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Deciding to outsource and offshore

Deciding to outsource and offshore. A classic make or buy decision RFP process Presented 20 May 2005, CSE Annual Meeting, Atlanta by Cara Kaufman. What is a make or buy decision?. Sometimes it makes more sense to buy services rather than perform the task in-house

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Deciding to outsource and offshore

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  1. Deciding to outsource and offshore A classic make or buy decision RFP process Presented 20 May 2005, CSE Annual Meeting, Atlanta by Cara Kaufman

  2. 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 Kaufman-Wills Group

  3. Deciding whether to make or buy • What do you want to accomplish? • How is it done now? • What can you do? • Make • Buy Kaufman-Wills Group

  4. Set objectives • What? • Improve quality • Reduce time • Cut costs • Why? • Rationale • Importance • When? • Timeframe Kaufman-Wills Group

  5. 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 Kaufman-Wills Group

  6. 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 Review options Kaufman-Wills Group

  7. The RFP process: a 5-point plan • Identify potential suppliers • Prepare and distribute the RFP • Evaluate proposals • Meet with finalist/s • Decide on supplier Kaufman-Wills Group

  8. Prospective suppliers • Identify • Direct and indirect competitors • Industry meetings and periodicals • Visit Web sites • Pre-screen • Experience • Interest • Time Kaufman-Wills Group

  9. 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 Prepare the RFP: components Kaufman-Wills Group

  10. 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 Kaufman-Wills Group

  11. Evaluating alternatives Kaufman-Wills Group

  12. Meet the finalist/s • Presentation • Q&A • Meet and greet • Tour Kaufman-Wills Group

  13. 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 Kaufman-Wills Group

  14. Culture “…the way we do things around here.”

  15. 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 Kaufman-Wills Group

  16. Management Risky Critical Time-consuming Employees Threatening Confusing Insecurity Positive Excitement Opportunity Motivation Negative Resistance Questioning trust Glorification of past What does change look like? Kaufman-Wills Group

  17. 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 Kaufman-Wills Group

  18. Q&AThank you! Cara Kaufmanckaufman@verizon.net

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