In this 2nd article of our series "Growing Smart By Outsourcing, a Step-By-Step Guide," we will discuss how you select the right projects, tasks or process to outsource by utilizing a value chain analysis and decision matrix.
What to consider when selecting what you should outsource?
- Can the activity be performed at a lower cost and/or better by suppliers?
- What is the risk of performing the activity in-house? If the activity relies on fast-changing technology it may be advantageous to outsource the activity in order to maintain flexibility and avoid the risk of investing in specialized assets.
- Would outsourcing improve your business process performance?
The goal of your value chain is to provide the customer more value than cost therefore providing you a solid profit margin. Below you see Technology as part of the support activities and typically if you are not a software development company you should outsource most of your software development because you cannot possible do it as inexpensive or as effective as firms that specialize in this practice.
Everyday in our personal lives we outsource tasks or work that we can't do as well or as cheap as another.
Step 1: Identify Your Core Competencies. What does your company do better than anyone else can?
Step 2: Utilize a Value Chain Analysis Chart to identify your core competencies and outsource the rest
- An example may be if you are an architect and design a building, do you hire a contractor to build it? You would be cause your vision can be delivered quicker and less expensive.
- These questions, and the answers can have huge effects on your organization's short-term and long-term success.
- Outsourcing can bring fresh minds to your business, and it can also free time up for innovation and other vital tasks.
Step 3: Utilize a decision matrix
- The Outsourcing Decision Matrix helps you consider two important factors in outsourcing a task:
Select the “Low-Hanging Fruit” to Outsource First
Once you’ve determined the processes and services within your company that make up your core competencies you can then prioritize the left over tasks for outsourcing.
If you don’t think your company or organization has any non-core business processes your fooling yourself. Our company specializes in developing enterprise level software applications for other technology companies so if they can outsource software development I am fairly certain that an insurance carrier; product manufacturer or distributor can as well.
In your search for your non-core business processes, pay particular attention to the following:
- Those activities that are repetitious
- Those activities that are ongoing
- Those things you know you’re not good at executing
Dos and Don'ts for Deciding Whether to Outsource
Do
- Have a clear vision of what outsourcing should achieve.
- Understand the scope of the services to be outsourced.
- Outsource the performance of a function, not the responsibility for it.
Don't
- Don't outsource strategic, customer, or financial management.
- Don't let the goal of cost savings dominate everything else.
- Don't think that outsourcing is the answer to every problem.
Setup a quick FREE consultation to discuss how you can determine if outsourcing will work for your company.
We do not take on projects unless we are the best team for the job.
Our websites:
Insurance Portals: http://insurance.beyondkey.com
If you have not heard of BeyondKey Systems thats OK its not too late to find out why we guarantee our development, partner with our clients and work the way you need. We have significant experience across several major global vertical markets and I myself will be your primary GO TO GUY here in North America.
Contact me direct and lets us start with a small project, gain your trust and go from there.
We are so good you will think we are in the corner office!
JD Meints
VP Business Development
jd.meints@beyondkey.com
818.338.6057 (Los Angeles, CA)
