Outsourcing: how to make vendors work for your shareholders (1999)

A critical analysis of the claims of outsourcing vendors, a review of the real reasons for outsourcing, and an approach to managing vendors through (not around) internal staff.

"Save money! Improve performance! Stick to your knitting!"

With promises of tantalizing payoffs and "strategic partnerships," outsourcing vendors have convinced a lot of top executives to replace entire staff groups with their services.

Sadly, many of the promised benefits never materialized. In fact, paying vendors a profit turns out to be surprisingly expensive. Meanwhile, outsourcing contracts are tough to manage. And even when relationships are good, vendors can never be as well aligned with business strategies as can insiders.

Unfortunately, after a series of disappointments, executives find that once an outsourcing decision has been made, it's very difficult to go back. Key staff have been lost, and lawyers have a lock on the relationship.

Certainly partnerships with suppliers are a good thing. But decimating the careers of staff and becoming dependent on vendors is not.

"A senior executive in our company continually pushed me to outsource more. The next time he started this conversation, I gave him a copy of "OUTSOURCING." A few days later, he told me this was an eye opener. That was more than a year ago. He's never talked to me about outsourcing again. Not even once!"

Dr. Eugene Nizker CIO, Custom House Global Foreign Exchange

How can corporations leverage the talents and economies of vendors without becoming hostages to people who serve other shareholders?

This book cuts through the hype, analyzes the fundamental trade-offs, and describes an approach called "extended staffing" which makes the right vendor decisions, in context, day after day.

It's written for executives who are not interested in leaping from the pan to the fire... who are willing to invest time and thought into getting the best of both vendors and internal staff.

Format: paperback, 106 pages. $8.95 US

Or contact us to order:

Format: audio cassette. $8.95 US

Table of Contents....

Speech on the contents of this book....

Calculating the costs of your services as basis for fair comparison....

Reviews

At 106 pages including the index, you may be tempted to dismiss this book on a subject that other books with five times the page count fail to adequately cover. Don't.

First, this is not a book on the measures of due diligence, detailed advice about vendor selection or even how to build a business case. It is, however, a book that will put outsourcing into perspective, arm you with the right questions you should be asking yourself, your staff, and your vendors, and finally, will cut through the haze and show you a few alternatives.

The first chapter covers the thesis - a brief context - followed by another short chapter that defines outsourcing. Then the book delves into the essence and key issues: claims versus reality, the key issues, and the real motives. Not surprisingly, one 'real' motive is an expedient way to get rid of internal service functions with which the 'customers' are dissatisfied. Meyer counters that and a few other motives with ideas about how to regain customer focus, control priorities and otherwise how outsourcing can be avoided if the reasons are superficial and correctable. Also promoted is a hybrid solution that uses an extended staffing concept - extend the resources of an internal group with careful, selective sourcing. I've seen this concept work well in practice, but you'd be surprised by the number of companies that do not consider this option. Meyer makes a strong case in favor, with diverse examples and alternatives.

As the book progresses, Meyer introduces a strategy mainly aimed at management of an at-risk function, to compete with vendors that provide outsourcing. The material is somewhat brief, but contains enough ideas to get you thinking. As an aside, the ideas in this part of the book are more fully presented, and in a compelling, sensible manner, in Meyer's companion book titled "The Internal Economy" (ISBN 1892606186). The final chapter addresses insourcing - going in the opposite direction - and is as thought provoking as the other chapters.

The book is a quick read, but each page will evoke thoughts, ideas and help to place outsourcing in its proper context. Think of it as a decision-aid, and as a way to cut to the key issues. Regardless of whether or not you ultimately decide to outsource, you'll do so with solid information and an objective approach.

Mike Tarrani
Amazon Top 50 Reviewer

This little book will give you the highlights and lowlights of outsourcing without too much pain. Dean Meyer says (and I agree) that outsourcing, under certain conditions, will save money, reduce risks, accommodate peak loads, and develop internal staff and processes. But these benefits come about only if internal staff remains in charge of the client relationships, deciding whether to "make or buy," selecting and managing vendors, establishing strategies and technical directions, defining standards and policies, and seeing that the vendor's knowledge is transferred internally over time.

Protect your organization by ensuring that those managing IT delivery work for the same shareholders that you do. Desperate executives, by definition, are not focused on the long term or thinking with a level head. Don't stand by and let them destroy your organization with outsourcing.

Susan H. Cramm
CIO Magazine columnist