By March 31, 2014 0 Comments Read More →

One Step Re-Engineering through Outsourcing

One Step Re-Engineering through Outsourcing

By bringing in a service provider who has already engineered their processes and management to world-class standards, your company benefits immediately. Since your service provider's core business is the service they are providing to you, they have already designed it to be as efficient and effective as possible. In addition, the scope and scale of most service providers ensures both efficiency as well as access to enterprise systems, technical knowledge and resources, including personnel, you may not otherwise have access to.

How do you know what to outsource and what to re-engineer? It's simply based on your core business. A core business is your primary purpose as a company, that which gives you the advantage over your competitors. And it's not always what you think. For instance, you would think Motorola's core business is making devices such as radios, cell phones and pagers. In fact, much of their manufacturing is outsourced. Their real core business is designing products that consumers will want and then convincing the consumers to buy them.

Non-core elements of your business include all the internal services that support your core business. What those services are will depend on your business. For property managers, this may include IT and payroll, for instance, while for property owners, it often includes the full range of Property Management or Facility Management services, depending on whether they occupy their own space.

Of course, successful outsourcing takes some effort too, just not as much effort for as long a period of time as a re-engineering initiative takes.

One of the difficult parts of change is always culture. While re-engineering usually retains much of the built-in culture, an outsourcing initiative results in a change in culture very quickly. Along with this comes a true sense of customer service, since the people now providing your non-core internal service are part of a different organization, your service provider. The difference is that they are governed by not only a contract, but a true business relationship that requires all the elements of a service culture to be in place, something not easy to achieve with internal services.

Implementing an outsourcing initiative as a re-engineering tool means you only need to focus on the inputs and outputs of the business process, and the related results you need for your core business to be successful. Internal process, technology, training, personnel and all the other management issues no longer need to consume time and effort that you can direct to the core business that makes your company successful. Of course, you will need to deal with employee issues related to outsourcing your staff, but the extensive change management required for a re-engineering initiative is reduced significantly.

It still takes planning and a certain amount of time to implement an outsourcing initiative, however it generally takes less time and fewer resources than re-engineering.

To be successful, you need to consider a number of elements that are necessary when outsourcing:

  • An effective Stay-Back Team to manage the outsourcing relationship.
  • Well Defined Scope and Contract provisions that also give you flexibility as your company changes.
  • A procurement process that ensures the Service Provider selected can deliver the results you expect.
  • Effective performance measurements that focuses on the results and provide management tools to both the Service Provider and your company.
  • A Transition plan to smoothly shift people, processes and other resources over to the new way of operating.

Like re-engineering, successful outsourcing has to be looked at as a project with clear objectives and a plan to get there. By using the above elements as an anchor point, your outsourcing initiative will get you where you want to go sooner, and get you the results you need.

Staying ahead of your competitors is the only way to be successful. Rather than focus your time and energy re-engineering non-core areas of your business, consider the option of outsourcing and then spend your own resources improving your company's competitive advantage - your core business.

About Michel Theriault

Michel is the founder of Success Fuel for Managers. He is an author, speaker and consultant focusing on topics relevant to Managers and aspiring Managers in businesses of all sizes who want to get results, get attention, and get ahead. He is also a contributor to Forbes and AllBusiness Experts . Michel is available for speaking engagements, training and consulting. Connect with him or send an email.

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