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Posts Tagged ‘vendor’

How “Vested Outsourcing” is Changing the Way Companies Do Business

Friday, January 6th, 2012

Recent research by Kate Vitasek and the University of Tennessee has created a new way of looking at outsourcing that is poised to transform the way businesses partner with providers.

“Vested outsourcing” is now being studied by government agencies as well as top commercial companies, who are eager to implement changes that promise to bring better results than traditional ways of outsourcing.

Here are some of the key differences in vested outsourcing as compared to current outsourcing practices:

Typically, companies pay for vendors to perform specific business activities. When following the vested outsourcing model, companies will look at the final results of those activities based on the value each vendor is actually contributing to the company and its bottom line. To that end, both parties must agree on “clearly defined and measurable outcomes.”
Companies have been accustomed to focusing on finding the lowest priced provider, but the vested outsourcing solution would have businesses consider the larger picture and carefully structure each vendor contract to eliminate hidden costs. Transparency is vital if you are to realize real value from your vendor partnerships.
With conventional outsourcing, the chief consideration has been based largely on a “What’s in it for me” attitude. Vested outsourcing allows the provider to reap increased financial benefits as well, based on their contribution to the company’s growth.
Traditionally, businesses outsource to expert providers who fill gaps in the company’s knowledge and skill base by completely taking on the processes involved in these areas. Vested outsourcing, on the other hand, advocates a governance structure that “provides insight, not merely oversight.”

According to Outsourcing Institute CEO Frank Casale, “Vested Outsourcing is a game-changing approach that will quickly become the new gold standard for advanced outsourcing relationships. It is a critical enabler for Outsourcing 2.0.” It is certainly something we’ll be keeping our eye on.

Tags: business service, outsourcing, sourcing, vendor, vendors, vested outsourcing
Posted in Outsourcing, Vendor Sourcing | No Comments »

Ten Tips for Mastering the Initial Phase of Outsourcing

Friday, December 2nd, 2011

Getting off to a good start will pave the way for success in outsourcing.

Research firm Gartner recently offered advice for a winning initial phase strategy. Here is a summary of their tips:

Establish your framework and define your goals. This involves setting priorities and outlining the principles and rules that will guide each sourcing decision and action. “Define specific business, service and technical goals for sourcing initiatives and relevant measures of success,” Gartner advises.
Evaluate the company’s current service delivery. Conduct a thorough assessment of the provider’s capabilities, considering the cost as well as the service levels of the organization’s existing contracts. Will this partner’s enterprise architecture enable it to deliver at the level required to achieve your objectives?
Assess the company’s multi-sourcing management competencies. Find out the level of the provider’s knowledge and expertise for managing service delivery on business, application and infrastructure processes.
Evaluate possible constraints and opportunities. Consider business forces, overall economic cycles, disruptive technologies, regulatory compliance requirements and internal organizational issues. Build risk profiles and a risk management framework.
Analyze gaps. Measure your defined needs and objectives against the current situation and consider alternative approaches and ways to fill any gaps. Weigh and compare the drivers, goals and risks of each given scenario.
Consider the external market. Evaluate the current vendor landscape as well as your competitors’ strategies. Assess the availability, maturity and stability of service offerings, and use this analysis to help you decide what services you will use and when. Then, says Gartner, “Refine the alternative sourcing scenario to drive business value and stay ahead of competitors.”
Use scenario planning. Compare the value and potential risk of various sourcing models. Does the sourcing solution fit your business objectives, gap analysis and company culture, for example? How will it impact retained competencies? Use this information to find the best fit for your company’s objectives.
Analyze your risks. Identify possible risks using a detailed risk-reward analysis for specific scenarios. Use tools and guidelines to assess and manage vendor risk, adapting your risk evaluation standards to different types of vendors and services.
Create a business case. Analyze the total cost of sourcing (TCS) for the scenarios you’re looking at. Consider the costs of the transition and how workloads and service requirements will likely evolve.
Develop an action plan. Define the agreements and the anticipated time frames, as well as a communication and change management plan, and develop an action plan to implement the strategy.

Tags: business service, outsourcing, vendor
Posted in Outsourcing, Vendor Sourcing | No Comments »

Six Mistakes Businesses Make When Outsourcing

Thursday, October 20th, 2011

Forbes recently listed the six most common mistakes companies make when outsourcing.

Knowing in advance what these pitfalls are can help you to avoid them, so we have provided a brief overview of each.

1. Underestimating the cost and complexity of managing relationships with outsourced partners.

Most companies greatly miscalculate the amount of time, money and talent it takes to effectively manage outsourced functions. Forbes states that “companies must invest in overseeing the partnership for the long term. This includes establishing a dedicated team of people, on both ends, to ensure compliance and adherence to agreed-upon service levels.”

2. Overestimating your cost savings from outsourcing.

Although labor costs may be lower in many countries, wages will continue to rise, as much as 10 percent each year, as is the case in India. A region can maintain highly educated leadership at a low cost for only about 20 years.

3. Choosing a country without having a clear understanding of your objectives.

Before selecting a country or service provider, first establish the cost of operating your business processes and set forth your objectives. Forbes recommends that you “study the expertise of each potential partner, considering proximity, costs, cultural and language barriers, telecom infrastructure and tax laws among other factors, before making a decision.”

4. Neglecting to communicate with your employees regarding the changes you’re planning.

Let your current employees know how much you have valued their service, and help them train for a new role within the company or elsewhere, to the extent possible. Be sensitive; don’t expect your employees to train the person who is to replace them.

5. Choosing a single source provider.

Whenever possible, distribute your risk by using a variety of service providers in different countries. You can also increase your company’s efficiency, by having providers in different time zones working around the clock on your projects.

6. Failure to provide retention programs for your best talent.

Competition for outsourced talent is intensifying, as more American and European companies send some of their work to offshore providers. The article’s advice? “Work with your service provider or offshore subsidiary–many American companies have established international development centers–to maintain your best assets.”

Tags: B2B services, offshoring, outsourcing, sourcing, vendor, vendors
Posted in Outsourcing, Vendor Sourcing | No Comments »

Choosing the Right Merchant Account Vendor

Wednesday, July 20th, 2011

Tags: B2B services, merchant accounts, outsourcing, sourcing, vendor
Posted in Small Biz Tips, Vendor Sourcing | No Comments »

The Pros and Cons of Outsourcing: What You Should Know

Monday, July 18th, 2011

A Deloitte study of 300 executives recently brought to light some important pros and cons to consider before outsourcing. Fully 83 percent of respondents reported that their outsourcing projects had met their ROI goals of slightly above 25 percent.

Obviously, outsourcing has its advantages, such as reduced labor costs and access to highly specialized expertise and experience that may not be available in-house. You will also save on related costs such as computers, equipment, office space, training and benefits for each employee.

Companies that outsource report greater productivity, especially when using offshore providers in a different time zone, in effect extending a company’s hours of operation.

Outsourcing can also allow you to reach beyond the confines of your budget and leverage the latest developments in technology that your provider offers.

Despite the benefits you can expect, it’s best to begin outsourcing with an awareness of some possible drawbacks.

Only 34 percent of the execs in the above survey felt that their service providers had contributed innovative ideas or that outsourcing had significantly improved their operations.

Recognizing the missed opportunities to make such improvements, 49 percent said that if they could start the project over, they would define service levels that are better aligned with their business goals.

Other issues you may face when outsourcing include security concerns, having less control over projects, and decreased customer satisfaction.

Most of these difficulties can be overcome in advance by careful vendor selection; do your research to ensure you’re partnering with providers who are best qualified to meet your organization’s needs.

Tags: B2B services, outsourcing, sourcing, vendor
Posted in Vendor Sourcing | No Comments »

How to Choose a Direct Marketing Provider

Friday, July 1st, 2011

Tags: B2B services, direct marketing, sourcing, vendor
Posted in Small Biz Tips, Vendor Sourcing | No Comments »

How to Manage Security Elements When Outsourcing

Friday, May 13th, 2011

Keeping sensitive company data secure is a major concern for any business considering outsourcing. But these apprehensions do not need to keep you from enjoying the benefits of outsourcing your business processes. By taking several precautionary steps, you can ensure your data is secure, even when using an offshore vendor.

Have a practical in-house security strategy that includes classification of data and a plan for handling various types of data, making sure you differentiate general information from sensitive data. Your security guidelines should include clearly stated principles and procedures that organization managers and IT professionals within your company agree on.
Ensure that the vendors you select have a security policy that is equivalent to or even more stringent than your own. This may mean you will need to do some additional investigating to find out whether the provider’s security policies are strictly enforced.
Ask about the type of deterrence technology the company has in place and the policies involved in its use. Does the vendor enforce these policies among all of its employees, including IT staff?
Use application firewalls and database monitoring gateways to enforce your company’s usage policy and deter abuse of privilege. Some providers combine both functions, which is optimal. Also, choose a vendor who diligently supervises outbound emails and Internet usage to prevent unauthorized data disclosure.
Perform regular application, database and network security checks to identify any potentially vulnerable areas.
Ascertain whether the provider has instructed its staff regarding the proper handling and protection of sensitive data. Information leaks are not always intentional. Some instances of data disclosure occur when employees mishandle data; for example, leaving unencrypted files open and unattended for a time.
Within your own company, keep abreast of the most recent developments in data security. Staying informed of the technology and processes involved in keeping your data secure will help you stay in control of your company’s security when outsourcing.

Tags: offshoring, outsourcing, security, sourcing, vendor
Posted in Vendor Sourcing | No Comments »

VoIP for Growing Companies

Friday, April 1st, 2011

Improvements in reliability and sound quality and a substantial cost advantage over traditional phone systems have made VoIP the communications system of choice for many businesses.

According to Forbes.com, “small- and medium-sized businesses (SMBs) have perhaps the most to gain from the explosion of new VOIP services. In one move, businesses can outsource their communications, doing away with clunky, on-site PBX equipment and reduce their monthly phone bills.”

Some of the newer VOIP features for smaller businesses include tools like “unified messaging” (converged voicemail and e-mail) that can actually improve productivity.

Because there are so many VoIP providers, it can be difficult to research and choose a vendor. Do a Google search about your potential VoIP service providers to see what others are saying. Below are a few other factors to help you in your search.

VoIP vendors offer a wide variety of features ranging from voice mail, faxing, and toll free lines to conversion of voice mail messages to emails or text messages. Many VoIP services allow you to integrate your voice traffic with SalesForce and other CRM solutions for easier access to customer data during sales and customer service calls.

The price for VoIP service varies a great deal depending on the number of phones a business uses, the features desired, and the vendor itself. Pricing can start as low as $20 per month. It’s a good idea to decide in advance how much you will be willing to pay for your service.

Should you go with a hosted VoIP service or purchase a premise-based system? A hosted VoIP system is owned and hosted by someone else, and is usually the best choice for smaller businesses. The telephones themselves are the only equipment you will need to buy. Service is provided by the hosting company, as are any upgrades.

A hosted PBX or virtual PBX VoIP system comes with all the features of a standard premise based phone system including voice mail, call attendant, call forwarding and faxing and you can usually choose from a variety of additional feature packages.

Tags: b2b, communication, vendor, voip
Posted in Small Biz Tips, Vendor Sourcing | No Comments »

Seven Ways to Increase Your Appeal to Potential Vendors

Saturday, March 26th, 2011

Whether your company needs to outsource human resources, IT or any other business function, finding quality vendors you can work well with is always the important first step. This can be a time-consuming process, but you’re already halfway there if you run your company in a way that attracts quality vendors.

Vendor selection can be much easier if your reputation places you among the companies that B2B service providers prefer to do business with. If, on the other hand you are known for haggling over pricing, delaying payments or being difficult to deal with in any number of ways, you may eventually find very few providers who are willing to do business with you.

How do you know if yours is the type of company that attracts the best vendors?

Look at your current vendor relationships. Do you have frequent misunderstandings with service providers? If so, the problem could lie with you rather than them.
Examine your relationship with your own employees. Is there a high turnover rate, a history of disputes or low morale? Your relationship with vendors will likely follow the same pattern.
When contacting potential vendors, do you make it clear you’re in the market to purchase and not just doing research?
Do you project that you have a budget in place for the services you are seeking?
Do you communicate your needs confidently? It helps to know in advance what you are looking for in a vendor.

Here are seven ways you can improve your vendor relationships and increase your company’s appeal to potential service providers:

Improve your communication skills. Be clear, friendly and open to discussion. If communicating with your vendors continues to be a source of frustration, consider hiring someone to manage these relationships.
Demonstrate respect for the other person’s perspective, even if you disagree with them.
Avoid micromanaging; allow the vendors you work with to apply their expertise to your projects.
Be available. Respond to emails within the same day whenever possible.
Avoid giving the impression that you’re simply looking for the cheapest vendors. This doesn’t mean you should always pay the highest price for every service, but do be willing to pay a fair price for quality service.
Maintain a good rating with the Better Business Bureau and keep your Dunn & Bradstreet profile up to date as well.
Make sure your website projects the image of a reputable company.

Tags: B2B services, business to business, sourcing, vendor, vendors
Posted in Vendor Sourcing | No Comments »

Seven Tips for Successful Vendor Contract Negotiation

Thursday, February 24th, 2011

Once you’ve found a suitable business service vendor you will want to arrange a meeting to discuss details of your contract. Successfully negotiating a contract that benefits both parties requires a degree of skill. Here are a few tips to keep in mind as you enter the negotiation process:

Before the actual meeting, obtain a copy of the vendor’s standard agreement, or a sample contract. A good time to do this is when requesting an initial quote from the vendor. This gives you time to completely review the terms of the contract and decide in advance areas in which you will want changes made in your favor.
Enter negotiations with the right mindset, making sure your expectations are reasonable. The best contract is one that both parties feel good about.
Be clear in your expectations. Include detailed time frames for specific milestones. It is in the vendor’s best interest to allow some leeway in their service agreement, so you might need to change some of the wording to ensure the work is completed within your expected time frame.
Stand your ground in areas that are the most important to you but not as high on the vendor’s list of priorities. But be flexible regarding aspects of the contract that have a lower priority for you.
Remember that it’s not all about price. By negotiating for the lowest price possible you could end up leaving your vendor looking for ways to cut corners in order to make a decent profit.
Even if the vendor’s opening price is well within your range, don’t hurry to sign the contract. Ask for some adjustment in the price or other concession in your favor, so the vendor does not end up feeling their offer was too low.
Don’t give into pressure to sign within a certain time. If the vendor warns that their prices will increase after a certain date, you can see if they will accept a letter of intent pending an acceptable agreement. Bear in mind, however, that this could limit your negotiating power by placing a time limit on the negotiation process. Ultimately, you have the choice to walk away if you are not satisfied with the terms you’re offered.

Tags: b2b, B2B services, outsourcing, vendor, vendor contracts
Posted in Small Biz Tips, Vendor Sourcing | No Comments »