In-Sourcing, Out-Sourcing & Multi-Sourcing

In-Sourcing, Out-Sourcing & Multi-Sourcing

If the last 100 years have brought to us (internet, WWW, Mobile etc…) what the last few centuries prior to them haven’t in general, the last 20 years have embraced every channel available to explore new territories, people, cultures and have succeeded in establishing trend-setting partnerships across the globe.

Getting into sourcing what was just ‘In-Sourcing’ for many years until few decades ago has been experimentally expanded by deploying team(s) in different location(s) within the country, outside of it, outside the company’s framework and so on, the need drove companies to be creative and so eventually sourcing evolved to what it is today

We will in this post get introduced to In-Sourcing, Out-Sourcing and Multi-Sourcing

In-Sourcing

Assigning the responsibility of a project to a team which is internal and which has been either set up specifically to deliver the task or has been in the system for some time and has been trained to deliver the task.

There are multiple aspects to be noticed in this mechanism like for example the team need not be Full Time Employees, they can be either part time or be contractors hired just for the task. Also the team need not be based in the same location as the (IT) Head Quarters or the location where the solution needs to be deployed. With an effective Programme and Project Management the task can be executed from any location that has decent network connectivity.

The most critical of all aspects in this model is Profit and Loss (P&L) ownership which is vested in the team which is given the responsibility of the deliverable. Many a cases this becomes the Achilles Heel, in very few a boon.

This model has been and is favoured by many organizations and there are few very big labels which pursue this route to this day like Tesco, Vodafone, Boeing etc…Yes, these companies also do some Out-Sourcing

Out-Sourcing

Out-Sourcing wont be a lot onerous because of a fair bit of commonality it has to In-Sourcing; let us see how and why. In Out-Sourcing too drawing the requirements together and weaving a scope happens very similar to as it does in In-Sourcing but because of the work being sent outside the legal walls of the outsourcer due diligence becomes de rigueur (Essential). The inquiry happens two ways, by the Outsourcer and by the Outsourcee

It would be hard to itemize all the aspects that are vital in Outsourcing; I have attempted summing up few.

The most crucial factor for success of an engagement or a partnership is the relation between the parties involved. Success and failure coexist in an outsourcing relation, quite a few companies fail not because having botched delivering the project but because of not having established a sincere affiliation with the client. There certainly are companies even today on the supplier’s side of the business which do not maintain a ‘open book’ policy with the clients specially around highlighting any hiccups as they come up, sharing the impact the hitches would have on the delivery of the task. In most of the times it is usually in the eleventh hour the client gets to know about the damage; not in all the cases but surely in few the setback is irreparable.

Cost, is not everything, but definitely plays a big role in clinching a relation. Costing differs a lot based on the experience both the organization has in delivering similar projects in the past and the individuals involved in estimation have experience in delivering that too. With many clients having learnt the hard way that cheapest option is not always the best they do wish to see both quality and quantity but just not money in a relation especially when someone envisages a long term one. Also because of the economy crisis if any suppliers can do their bit in offering cost effective solutions by lowering margins clients would absolutely be ready to consider such proposals

It is an endless debate to have whether a project lost is a relation lost, I would agree that the supplier who wins the deal has demonstrated that extra care in a relationship perspective which goes a long way beyond that assignment but the other suppliers involved in the process would undoubtedly stand a chance in the future provided they have showcased strong commitment throughout. Relationship, a lot is about understanding the priorities of the client, accepting or sharing the inability as a supplier on any of the aspects with the client upfront. We have seen in many occasions client setting out to procure a service/solution on a specific technology and with the rapport the supplier establishes with the client they make the client change their mind/approach by suggesting that some other technolog(ies)y would best suit their needs.

Because of the variety market/Supplier today has got to offer clients are expecting suppliers to be proactive than reactive. Proactive here means supplier engaging with client in a series of discussions which will give the supplier a fine understanding of the client’s the then existing business, technology scenario and needs and will help to get back to the client with a winning proposition of what new and unique benefit can the client get from them if given an opportunity. Here sometimes a supplier might have to demonstrate the technical and operational deliverability and knowledge by offering a portion of the target deliverable as Proof of Concept at their expense, history has many examples which have proven that client does get into a relation with that supplier further to that

An aspect worth citing would be that no definitive scope of work is required as highlighted in most of the forums, yes it would aid in accelerating the whole development but it surely is not the ‘show-stopper’ ingredient. It infact has been demonstrated many a times that without a strict scope of work projects were delivered to mutual satisfaction of the vendor and the client solely because of a worthy exchange of expectations.

Multi-Sourcing

This is still evolving conceptually but indubitably offers best of both (Insourcing and Outsourcing) worlds. By parts the concept was and is being practised and serviced across various geographies. In this model the client goes an extra mile backward to invite a supplier (of course after due diligence) to assess their current set up/investment and map out the benefits the client can get out of it with minimal or some changes and define what would they need in addition. Further to this another partner selection programme is conducted by the client to identify the right supplier who can deliver what they want, here comes the benefit and inimitability of Multi-Sourcing. The client should from the earlier exercise have got an output that offers the clarity on what’s missing and what needs improvement; that report when appropriately synchronized with the potential supplier’s capabilities client will realize that each of the potential supplier has something distinct to offer and they have proven expertise within that space.

Yes, it would be challenging to coordinate with multiple suppliers on a single assignment as the task would be broken into multiple modules and outsourced amongst few but if we look at the precision each of the suppliers would offer, the amalgamation would result profits.

For example: if we consider a company wanting to start offering their business online or enhance their existing online portfolio depending on the business if it is a retailer they can fragment the target chore into multiple tasks like building an appealing User Interface which can be outsourced to a supplier who has demonstrable expertise in that space, then look at the layout, design and architecture and partner with a supplier who specializes in those, then partner with a testing services provider to gauge and ensure that the solution in hand is robust and scalable enough, then a good hosting partner and so on. Also there are suppliers who are good in support and maintenance of this kind of solutions who can offer quality service economically once the solution has gone live.

Not to forget Multi-Sourcing can be applied to a project or to multiple projects based on a technology stream.

If we consider the above example in a typical ‘In-Sourcing’ or ‘Out-Sourcing’ angle the client will be able to find very few suppliers who can offer everything (specially when the project is of very large scale) which indeed does reduce the cost of having to evaluate suppliers and coordinate with quite few of them to achieve desired results but as we are all aware the investment would be so significant compared to the ‘Multi-Sourcing’ mechanism.

I am sure you would appreciate that there is a lot to In-Sourcing, Out-Sourcing and Multi-Sourcing; we will try digging Multi-Sourcing more as that’s going to dominate the Sourcing arena in the coming years.

Outsourcing X.0

OutSourcing X.0

Food, Shelter, Money, many out there know about outsourcing as much as they know about these aspects. Historically outsourcing has proven to be a significant way of doing business as the outsourcer gets to focus on their core business areas by offloading the aspects which are better done at a location and by people or organization(s) economically and quality wise apt

If I could recall relatively older success stories like the ‘Ford’ to more recent ones like DELL, companies have prospered by choosing the outsourcing conduit. There are very successful stories on the Insourcing and Multisourcing side too

From the need and the action came the processes to qualify the quantification. 

We have seen the CMMs, the CMMi’s, the ISOs, the SIX SIGMAs circumscribing Outsourcing in the last couple of decades making it a more stronger, indispensable and trusty course

With the upsetting economical climate in the last few months outsourcing, by few, has been translated being anecdotal which is alarming. This should in fact be the time for an organization with outsourcing potential to look for the right partner as companies which have the capability to deliver have stood up with time and have a great lot to offer. The key is though for both the buyer and the seller to evaluate each other unlike one evaluating just one in many cases till now

Increasingly as I find organizations wanting to find the key aspects of any project management process that would reduce the risk in an outsourcing assignment I feel like sharing with them these thoughts:

As the acceptance of Six Sigma has grown and is penetrating deeper into common business culture, a question arises when is the right time to determine when a process needs to be improved versus designed?

Let’s examine two established and proven methodologies Six Sigma DMEDI and DMAIC which would benefit companies from many industry backgrounds and people working on various projects of both technical and non-technical in nature if implemented for the right variety of projects. In many occasions organizations are convinced/sold on Six Sigma ‘DMAIC’ as a quick fix to internal organizational issues and problems. However, the true benefit Six Sigma can be realized when it is applied in scenarios involving building processes from scratch than fixing issues or processes

DMAIC (Define, Measure, Analyze, Improve, Control)

DMAIC is an analytical, data driven approach to eliminate weaknesses in active processes, products and services. DMAIC brings incremental improvements.

DMEDI (Design, Measure, Explore, Develop, Implement)

DMEDI is more of a creative approach to designing new robust processes, products and services. This roadmap is focused purposed to obtain significant competitive advantages or quantum leaps over current environments. However DMEDI Projects tend to be more time and resource intensive.

Enclosed below is a high level comparison of DMAIC and DMEDI Six Sigma methodologies

DMAIC	DMEDI
Define – Review project charter, Validate problem statement and goals, Validate voice of the customer and voice of the business, validate financial benefits, validate high level Value-Stream map and scope, Create Communication plan, Select and launch team, Develop project schedule and Complete Define gate	Define – Almost similar to Define in the DMAIC methodology
Measure – Value Stream map for deeper understanding and focus, Identify Key Input, process and Output metrics, Develop operational definitions, Develop data collection plan, Validate measurement system, Collect baseline data, Determine Process capability and Complete Measure gate	Measure – Define Customer’s needs using VOC and QFD, determine CCR’s
Analyze – Determine critical inputs, Identify potential root causes, Reduce list of potential root causes, Confirm root cause effect on output, Estimate impact of root causes on key outputs, Prioritize root causes and Complete Analyze gate	Explore – Develop Design concepts, and High-Level design
Improve – Develop potential solutions, Evaluate, select and optimize best solutions, Develop ‘To-Be’ value stream maps, Develop and implement pilot solution, Confirm attainment of project goals, Develop full-scale implementation plan and Complete Improve gate	Develop – Develop and optimize detailed design
Control – Implement mistake proofing, Develop SOPs, training plan and process controls, Implement solution and ongoing process measurements, Identify opportunities to apply project lessons and Complete control gate. Transition Monitoring/Control to process owner	Implement – Validate design with pilot, establish controls, full scale implementation

Both the methodologies bring strengths when used in a right environment, right situation, right industry on the right project (ideally when being built from the scratch as highlighted in one of the aspects above), with the right team. A thorough monitoring (checking and re-checking) should yield best results

We will look at how Insourcing, Outsourcing and Multisourcing are different in their approach and what benefits do they bring to a client in the coming posts

We can win TOGETHER

We can win TOGETHER

Sorry for the long silence as it has been really tough to balance work-life in this tough economic climate and my latest article presents a unique dimension to the downturn/recession and how could we possibly minimize the impact together

I am sure all of us have learnt a lot about Recession, Subprime crisis, stock markets, price indices and few more aspects which wouldn't have meant much to us prior to this unpleasant, unexpected and unwanted change that has hit many places and people globally.

I see property (houses, apartments etc…) ads on television, newspapers and other media trying to convince us with astonishing rates and everyone there trying to sound as promising as they can to win the buck. On the other hand, shops and retail businesses are trying to make the best use of every opportunity – Valentine’s Day, Easter, and Mother’s Day to weather the recession.

Technology companies around the world are confused unaware of what is the next potential market for them which can mitigate the risk they have from economies who have been the heart of their outsourcing action and who today are shying away or atleast trying to do so. Emerging markets all said and done haven't shown any great positive difference except the resilience which could pay off in the long run

I was wondering is there something we all can do at an individual level which when combined will make a world of difference!!! I wish I was an economist, I would have carved out a very convincing plan or may be would have tried convincing people with whatever I have in hand even if it’s unrealistic as it happens in most of the political scenarios around the world :-), just kidding. But but but, I have a story which I had fortunately read around twelve years ago which bears a very strong relevance to the current economic situation which I felt can trigger a thought in most of us to do something to minimize the damage this downturn has caused and is causing to our society. May be unknowingly or knowingly we might help someone save their job, or give one a peaceful life even if it’s for a day, or spread smiles across miles

A story set in the ancient times around a fantasy town called Pumpelsdrop with the story titled ‘The man who saved Pumpelsdrop’, I truly wish every nation, city, town or village experience a magic that Pumpelsdrop goes through in the story. I have tried as much as I could to know and publish the author’s name here but I have not been successful in finding the right details, however the closest I can recall I guess is ‘Mr. Walter J Turner’. Also about the story I have tried to cover the essence to the best possible extent, please excuse me if I have missed out any key points if you are aware of the story!!

The story is about a stranger, whom the author calls as a Lunatic and considers him to be the greatest benefactor, the town of Pumpelsdrop had ever known. The story refers to the time in the history of ‘Pumpelsdrop’ when the town would be experiencing a terrible economic turmoil, when everything seems to be deteriorating - businesses, agriculture and so on. Many who would have had lost hopes would have started leaving the town to make a better living or just ‘a living’ elsewhere. It was a defining movement for Pumpelsdrop and no one had a clue what would or who would save them

On a particular morning a stranger walks into the local car showroom which was the only showroom, selling expensive cars though. Due to the recession there wasn't any stock for a ready dispatch and it would have been more than a year since the showroom saw a car actually sold. This stranger who walked in to the showroom orders for a fleet of cars (may be around 6-10 ten of those) which startles the showroom owner and makes him ask the stranger for an advance. The Stranger pulls out a cheque book and signs a cheque for the bulk of the amount and says he would pay the rest when he returns to collect the vehicles.

With the joy that his business has seen some light the car showroom owner gifts his wife some cash on the same evening asking her to buy some jewelry for herself, she falling short of words shops to her delight the same evening. With the money flown in to the Jeweler’s hands he shares his content with his wife by giving her some cash to spend, the lady buys some furniture and I am sure you have guessed it right by now, the fun goes on and on.

Before one could realize the town was fully back in action and finally the day had come when the stranger had to pick up the cars. The car showroom owner was going through the most exciting day of his life with the satisfaction and confidence that this order has given life not just to them but to the whole town and they have already seen small orders coming in

A while later a van (which appears to be an ambulance) stops slightly away from the showroom and three people exiting from it walk towards the showroom. They show a photograph to the showroom owner and ask him if he can identify the person in that photo, the showroom owner is shocked to find that it’s the stranger who had placed the magical order and asks those three people curiously if everything is fine. The Showroom owner is told that the stranger was a mentally challenged person and had escaped from the hospital recently and they have been trying to fetch him.

Finding it hard to digest the twist the showroom owner gets to his home in the evening to realize that the stranger has actually been the savior, he thinks that if it wasn't for the stranger his wife wouldn't have bought the jewelry and the jeweler’s wife wouldn't have bought the furniture and the town would have never come back to life again. The showroom owner next day wakes up to a new and positive morning to contribute his part to rebuilding the town

Moral of the story to me is that if all of us contribute to the society we live in to our best extent possible either by buying goods or educating people around us on how to spend effectively, I am sure we will get out of the crisis sooner than later

We can win TOGETHER