Planning and Implementing an Outsourcing Program
February 1997
Karen A. Wilson, Head Technical Services Librarian/Assistant Director, J. Hugh Jackson Library, Graduate School of Business, Stanford University, Stanford, CA 94305-5016
This introduction to library technical services outsourcing describes the major steps that librarians encounter in planning and implementing an outsourcing program. The accompanying bibliography of technical services outsourcing literature includes articles that also contain valuable tips for outsourcing.
GENERAL GUIDELINES
Outsourcing is not an activity that happens overnight. Prior to implementation of any outsourcing program, staff may need between one to two years of time for strategic thinking and planning. Vendor selection, as well as profiling and testing of services, also needs to be completed before the actual implementation stage begins. It is important to note that the amount of time required for preparation will vary among organizations, depending on the size and complexity of the organization and the scope and difficulty of the outsourcing program.
In addition to providing adequate time for planning an outsourcing program, managers need to provide adequate staff to work on the outsourcing effort. There is a need to identify staff who will be primarily responsible for both the planning and implementation phases. Some staff will be involved in only one of those two phases; others will be involved in both phases. Launching an outsourcing program can be a full-time job for certain individuals. Because of that fact, managers also need to provide other ways of accomplishing ongoing tasks while staff are removed from day-to-day routines to focus on an outsourcing program.
Outside consultants, working together with library staff, can provide instant expertise during the planning and implementation phases. Although library staff are better at understanding the significance of different processes, and the relationship of those processes to the organization as a whole, consultants can assist staff in questioning the relevance of certain processes and the manner in which tasks are performed. Library staff can benefit from the cost-analysis skills that consultants offer. Consultants can provide a framework and create a schedule for the outsourcing effort, as well. They can also assist staff in overcoming obstacles and in exercising creativity while developing an outsourcing program. Furthermore, by helping staff through the rapid change process that accompanies the development of an outsourcing effort, consultants can boost the morale of those staff most closely engaged in developing the outsourcing program.
EVALUATING EXISTING PROCESSES AND COSTS
Often, the first step in exploring outsourcing possibilities is conducting an analysis of existing processes and costs.
Process Analysis: When considering outsourcing as an option for managing technical services operations, it is essential to know as much as possible about current processes. It is also necessary to understand the policies and procedures governing those processes. This process-analysis phase is a good method for identifying immediate ways to streamline processes, before advancing further with an outsourcing plan. This analysis provides documentation of processes subject to outsourcing, as well. Gathering this kind of documentation on internal processes is necessary in order to convey the scope of requested outsourcing services to vendors.
Estimated time to complete the process analysis: One to three months, in conjunction with the cost analysis.
Cost Analysis: Gathering data on the cost of current operations goes hand in hand with process analysis. Prior to outsourcing, this data can be useful in illustrating how successful staff were in reducing overall costs by streamlining internal operations. It is also essential to have this data in order to compare an operation's current costs with the costs of services offered by vendors. This data is valuable later too, when it is time to determine cost savings as a result of outsourcing.
Estimated time to complete the cost analysis: One to three months, in conjunction with the process analysis.
Resources for process analysis and cost analysis: There are several articles on cost studies in the library literature. A good starting point is a 1991 article, "Guide to cost analysis of acquisitions and cataloging in libraries," in ALCTS Newsletter (vol. 2, no. 5, pages 49-52). There have also been a number of articles on cost studies in The Bottom Line.
DESIGNING OUTSOURCING SERVICES
It might be somewhat easier to design library outsourcing services today than it was a few years ago, given that there have been several pioneers in the outsourcing arena during the 1990s. It is worthwhile to review existing outsourcing models before designing a specific outsourcing program. Reviewing different outsourcing models provides insight on the kinds of vendor services currently available and the various types of outsourcing programs occurring within comparable organizations.
After gathering as much information as possible about outsourcing possibilities, it is important to discuss outsourcing strategies with all internal staff. The in-house discussions help in discovering additional ways in which the individual needs of an organization can be addressed by outsourcing.
At some point, an outsourcing team needs to draft a written plan for outsourcing. At the bare minimum, this plan should include a description of the redesigned operation and details about the outsourcing services to be provided by vendors. A time schedule and strategy for implementation of the outsourcing program are also likely to be included in this kind of report. The plan should be distributed for review by library staff at large, so that all interested parties have an opportunity for input on aspects of the redesigned operation. Following open debate of the outsourcing plan, a final design can be completed.
Estimated time to complete the design process: Three to nine months, including any travel time for visiting other outsourcing sites, time for preparation of a written outsourcing plan and time for staff discussion and debate of the plan.
VENDOR SELECTION
RFI: In many cases, the first step in the vendor selection process is completing an RFI (Request for Information). An RFI solicits details about the kinds of vendor services currently offered. Once responses to an RFI are received, selected vendors might be invited to make formal presentations to library staff. In some instances, it may be appropriate for selected staff to tour vendor sites and meet with other members of the vendors' organizations.
In general, the RFI phase is an education process for library staff. Furthermore, the RFI phase allows library staff to prequalify vendors for the subsequent RFP (Request for Proposal) process. Vendors who are unable to meet basic outsourcing requirements in the RFI might be eliminated from further consideration at this point.
Estimated time to complete the RFI phase: Three to four months, including time for reviewing responses, sponsoring vendor presentations and visiting vendor sites. Note: The RFI phase can be done before or during the process-analysis and cost-analysis phases.
RFP: An RFP is typically required for outsourcing, regardless of whether or not an RFI was prepared in advance. If not done as part of an RFI process, selected vendors can be invited to make formal presentations to staff after RFP responses are received. If staff did not visit vendor sites during an RFI phase, it may be appropriate for selected staff to tour vendor sites during the RFP stage. References also need to be checked following the RFP process.
Estimated time to complete the RFP phase: Three to four months, including time for reviewing responses, sponsoring vendor presentations and visiting vendor sites.
Resources for vendor selection: The accompanying bibliography includes a citation for the ALCTS Commercial Technical Services Committee's outsourcing book, published in 1995, which provides a checklist of considerations for outsourcing cataloging, authority work, and physical processing. Other resources are listed at the beginning of the bibliography. In addition, the Stanford University Libraries Redesign Team's report provides a brief analysis of vendors' outsourcing capabilities, based on responses to Stanford's RFI. Although that information is out-of-date by now, their matrix is still useful as one example for evaluating vendor services. Stanford's report also provides a good background on both process analysis and designing of outsourcing services. In addition, the following article provides background information on RFPs: Schatz, Bob, and Diane J. Graves. 1996. "Request for proposal" or "run for protection?": Some thoughts on RFPs from a librarian and a bookseller. Library Acquisitions: Practice & Theory 20 (4): 421-28.
NEGOTIATING COSTS AND REVIEWING CONTRACTS
Once a vendor has been selected, the task of negotiating final costs and reviewing contracts begins. Much of this activity occurs within the higher management levels of an organization and does not involve as many staff members as are needed to complete the previous steps in planning and implementing an outsourcing program. It is important to note that procurement personnel and/or legal staff within the parent organization typically need to be consulted in these processes. In addition, payment options for the new outsourcing services can be resolved at this time.
Estimated time to negotiate costs and review contracts One to two months.
PROFILING AND TESTING VENDOR SERVICES
Be prepared to take some time to work closely with a vendor to develop a profile of organizational requirements and specifications. Vendors will provide documentation and some forms to be completed by staff. The amount of effort required for profiling vendor services depends on the size of an organization and the scope of outsourcing services that are to be provided by the vendor. The amount of outsourcing experience that the vendor has acquired is also a factor to be considered here.
Once a profile has been established, it is necessary to test the quality of certain products or services provided by the vendor. If the vendor's outsourcing services have been in operation for quite some time, and thoroughly tested by staff at other libraries, the testing stage may be completed with few obstacles. On the other hand, each organization is unique. There are likely to be some bugs in every new outsourcing program which need to be resolved during the testing phase.
Estimated time to profile and test vendor services: Three to six months.
EVALUATING VENDOR SERVICES
The level of quality control efforts and the extent of vendor evaluation processes vary from organization to organization, depending on the scope and level of outsourcing services provided in each setting. With regard to the overall issue of quality control, it is common for library staff to monitor 100% of the products and services during the initial stages of outsourcing. A high degree of quality control monitoring in the early stages of outsourcing is especially typical in experimental pilot projects.
Vendors with an established track record for success, as verified by other customers or documented in published reports, may not need close observation for as long as untested vendors or established vendors who are offering new services for the first time. However, the initial amount of checking, and the documentation associated with this process, can be reduced substantially once an acceptable level of quality has been reached.
It is important to recognize that outsourcing programs require a minimal level of continuous monitoring by library staff for as long as vendor services are provided. Outsourcing does not result in complete abandonment of all responsibility for oversight of an operation, just because a vendor has begun to provide services which were once performed in-house.
Estimated time to evaluate vendor services: Three to six months for the initial stage; six months to one year for the following phase; followed by periodic monitoring on an ongoing basis for the life of the outsourcing program.
Resources for Evaluating Vendor Services: Until very recently, there has been a void in the literature on the results of technical services outsourcing in libraries. As it is now, there are still only a few articles which provide detailed reports of the actual quality of vendor services. Those articles are listed in the accompanying bibliography. A forthcoming book sponsored by members of the ALCTS Commercial Technical Services Committee, Outsourcing Library Technical Services Operations: Case Studies from Academic, Public and Special Libraries, promises to provide more insight on the results of contemporary outsourcing programs in different library settings.
ASSESSING OUTSOURCING COSTS AND SAVINGS
Identification of total outsourcing costs and savings can be a full-time job. The degree to which staff monitor and report outsourcing costs, in comparison with in-house costs, seems to vary depending on how much staff expertise and time are available for that effort. In addition, anyone who has been involved in the implementation process for a new product or service knows that there are numerous start-up costs in the initial stages of implementation. The same holds true for launching an outsourcing program. In the end, all of these factors have an impact on the process of assessing outsourcing costs and savings.
Two methods for capturing cost data periodically are to measure unit costs/savings and to monitor aggregate costs/savings. It is likely that there will be substantial savings in one area which is outsourced, moderate savings for another function, and little or no savings in a third area. In many cases, the impact of outsourcing is most obvious when examining the bottom line and assessing the net effect of outsourcing within an organization as a whole.
Estimated time to assess outsourcing costs and savings: Three to six months for the initial stage; six months to one year for the following phase; followed by periodic monitoring on an ongoing basis for the life of the outsourcing program.
LIBRARY/VENDOR COMMUNICATIONS AND RELATIONSHIPS
Several authors in the accompanying outsourcing bibliography elaborate on the importance of managing the relationship with vendors. The success of any outsourcing program is highly dependent on excellent communications between a client and its vendor. Outsourcing involves a new client and vendor relationship; a relationship frequently described as a partnership. It is necessary for both parties to work together for success. A vendor cannot provide or improve services without feedback from a client. A client cannot ensure quality services to library customers without support from the vendor. For these reasons, it is important to establish and maintain excellent communication between library staff and vendor staff during the lifetime of any outsourcing program.
SECRETS FOR SUCCESS
The above guidelines for planning and implementing an outsourcing program merely provide a brief outline of the major issues and steps which are likely to be faced in the outsourcing process. They do not include any magic formula or secret for guaranteeing the success of an outsourcing program. However, a few words of wisdom, from those who have experienced outsourcing firsthand and developed successful outsourcing programs, are available for the benefit of others who have not yet traveled this path.
- Adapt to change: It is essential to accept from the outset that things will be different from the past. As part of the process of adapting to change, it is also important to recognize that compromises may be called for in the new environment. Adapting to change and taking the necessary steps to make change occur more easily are critical to the success of any outsourcing endeavor.
- Manage the vendor relationship: Instead of withdrawing from the outsourcing situation, library staff need to embrace the new vendor relationship. Library staff need to be committed to providing the necessary management oversight to make outsourcing work for the entire organization. Managing the vendor relationship is required to some degree for the lifetime of the outsourcing program.
- Give the outsourcing process time to work: Once implementation begins, it takes at least six months to one year to reap the full benefits of an outsourcing effort. It is important to allow time for the process to work. There is a need to understand that it takes time to overcome obstacles and to resolve problems that will inevitably occur when implementing an outsourcing program.
- Keep a sense of humor: It almost goes without saying that a sense of humor will help anyone endure even the most troublesome times. Outsourcing is not easy and, as stated at the outset, it does not happen overnight. Keeping a sense of humor and being able to maintain a sense of perspective makes it much easier for library staff to survive the outsourcing planning and implementation processes.
- Focus on the long-term benefits and goals: It is easy to be overwhelmed by the enormous amount of details associated with planning and implementing an outsourcing program. In the midst of coping with daily challenges during the early stages of outsourcing, it is important to remain focused on the long-term benefits and goals which will be achieved as a result of outsourcing.
FINAL THOUGHTS
Outsourcing might be the preferred option for managing certain library technical services operations in some libraries. However, it might not be the only option or the best option for staff in other libraries. Staff may find that the process-analysis and cost-analysis steps, outlined in the beginning of this document, lead to simplification of procedures and result in cost savings that reduce the need to outsource. Because of that fact, it is essential to consider options for in-house innovation, in conjunction with options for outsourcing, when redesigning operations and reorganizing staff in technical services. Every possible solution should be considered. In some instances, outsourcing might not be the best avenue at a given point in time. On the other hand, outsourcing all or part of a process might emerge as the preferred option, once all other possibilities have been explored.
|
