Outsource Vs. In-House

Table of Contents

•       Specific Questions

–     What are industry trends in outsourcing services?
–     What are reasonable estimates of savings from outsourcing?
–     What is the process to move forward?

•       Essential Elements

–     Grouping of logical service groups
–     Considerations of geographic limitations
–     Vendor pool
–     Motivation for change
–     Cost considerations

•       Conversion Issues

–     Stranded assets
–     Management skills
–     Operations and procedures
–     Disruption risks
–     Service definitions

•       Our Recommendations

 

Specific Questions

•      INDUSTRY TRENDS
–    Strong bias toward outsourcing
–    Both stand alone property and system-wide
–    Support Services not core business
–    Reengineering service resource distribution

•      REASONABLE COST/SAVINGS ESTIMATES
–    Plant Operations
–    Security
–    Telecommunications
–    Food Service
–    Janitorial
–    Grounds

Essential Elements

•      LOGICAL SERVICE GROUPS
–    Engineering
–    Housekeeping
–   Operations

•      GEOGRAPHIC LIMITATIONS
–    Metro Area With Large Vendor Base for Competitive Selection
–    Sufficient Client Base for Vendor to Thrive
–    Service Locations Proximate to Vendor Dispatch/Warehouse

•      VENDOR POOL
–   Same Industry Qualified
–   National Buying Power
–   Established Stable Employees
–   Union/Non-Union As Appropriate)

•      MOTIVATION FOR CHANGE
–   Cost Reduction
–   Re-Utilize Freed Building Space
–   Reduce Employee Count
–   Improve/Expand Services
–   Reduce Liability/Exposure
–   Existing Contracts Terminating
–   Time Constraints/Deadlines
–   System Standardization

•      Cost Considerations
–   SAVINGS BREAKPOINT TO JUSTIFY CHANGE, OR
–   PREMIUM ACCEPTABLE TO ACCOMPLISH NON-COST GOALS
–   FACILITY RENOVATION COSTS
–   ADMINISTRATIVE STAFF LEFT UNDERUTILIZED

 Conversion Issues

•      STRANDED ASSETS
–   Facilities, Fixtures, Equipment and Supplies
–   Displaced Employees
–   Build-in Use Via Contract

•      MANAGEMENT SKILLS
–   Shift From Labor/Staff Focus to Contract Administration
–   New Evaluation/Performance Guidelines Required
–   New Communications Processes Between Vendor/Users

•      OPERATIONS & PROCEDURE
–   De-Bug Before Implementation
–   Cost Allocation Guidelines
–   User Frustration With Change

•      DISRUPTION RISKS
–   Define and Understand Risks
–   Lose Direct Control
–   Labor & Materials Disruption
–   Establish Disruption Levels

•      SERVICE DEFINITION
–   Define Exact Services Required
–   Define Service Levels Required
–   Many Existing Services Lost
–   Requires User Group Input

Our Recommendations

•      Understand Motivation and Goals

•      Understand Consequences to Service, Staff and Administrators

•      Identify Outside Assistance Required to Implement Process

•      Analyze True Cost and Projected Savings (if any)

•      Proceed as Outlined Earlier, IF Above Meet Needs