| Editor’s Note:
Outsourcing is the practice of using outside vendors, consultants, and other service providers to plan, implement, or evaluate an organization’s technology needs. But how does an organization make the decision to outsource in the first place? Why not do the work in-house with existing staff or volunteers? This article will discuss the issues that nonprofit organizations should consider when making the decision. |
Outsourcing is the practice of using outside vendors, consultants, and other service providers to plan, implement, or evaluate an organization’s technology needs. But how does an organization make the decision to outsource in the first place? Why not do the work in-house with existing staff or volunteers? This article will discuss the issues that nonprofit organizations should consider when making the decision.
Typically, nonprofits consider outsourcing technology work when one or more of the following conditions are met:
- The organization is already committed to a tremendous amount of work and cannot dedicate the amount of staff time necessary to handle a technology project in house. [Note: Even when outsourcing, nonprofit organizations must dedicate some time to planning the project and hiring and managing a provider.]
- The organization has available time but does not have staff with the required technical expertise to scope out and properly implement the technology project.
- The organization needs the technology project implemented quickly and cannot take the time to retrain staff or wait for staff time to become available.
- The organization needs a variety of technology projects implemented, and outsourcing to a vendor offers access to a wide range of technology expertise.
These kinds of resource allocation, managerial, and human resource issues are not unique to technology projects, and would also be present on projects such as program work, public relations, or fieldwork. However, outsourcing technology work raises another set of issues:
- Even when a technology project is outsourced, an in-house project manager or team will need to manage the relationship with the vendor or consultant.
- When a technology project is outsourced, there is often a cash cost associated with that contract. That cash outlay should be properly budgeted. Some contracts require an upfront payment, while others may have ongoing monthly or quarterly costs.
- When outsourcing a technology project, an organization must identify an appropriate vendor or consultant to do the needed work. This task often requires writing a Request For Proposal (RFP) so that vendors and consultants can submit bids. Depending on the size of the technology project, the RFP process itself can be time-consuming, and may even require the help of a consultant to help identify bidders and review their proposals.
- An organization should have a contract with the vendor or consultant to clearly specify the scope of services, the cost, how contract disputes should be addressed, and how the contract should end.
Considering Your Technology Needs
Before you begin your search for a specific vendor or solution, you need to know exactly why you are seeking the product or solution in the first place. This will help you direct the work of a consultant or vendor, could result in the discovery that you do not need to outsource but need to handle the issue in-house or blend and in-house and outsource solution. Things to think about include:
- What is it about the current business system that we want to improve? (Examples of business systems include things like communications, accounting, information storage and use, relationship management, publicity, etc.)
- How does that current business system operate? Detail what the different steps are in the system and who is involved in making it all work.
- What are the parts of the system that may benefit from a technology solution? For example, look for areas in the system where there is a lack of automation or redundancy. This is very important because systems fail to operate for many reasons and technology solutions are often applied inappropriately. For example, systems can break down due to lack of staff training or poor design. Superimposing a new technology tool on top of a system with these types of problems may not have the intended results of improving the operations. As many providers have a motive to sell you more technology, they may not be able to separate their own self-interest from your real needs. That is why it is essential that you really understand your needs BEFORE vendors and consultants are brought in. This of course is less of a concern if you are working with a consultant whose sole purpose is to help you determine your needs and they will not be part of implementing the solution.
- Finally, be clear about what would be different if the system was improved. Be very specific and detail exactly what will work better and the results from those improvements. This list of ‘outcomes’ should be used by you to determine if the project was a success and to what degree.
Determine What Type of Service Provider You Need
You also need to determine what type of vendor or consultant you need to hire to help you. There isn’t a standardized menu of services and products that all technology vendors and consultants provide and as a result figuring out exactly what you need requires some time for internal conversation. Here are some questions to help you think things through:
- Are you looking for someone with specific technical expertise or skill?
- Are you looking for someone who can advise you on the options?
- Are you looking for someone to write the RFP, vet responses, and manage the project?
- Are you looking for a particular type of product?
- Do you need any additional services to support the product such as training or installation?
- Are you looking for a combination of these?
You may have a general idea of what you need, but may not have the specific knowledge and insight in-house to refine that vision or translate it into a written RFP. For complex projects such database systems, wide-area networks, or large-scale Web sites, some organizations hire an “intermediary” outside consultant who has expertise in the technical area, but is not bidding on the project. An intermediary can be extremely valuable as a trusted advisor who has no stake in the ultimate decision you make.
In-House or Outsource
Ultimately, it is important for the organization to compare the benefits and costs of handling the project in-house versus going with an outsourced solution. Of course there is also the option of blending an in-house and outsource solution. The articles and case studies in this series will provide you with more detail depending on the type of technology challenge you face. Regardless of the specific challenge you face, some general issues to consider are:
- Does your organization have existing staff with appropriate skills to implement the technology project? If so, can that staff person be re-assigned to the technology project? What impacts will that have?
- If you have available staff but their skill sets are not the right fit for the technology project, is retraining a possibility? Some technology projects are more easily suited than others to staff retraining. For example, maintaining a Web site with specialized software is typically something that an existing staff person can be retrained to do. However, installing and maintaining an office computer network may be too complex.
- Are there upcoming opportunities with staff changes or new hires that would allow the agency to acquire staff with new skills? This option would allow the agency to create a new position (either permanent or temporary) to accomplish its technology goals.
- Would working with an outsourced provider bring a level of skill to the organization that can be transferred in-house for future benefits?
- How would outsourcing affect the speed at which you implement the improvements? Is it important that the improvements be made quickly or could they be phased in over time?
- What are the costs, financial and staff time of outsourcing versus going in-house?
Whatever the challenge, its important that you take the time to clarify what your real needs are before calling in the experts. For all technology projects, outsourced or not, this is the best way to assure that you specific needs — and not the technology itself — drive your decisions.