C.M. Winters and MASP Consulting Group

Today’s highly competitive world business environment is forcing management to aggressively pursue ways to achieve efficiencies, improve customer service and save money. In their frantic search for new ways to streamline company operations, the concept of outsourcing "non-core" business processes and activities is a tempting new way to improve operations and costs.  Management has become intrigued with the idea that they should be focusing on managing and controlling those key "core" business processes and activities that their organizations are best at doing and that represent the mainstay of the business instead of trying to dilute precious efforts in some of the business activities that do not represent the essence of the activities of the company. 

Here is where outsourcing comes to the rescue.  The market for outsourcing is reported to be in the hundreds of billions of dollars. The outsourcing concept is not new.  Thousands of companies have being applying the concept in the form of cleaning and janitorial services, repairing services, warehousing and shipping services, order processing and fulfillment and a host of other fields.

Of late, the area that has received the most attention is the outsourcing of information technology services, especially, as some would like to believe that information services is swiftly approaching the concept of the utility.  The closest approach to this kind of outsourcing is the so-called Application Service Provisioning (ASP), whereby many organizations, small-medium (and now large) are able to procure application software and processing services on a rental basis and without the awkward development cost and the unpleasant initial and upfront investment. 

 As outsourcing of functions and services becomes increasingly pervasive and almost commonplace in organizations of all types, the question before us is not whether we should outsource but rather “what functions, areas or activities should we outsource and to what outsource provider company”? The other key issue is how to accomplish the outsourcing in an effective, secure and cost-effective manner.

This manual covers principles and practices that apply to all types of outsourcing.  Chapter 8 focuses on key aspects of IT outsourcing while Chapter 9 provides ideas on E-commerce outsourcing in view of the strong popularity of these new fields of endeavor. 

Surveys indicate that managers, IT managers and CIOs and others involved in the process (such as legal and purchasing officers) are inadequately equipped to make decisions on outsourcing or carry out the process of outsourcing in a careful and disciplined manner. 

MAP-49 provides a practical guidelines oriented manual for the busy manager and practitioner. As you consider outsourcing of functions and services you need the information provided in this unique manual.

PREPAID PRICE:  $150 plus $ 10 postage & handling in the US  - Overseas: $180 including air post

CONTENTS

PREFACE

1.              BACKGROUND AND BUSINESS DRIVERS

1.1          Increasing Trend in Outsourcing              

1.2          Objectives of this Chapter            

1.3          Definition of Outsourcing               

1.4          Focusing on Critical Core Business Processes as a Major Factor                

1.5          What Are the Business Drivers for Outsourcing?              

1.6          The Value Proposition for Undertaking Outsourcing              

1.7          Difference Between Outsourcing and Contracting or Purchasing           

1.8          The Increase in Growth of Outsourcing               

2.              DETERMINING THE OPPORTUNITIES AND THE NEED FOR OUTSOURCING

2.1          Chapter Objectives           

2.2          Is Outsourcing Good for Your Business?              

2.3          Identifying Opportunities and Non-Core Business Processes for Outsourcing              

2.4          Strategic, Tactical and Operational Level Outsourcing         

2.5          A Methodology or Mechanism to Determine the Areas that Should Be at The Top of the List for Outsourcing 

2.6          Identifying and Articulating the "Value Proposition" for Your Outsourcing Candidates              

2.7          Identifying the Political Atmosphere and Implications of Outsourcing               

3.              SETTING GOALS AND STRATEGIES AND ESTABLISHING THE CRITERIA FOR EVALUATING OUTSOURCING OPTIONS

3.1      setting Goals and Developing Strategies               

3.2          What is the Value Proposition (Value/Benefit)  - Tangible and Intangible Benefits             

3.3          Outlining the “Business Drivers” for Undertaking Outsourcing Programs         

4.             CRITICAL SUCCESS FACTORS FOR OUTSOURCING - Establishing the Criteria for Outsourcing and the Basis for a Plan of Action

4.1          Chapter Objectives              

4.2          Critical Success Factors for Outsourcing              

4.3     Life Cycle Methodology for Outsourcing              

4.4     Importance of Incorporating as Many Success Factors as Feasible to Ensure Quality Outsourcing      

5.             JUSTIFYING OUTSOURCING PROGRAMS

5.1          Chapter Objectives        

5.2          Importance of Developing a Sound Justification Document              

5.3          Key Elements of a Justification Document              

5.4          A Summary of Success Elements in Selling and Justifying Outsourcing Programs to Management              

5.5     Using ROI Concepts to Justify Your Outsourcing Programs        

6.              A PLAN FOR IMPLEMENTING AND MANAGING OUTSOURCING PROGRAMS

6.1          Chapter Objectives               

6.2          Establish the Key Business Objectives and Determine the Scope of the Outsourcing Effort            

6.3          Establish the Core Issues and the Outsourcing Goals            

6.4     Establish and Staff the Outsourcing Team

6.5     Establish Roles and Responsibilities of the Outsourcing Team

6.6     Validate the Scope of the Outsourcing Effort and the Targeted Areas or Functions        

6.7     Establish the Objectives for the Areas Targeted for Outsourcing        

6.8     Develop an Outsourcing Project Plan to Guide and Direct the Outsourcing Effort Through Vendor Selection      

6.9     Define the Core Criteria to Be Used to Select the Vendor(s)        

6.10   Identify Potential Vendors Based on the Core Criteria for Evaluating Outsourcing Alternatives     

6.11   Prepare, Transmit and Review a Request for Information       

6.12      Receive RFI and Select Targeted Vendors for Evaluation and Interviews Through the RFP Process      

6.13   Develop the Request for Proposal and Submit to Targeted Vendors         

6.14   Establish a Process and System for Evaluating the Vendor Proposals        

6.15   Evaluate the Responses to the RFP, the Interview, Site Inspections and the List of Services Provided      

6.16   Select the Vendor, Negotiate the Contract and Develop the Service Level Agreement(s)    

6.17   Establish the Plan for Migration to the Outsourced Environment     

6.18   Develop the Communication Plan 

6.19   Conduct an Operational Analysis by the Selected Service Provider    

6.20   Develop Transition Target Dates, Supporting Schedules, and a Transition Project Plan       

6.21   Develop a Process for Identifying and Tracking Transition Issues   

6.22   Establish the Retained IT or Contract Management Structure      

6.23   Establish the Transition Reporting Process        

6.24   Perform a Documented Review of Transition Activities and Achievements       

6.25   Manage the On-Going Vendor Relationship       

7.      CREATING AND MANAGING OUTSOURCING SERVICe LEVEL AGREEMENTS

7.1     The Need for a Service Level Agreement                      

7.2     SLA Defined               

7.3     Core Service Levels      

7.4     Response to Changes in Volume and Demand for Services        

7.5     Service Level Administration       

7.6     Request for Services      

7.7     Scope of Services       

7.8     Availability of Services       

7.9     The Components of Service Level Measurement and Specifications    

7.10   Defining Clear Roles and Responsibilities     

7.11   The SLA Scorecard       

7.12   The Regular Service Level Review Process     

7.13   Special Projects and Requests      

7.14   Key Issue – Technology Refreshment       

7.15   Key Issue – Information Security Compliance       

7.16   Sub-Contractor Performance and Adherence to the SLA    

7.13   The SLA and Management of the Outsourcing Relationship      

8.              SPECIAL CONSIDERATIONS FOR INFORMATION TECHNOLOGIES OUTSOURCING

8.1          Chapter Objectives               

8.2          IT Services Outsourcing           

8.3          Identifying and Articulating The "Value Proposition" For Your IT Outsourcing Candidates         

8.4          Outsourcing Via Application Service Provisioning (ASP) – The Latest Trend              

8.5          What is Application Service Provisioning?             

8.6          Service Level Agreements as a Key Success Factor for Effective ASP Outsourcing             

8.7          Factors to Consider in Minimizing the Risk of Outsourcing via ASP Providers        

8.8          Business Process Outsourcing              

8.9          A Few Key Elements for Success in BPO and ASP Outsourcing         

9.              CONSIDERATIONS IN OUTSOURCING E-COMMERCE ACTIVITIES

9.1          Chapter Objectives       

9.2          Business Drivers for E-Commerce Outsourcing                        

9.3       Core Issues for E-Commerce               

9.4        The Decison to Outsource E-Commerce Functions and Support          

9.5          A Contractual and Service Level Agreemenet Requirements            

10.     EFFECTIVE MANAGEMENT OF THE OUTSOURCING RELATIONSHIP

10.1          Outsourcing Relationship Management Program and Factors in an Effective Relationship 

10.2.  Clearly Defined Goals and Strategies For Outsourcing             

10.3   A Thorough and Well Defined Scope               

10.4   Due Diligence                      

10.5   A Clearly Defined Client-Customer Management Structure For Managing the Outsourced Environment              

10.6   A Well Structured SLA and an Effective SLA Administration Program               

10.7  Technical and Industry Expertise              

10.8   Approach to Migration and Conversion               

10.9   Project Management                   

10.10 Key Processes Are Defined and Demonstrate a Well Disciplined Approach              

10.11 A Well Structured SLA and an Effective SLA Administration Program         

10.12 Strong and Effective Problem Resolution Process                   

10.13 A Disciplined Approach to Change Management         

10.14 Competent Personnel            

10.15 The Ability of the Outsourcing Provider to Respond to Technology Change and Emerging Technology Requirements in a Timely Manner           

10.16 An Effective IT Governance Structure Allowing for Effective Communications at All Levels of The IT and Client Organization

10.17 An Agreed Upon Approach to Information Technology Planning (and How that Will Be Aligned With the Client’s Business Planning)               

APPENDIX

A-1    Literature sources        

A-2    Glossary of Terms 

A-3     Standards for Service Providers    

A-3    Index                                                             

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