“Outsourcing: It's not just for huge companies anymore” A non-profit perspective on the

1. “Outsourcing: It's not just for huge companies anymore” A non-profit perspective on the Out-sourcing and In-sourcing Continuum

2. Top Three Takeaways for Session: 1. Identify the areas where IT outsourcing is most common and where non-profit organizations can reap the biggest rewards 2. Learn how to evaluate when IT outsourcing makes sense 3. Case studies of successful outsourcing models (private & non-profit)

3. Presentation Overview: • Outsourcing & In-sourcing Overview • Case Study: Limited Brands • Case Study: Indiana Assoc. of United Ways collaborative • Case Study: United Way Processing & Information Center collaborative • Discussion and Q & A

4. Thomas McLaughlinSenior Manager Grant Thornton 226 Causeway St. Boston, Massachusetts 02114 p 617.848.4899 f 617.723.3640 thomas.mclaughlin@gt.com

5. Creation of a Technology Shared Services Company • Nonprofits can be either ‘prototypers’ or ‘industrializers’ • Prototypers are usually smallish organizations that must constantly create new material, new approaches, or new intellectual property • Industrializers are medium to large size organizations which standardize production

6. Some Examples • Prototypers • Advocacy organizations • Small consulting/TA organizations • Any NPO with just one or two programs • Industrializers • Home health agencies • Hospitals • Universities

7. Automation Pathways

8. The Problem(s) • Technology increases need for capital • Technology increases fixed operating costs • There is little room for IT in the typical nonprofit's labor-intensive business model

9. The Problem(s) . . .therefore the investment doesn't get made or gets made at a less than optimal level

10. One solution… Spread technology's fixed costs over a broader base through collaboration with other nonprofit organizations – 'in-sourcing'.

11. Corporate Structure Operations Responsibility Economics Low Integration High Integration C.O.R.E. continuum of nonprofit collaboration

12. Tom McFaddenGroup VP, Chief Development Officer Limited Brands, Inc. 3 Limited Parkway Columbus, OH 43230 614 415-7788 tmcfadden@limited.com

13. Creation of a Technology Shared Services Company • Centralization • Moving from a de-centralized structure • Each company having their own Technology organization • Each company funding 100% of their own support from their own operating budget

14. Business Case – Before you initiate • WHY Do This? • Leverage – while small groups can accomplish things large groups cannot, large groups can accomplish many more things than the small • Strategic advantage – free up critical talent for higher value initiatives in the business

15. Business Case – Before you initiate • WHY Do This? • Know reasons first – have fact-based foundation • Take pulse of organization first – assess the following: • Willingness • Feasibility • Probability

16. Business Case – Before you initiate • HOW To Do This? • Know your baselines – precisely • Unit costs • Service levels • Supply/Demand model – organizational design

17. Business Case – Before you initiate • HOW To Do This? • Set expectations • Reasonable • Timing • Results • Not overnight • Have a comprehensive communications plan

18. Creation of a Technology Shared Services Company • Outsourcing • Becomes much more achievable due to leverage • Alleviates multi-site management issues • Centralized procurement much more attractive

19. Mike CabatVP Technology Indiana Association of United Ways mike.cabat@iauw.org

20. Evolution of a Service Center Providing Back Office Services

21. Technology Committee Formed In 2000 • Reviewed available • Technology • Fund Raising Software

22. Technology Committee • 12 United Ways • 18 Month Process

23. Technology Committee • Available software was • Very Powerful • Very Expensive • Beyond the reach of most UW’s • both cost & skills needed

24. Technology Committee • 2 major problems at UW’s • Lack of resources • Staff turnover

25. IaUW in 2001 Grants for Processing Collaboratives

26. Processing Collaboratives • Were cost effective • Did not solve turnover problem • Difficult to get started • Trust issues

27. IaUW in 2003 • Took Responsibility • Hired Staff • Consolidated Processing Centers

28. IaUW Service Center • Policies/procedures • Pricing • Identity – Marketing • Outsourcing • Certification

29. IaUW Service Center • Cost effective • Continuity in spite of turnover • Improved quality of data

30. IaUW Service Center • Issues • Customers feel loss of control • Turn-around time • Cost containment • Mission creep

31. IaUW Service Center • Success • meeting goals • Adding customers • Still learning lessons

32. Winston FairclothCEO, UWPIC winston.faircloth@uwpic.org 859-240-9822

33. Building Pressures

34. Our Response: Create Our UWPIC • Independent 501-c-3 administrative services organization • Mission: “helping local UW’s focus on core functions of building community and donor relationships” • Operating in 8 states, since March 2001.

35. Shared Services: Intended Benefits • Gain organizational capacity • Best practice identification and migration • Redirect resources to mission critical functions • Provide higher service levels & management focus

36. Shared Services: Intended Benefits • Achieve cost savings • Efficiencies in business practices • Rebalancing of effort to tasks • Group purchasing clout via volumes

37. Cost Savings Primary Benefit • Additional Capacity United Way SIZE Small Large Value Proposition Varies by Size

38. Benefit #1: Gain organizational capacity • Services • Speed & Accuracy: 950,000 units, 3.0 TAT, 99% • 24x7 management/support of technology platform, including technical help desk • Access to skilled talent & bench strength • Benefit • Higher service levels/SLA compliance

39. Benefit #2: Achieve cost savings • Savings • $750,000 in personnel savings year one • Cost per FTE: 25-40% annually • $850,000 in shared licensing/hardware • Benefit • Redeployment to core functions/mission

40. Service Offerings • Processing • Information • Technology • Administrative

41. Customers