metrics • Retention planning

30. Hybrid: The Best of Both Worlds? • Hybrid can be many things • Pieces of project • Management of project • Consider starting onshore and then transitioning • Utilize knowledge base of onshore staff for supervision and training • Establish a strong outsourcing program prior to the transition • Savings are still possible • Take advantage of hybrid pricing models • Obtain long-term savings with transition

31. Training is Key • Create an understanding of outsourcing, buy-in with the publisher • Identify strengths and weaknesses with publisher & vendor staff • Create a formal training program with dedicated staff • Set scheduled sessions, and make them a priority • Team-based training; create a mentor program • Hold consistent status meetings with feedback, organic training • Plan travel and visits for in-person training and team building • Set goals and expectations for all team members • Employee assessment , review, and recognition—both partners should reward employees based on joint success

32. Documentation Libraries • Common access point for documentation of processes & standards • Ensures most up-to-date documents are used • Eliminates need for transmittal via email or FTP • Publishers should a create library for shared partner use • Partners should verify they also use a centralized document library

33. Escalation Planning is Essential • Include on- and offshore personnel [if applicable] • Clear concise chain of escalation & current contacts • Include key levels of management with authority and ability to make changes and/or redirect resources to remedy any situation • Implement formal escalation policies for both publisher and partner • Identify and plan for frequently occurring crises/emergencies • Scale back or shift volume • Monitor performance closely • Provide further training

34. Retention Planning is Critical • Employment dynamics in India differ from the US • Planning is critical for consistency and continuity • Ensure best practices are in place • Team building • Good working conditions • Positive and upbeat work environment • Incentives and rewards • Transportation • Employment contracts for senior staff

35. 6. Maintain Continue to Improve

36. Program Management • Develop or refine SLAs and QA metrics • Measure performance on both sides • Continue to build the relationship • Meet often & communicate business needs • Regular program reviews to discuss strategy • Refine forecasts; monitor/manage load • Refine definitions & expectations • Plan for process improvements • Encourage ideas for improvement & expansion • Staff, stakeholders • Partners

37. Performance Metrics • Performance feedback should not be anecdotal • Create a formal tool for collection • Both quantitative and qualitative measurements • Avoid ambiguity in feedback tools • Eliminate subjective questions • Continue to refine or redefine as programs mature

38. Sample CL Service Level Agreement

39. Sample CL Evaluation Questions

40. Sample CL Performance Scorecard Manuscript to Compositor Copyedited Manuscript to Vendor 1st Pages Rec’d from Compositor 2nd Pages Rec’d from Compositor Text Files to Printer Files Delivered to Archive

41. Sample Partner QA Form Collect publisher feedback Determine root cause Identify responsible parties Determine corrective action Identify preventative action Respond to publisher

42. Sample Partner QA Tracking Tool

43. Sample Partner Quality Analysis Report

44. Sample Partner Performance Metrics

45. 7. One Last Thought The Most Important One!

46. Be Transparent • Get to know one another as people • Encourage open and direct dialogue • Share business objectives with one another • Ensure regular communication takes place at all levels

47. 8. Q&A