Outsourcing: Homework
Doing homework before getting started with outsourcing is as important as managing the outsourcing relationship once established.
Aug 15, 2005
Doing homework before getting started with outsourcing is as important as managing the outsourcing relationship once established. Like any organizational decision, outsourcing requires effective management from the outset of the outsourcing evaluation through the life of the outsourcing relationship. The most critical part of getting started right is to first determine the reasons for outsourcing.
Even before sending the first RFP or meeting with a potential vendor, the company should have all the stakeholders fill out a questionnaire, that should contain at a minimum questions such as the following:
The first question helps to get the management to clearly define the core competencies for the enterprise. Even though this is a simple question, the amount of internal debate it can generate will come as a surprise to most involved in this exercise.
The second question is more of a second part of the first question. Once the core areas have been identified, this question leads to a discussion on the non-core activities, that are considered a "burden" on the enterprises resources. This question helps bring to foreground areas that are possible candidates for outsourcing.
The third question is for more organizational perspective completeness reasons, than for any other. This also allows the organizational heads of non-core activities identified in question 2 to be able to offer any plans to fix the problems or issues. Sometimes it does turn out that an enterprise may prematurely outsource a non-core activity without first ensuring that all has been done to resolve the problem organically.
The fourth question is to better focus on the areas identified by answer to the earlier question. Any non-core activity, that many parts of the enterprise rely on to perform their function, will be harder to outsource than a non-core function that has few internal clients. And this is very useful information for prioritizing.
Questions five through eight are meant to clarify organizations game plan while walking into an outsourcing identification and engagement process. These questions should be answered in much detail. The more detailed the response, - the easier it will be later in the process to go back and recalibrate.
The above eight questions are only meant as a guideline and every enterprise should refine the set of questions to be answered on a case-by-case basis before taking on the daunting task of outsourcing. The importance of talking to executives in other corporations who have successfully implemented outsourcing should also not be underestimated.
Even before sending the first RFP or meeting with a potential vendor, the company should have all the stakeholders fill out a questionnaire, that should contain at a minimum questions such as the following:
- What are our core competencies?
- What areas of the corporation take a large share of management time and other resources, but are not critical to the survival of the enterprise?
- What has been our approach to fixing the issues enumerated in question #2?
- For areas identified in Question #2, - are there many organizations that rely on those areas?
- What kind of relationship with a vendor is most appropriate?
- What objectives will be used to measure performance of the outsourcer?
- What are the major issues that we want outsourcing to resolve?
- What time frame of a business relationship are we looking at for outsourcing?
The first question helps to get the management to clearly define the core competencies for the enterprise. Even though this is a simple question, the amount of internal debate it can generate will come as a surprise to most involved in this exercise.
The second question is more of a second part of the first question. Once the core areas have been identified, this question leads to a discussion on the non-core activities, that are considered a "burden" on the enterprises resources. This question helps bring to foreground areas that are possible candidates for outsourcing.
The third question is for more organizational perspective completeness reasons, than for any other. This also allows the organizational heads of non-core activities identified in question 2 to be able to offer any plans to fix the problems or issues. Sometimes it does turn out that an enterprise may prematurely outsource a non-core activity without first ensuring that all has been done to resolve the problem organically.
The fourth question is to better focus on the areas identified by answer to the earlier question. Any non-core activity, that many parts of the enterprise rely on to perform their function, will be harder to outsource than a non-core function that has few internal clients. And this is very useful information for prioritizing.
Questions five through eight are meant to clarify organizations game plan while walking into an outsourcing identification and engagement process. These questions should be answered in much detail. The more detailed the response, - the easier it will be later in the process to go back and recalibrate.
The above eight questions are only meant as a guideline and every enterprise should refine the set of questions to be answered on a case-by-case basis before taking on the daunting task of outsourcing. The importance of talking to executives in other corporations who have successfully implemented outsourcing should also not be underestimated.