Strategic Sourcing  Not Just Procurement Anymore

Five steps to help your company decide whether or not outsourcing is the right move


  • Create a detailed RFX, incorporating the key evaluation criteria, requirements and SLAs. There should be separate sections for:
    * Instructions
    * Company information
    * Service requirements
    * Pricing
    * References
    * A contract for services (not generic boilerplate, but one that has been customized for the services needed)

  • Create a balanced scorecard for the efficient analysis and assessment of the RFX responses. Spreadsheets work well for this and allow each response to be scored against the key evaluation criteria. Compute the score.

  • Create a pricing response booklet that clearly lays out what your company will have to have pay for the totality of the services. Vendors need to make sure that all costs are included in the pricing workbooks.

Now it is time to issue the RFX. Remember, when deciding on how much time to give vendors to respond, be reasonable — not generous. Also, be sure to remain the key driver in the process: If your company feels uncomfortable providing additional information or meeting with vendors before receiving their proposals, don't do it.

Step 4: Analyzing RFX Responses

Objective: Provide direct vendor-to-vendor/solution-to-solution comparisons for each of the respondent's proposals.

Evaluation scorecards will guide this Step of the process. There are two sets of evaluations that should be completed: price, and everything else. The pricing analysis should be a comparison of the pricing workbooks that were included as part of the RFX. The balanced scorecard should cover everything else. Some of the evaluation headlines should include:

  • Financial viability over the long term

  • Merit of technical solution

  • Costs and unit pricing

  • Future technical and services roadmap

  • Experience providing the services required

  • Customer reference interviews

  • Compliance against the evaluation criteria established in Step 3.

During the analysis phase, ensure that the proposals are clear and that each vendor complies with the requirements of the RFX. Where responses are missing information or require verification, reach back out to the vendor(s) in question to fill in the blanks.

Note: When evaluating the RFX responses, don't forget to include the current internal solution as an option. The evaluation may indicate that the best solution doesn't involve any outsourcing at all.

Upon conclusion of this step you will have an analysis document that provides complete vendor/solution comparisons so that recommendations can be developed for the leading vendor(s) and can be used for the implementation of a solution.

Step 5: Negotiate Contracts

If the analysis concludes in a recommendation to outsource, start from the contract that the vendor submitted. This will reduce the amount of time it takes to successfully come to agreement on key legal and business terms and conditions. Areas of focus during this step should include:

  • Draft a framework for further defining comprehensive service level agreements and ensuring that the SLA metrics outlined in the RFX are completely understood and agreed to by the vendor, as well as represented in the contract(s).

  • Merit of technical solution

  • Ensure that all requirements outlined in both the RFX and accepted by the vendor in the response are captured within the contract terms.

  • Set vendor expectations with respect to contract term, periodic rate reviews, early termination provisions and discontinuance without cause clauses.

  • Build in key stakeholder-specific requirements (e.g., billing formats, account management, SLA reporting as well as any others).

  • Work with legal and procurement teams to conclude an agreement for the specified services.

Upon conclusion of this step of the process, you should have a signature-ready contract, allowing your company to move forward with the solution.

Answering the question, Should I outsource? may not have an immediately obvious answer, but when you follow the five steps outlined above, it will allow you to make a fact-based strategic decision.

About the Author: Shally Bansal Stanley is the managing director at Acumen Solutions, a management and technology consulting firm based in Vienna, Va.

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