How to evaluate Flex-Sourcing for your business:

Obviously each business has somewhat unique factors to take into consideration when evaluating how a business could benefit from outsourcing or Flex-Sourcing arrangements.

The size and complexity of your business, coupled with your critical core competencies will dictate where you should investigate!  Following is a five step approach that outlines how to evaluate Flex-Sourcing for your business:

Step One:   Establish current business benchmarks.  What levels of service are currently delivered, and at what cost, to your enterprise.  Which functions/processes should be considered Critical Core Competencies? Review the Potential Flex-Souring areas at the end of this article for ideas on which functions of your business to evaluate.  Remember! Critical Mgmt/ staff time is a cost to be factored!

Step Two:   Select focus areas.  Evaluate the benchmarks established in Step One in regards to ranking how they perform, costs to deliver results and select 2-5 areas that appear to have poor performance measures (high cost/low performance) and ARE NOT Critical Core Competencies.  Core Competency areas performing poorly are business functions where Business Process Reengineering and other improvement initiatives are critical. These should be priorities of management to correct, but are often not appropriate for Flex-sourcing arrangements.

Step Three:  Develop the business case for each focus area.  The business case should consist of minimally the following:

1.      A paragraph or two describing the desired Outcomes agreed to by your management team.  What needs to happen, when and why.

2.      The metrics to be used to measure the success/failure of the project. What and how will you measure them? Refer back to these metrics in every project and management team meetings/project updates.

3.      Outline the Drivers and Constrainers of the project. In other words, what are the urgencies, dependencies and resources driving the project!

4.      It is critically important you dig into the “details” of what the functional requirements of your business are to truly understand what services you will need and what valid payback would be.

Step Four:  Evaluate sourcing options for each selected area.  You probably will not have a good idea of what’s really available to you that makes sense (meets requirements at a price that delivers ROI) until you talk to people who know “the lay of the land”.  Sourcing vendors are good sources of information, but certainly not objective and not comprehensive.  Business associates you know who have experience with outsourcing (or Flex-Sourcing, which is more practical for most Mid-Market firms) are better sources of objective insight.  

I am available to discuss your options and provide feedback on your plans, at no obligation, via a phone discussion or, if appropriate in a meeting at your office.

Step Five:  Select your Sourcing Partner(s) and “Pilot  the Experience”.  Narrow down the field of potential Sources to a few (if not one) where due diligence can be performed. Negotiate the details of the contract terms, deliverables and length. In most cases a Pilot Project makes good sense to test out assumptions and clarify requirements.

Other Factors to consider….

Flexibility – You need Sourcing partners who can adapt to change quickly and “tailor fit” their services to your specific ever-changing circumstances and requirements.

Activity Based Costing – Understanding what something really costs requires evaluating the “People/Activity” costs that may be hidden to deliver a service (meet customer demand, etc.).  Factor in lost sales because of customer problems due to something not  getting done on time/budget/quality.

Customer Satisfaction is #1 – If your customer satisfaction level is not Tops in your industry – you must change your current Modus Operandi or continually struggle for survival.  

“Lean & mean” staffing can lead to “stretched & stressed” staffing – Those people who come in contact with your customers, if stretched & stressed, will typically not consistently deliver satisfactory service!

Potential Flex-Sourcing areas:

The following list is not intended to be exhaustive, but should help your evaluation process.

Information Technology:

Infrastructure support- USA/Europe/Far East	Software maintenance & enhancement - Packages and custom
24/7 Monitoring/DBA services	Off-Shore software development
Hosting services for Internet technologies	Help Desk
Recruiting services	Fixed Bid & Staff augmentation for projects
Special application support (i.e., user specific, ASP’s)	Web Master and content management

Back Office:

Bookkeeping & clerical functions	Payables & vendor management
Receivables & Cash management	Order processing

Production/Distribution:

Warehouse Mgmt & Fulfillment	Safety management
Logistics & transportation	Engineering and Process services
Orphaned Products	Plant Maintenance
Production staff augmentation

Sales & Marketing:

Lead generation	Trade show mgmt
Marketing services	Market research
New product/Service design	Sales training and enhancement
Channel management	Call Center – in/out bound
Recruiting and testing

Human Resource:

Professional Employment Organizations (PEO’s)	Long-Distance learning
Recruiting services	Team building and Staff enhancement
Benefits & compliance services	Payroll and Retirement plans

We at Rainmakers appreciate the opportunity to be of service. Feel free to contact me if you have any questions or I can be assistance.

Jon C. Liberman
Chief Rainmaker
Rainmakers
847/251-3327
jon@rainmkrs.com
www.rainmakers.us