Sourcing Strategy: 10 Key Questions to Ask First

Before a client takes their first step towards a sourcing strategy, they should determine if they are mentally, corporately and organizationally prepared to do what is necessary to succeed. Alsbridge has seen clients who did not take the time to consider what lies ahead of them and it cost millions of dollars in lost savings through delays as management decides whether they were ready to outsource a particular function. Not all of these questions need to be answered before you begin, but they should be answered by the time you complete your sourcing cost/benefit analysis:

10 Key Questions to Ask Yourself about Outsourcing

1. Management Commitment – Are your executives at the highest levels committed to moving ahead should the business case, quality and time-frame to source be compelling?

2. Organizational Readiness – Is our organization ready culturally, operationally and strategically to change the way services are delivered today? Can our business environment accommodate a third party delivering the services we provide to the business? Perhaps from India or China? From a different culture? (If not ready, you can help your organization through the process by leveraging change management techniques that have been proven to work.)

3. Determine Scope – Many components of information technology, finance and accounting, human resources, procurement, and/or knowledge processing activities can be outsourced. What scope must we absolutely keep in-house? Why that particular scope?

4. Baseline Current Cost – Can we account for all our related delivery costs, not just what we have in our “budget”? If we don’t do this, how will we know whether we can save the company money with a new approach?

5. Develop Initial Criteria to Build List of Potential Candidates – Can they deliver what we need? Do they provide meaningful Service Level Agreements (SLAs)? Do they have industry experience we can leverage and good references?

6. Create a Practical RFP – Put in writing the scope to be outsourced, sample terms and conditions, and SLAs. How does the provider map their capabilities to meet our business objectives, sourcing objectives, scope objectives?

7. Look Them in the Face – Check them out on their own turf in a site visit. What capabilities do they really have? Ask the provider staff who are not engaged in the visit how they adhere to the processes that the tour guide is suggesting.

8. Check ‘em Out – Seek relevant references. What is their track record for successfully delivering similar work of a similar size to a similar industry? To another industry?

9. Establish Meaningful Selection Criteria and a Rock Solid Evaluation Method – What quantitative and qualitative criteria will we use to select the winning provider? What method will we use to ensure that we judge each provider fairly?

10. Be Honest – Does our team have the discipline, experience and time to do this properly? If not, seek a qualified outside sourcing advisor with a proven track record, practical methodology, and deep information databases.

There are many more questions you need to ask yourself as you move toward solidifying your sourcing strategy. This is just the beginning. Going down this path is not trivial nor for the faint of heart. If you choose to outsource, it can take several months to get to contract. The sooner you begin, the closer you are to the answers. The closer you are to the answers, the quicker you’ll realize the potential savings.

 
 

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