Managing Renewals and Outsourcing

Is it time to bring support back in-house, or continue with expert, external support?  

The outsourcing strategy started over 60 years ago.  Back then, the move was focused on relocating our manufacturing jobs overseas, searching for lower labour costs.  As time has passed, the adoption of expert skills beyond organisational borders has accelerated.    

When our business grows, outsourcing becomes more viable.  More established companies often move cyclically through in-house and outsourced models as strategy and management teams change. 

So, when it comes time to make the choice of in-house or outsourced, either for the first time or during a renewal, what factors do we need to consider, to ensure we are making the right choice?   

To answer this question, let’s step through our thought process. 

How much effort do we need? 

Our first objective is to work out how much effort we need to complete the task.  To do this, we need to talk to the people responsible and related to the activity. If we aren’t clear with our questions and direction, we will end up with a service that doesn’t meet our requirements, and that mismatch will be visible in multiple ways: 

• A growing backlog of issues resulting from a lack of resources or acquiring the wrong skills. 
• No backlog at all because we have too many people. 

To build a quality service, our teams or our partners need to spend time with the people closest to the activity to understand what is needed. 

What is it going to cost to build our capability? 

Another dimension in the cost conversation is obviously how much we are going to need to pay to employ the people we need: 

People x Salary = Cost of Service 

Does this look right?  We’re part of the way there.  But if we are thinking about the real, holistic cost of people we need to look beyond the salary cost: 

• Salary – as we’ve said, we need to factor the base costs of the people we’re going to recruit.  But we also need to consider other costs that come with employment: 
   
  1. Benefits and pensions 
  2. Training 
  3. Recruitment 
• Management – employees generally need a layer of management, and we should include this when profiling our cost base. 
• Utilisation – if we don’t have enough work to satisfy a full resource, or we need 3.2 resources to deliver the function, we’re wasting the excess.  Maybe we can give them some other work to do, but then we’re diluting the skill, probably diluting the employee confidence in us, and increasing the possibility of ending up in another recruitment cycle. 
• Out of Hours – if we’re looking to go 24*7, then we may need to think about how we will cover evenings, weekends, and what about… 
• Sickness and Holidays – who is going to cover when someone is on holiday or off sick?  Can we (or more importantly our customers) tolerate a drop in productivity for 2 weeks? 

To understand the real cost, we need to factor in all the commercial implications that will affect us. 

Do we have all the tools to deliver our service? 

To deliver an effective support service, we’re probably going to need some tools to help us.  Even SaaS products which promise an end-to-end capability, often fall short when it comes to being able to manage our software investment. Common management tooling could extend to: 

• A system to log our support requests so they can be tracked and managed to resolution. This could be something we already have that can be reused or extended to cater for our new service. 
• Tooling that helps monitor the availability and performance of our software. Again, we could potentially reuse existing monitoring tools, but we need to be mindful of the criticality of our solution and whether it can be managed more effectively with a dedicated and solution-specific set of tooling. 

How effective are we in our delivery? 

We’ve figured out our people, got our costs sorted, what’s next?  Performance.  To report on something, we need to be able to measure it. A service provider would do that in several ways, and we need to measure ourselves by the same criteria. 

 Typical factors include: 

• Response times – Guaranteeing how quickly we can react to an issue keeps our customers informed. 
• Resolution times – Guaranteeing how quickly we can resolve an issue puts confidence in our customers that we know what we are doing. 
• First-time fix – Helps to determine the effectiveness of our first-line team and knowledgebase. 
• Average hops – The number of times a ticket “hops” between support personnel can indicate a lack of ownership and/or knowledge. 

To report to our management team, we need to measure our performance and show improvement.

Conclusion 

Whilst this isn’t an exhaustive list, this short summary of service scoping can help you achieve a successful service deployment, either by outsourcing or understanding the real cost of investment in your own people. These decisions will be tempered by your current market position, forecasted position, levels of investment and market dynamics. Working through these different dimensions whilst trying to maintain your normal business-as-usual activities can be a challenge. 

Partners like Mastek should be consulted to help you get to the right decision. We provide impartial advice with many years of experience to back up our services, so you know the advice you are getting is right for you.