Category Archives: Services

The Sourcing Maniacs 2008 Vendor Tour Part VIII: FieldGlass

In yesterday’s installment, we jumped ahead in our story and recounted the Maniacs’ failed attempt to infiltrate Empower and find out what Emptoris is really up to, whether or not they’re going to go public soon, and what their plans are in their quest to become the largest sourcing provider in the space. In today’s installment, we recount the maniacs’ visit to FieldGlass (acquired by SAP).

Today’s post is a long post, as it recounts the “rationale” the maniancs used in selecting Fieldglass, a lenghty definition of what contingent workforce manaagement is, as the maniacs apparently had no clue, and then a detailed description of Fieldglass’ capabilites. I’ve broken it into Preamble, Lead-In, CWM Definition*, Technology*, and Epilogue so that you can jump to the part you’re most interested in, where * indicates content,  if you’re short on time (and come back later for the rest).

Preamble

Yakko, Wakko, & Dot Oompa Loompa Doom-pa-dee-do
Yakko I have a great product for you
Yakko, Wakko, & Dot Oompa Loompa Doom-pa-dee-dee
Dot If you are wise you’ll take a look-see
Yakko, Wakko, & Dot Oracle‘s fine when you have lots of cash
It stores all your data and caches it fast
But when you’re cash-strapped, you’re hung out to dry
To watch the vultures circ’ling high
Wakko Up in the dark’ning skies
Yakko, Wakko, & Dot Oompa Loompa doom-pa-dee-dar
But now there’s Coupa, you can go far
You will buy in happiness too
Like the Oompa-Loompa doom-pa-dee-do
 
Dot the doctor sure knows how to write a catchy tune!
Wakko I could sing it all day long. ‘Cause I wanna go to the Coupa Store!
Dot So where are we going next?
Yakko I guess we’re on the D’s.
Wakko Who do we know who starts with D?
Yakko Demica.
Dot Supply Chain Finance, right?
Yakko Yep.
Dot Well, the innovation there is in the application thereof, and not necessarily in the technology, as the doctor explains nicely in the wiki-paper, so I’ll pass this time around, since we’re more focused on technology right now.
Yakko No prob. We can always do a services company tour later if we don’t find any jobs before this tech tour is over. How about Descartes?
Wakko The “delivery management” company. That’s just combining 3PL with VMI and network op-ti-my-za-shun, right?
Yakko I think so, but I’m not 100% sure.
Wakko I’ll pass for now. Too complex for me! I still have problems with 5 by 5 … I run out of fingers and toes …
Yakko Hmmm … Denali?
Dot Consulting, market intelligence, and professional placement. Again, services.
Yakko Well, dat does It. I’m out of D’s. On to the E’s!
Dot I have a sour taste in my mouth for the E’s right now.
Yakko And there’s a chance we can sneak into Empower in the fall and find out what Emptoris is up to. Ok. On to the F’s. Frictionless?
Wakko Aren’t they just a bunch of saps?
Yakko Excuse me?
Wakko Didn’t SAP buy them?
Yakko Oh, you mean S-A-Ps. Yes, you’re right! Fogbreak?
Dot Again, back in California. Too soon to go back.
Yakko FieldGlass?
Wakko What do they do?
Yakko Contingent Workforce Management.
Dot And where are they?
Yakko Chicago.
Dot That’s not too far.
Wakko Wind! I like wind! Let’s go!
Dot And since we have a mighty hike ahead of us …
the maniacs are still in Pittsburgh, PA, where they were visiting Co-exprise before doing their on-line Coupa research
let’s sing!
Wakko It was just yesterday, I ran out of feed
Dot A wascally wabbit, it ate all my seed
Yakko Hens were getting restless, I couldn’t drink my mead
Yakko, Wakko, & Dot I logged into Coupa, and it met my need
  Editor’s note: the maniacs proceed to sing all of the Coupa songs, repeatedly … and even though I think they’re pretty damn good (after all, I wrote them), they get a little tiring after you’ve heard them for the tenth time … in a row … so I’ll save you a few pages and simply point you to Davie and the Coupa Factory, It’s Coupa Time, The Coupa Hoedown, The Coupa Drinking Song, and The Coupa Store if you’re curious.

 

Lead-In

Wakko Feel that wind! We must be getting close.
Yakko Pretty darn close, actually!
Dot So why are we here? After all, isn’t contingent workforce management simply contractor management? And when you need a contractor, don’t you just call up your placement agency and get one? What’s so hard about that? And why would you need a software solution?
Wakko Quoting?
Dot e-RFX.
Wakko Billing?
Dot e-Invoicing.
Wakko Payment?
Dot e-Payment.
Yakko Firing?
Wakko Donald Trump!
Yakko Were we too hasty in selecting FieldGlass as our next target? Were we swayed by the possibility of an excuse to visit the windy city
Wakko so I could fly my kite
Yakko and not by whether or not the technology might have something to offer, making the company viable, and, thus, increasing the chances that there might be a job for us?
Dot Maybe. I’m starting to wonder about this decision.
Yakko Well, we’re here … so we might as well give them a shot!
Wakko On it!
Out comes Wakko’s mini mallet. Tap. Tap. Tap.
See, no dings!
  A man in a blue suit and dark jacket opens the door.
Dark Jacket Can I help you?
Wakko I’m Wakko!
Yakko I’m Yakko!
Dot And I’m Dot!
Yakko, Wakko, & Dot And we want to know why we’re here!
Dark Jacket Now that’s a very difficult question, and one I leave to the philosophers. I’m a technology guy myself.
Yakko What we mean is, why is FieldGlass here?

 

CWM Definition

Dark Jacket To provide a unified, best-of-breed, contingent workforce solution.
Dot But why? Isn’t contingent workforce management simply contractor management? And when you need a contractor, don’t you just call up your placement agency and get one? What’s so hard about that? And why would you need a software solution?
Dark Jacket No, and no. Why are you here?
Yakko We’re seeking enlightenment. We’re trying to find out what various solution providers offer the sourcing world.
Dark Jacket To what end?
Wakko Well, we’re trying to map the new sourcing world to find our place in it
Dot and help the doctor in his quest to educate the masses.
Dark Jacket The Doctor? I’m sorry, but you’ve lost me.
Yakko the doctor of Sourcing Innovation informed us that the best way to find our place in the sourcing world was to understand it, and the best way to understand it was to go and talk to the innovative vendors and find out what they were doing. And if we did that, we could help him in his mission to educate the sourcing world, which he says is a win-win for everybody.
Dark Jacket Sourcing Innovation … I think I’ve heard of it. It’s one of those upstart blogs, isn’t it?
Wakko It’s not just any blog … it’s the best blog if you want to learn about innovation in your supply chain.
Dot And it publishes our stories! How can you beat that!
Dark Jacket So you want me to explain what FieldGlass does?
Yakko And why anyone would need a contingent workforce management solution. Especially in supply chain. It really sounds like a simple HR tool to me.
Dark Jacket Well, it sounds to me like you don’t understand the problem. Would you like to?
Yakko, Wakko, & Dot Yes, please!
Dark Jacket OK … give me a few minutes.
  Dark Jacket disappears back inside and re-emerges a few minutes later.
Dark Jacket Since you say you’re familiar with Sourcing Innovation, we’ll start there. I did a bit of research, and found a number of informative articles on the site that frame the problem quite well, and which should allow me to convey the purpose of the FieldGlass solution to you in a manner that will be easy for you to understand.

We’re at the beginning of a talent crunch that will surpass anything the world has ever seen. Over one quarter of America’s population, and well over one third of America’s workforce, is eligible, or will soon be eligible, for retirement. The vast majority do necessary jobs. Where are their replacements going to come from?
Yakko New Graduates?
Dot Other countries?
Wakko Robots?
Dark Jacket Nope. Nope. And Nope. There aren’t near enough graduates to fill all those empty positions as American’s youth is declining. Remember, it’s the boomer generation that is retiring and birth rates have decreased since then. There are strict limits on how many people can enter the US each year to work. If we are lucky, and the incoming administration doesn’t lock down the borders even more, over the next five years, the government might permit 1% of those jobs to be filled with foreign workers. And that might be an optimistic scenario, especially since most countries around the globe are suffering talent crunches as well, and some are worse off than we are! Finally, although Disney’s Imagineering leads us to believe that it won’t be long before Robo can do all of our jobs for us, the AI that would be needed is likely still decades off so robots won’t save us either.
Yakko So we’re doomed?
Dark Jacket Only if we continue with the traditional mentality that all workers must be full time employees. The fact of the matter is that, at least to a limited extent, the vast majority of the American population, almost 80% in fact, is able to contribute to the economy in some way, shape, or form. Furthermore, if we add up all the available capacity that is going unused in the traditional employment model, we find that, at the very least, we can make a major dent in the talent crunch … and maybe even halt it altogether (at least for the time being).
Dot So how should we be thinking?
Dark Jacket Part-time. Flux-time. As needed. As available. Pre-graduate. Retiree. Disabled. Telecommute.

Many people retire because they are forced into it (because of organizational policies, especially in the public sector), because they don’t want to work full time anymore, or because they are unable to do the job they were doing, be it due to failing health or lack of education and training, and not because they want to sit on their porch and stare into space. Many of these people want to keep being productive, they just want to do it less, and maybe do it from home. And they’re great resources. Their valuable experience can be used to mentor junior employees, which helps them become better, more productive employees, faster; to improve processes, which will help the organization do more with less; and to guide management around pitfalls and traps that they know are there in the market, which can prevent the current generation from repeating the mistakes of its predecessors.

And with the high and steadily rising costs of education these days, as well as the desire to be part of the consumer economy, more and more high-school and college students are seeking part time work. Not only are they a great resource to help you with the escalating amounts of tactical work many business face in today’s economy, but utilizing them in positions that correspond to their course of study helps prepare them for full time work when they graduate.
Yakko And that’s why we need contingent workforce management?
Dark Jacket It’s one of the reasons. As I have just described, organizations can not rely on full time labor alone. In addition, the need for temporary contract labor in the services industry is going to increase as lack of talent and market forces dictate less full time employees and more contract labor. And from a business perspective, without a contingent workforce management solution, you can’t have an effective talent management program, and this costs your business money. Lots of money.
Dot How much?
Dark Jacket It depends on the company. But if you look at our Verizon Case Study, readily available on our website, you’ll see that Verizon achieved a four-month payback, 9M in savings in the first year, and a 2 year ROI of 77% after implementation of our InSite solution.
Yakko That’s a lot of cash!
Wakko So how come my wireless bill is so bloody expensive?
Dark Jacket You’ll have to take that up with Verizon, I can only tell you how contingent workforce management saves you money.
Dot So how does it do that?
Dark Jacket Simply put, it streamlines the contingent labor requisition process, simplifies the identification of resources, automates the distribution of requests, standardizes resource rates, automates the collection of quotes, tracks awards, and insures that companies always bill at the approved rate and only for approved hours on approved projects. This reduces recruitment costs, reduces processing and payment costs, and, most importantly, prevents overcharges and overpayments, which often total 20% or more at companies without contingent workforce management solutions.

 

Technology

Yakko And how does your InSite solution enable Contingent Workforce Management?
Dark Jacket Simply put, we enable the end-to-end contingent worker life-cycle, from acquisition, through onboarding, through management and payment, to offboarding, with complete historical data storage to allow you to repeat the process in the future for the same employee, same position, or same department as needed.

We do this with an application that has fully customizable workflows that support the hiring manager, approvers, HR coordinators, suppliers, and workers in each step of the procure-engage-pay-offboard cycle, to whatever level of support and detail they need.

Our application simplifies the definition and setup of a requisition, which, when driven off of a pre-configured template, will automatically populate the job title, description, department, job site, travel requirements, full position description, desired skills, approved rates, default suppliers to issues the requisition to, job status, and any other detail that is relevant to the job posting. All a hiring manager has to do is define the desired start-and-end dates and, if she desires, modify default settings and requirements if the position requires some customization. Once the requisition is completed, pre-configured rules route it to the appropriate approvers, and once it is approved, it is delivered to the appropriate suppliers using multi-tiered supply based rules that can give preferred suppliers or minority suppliers of contingent labor the ability to bid first.

Once the supplier submit candidates, the hiring manager can then use the tool to shortlist candidates (or block them from consideration), select candidates for interviews, record the interview results, select a candidate for hire, send a work-order to a supplier, and then, when the supplier accepts the work-order, “hire” the candidate.
Dot Well, that’s kind of what we’d expect a workforce management tool to do. But what’s so special about it? How does it help procurement? Why can’t we just use Word, Excel, e-Mail, and a File Server.
Dark Jacket That’s a mouthful!

Let’s start with the last question. Theoretically, you could create your template job descriptions in Word and your rate-cards in Excel, store them on a Central File Server, and then, every time you need to fill a new job, create a copy, send it out through e-mail, and store the specific instance somewhere else on a file server. And maybe if you’re a small company who only hires a few contingent workers a year, and you were very methodical, you could make that work for you. But what if you hire 100 contingent workers a year in 20 different positions. How easy do you think it would be to keep track of all the different paperwork? Let me ask it this way, you used to do Contract Management right?
Yakko Right.
Dark Jacket And for your average company with more than 500 active contracts without a contract management solution, what was the average level of contract management maturity.
Dot The average company couldn’t even find its contracts!
Dark Jacket So how well do you think the average company who has to hire hundreds, or thousands, of contingent workers a year, where each worker has her own contract, fares?
Dot Not very well.
Dark Jacket And that’s fundamentally why you need a contingent workforce management solution if you have to hire a lot of contingent workers each year.

Now, the reason it helps procurement is that it stores all of the information, including rate information, billed hours, and budgetary information in one place. This allows procurement to get up to date information at any time as to how many contingent workers in each category are hired each year, on average, and how much is being paid, on average, for each position. Procurement can use this information to initiate fact-based negotiations with contingent labor-suppliers to get better rates. Then, procurement can turn around and compare invoices versus approved rates, hours, and expenses and make sure that each worker is being paid at agreed upon rates, and no more, and that unapproved expenses are never paid. Furthermore, they can configure rules that will prevent managers from approving payments that are outside of approved rate or expense bands or that would cause a budget to be exceeded. It gives them the insight into contingent workfoce spend that they’ve never had before without this type of tool.
Dot I get it now. So what’s so special about your tool. We know other companies offer workforce solutions, and we’re wondering what sets yours apart.
Dark Jacket As you can see, it’s very easy to use and guides a user through the process.
Wakko Even I can use it, so I’ll give you that. But most tools are getting easier to use every year. Why should I use yours?
Dark Jacket I could tell you about the hundreds of little usability features we’ve crammed into this tool that make it as easy to use as Google for our average user, but instead I’ll tell you about how we think we’re really different.

Our tool, which supports over 80 Fortune 2000 Global Multi-nationals, was built to be a global tool. That means that we’ve localized it for over 30 countries …
Dot But isn’t that just changing the unit of currency and supporting different languages? If you use Java, that’s easy to code these days.
Dark Jacket It’s much more than that. When I say we’ve localized it, I mean that we’ve configure it to take into account all of the standard business practices, taxation requirements, and legal requirements of each country in which our customers have deployed it. For example, workforce management in Europe is considerably different than in the US. When you bid a rate, you have to break it down into base pay, benefits, travel, per-diem, etc. in Europe. Furthermore, you have different taxation requirements to track and different legal issues to watch out for when onboarding and offboarding. Our tool customizes its workflow and data capture to each country it is used in. And to make sure we do it right, we retain over 20 international law-firms around the globe to keep us up to date on changing requirements and ensure we go above and beyond the requirements when we enter a new country on behalf of a customer.
Wakko So I could hire a vinyard worker in France to hand pick grapes for me and be certain I was following all the rules?
Dark Jacket If you wanted to …
Wakko Awesome!
Dark Jacket That’s what we think of our tool, which can be delivered pure SaaS, and which we improve upon every day. In fact, we now not only do contingent workforce management, but we also do direct hires and service management against projects. And we also have a new InSite Visualizer tool that can be used to generate business intelligence on all of the data the tool collects and present the user with trends and patterns that emerge over time. This way they can accurately predict resource costs over the next contract cycle before entering into a negotiation or compare their data against industry average benchmarks to see how well they’re doing. This is on top of the dozens of standard reports, as well as the ad-hoc report generator, that is built into the tool and the workflow.
Yakko Contingent workforce management is sure a lot more involved then we ever thought it was!
Dark Jacket It truly is … and that’s why your standard direct goods procurment solution you get off-the-shelf won’t work and why you need a customized solution.

Now if you’ll excuse me, I have a workforce management platform to improve. Good day.

 

Epilogue

Dot That was a learning experience!
Yakko I guess it is a lot more involved than just telling HR to “get me this resource by Monday”.
Wakko I’ll say. So where are we going next?
Dot We’re on the G’s.
Wakko Didn’t the doctor recommend someone else?
Yakko I think so. Just a second.
Yakko takes out his notebook. GDM … Global Data Mining.
Dot What do they do?
Yakko BI, maybe? I don’t know. So let’s go!
Wakko OK. So where are they?
Yakko Just outside of Denver, Colorado I believe.
Wakko All right! We get to see the Rockies! Let’s go!

 

“Spend” Analysis helps the Service Chain too

It would appear that Business Intelligence, once restricted to leading edge spend analysis providers, is starting to permeate the services supply chain. As noted in a recent Industry Week article on “Creating Visibility Throughout the Service Chain”, customer dashboards, key performance indicators (KPIs), and customized reports have long been available to internal account teams but now, however, leading edge organizations are making these same tools and data available to their suppliers and customers through business portals with aggregated information from multiple enterprise and transactional data systems. This is because business intelligence in the service chain not only generates efficiency, but also creates opportunities for real customer loyalty and business growth.

As the article notes, a real analytics solution that provides a user with the ability to truly “slice and dice” data across multiple business hierarchies offers a number of benefits, which include:

  • the quick determination of how well the most strategic and / or largest revenue sites are being serviced
  • the mapping of actual service delivery performance to perceived customer satisfaction
  • the actual equipment utilization against contract terms
  • the proactive monitoring of equipment usage and synchronization of information with actual inventory
  • the ability to gather the data required to capture a true “operational index” or “readiness-to-serve indicator”

The last benefit is of particular importance. The success of the service chain relies on the ability of a service organization to quickly and efficiently serve their customer. If service is bad, the customer will go elsewhere. It’s that simple. And the only way to to gage the true “readiness-to-serve” of the organization is to get a multi-dimensional view of the data. This is because overall equipment utilization (OEE), MTBF, first-time fix rates, on-time delivery performance, service-event resolution times, call center performance, service supply-chain order-fill-rates, warranty compliance, and invoice accuracy, among other service metrics, all contribute to an organization’s “readiness-to-serve”. To extract and aggregate this data from a classic reporting tool would be a humongous project that required multiple rounds of data extraction and Excel manipulation. But in a true data analysis tool, you could slice, dice, aggregate, disaggregate, normalize, derive, re-derive, restructure, aggregate again and get the report you needed in ten minutes.

And this is something that can only be done by a real spend analysis solution, because “spend” analysis has to go beyond the spend, and be able to analyze all of the data related to the spend. Otherwise, you get an incomplete picture, and that can cause more harm than good.

Maximum Value From Your Consulting Advisors II

As I clearly pointed out in Consultants are Cheap, a good consultant can be the most cost effective business savior you’ll ever have the good fortune to hire. Especially when you consider that, unlike your top-performer who is forever consumed with the tactical day-to-day operations of the business, a good consultant can come in and spend all of his or her time applying his or her hard-earned market leading education and experience on the core strategic issues that, when effectively addressed, can take your operation to the next level.

However, as I pointed out in Maximum Value From Your Consultants, you’ll only get your money’s worth — and more — if you’re willing to:

  • Put your own ego in check.
    This will be hard for a few managers (who take after Dilbert’s Pointy-Haired Boss), especially those whose general reasoning abilities fall in the low percentiles (as per a recent psychology paper in the APA by David Dunning and Justin Kruger, summarized for the average Joe in this Salon article), but I know that the majority of you will understand me when I say that if you don’t do it, you’ll never truly hear what the consultant has to say.
  • Listen intently to what the consultant has to say, even if it’s not what you want to hear.
    You might think that you’re doing good in procurement and great in marketing, only to find out that you’re procurement is so-so at best and that your marketing truly sucks. It’s important to listen intently because the only way to improve is to fix your flaws, and that’s something you can’t do if you won’t admit you have a problem.
  • Be ready to take immediate action.
    There’s less than zero value in a report that sits on the shelf. How can there be less than zero? Simple, you paid for a report you failed to act on. That’s negative dollars on the balance sheet. The way you get value is to implement the recommendations that fix your problems and save you money (and / or increase your sales).

Then, you need to

  • Work with the consultant.
  • Get the consultant the data she needs promptly …
  • … and insure that the data is good.
  • Free the consultant to focus on the core issues, not just process or just technology.
  • Accept that sometimes new technology will be the answer (and sometimes it won’t).
  • Be prepared for scope creep or scope shift.
  • And to go back to school if need be.

And then, finally, you have to select the right consulting advisor for you. Start by reviewing the Advisory Checklist, because a good consultant has:

  • a depth of experience
    in the most critical areas that need to be addressed
  • a breadth of experience
    that helps him or her understand how the issues being addressed involve and impact your operation as a whole
  • true independence where YOUR outcome is concerned
    as the consultant must be free to select the right solution for you, not a solution from a solution vendor that his or her firm has a stake in
  • a deep focus on IP, Research, and Success
    as a good consultant tries to constantly stay ahead of the market in his or her primary areas of expertise
  • a strong firm behind him or her that practices internal knowledge management
    which allows their consultants to leverage their collective experience, best practices, and lessons learned from every engagement for every client

And finally, in addition to a deep down desire to generate value for each dollar they charge, a great consultant (from the consultant corral) will:

FOLLOW HER OWN ADVICE
And so will the firm that stands behind her!

That’s probably the single most important thing to remember when trying to select the consultant that’s right for you. I probably should have pointed this out before, but I thought it was obvious, and, more importantly, we’ve only just begun the consultant craze which happens every time markets start tanking and companies hemorrhaging cash go looking for consultants in a panic (when they should have been engaging those consultants all along to avoid hemorrhaging cash in the first place). In consultant crazes, good consulting firms tend to rack up big successes one after the other in a short time frame. And sometimes, these successes go to their heads, and they start thinking they can expand beyond the niches they carved out for themselves. Sometimes they have the knowledge and skills they need to expand in-house, sometimes they don’t. In the latter case, a good firm will not expand their menu of services until they get new partners on board and plugged into their methodology, even if a customer asks. So how do you know if a consultant follows her own advice? Ask her what she can’t do. A good consultant knows her limits, will tell you her limits, and, most importantly, when you encounter a problem outside the original project scope that she is unable to bring you a first class solution to, she’ll tell you, and, if her firm can’t help you (because it’s a sales operations problem and you hired them for procurement process and technology, for example), she’ll work with you to find the right consultant who can.

Furthermore, good service providers, no matter how good they are at project management, will not rush to bring software development in house — because this will substantially increase their cost of operations, and thus of service delivery, if they do not have the time, resources, and funding to devote to a full-fledged product development operation (and most [niche] consulting firms don’t). Good service providers partner with rapid-development SaaS providers when their clients need specialized solutions. They offer to manage the work for you, not do it themselves.

Baseline’s Seven Sins of Offshore Outsourcing

Having posted on the Seven Deadly Sales Suppressors, the Seven Deadly Supply Chain Sins, and the Seven Deadly Supply Chain Wastes, it should be obvious that I’d pick up on Baseline’s 7 Sins of Offshore Outsourcing.

When outsourcing, organizations that focus on short-term cost reductions often rush through projects without adequate planning, due diligence or consideration of the long-term implications of the inevitable changes in business requirements or offshore market conditions. This not only causes them to overlook most of their savings opportunities, but often leads to project failure. However, an organization that knows what to look out for can avoid the mistakes that others have made in the past, mistakes that can be understood in the context of the seven deadly sins: pride, sloth, avarice, lust/extravagance, envy, gluttony and anger.

  • Pride
    Many organizations succumb to the sin of false pride and plunge headlong into an offshoring initiative without performing due diligence. They assume that they (already) have the internal capabilities necessary to plan and manage an offshore operation, when this is often not the case. They also seriously underestimate the management resources required to successfully set-up and run such an operation.
  • Sloth/Laziness
    You can’t just move an inefficient operation offshore and hope that lower salaries will result in cost savings. “Lift and Shift” doesn’t work, and, when the process is inefficient it will, in fact, often increase the personnel resources required to do the job, wiping out the cost savings the organization expected to achieve.
  • Avarice/Greed
    Many organizations will not be concerned enough about the ultimate fate of the business, or, even worse, possess disdain towards the offshore operation. This makes it difficult for the offshore operation to retain knowledgeable and productive staff, leading to quality problems and cost overruns as greater numbers of inexperienced resources need to be thrown at the problem.
  • Lust/Extravagence
    The desire to solve a problem by taking on more, cheaper personnel is extravagant and wasteful and has serious implications for service quality. It’s important to remember that many offshore operations have lower productivity and excessively high turnover, reducing cost savings. Don’t give in to the impulse to compensate for low productivity with more bodies: It’s a false economy. Before you offshore the process, make sure it is efficient. If necessary, re-engineer and improve the process first. Furthermore, even after your processes are off-shored, it’s important to continuously apply performance improvement initiatives.
  • Envy
    Don’t assume that offshoring automatically comes with big savings and be envious of your peers who are already doing it. Most of the claims you’ll find by the promotors of the strategy don’t take into account the lower productivity that comes with offshore personnel, higher communication costs with an offshore team, and the additional overhead required to govern an offshore process. Actual savings are often only half of what is claimed.
  • Gluttony
    Don’t offshore as much as possible as quickly as possible, like a glutton, with the ill-formed belief that this will maximize savings. Don’t overlook the average organization’s capacity to digest change, and even smaller capacity to digest offshore change — because organizations that offshore too much too quick often spend the majority of their time firefighting. The key to success is selective offshore outsourcing, following a careful analysis of what processes are the most likely to lead to savings if outsourced.
  • Anger/Wrath
    Don’t blame the outsourcer when the savings don’t materialize, especially if you committed one or more of the sins above. Blame-wise, at least half will always rest with you, and if you committed multiple sins, all the blame rests with you.

A Sourcing Advisory Checklist

Sometimes a sourcing advisory firm can save you untold millions, and sometimes, as in the recent cock-up exposed by Jason Busch over on Spend Matters, the engagement will lead to a total disaster. So how do you make sure you’re the superstar who brokered the agreement that saved your firms millions of dollars and not the fall-guy who takes the blame for a multi-million dollar cock-up? You manage the process from end-to-end, and you start by making sure you have the right firm as an advisory partner. What should you look for when searching for the partner who will help you succeed when others have failed? Although the specifics will depend upon your needs and the sourcing projects in hand, the following checklist, first put forth by Phillip Fersht, blogmaster of Horses for Sources, in this Global Services article is a great start!

  • Internal Knowledge Management
    The firm should be taking advantage of the latest technology to share their intellectual property internally in a manner that will allow any of their employees to take advantage of the knowledge available to benefit their customer. You should be getting more than just the experience of the reps on your account — you should be getting the experience of the entire firm.
  • Depth of Experience
    Harvard MBAs look good on paper, but you want a significant amount of deep operational work conducted at real customers in industry, not theoretical research projects conducted in the safe confines of the ivory tower. In addition, make sure at least one of the reps on your project has deep experience in the categories you will be sourcing.
  • Mix of Experience
    A breadth of experience is important, especially when market conditions change and new sourcing strategies need to be derived. In addition, make sure the firm has employees who have crossed the breadth of operational roles, including sales and customer service.
  • Ability to ‘Advise’
    The ability to ‘consult’ is good, but you need specific advice that is going to allow you to succeed beyond what you could do in-house or with the lowest-bid consulting firm.
  • True Independence Where YOUR Outcome is Concerned
    They must be focused on YOUR best interests, and not theirs’. Make sure their interests don’t lie in relationships that force them to use, or compensate them to use, particular tools, processes, or staffing agencies. Just because something works for the majority of their current clients, it does not mean it will work for you. It might, and if it does, that’s great, but if it doesn’t, they should have the freedom to put together the best solution for YOU.
  • A deep focus on IP, Benchmarking, and Research
    No one knows everything … and, more importantly, if they don’t benchmark, they won’t know how good they should be able to do.
  • Operational Business Focus and Advisory Experience Beyond Simple Negotiation
    The best advisor can offer services that guide you through the sourcing lifecycle and beyond. In addition, sometimes just having an independent party available can help you build consensus and support in complex and sensitive situations.
  • A Sensible, Proven, and Flexible Methodology
    If their method of negotiation methodology selection starts with “eenie, meeniee, minie, moe … “, simply put, you’ve chosen the wrong advisor.
  • Respected in the Market
    You want an advisor that oursourcers and suppliers respect … because if they don’t bid, you don’t save.
  • Multiple Customer References You Can Talk Too Directly
    The ultimate proof of their capability will be in their success with their other clients.