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Strategic Outsourcing Assessment
(SOA)
Outsourcing initiatives have evolved
from short-term tactical projects focused on cost savings,
to executive-level business strategies that enable companies
to gain and sustain revenues and profits in the competitive
global marketplace. In this fourth newsletter of a four-part
series, ZSL, an IT outsourcing solutions provider, discusses
starting off with a small pilot project, and selecting
the right outsourcing solutions provider.
Pilot initiative
Consider the application with the
lowest Mass Value. Then:
- Identify a Project Owner who is fairly familiar
in managing the specific elements considered for outsourcing
- Define the Scope of the work
- Develop an RFP (Request For Proposal) if necessary
- Solicit proposals from qualified Solution Providers
- Solution Provider Evaluation
Once the RFPs have been submitted
for review, it then becomes time to consider the option
that provides the “best value” which can
only be derived by selecting the best combination of
cost and capabilities. The providers’ interpretation
of the pilot scope, and responses to key factors included
in the Provider Check List, are as important if not
more important than the cost of the pilot. The Provider
Check List included with every ZSL SOA asks all of the
tough questions, such as:
- Are the Offshore Development Centres wholly owned
and operated by the vendor?
- How secure is their work environment?
- How will they integrate their project management
methodology with mine?
- Can the provider truly operate as an extension of
my in-house environment?
- How quickly can they scale up or down?
Often, the solution providers’
services will be available on a fixed-fee or per-transaction-fee
basis. Take the time to work out a business relationship
that both companies will be comfortable with –
one in which both can succeed. But also be sure to make
provisions for a relatively quick and well-defined exit
process if things change.
The most desirable outcome is a long-term
relationship supported by a continually renewable short-term
contract. This gives both parties the ability to adjust
things as business conditions change.
The pilot implementation involves
the start-up activities of planning the knowledge transition
and resources set-up, as well as crafting the Project
Management Plan.
Closing remarks
Outsourcing is a strategic decision
that is typically developed at the senior executive
level within most organizations. It may be part of a
larger strategy to move the company to a leveraged business
model and to focus on core competencies. Or it may be
intended to save net costs or to compensate for a lack
of internal resources. Outsourcing may act as a key
differentiator, which will give your business a competitive
advantage over your competition.
Outsourcing to outside suppliers,
work that companies and other institutions used to do
(or could be expected to do) for themselves is often
much maligned. But more often than not, outsourcing
has nothing to do with sending work abroad. And even
when it does, there is also an often missed positive
effect on employment back home, economists have determined.
And the benefit will grow – for outsourcing itself
is still growing.
About ZSL’s SOA
ZSL offers a complementary Strategic
Outsourcing Assessment (SOA), resulting in a highly
detailed step-by-step document, or "roadmap",
which includes:
- High-level overview of core and non-core business
applications/processes
- Evaluation of outsourcing readiness
- Itemized gap analysis of systems/process infrastructure,
complete with roadmap and recommendations
- Summary of optional engagement models with projected
impact analysis
- Summary of short term and long term recommendations
- Detailed solution providers evaluation checklist
- Recommended jump-start pilot outsourcing initiative
to build buy-in and momentum.
The SOA is often used as
a catalyst to help in
a) getting a baseline for a overall project plan,
b) providing momentum to stalled discussions/planning
of outsourcing initiatives,
c) validation for functional heads who have yet to secure
sign-off for an outsourcing initiative,
d) providing a competitive baseline by which current
preferred outsourcing vendors can be re-evaluated.
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