In many organizations, when the topic of hiring an external service provider comes up, there are usually two schools of thought. On one hand, getting help from the outside is perceived as less than ideal; decision makers may cite cost, expertise limitations, and a lack of understanding of organizational culture as factors that discourage outsourcing. On the other hand, outsourcing may provide many advantages, including relief for overtaxed staff, reduced training and maintenance needs, and a resource to augment internal expertise.
So how do you determine which way to go in your situation?
1. Define the need
The most important factor in making the decision whether to outsource is the business objective. What specific need is your organization trying to meet? Surprisingly, many organizations make outsourcing decisions without clearly defining their objective. This results in frustration, because different people will have different perspectives on the challenge that needs to be addressed, and that leads to different solutions. Once you clearly define your objective, it becomes easier to address it.
2. Quantify the risk
Next, determine the risk that your organization will face if your objective is not met. This is a consideration that is often disregarded. Is your business objective attempting to address an issue that is critical in nature? Will you incur financial loss, revocation of licenses or privileges, or experience a loss of business opportunities if you do not meet the business objective? What is the impact? Determine this in advance; this will give you an understanding of the importance of an effective solution. It may also open doors to consider less costly or less labor intensive options.
3. Identify needs versus wants
After you have determined the business objective, and identified the risks involved in not meeting the objective, the next step is to outline all of the functions, features, and expectations for the solution. Once you have identified them, categorize them as “essential” versus “nice to have,” and rank them within these specific categories. Your completed list now prioritizes all elements.
4. Evaluate existing capabilities
Once you have defined the business need, evaluated the business risk, and identified the needs versus the wants, look at your existing resources to determine feasibility in addressing the business challenge internally. Some issues to consider include:
· Do you have support from the highest levels of management to support addressing the business objective with existing resources?
· Do you have existing staff to address the objective, and do they have the necessary expertise and time?
· If not, will you be able to hire staff and provide a budget for them to address the need?
· Will workflows need to be adjusted, and do you have the capability to adjust them with existing personnel?
· If the function or activity has not been performed in your organization before, do you have best practices determined, or can you somehow acquire them?
· Is your organization able to assume the risk associated with performing the function or activity, if there are errors or failures? This may include financial, market share, and reputation loss incurred due to errors or failures.
· Have you projected demand growth for this function, product, or service, and are you reasonably prepared to address this growth?
5. Determine approach
After taking each of the steps above, you should have enough information to make a decision. Determine whether you will attempt to address the business challenge using existing resources, or consider outsourcing instead. Even if you end up making the “wrong” decision, going through these steps will provide you with a way to identify where failures might have occurred. And if, ultimately, you choose to hire a service provider, your answers to many of these questions can help you evaluate your options in the marketplace, helping you ultimately to meet your business objective.
Chansone Durden is an account executive team manager with TG serving schools in SASFAA. You can reach Chansone at (800) 252-9743, ext. 6710, or by email at chansone.durden@tgslc.org. Additional information about TG can be found online at www.TG.org.
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