Marketing & Services
Retaining services in-house vs outsourcing (Ch4)
The choice between in-house and outsourced services is not always clear-cut, which
is why there has to be a proper understanding of requirements.
The organization is free to determine those features of a given service that are
important to it. The organization must be realistic, both in terms of the features
demanded and the ability of others to deliver them. For any given service, there will
be a number of features that can be considered significant and/or important to the
organization:
Customer service
Uniqueness of service
Priority, flexibility and speed of response
Management implications and indirect cost
Direct cost
Control
The organization will have established the scope and standard of services it
requires. In addition to the many 'hard' measures that are usually associated with
them a number of 'soft' measures must also be considered. These become
particularly important when dealing with people who are external to the
organization, although are still important when dealing with people within it. Soft
measures might include:
Mannerly and responsive helpdesk
Call-back to the customer to verify that the work has been carried out.
Adoption of performance measures
When reviewing different ways of providing a service, the special demands of that
service must also be considered. While most tasks will not represent and undue
challenge to providers within the facilities management sector, the organization
might, for example, possess specialist plant and equipment unfamiliar to
maintenance operatives. Generally, issues can include:
The number of external providers that can potentially offer the service
Location of the service provider and its distance from the organization's
facility in question
Cost of the service
Average delivery time, i.e. waiting time and time for undertaking the service
Level of specification needed to place orders
The priority of services to be provided must be expressed clearly, so that critical
services can be highlighted and the required level of response taken into account. A
risk assessment should be undertaken for high-priority services, so that the
,consequence of failures is made clear and the appropriate level and speed of
response can be planned. High-priority services and their related risks must be
identified and assessment made of the probability and consequences of such risks.
Questionnaires and checklists can be used to identify risks. Risks scoring a total of
5 or more would be unacceptable and consideration would need to be given to how
such risks might be avoided, reduced or transferred.
The organization should also consider the level of flexibility required for each of the
services provided. Variable demand for some services, such as portering and
transport, which may peak at certain times of the year, can cause difficulties in
maintaining a constant resource level. The ability to call off labour from an external
provider at short notice can help then.
The speed with which a service provider can, respond to orders or requests is a
factor for further consideration. For example, the response time of an external
provider, may or may not be longer that of an in-house resource. If an emergency
were to escalate, a larger external provider may be preferred to the in-house
alternative, because of ready access, out of hours, to necessary equipment and
labour.
The decision to outsource or provide services in-house must take into account both
the capability of service providers and the effort required to manage them. An
organization that takes the decision to outsource can delegate the direct
supervision of work and service operatives to the provider the role for the
organization's representative then becomes the management of the output from the
service provider. The representative should acts as an informed client, managing
performance against specifications and service level agreements. A manager or a
supervisor who is trying to cope with such a diverse range of services may not be
proficient in all. For larger organizations, specialist management and supervision
may be cost-effective and efficient, because more of it is required.
A further consideration is that of the expertise available within the organization for
the management of these services if retained in-house. Whilst accommodation
services do not require high levels of expertise, statutory equipment testing and
maintenance of major appliances do. For a manager whose remit includes the
management of such services on a part-time basis, the initial learning and the
, continuing professional development (CPD), to keep abreast of legislation and
industry practice, represent a significant investment in time and effort.
Consequently, in-house service provision may not be the most cost-effective choice.
Direct cost is easier to ascertain than indirect cost. In the case of an outsourced
service, the contract sum is a clear figure that is readily available. For in-house
provision, the direct cost calculation would include employees' salaries and benefits.
For considering outsourcing, the greatest concern is that of a perceived loss of
control. The level of control that can be achieved is closely correlated with the
method of procurement and the contractual relationship established between the
organization and the service provider. Through a traditional contract the level of
control is limited. For a greater control, a partnering arrangement may be
appropriate. Whatever arrangement is put in place, ICT has a part to play in the
delivery of reliable management information. Value can also be added if
management information is delivered as a consequence of service provision and is,
therefore, available without cost or, at least, for a nominal sum.
Consequently the decision to outsource can be made rationally and objectively.
However at any time, organizations can apply the evaluation model to help
determine whether or not to outsource a service.
Policy and procedures for outsourcing (Ch 7)
Once the decision to outsource has been reached, senior management can rely
upon legislation, guidelines and practice notes from a wide range of sources. There
is benefit from this situation, but there can be disadvantages arising from dogged
adherence to procedures that may have been designed for a different purpose.
The procedures are followed in chronological order as far as practicable. The
objective is to ensure that the following critical success factors are achieved:
- The scope of the services and interfaces with related services are defined
- The service level required by stakeholders from the outsourced team is
clearly specified
-The outsourced team has the capabilities and skills to deliver the service
- Internal departments are recognized as customers and treated as such
Retaining services in-house vs outsourcing (Ch4)
The choice between in-house and outsourced services is not always clear-cut, which
is why there has to be a proper understanding of requirements.
The organization is free to determine those features of a given service that are
important to it. The organization must be realistic, both in terms of the features
demanded and the ability of others to deliver them. For any given service, there will
be a number of features that can be considered significant and/or important to the
organization:
Customer service
Uniqueness of service
Priority, flexibility and speed of response
Management implications and indirect cost
Direct cost
Control
The organization will have established the scope and standard of services it
requires. In addition to the many 'hard' measures that are usually associated with
them a number of 'soft' measures must also be considered. These become
particularly important when dealing with people who are external to the
organization, although are still important when dealing with people within it. Soft
measures might include:
Mannerly and responsive helpdesk
Call-back to the customer to verify that the work has been carried out.
Adoption of performance measures
When reviewing different ways of providing a service, the special demands of that
service must also be considered. While most tasks will not represent and undue
challenge to providers within the facilities management sector, the organization
might, for example, possess specialist plant and equipment unfamiliar to
maintenance operatives. Generally, issues can include:
The number of external providers that can potentially offer the service
Location of the service provider and its distance from the organization's
facility in question
Cost of the service
Average delivery time, i.e. waiting time and time for undertaking the service
Level of specification needed to place orders
The priority of services to be provided must be expressed clearly, so that critical
services can be highlighted and the required level of response taken into account. A
risk assessment should be undertaken for high-priority services, so that the
,consequence of failures is made clear and the appropriate level and speed of
response can be planned. High-priority services and their related risks must be
identified and assessment made of the probability and consequences of such risks.
Questionnaires and checklists can be used to identify risks. Risks scoring a total of
5 or more would be unacceptable and consideration would need to be given to how
such risks might be avoided, reduced or transferred.
The organization should also consider the level of flexibility required for each of the
services provided. Variable demand for some services, such as portering and
transport, which may peak at certain times of the year, can cause difficulties in
maintaining a constant resource level. The ability to call off labour from an external
provider at short notice can help then.
The speed with which a service provider can, respond to orders or requests is a
factor for further consideration. For example, the response time of an external
provider, may or may not be longer that of an in-house resource. If an emergency
were to escalate, a larger external provider may be preferred to the in-house
alternative, because of ready access, out of hours, to necessary equipment and
labour.
The decision to outsource or provide services in-house must take into account both
the capability of service providers and the effort required to manage them. An
organization that takes the decision to outsource can delegate the direct
supervision of work and service operatives to the provider the role for the
organization's representative then becomes the management of the output from the
service provider. The representative should acts as an informed client, managing
performance against specifications and service level agreements. A manager or a
supervisor who is trying to cope with such a diverse range of services may not be
proficient in all. For larger organizations, specialist management and supervision
may be cost-effective and efficient, because more of it is required.
A further consideration is that of the expertise available within the organization for
the management of these services if retained in-house. Whilst accommodation
services do not require high levels of expertise, statutory equipment testing and
maintenance of major appliances do. For a manager whose remit includes the
management of such services on a part-time basis, the initial learning and the
, continuing professional development (CPD), to keep abreast of legislation and
industry practice, represent a significant investment in time and effort.
Consequently, in-house service provision may not be the most cost-effective choice.
Direct cost is easier to ascertain than indirect cost. In the case of an outsourced
service, the contract sum is a clear figure that is readily available. For in-house
provision, the direct cost calculation would include employees' salaries and benefits.
For considering outsourcing, the greatest concern is that of a perceived loss of
control. The level of control that can be achieved is closely correlated with the
method of procurement and the contractual relationship established between the
organization and the service provider. Through a traditional contract the level of
control is limited. For a greater control, a partnering arrangement may be
appropriate. Whatever arrangement is put in place, ICT has a part to play in the
delivery of reliable management information. Value can also be added if
management information is delivered as a consequence of service provision and is,
therefore, available without cost or, at least, for a nominal sum.
Consequently the decision to outsource can be made rationally and objectively.
However at any time, organizations can apply the evaluation model to help
determine whether or not to outsource a service.
Policy and procedures for outsourcing (Ch 7)
Once the decision to outsource has been reached, senior management can rely
upon legislation, guidelines and practice notes from a wide range of sources. There
is benefit from this situation, but there can be disadvantages arising from dogged
adherence to procedures that may have been designed for a different purpose.
The procedures are followed in chronological order as far as practicable. The
objective is to ensure that the following critical success factors are achieved:
- The scope of the services and interfaces with related services are defined
- The service level required by stakeholders from the outsourced team is
clearly specified
-The outsourced team has the capabilities and skills to deliver the service
- Internal departments are recognized as customers and treated as such
