Outsourcing

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OUTSOURCINGTexas Department of Information
ResourcesTSABAA 29th Annual Summer Conference
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Outsourcing Environment

• Types of outsourcing
• Changing motivations for outsourcing
• Increased interest in outsourcing

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Outsourcing Cycle
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Part 1 Preparation
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Preparation

• Identify agency strategies and priorities
• Understand project/process motivations
• Successful projects result from strong in-house
  knowledge and understanding of agency
  requirements and processes

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Assessment

• What to assess internally
• Processes
• Objectives
• Measures
• How to assess internal external providers
• Quantitative Costs/Benefits
• Qualitative Costs/Benefits

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Internal/External Comparisons

• Quantitative Costs/Benefits
• Dollar Costs
• Qualitative Costs/Benefits
• Time
• Risk
• Staffing
• Business Value

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Cost/Benefit Rules

• Benefits are as important as costs
• Successful projects require
• consistent, reliable information about the real
  costs and benefits
• specific, measurable goals

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Decision-Making Bottom Line

• Costs and benefits are
• Identified
• Weighed
• Evaluated
• In-house v. external service comparison is
  accurate
• Priorities and success criteria established
• All options evaluated

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Part 2 Outsourcing
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Measures

• Use measures identified in cost/benefit analysis
• Reliable and measurable
• Three types
• outcome- and performance- based
• quality assurance
• work and operational

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Vendor Selection

• Selection team composition
• Check
• Vendor business culture
• Resources
• Expertise
• Flexibility
• References

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Contract Negotiation

• Negotiation team composition
• Agency/vendor communication
• The better the requirements and the statement of
  work, the better the relationship between the
  agency and the vendor

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Transitions

• Two transitions
• transition to the outsourcer
• transition at the end of the contract
• Considerations
• Responsibilities
• Tasks
• Assets

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Management Evaluation

• Establish
• In-house resources to manage the contract
• Communication with the vendor
• Documentation
• Ongoing review process
• Managed project requirements
• Outsourcing contracts do not manage themselves

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Outsourcing Myths

• Outsourcing will save the agency money
• Outsourcing implies that internal staff are not
  effective/efficient at their jobs
• Outsourcing alleviates staff workload and reduces
  agency responsibilities

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Conclusions

• Outsourcing requires significant time and
  personnel investment from the agency
• It is never possible to outsource responsibility
• Accurate and reliable information and measures
  are critical
• Outsourced projects require input and definition
  from business areas

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Questions?

• DIR Outsourcing Paper http//www.dir.state.tx.us/
  oversight/outsourcing/
• November 10 Outsourcing Conference
• http//www.dir.state.tx.us/osconf/