Challenge    Solution    Success Story

Challenge

A Sourcing Strategy is an essential component of every company's business plan.  To develop an effective Sourcing Strategy, companies need to understand why it is much more than outsourcing.  The axiom used to be, "If you want something done right - you should do it yourself!"  These days, the saying is more likely to be, "If you want something done right, give it to an expert!"  The essence of a Sourcing Strategy is determining what kind of expertise is necessary and whether the expertise should be provided internally by the company (insourced), or outsourced through an external service provider.

The key questions that companies that need to answer when developing and evaluating their Sourcing Strategy are:

      Which parts of the company are good candidates for outsourcing?

      Which core competencies should not be outsourced?

      How much does it cost the company today?

      How do you manage a relationship with an outsource service provider?

      Which Sourcing Strategy matches the company's culture?

      How do we handle the transfer of our employees to the outsource service providers?

      How important is the company to our outsource service providers?

      How should a company monitor the performance of its Sourcing Strategy?

      Are there any legal or regulatory issues that limit or eliminate our outsourcing options?

If a company does make the decision to include outsourcing as part of their Sourcing Strategy, they must be acutely aware of the variety of problems that can arise throughout the entire outsourcing process.  Most problems that occur are the result of:

      Viewing outsourcing only as a cost reduction exercise and ignoring the full transaction costs.

      Outsourcing in isolation rather than as a part of the overall business strategy

      Outsourcing before considering organization reengineering or reorganization

      Failing to plan and adhere to a robust methodology

      Unrealistic expectations of the benefits of outsourcing

      Not drafting the contract and service level agreement before going to tender

      Failing to plan and implement a human resource and communications strategy

      Not planning for the entire lifecycle on a timely basis

Solution

Optimal Services takes a pragmatic and comprehensive approach to developing and implementing a Sourcing Strategy for our clients.  We are successful because we use our time-tested methodology that is not predisposed towards outsourcing or insourcing.  Our efforts include all of the essential aspects of outsourcing:

      Provision of Services

      Size and Duration of Contract

      Transfer of Assets and Resources

      Breadth of Responsibilities

      Style of Relationship

      New Skills Required

We bring a over 18 years of experience in developing, negotiating, and implementing Sourcing Strategies for companies such as:

      SAP

      AT&T

      The Bank of New York

      Chase Manhattan Bank

      GE Capital

Our experience includes evaluating, negotiating, and implementing multi-year, multi-million dollar service contracts with global outsource service providers such as:

      AT&T

      MCI Worldcom

      IBM

      CSC

      EDS

      Sungard

Success Story

Challenge

A rapidly expanding international professional services firm wanted to develop a Sourcing Strategy and evaluate the possibility of outsourcing all of its information technology (IT) organization to one or more outsource service providers.  The major components of the IT organization were:

   1.  Web Services: Internet, Intranet, and Extranet

   2.  Messaging & Groupware Services

   3.  Application Services: Back Office, Knowledge Management, and Document Management

   4.  End-User Services

   5.  Remote Access Services

Solution

The major steps in developing the Sourcing Strategy were:

      Identify business priorities based on the company's business strategy

      Map technology services to dependent business processes

      Evaluate legal and regulatory requirements

      Compare the advantages, disadvantages, and costs of Sourcing Strategy options

      Evaluate the viability and stability of potential outsource service providers

Based on the above assessment and analysis, the following strategic plans were developed and implemented successfully:

      Web Services: outsourced contract was renegotiated to reflect expected business growth

      Messaging & Groupware Services: remained insourced as a key infrastructure component

      Application Services: remained insourced to further develop as a core competency 

      End-User Services: remained insourced because of the inflexibility of outsourced solutions

      Remote Access Services: outsourced because of the flexibility of outsourced solutions