Outsource Case Study The organisation for Operational Integration Standards (OIS)

Outsourcing Waste Management

Background

All large organisations must consider outsourcing and the procurement of services from external bodies. Outsourcing ranges from 

  • meeting short term demand by simply bringing in people supplied by an external Managed Services organisation
  • to handing over a complete operational area to a Managed Service provider
There are few challenges at the simple end, short of diligence over cost and dependency on external contractors. However, no large organisation is immune to the challenges of outsourcing and the procurement of services

Examples of major outsourcing include
  • Mobile Virtual Network Opertors (MVNM), who outsource their physical network to other mobile network operators
  • Software Development Off-shoring of development to lower cost countries
  • Local Government outsourcing of Waste Collection to commercial organisations
  • Healthcare buying in facilities from commercial healthcare providers
In order to successfully separate out an area of operations, a precise understanding of of the operations is required
  • the boundary specified by the activities that fall on either side
  • the dependencies between activities on either side
OIS modelling provides exactly this
This is a transfer of operations, with assets and people to a commercial enterprise. The Managed Service Provider (MSP) has a customer base that includes a number of Local Authorities and therefore is able to leverage the values of scale. Chief amongst these are
  • Ability to distribute resource to meet fluctuating demands
  • Economies of scale for vehicles, maintenance etc.
  • More favorable contracts with waste processing organisations

The Two-Phases of Challenge

The first challenge is for the Local Authority to specify the outsourcing requirements with sufficient completeness and detail

Challenge: Failure to transfer local knowledge and experience will undermine the project

The Local Authority must articulate the precise details of the operations that are being outsourced
This means capturing the know-how of their Subject Matter Experts and operatives who have performed the service and ideally using this resource to establish best practice

The second phase of the challenge is that the MSP must respond to stated requirements in a way that clearly demonstrates how its offering meets the Local Authority requirements

Challenge: Failure to communicate between Local Authority and MSP At Tender Stage and Beyond

There must be a direct and explicit relationship between requirements and offerings
A precise specification of Local Authority operations enables a precise specification of MSP actions to perform those operations


Shred
Failure to take these action on these key points leads to a catalogue of real life difficulties, found in many outsourcing projects. Most are well known, but a few are worth highlighting
          • The evaluation of tender submissions requires much more time and effort than necessary (or available)
          • Misunderstandings arise as to what the MSP offer specifically includes, leading to failure to identify shortfalls
          • The MSP will have a costly learning curve to gain local knowledge, jeopardizing the quality of delivered service 



The Value of OIS

Standard InterOperations recognises that these challenges are at the root of all outsourcing projects; whether it is actual outsourcing to a Managed Service Provider, or a redirect to operational automation software systems

OIS is built on the solution to these two requirements

Using OIS to specify operational duties eliminates the risk of outsourcing

OIS provides the language and methodology to construct a detailed model of the Local Authority Waste Collection operations. It does this by mining the experience of the Subject Matter Experts who understand the processes and the local conditions

Local Authority expertise in turned into a detailed model of operations

Building the Library
Using OIS builds up a library of specifications, where each item is a specific operational area that must be supported

These are used to specify 
requirements and design for outsourcing projects

Once established they can be used over again for each new project, or contract

Experts from across the country can be brought together to build and refine the library, so capturing genuine best practice
... and reuse the best practice nationally

The Operational areas covered must include
  • Outsourcing Contract Specification and Negotiation
  • Terms and conditions of transferred staff
  • Waste Collection across the 26 statutory duties placed on local government with regard to waste management
  • Including Waste Disposal
  • Reporting

OIS Modelling Links Operational Areas to Actions 

OIS models are completed by service suppliers who specify how their actions combine to support each operational area. This requires drawing on the expertise of the MSP and the Local Authority

OIS documents mutual understanding of client and supplier

The result is a model of how Operational Requirements are explicitly implemented by the MSP offering, which connects across any language barrier

Mapping Client to Supplier

The specifications not only includes activities, but the OIS model also specifies performance factors
  • Service Level Metrics and Agreements
  • Tests and Preconditions
  • Activity Feedback and Audit
  • Activity Dependencies
  • Necessary Information exchange
  • Mandated feedback

Standard InterOperations

OIS Makes More Effective Use of Local Authority Resources

Errors and omissions are removed from any operational change project, such as outsourcing

Local authorities are no longer forced to create 'On-the-fly' documents for each new project, using whatever expertise that is made available to them at the time. This approach is prone to error, misinterpretation and omissions and contributes significantly to the risks in a project and the currently observed failure rate

Instead OIS Captures the valuable experience of experts once and reuses it often

OIS Information
  • Local Authority expertise in each modelled area remains available long after the experts have moved on
  • and is available to all projects and all new people
OIS models the operations to be outsourced precisely. This saves the cost of unplanned, emergency actions and re-tendering
  • Duties such as waste management are modelled precisely
  • together with the neighboring, affected areas
  • taking into account the range of possible local variations
    • e.g. traffic conditions, accessibility, population density and so on
    • ..as judged by experts from across Local Government and Suppliers
  • Generating and maintaining a library of best practice for the nation
  • Providing off-the-shelf specifications for new projects
OIS grows to provide an authoritative library of all government operations
  • ..but is able to address one area at a time
  • So no need for big bang transformation projects


OIS Contracts form the basis of outsourcing and procurement projects
Suppliers are required to respond with compliance to the OIS Contract requirements
so the procurement process is radically simplified and reduced in risk and duration


OIS Contracts are used to order individual services from the MSP

Within the MSP contract, in specific areas at specified, or repeated times
and to record the individual results, feedback and conformance to SLAs

The business of outsourcing and procurement is put on a truly industrial footing


Standard InterOperations

Further Details

OIS Makes Full Use of Available Expertise to Reduce Cost and Risk

OIS builds a model of the Local Authority expert’s ‘know-how’ that can be used for each new project. This is made possible by a new formal, modelling language and methodology developed by Standard InterOperations. The resulting models of operation:
  • avoids the misunderstandings of normal language documents
  • ensure all aspects of the operations are covered
  • the specifications are concise
  • the specifications have the correct granularity
  • they are generally applicable and reusable
Each operational area is modelled by experts in that area, ideally from different organisations and regions. The enables experts to:
  • Refine and enhance their own normal practice by building the model
  • These are OIS Contracts
  • They are concise and unambiguous 
  • They can be communicated without misunderstanding
  • Experts work together to converge individual ‘know-how’ into best practice and standards
Contributions from experts in different operational areas build up a library of OIS Contracts

The library becomes the source for all future projects and procurements in that operational area

Local Authority: Service Oriented

An OIS Contract models precisely how service obligations are fulfilled

OIS specify each Government duty as a set of OIS Contracts for each operational area required to meet service obligations

The Local Authority experts determine where it is most useful to draw boundaries between neighboring operational areas
e.g. Recycle food waste, metallic waste,.. versus general recycling

Service Level Agreements (SLAs) are attached to those operations and individual activities to set unambiguous expectations. They capture real-world, location-specific expectations
e.g. Residential collection twice a week in Low density region North-West sector 22

Each duty may involve multiple OIS Contracts
  • Between internal government departments
  • With external Service Providers
  • With Residents and Businesses
The OIS Contracts will specify the information the Local Authority is required to provide to the MSP as well as the mandatory reporting by the MSP. Data items may include information such as:
  • Waste according to category
  • Biodegradable, recycling categories, controlled waste
  • Limits
  • Percentage  recycling per category, percentage biodegradable,..
  • Geographic regions based on density & accessibility

MSP: Action Oriented

The OIS Contract models precisely all actions, their service requirements and dependencies

OIS Contracts is a rigorous specification of behaviour

  • It models the individual supplier actions required to perform the overall service duty modelled by the Contract
  • With dependencies between actions
  • Modelling the dependencies between actions
  • Using SLAs associated with each action
  • Individual SLAs combine to meet overall service SLA
  • Including provision for local circumstances
      • Accessibility
      • Traffic levels
      • Building density
e.g. Time to collect from each route combine for total time to collect for area

Actions will have the granularity of activities that can be directly tasked out to operatives

  • Perform initial test collections, in specified geographic region at specified time, to determine service metrics
  • Map truck size limits in confined spaces
  • Record Real-world collection speed
  • Perform collections in specified geographic region at specified times
  • Monitor and Report on Resident action violations
  • Collect ad hoc based on monitor action
  • Report on performance statistics as required
  • Dispose of Waste Type to quota limit