Outsourcing and offshoring, KWG, CSE, 22 May 05

8/7/2019 Outsourcing and offshoring, KWG, CSE, 22 May 05

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Deciding to outsourceand offshore

A classic make or buy decision

RFP process

Presented 20 May 2005, CSE Annual Meeting, Atlanta

by Cara Kaufman


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Kaufman-Wills Group 2Outsourcing and Offshoring

What is a make or buy decision? Sometimes it makes more sense to buy services

rather than perform the task in-house

The argument for outsourcing Proficiency

Complexity

The argument against outsourcing Control

Flexibility

The verdict Either can make operational and financial sense

Arguments for, can become arguments against


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Deciding whether to make or buy

What do you want to accomplish?

How is it done now?

What can you do?

Make

Buy


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Set objectives What?

Improve quality

Reduce time Cut costs

Why? Rationale

Importance When?

Timeframe


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Needs assessment Identify your needs

The more crucial the task, the more details need to be

specified Workflow and outputs

Policies

Steps

Time increments

Staff and system capabilities

Classify your needs Long-term, medium-term, immediate

Low, medium, and high priority


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Review options Outsourcing

Availability of options

Competitor offerings

Appropriateness

(esp, offshoring)

Gains from technology

Interface issues

In-house

Core competencies

Competing priorities

Career path

Skills to task

Supervision

Corporate culture


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The RFP process: a 5-point plan

1. Identify potential suppliers

2. Prepare and distribute the RFP

3. Evaluate proposals

4. Meet with finalist/s

5. Decide on supplier


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Prospective suppliers Identify

Direct and indirect competitors

Industry meetings and periodicals

Visit Web sites

Pre-screen

Experience Interest

Time


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Prepare the RFP: components Stated objective

Organizational overview

Required deliverables Product specifications

Service expectations

Assumptions, agreement Start date, length of initial

term Budget, cost

considerations

Ownership of data, code,etc.

Required proposal format Technical section

Time-cost section

Additional documentation Submission

Deadline

Contact

Basis of award of contract

Award date Send

Targeted suppliers

With sample materials

Confirm receipt


10/18


Evaluate proposals Decide on evaluation criteria

Financial

Qualitative Create summary grid/s

Compare apples to apples

Involve stakeholders appropriately

Goal: good decision, perhaps not best decision

Select finalist/s


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Evaluating alternativesMake Buy 1 Buy 2

What it

means

Potential

benefits

Potentialdrawbacks

Costs to

consider


12/18


Meet the finalist/s Presentation

Q&A

Meet and greet

Tour


13/18


Decide on supplier Decide on supplier

Notify all prospective suppliers

Enter into contract negotiation

Set timeline for completion

Business terms first

Legal sign off afterward


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Culture

the way we do thingsaround here.


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When is change necessary? When the environment is undergoing

fundamental change, and the organization

has always been highly value driven

Advent of new technologies

Pressure on traditional business models

Globalization

Deal and Kennedy


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What does change look like? Management

Risky

Critical

Time-consuming

Employees

Threatening

Confusing

Insecurity

Positive

Excitement

Opportunity

Motivation

Negative

Resistance

Questioning trust

Glorification of past


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Promote and manage change Managers

Articulate objectives clearly

Lay out step-by-step plan Align employee incentives with objectives

Employees

Participate directly in process Coordinate and implement change

Communicate concerns constructively


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Q&A

Thank you!

Cara [email protected]

Documents

Outsourcing and offshoring, KWG, CSE, 22 May 05