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Don’t Sing the Outsourcing Blues, Part 1

Outsourced services and functions are common practice for most businesses, yet they come with their own set of horror stories and sad songs.

By ALAN NICOL, Executive Member, AlanNicolSolutions

Many of the problems people discuss with me turn out to be problems that people decide are easier to live with than to fix. Almost all of them are problems with outsourced solutions.

Outsourced solutions are some of the simplest solutions for the business improvement analyst and the biggest nightmares for the process improvement analyst. It’s simple for the business improvement analyst because, on the surface, outsourcing expertise proves to be a cost-effective way to improve upon a business’s tertiary skills and improve on performance in arenas where the business is not an expert and does not want to be an expert. They are nightmarish for process improvement analysts because a business does not control an outsourced process.

See if this story sounds familiar. A medium sized business is growing in a healthy way and the “ins and outs” of customers, orders, services, and shipments has outgrown the effectiveness of the homegrown database. Rather than hiring more experts to build a more capable database, the business decides to license an already existing system.

A leader in the business is tasked with identifying a good solution for the right price and goes shopping. Naturally, the mode settles into one of looking for the greatest capability for the price, and of course considering long-term support. A widely distributed solution is identified, presented to the business leaders, and selected.

Crews of expert personnel from the supplier of the system solution come in and spend many expensive weeks helping to configure the system and teach personnel how to use it.

Eventually, they all disappear and the last remaining developer of the prior, in-house database is now in charge of managing the new system for the business.

While the capabilities of the new system are vast, not everything it does occurs in a way that is right for the medium-sized business that bought it. As people become versed in the new system, they discover how wasteful or difficult certain tasks or functions are. They ask the “one guy” to change it, but he can’t easily do so.

There are limits to his understanding of how to configure the system. He can call on the supplier and under the contract there are some limited adjustments the supplier can make, but major configuration changes will require additional charges for additional experts, and time that is not part of the annual support fee and services. Furthermore, to really get things the way users inside the medium-sized business would like will require some custom code. That option projects a support cost that is well beyond what the business can responsibly invest.

When it is all discussed and the options are presented, the most economical solution is for users inside the medium-sized business to either work around the system, or put up with its inefficient processes. That’s right, it is cheaper to be wasteful than to do it right.

I’d bet a soda that every reader has either experienced or otherwise witnessed this very scenario or one like it. Maybe it wasn’t an outsourced system, but instead a function such as Information Technologies, Human Resources, Accounting.

Just last week a friend of mine met an engineer who said he has worked for years without his own computer, because the outsourced IT function in his business has not provided one. The red tape necessary had been applied repeatedly for years without results and eventually the engineer quit trying. He uses computers set aside in break rooms for the production personnel to access his e-mails. When he needs engineering-specific software, he hops from cubicle to cubicle borrowing computers while others are out of the office or attending meetings.

It rings of urban myth it’s so absurd. I didn’t meet this engineer myself, but I don’t expect my friend to mislead me either. I can’t guarantee the story, but at the same time, we have all witnessed enough waste and trouble from outsourced services that it is believable.

Please tune into the Chemical Equipment Daily for part two of this two-part piece. What’s your take? Please feel free to comment below!