Terminology
A brief overview of some of the more commonly used terminology within our industry. We have also included definitions from the RPO, HRO, ITO, BPO and staffing markets.
Activity Based Costing (ABC)
ABC is a costing model that identifies activities in an organisation and assigns the cost of each activity resource to all products and services according to the actual consumption by each. A company can establish the true cost of its individual products and services for the purposes of identifying and eliminating those which are unprofitable and lowering the prices of those which are over priced.
It is generally used as a tool for understanding product and customer cost and profitability. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing and identification and measurement of process improvement initiatives.
Application Hosting
The hosting of dedicated applications on a service providers computer. May be used in connection with a maintenance contract for the applications (Applications Outsourcing).
Application Management
The maintenance by a service provider of an IT application specific to an enterprise. The providers only commitment is to ensure that the tool functions correctly. Application management is part of application outsourcing.
Application Outsourcing
The management, operation, and maintenance of an application in a dedicated environment. The service provider is responsible for the effectiveness of the processes in question. The service provider's mission includes application management.
Application Service Provider (ASP)
Provider of packaged on-line applications. The service is paid for on a transaction or flat rate basis; it includes rental, maintenance and operation of the software.
Business Process Outsourcing (BPO)
Outsourcing one of a companies services. As a rule, the service provider uses the outsourcing companies personnel and is responsible for the proper functioning of the service. Although the resources remain dedicated, the processes are optimised.
Business Service Provider (BSP)
Provider of services ( BPO for example), working towards a pre-defined result and enabling clients to take advantage of a shared environment.
COGS
Stands for cost of goods sold (COGS)
COPQ
Stands for costs of poor quality (COPQ)
CTQ
Stands for critical to quality (CTQ)
COSS
Stands for cost of services sold (COSS)
DPMO
Stands for defects per million opportunities (DPMO), relating to Six Sigma
DMAIC
Stands for define, measure, analyse, improve control (DMAIC)
Enterprise Resource Planning (ERP)
An integrated application software suite that balances manufacturing, distribution and financial business functions.
Employee Self Service (ESS)
Employee self service (ESS) allows an employee to manage a range of job related tasks (such as expense claims, updates of personal information, access to HR policies etc). An ESS application can be made available over the intranet or via a portal or though specialised kiosks and may be confirmed to a private network or may be part of a web enabled service. ESS software is available as a stand alone product or as a component of a larger application for example Oracle, SAP or Peoplesoft etc. Manager self service (MSS)
Help Desk
A single point of contact for employee and manager queries in relation to HR policies, processes and practices. Help can be provided by phone, fax, self service, email or through a summary listing of typical questions and answers.
HR Outsourcing (HRO)
HR outsourcing & the transformation of the day to day administration can improve the HR service provided to employees, introduce best practice, allow access to supportive technology at an affordable price and allow our client to focus on its core activities.
Interactive Voice Response (IVR)
IVR is a telephony technology in which someone uses a touch tone phone to interact with a database to acquire information from or enter data into the database. IVR technology does not require human interaction over the phone as the users interaction with the database is pre-determined by what the IVR system will allow the user to access. IVR is also used to gather information as in the case of phone surveys in which the user is prompted to answer questions by pushing the number on a touch tone phone.
IT Outsourcing (ITO)The management and operation by a service provider of an organisation's IT resources (hardware and networks), dedicated or shared. The resource may be physically located at the service providers site.
Knowledge Transfer (KT)
KT involves a subject matter expert sharing their knowledge with a designated person on how to undertake a process whilst making reference to a detailed work instruction.
Labour Arbitrage (LB)
Is the financial benefit of buying a comparable service elsewhere to exploit the difference in pricing. In outsourcing the term is often used to describe the savings an organisation will enjoy when it contractually hires work in labour markets offshore or onshore that give a more favourable price differential that is currently available.
Manager Self Service (MSS)
Manager self service (MSS) allows managers to access and maintain data related to their employees (such as salary, reviews, leavers, probationary periods etc). Such an application can be made available on the same infrastructure as ESS mode.
Manager Services (MS)
Delegation to a specialist partner of a function that is essential to the company but is outside its core business. For example, by outsourcing personnel administration management, companies retain managers decision marking capacity, but their service provider assumes responsibility for all administrative procedures and obligations.
Outsourcing
Is entrusting a partner with a complex, long term mission that is defined in terms of results. The service provider decides on the methods to be employed to secure the desired result. For example outsourcing payroll services necessitates a commitment to punctuality, accuracy, legal compliance and so on.
Professional Employer Organisation (PEO)
Outsourcing of an organisations entire workforce, employment contracts, compliance and liability to AttractRetain.
Processing Services
Shared management of a process or processes by a service provider who is responsible for its/their automation and efficiency. The service is billed per transaction or unit activity. For example in relation to payroll, the service provider must guarantee punctuality and that the reports are consistent with the data supplied.
Recruitment Process Outsourcing (RPO)
Recruitment Process Outsource represents the first level of HRO or HR BPO activities, under this form of contract as the RPO provider we will agree to take over the whole staff procurement function of our clients.
Service Level Agreement (SLA)
SLA is the contract between service provider and customer, defining the service provided in relation to the metrics, acceptable and unacceptable service levels, liabilities for both companies and actions to be taken. The SLA records a common understanding about services, priorities, responsibilities, guarantees and warranties.
Each area of service scope should have the 'level of service' defined. The SLA may specify the levels of availability, serviceability, performance, operation, or other attributes of the service such as billing. The level of service can also be specified as target and minimum, which allows customers to be informed of what to expect (the minimum), whilst providing a measurable (average) target value that shows the level of organisation performance. In some contracts penalties may be agreed in the case of non compliance of the SLA.
Six Sigma
Is a statistical concept that measures a process in terms of defects. Achieving six sigma means your processes are delivering only 3.4 defects per million opportunities. In its business use it indicates defects in the outputs of a process and helps us to understand how far the process deviates from perfections. It is often referred to as symbol of quality and a methodology in that it is a philosophy of managing that focuses on eliminating defects through practises that emphasize understanding, measuring and improving processes.
Total Cost of Ownership (TCO)
Comprehensive analysis of a solution cost including asset, management (network, system, storage) support, development and communication.
Total Contract Value (TCV)
Stands for total contract value of a particular deal or project.
Total Value Equation (TVE)
Outsourcing a process like IT can produce savings. Outsourcing across an organization has a greater financial impact on the corporation's bottom line than just outsourcing a process. A supplier can only produce that kind of impact by outsourcing across multiple areas. As companies evaluate an enterprise sourcing strategy, it becomes obvious they need a bigger framework to evaluate their options.
TVE is all about strategic thinking and fostering enterprise changes - and becomes a mechanism for transforming an organization by aligning outsourcing objectives with the corporation's core corporate initiatives. TVE almost always implies some kind of re-engineering between the enterprise's core and non-core processes. Please see below diagram for more information.
Work Flow
Work flow is part or whole automation of a business process, during which documents, information or tasks are passed from one party to another for action according to a set of procedural rules.
