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OUTSOURCING 101 Primer

The philosophical arguments for outsourcing may make perfect sense, but real results depend on genuine operational compatibility, understanding the real economies of scale, and working through all the painful details for the initial project and the ongoing partnership to come.

Methodology

Getting Organized
• Establish outsourcing program credibility
• Vendor selection
• High level transition approach

Assessing the Opportunity (Executive Champion, OS Steering Committee)
• Develop high level objectives and scope
• Identify high level concerns and known barriers
• Ensure adequate resources remain for business as usual

Framing the Deal (OS Steering Committee, Evaluation Team)
• Develop specific business and technology objectives
• Define success criteria

Establishing Baselines (Evaluation Team)
• Actual and budgeted expenditures
• Maintenance
• System / software support
• Software licenses
• Contract or temporary labor

Defining Timelines (Evaluation Team, OS Steering Committee)
• Construct project schedule for remaining Outsourcing activities
• Vendor evaluation and selection
• Contract negotiation / development
• Employee and service transition

Vendor Evaluation and Selection (Evaluation Team, OS Steering Committee, Executive Sponsor)
• Develop RFP utilizing business objectives, scope definitions and baseline data
• Vendor due diligence inspections (in house)
• Vendor selection
• Contract development and negotiation

Transition Planning (Evaluation Team, OS Steering Committee)
• Personnel identification
• Organizational alignment
• Job / function mapping
• Employee retention program
• Asset sale / assignment

Managing the Deal
• Vendor and client management structure
• Defined roles / responsibilities / authorizations
• Work flow management
• Service Levels
• Dispute resolution

Revisiting the Deal - Renew or Exit
• Business environment - Significantly changed?
• Vendor performance - Acceptable? Outstanding? Marginal? Unsatisfactory?
• Technology environment - Significantly changed?
• Cultural environment - Acceptable? Outstanding? Marginal? Unsatisfactory?
• Process environment - Acceptable? Outstanding? Marginal? Unsatisfactory?

The selection of an outsourcing partner and the ongoing management of the outsourcing relationship directly affect a company’s growth and future performance. For many companies, an outsourcing decision may represent the longest duration and largest financial commitment the company will make.

At Major Scale, our senior outsourcing consultants can guide you through the assessment, decision, and transition. Our methodology is intended to lead you to a fair and objective decision. We will help you establish required processes and procedures that allow both you and your supplier to benefit from the partnership. We assist you with evaluation, negotiation, implementation and management of the entire IT outsourcing transaction.

The Problem:

In an outsourcing negotiation the vendor desires a high margin, low investment deal. The client desires a low cost, high service level deal. When both parties concede to an arbitrary middle point, the resulting agreement may simply produce average performance for an OK cost, which makes neither party happy in the long-run.

Maximizing Value:

Major Scale's structured approach to outsourcing identifies those elements and services that add value to the client and aligns them with vendor processes to yield high quality service at a fair return, resulting in a successful deal for all parties.