Last month we looked at the trend towards “Back-sourcing”. Recently, I had the opportunity to attend a training session presented by Luda Kopeikina. Luda holds two Masters Degrees (one from MIT) and has completed her Ph.D thesis in computer science, as well she has “real world” experience having worked in a number of VP roles alongside Jack Welch (GE) and successfully created two companies.
Luda’s session focused on decision-making, which she explores in-depth in her book, “The Right Decision Every Time.” In today’s fast and ever changing business climate, the ability to make the right decision can be a daunting task.
In applying Luda’s principals to the question as to whether to out-source, back-source or co-source, I hope to share a means to gain critical clarity on what motivates, and why, your decision-making.
- Ask yourself what is your true objective in this decision. This is not an easy question to answer at times. Is it only financial? Is it the struggle with retaining existing resources? Is it pressure from the executive office? What emotions are attached to this decision? Will there be job losses? Fear of failure?
- What are the constraints or the parameters of your decision? Sometimes this can start with a gut reaction. Do not ignore these. It is important to explore these. For example, do we have someone who can manage a vendor effectively?
- Look at the emotions attached to this decision. How do you feel about this decision? Are you attached to the success of this decision meaning at all costs regardless of the true outcome?
- Do you have a clear perspective? Have you boxed yourself in? Try to have a blank easel and don’t frame yourself in. According to Luda’s studies, by applying this principal, 30% of businesses found alternative frames to consider.
- Looking at options. Luda states in her book that most decisions really do not have a lot of options. What you need to find is the crux or the critical point of the issue so that the best option becomes clear. One of the examples Luda uses in her book is when Jack Welch was deciding whether to convert some applications, develop new applications or acquire a company with the applications they needed. Long story short, once he had clarity on what the true objective and the critical need, he was able to make a decision that combined 2 of the above options and was a huge success.
I would encourage reading Luda’s book on how to develop a “Decision Map” which will train your mind to make critical decisions in as little as three minutes.
In my discussions with IT leaders, we look at what makes sense not only in terms of cost-efficiencies and needs today, but also based on projections for their department, company and industry into the future. What will ensure you have the flexibility you need to remain innovative and competitive?
I have put together these eight key questions that many find useful when deciding between options.
- What are your resource requirements? Do you have enough staff and the right skill set to undertake the operation in-house?
- Is this a capital project or an operations function? When considering outsourcing capital projects, how will this affect retention within your team? Perhaps outsourcing some of the maintenance to older applications will free up your team to work on new projects or perhaps a combination of both.
- How much control do you need? Is this an impactful business requirement that should really be done in a specific, unique way, under your direct supervision? Would the project be compromised if there’s a lot of turnover on the team?
- How much agility is required? Will there be many changes –what will be the needs of your team, organization or industry in a year, two years, three years? As we know, the present lasts only a nanosecond in our business. In-house may allow for more turn-on-a-dime innovation. For breakthrough or unpredictable changes, communicating with a provider can take as much time and energy as the work itself.
- What components make sense to keep in-house? Will you be able to acquire the knowledge in house should the work be outsourced offsite?
- What are the real costs? Figuring out the actual costs of outsourcing a service or function vs. in-house or a combination of in-house and outsourced is critical. In-house costs include staff, hardware, software and system maintenance whereas outsourcing, involves money paid to the service provider as well as time spent managing service agreements, business continuity and risk and other in-house costs such as Project Managers and additional Business Analysts.
- Is your organization ready culturally, operationally, and strategically to change the way services are delivered? What information do you need to provide to help your organization make the transition? What are your organization’s expectations?
- What qualitative and quantitative data will you use to select a third party provider and track performance? What are your key performance indicators?
Next month, we will look at the true value of Business Intelligence and Big Data and all the hype. Having personally looked at new BI tool this month and whether there truly is ROI, I recognize it’s a frustrating exercise to which I am sure all of us can relate.
Joanne is the General Manager for Bagg Technology Resources bringing over 20 years of industry experience in Project and Solutions Resourcing, Solutions offshore and near-shore for application development and data warehouse project delivery, Information Technology, Digital Interactive/Marketing, Engineering, Management, Contract/Full Time Resourcing.
Joanne’s goal is to deliver distinct flexible resource solutions to meet and exceed the requirements of her clients and candidates by understanding their goals and challenges, by leveraging technology and by respecting the intrinsic value of our each person she comes in contact with.
Joanne believes that the relationships developed in resourcing are lasting and works with both resources and clients on long term plans and goals. This consultative approach has enabled her to be proactive in forecasting clients’ requirements and assisting resources with their career direction. To enhance her ability to understand the requirements of her clients, Joanne has enhanced her post-secondary education with Information Technology courses at Ryerson University.