Define your terms - making outsourcing work for information services

Peter Griffiths

Disclaimer – nothing in this presentation should be taken either to representofficial practice or to criticise or endorse it from any official viewpoint

Outsourcing and externalisation

Same difference? Outsourcing – the buying in of one or

more parts of a service provided within or by an organisation

Externalisation – the buying in of a complete service from an external contractor

Why libraries outsourceTo provide more services than they can currently afford from their fundingTo take advantage of suppliers’ economies of scaleTo avoid the need to maintain a high level of in house skills

e.g. Internet outsourcing via an ASP e.g. to focus on what they see as key professional

issues by contracting out lower level activities

To provide a hedge against future shortages of funds

Contractual aspects of the arrangement Case study to follow – where does money go first,

disaster relief or libraries?

To introduce innovative ideas

More than you think …

Services outsourced by law libraries1

Bar coding Billing/accounting BindingBookkeeping  Book purchasing Cataloging Computer center/technology management Database access Data recovery Deacidification  Disaster recovery Document delivery Document retrieval Imaging Indexing Library move Loose-leaf filing Messenger services

Microfilming Network management Payroll preparation PC management Personnel/recruiting Photocopy service Printing Records management Research (AIIP) Retrospective conversion Routing Shelving Specialized research Subscription management Temporary staffing Thesaurus development

Web page design/hosting

1 – Ebbinghouse, C. Library outsourcing – a new look. Searcher, 10 (4), April 2002 http://www.infotoday.com/searcher/apr02/ebbinghouse.htm

Longer than you think …

Library and information services have been outsourcing catalogue card production at least since 1902 …Book servicing Business Information Services, public enquiriesBook repair and bindingStock pre-selection / approvals (Liverpool; New Zealand)IT – see onSchools servicesBuildings (e.g. Brighton; Bournemouth; Newcastle)

Requirements and standards

“It is debatable whether libraries can hold contractors to in-house standards of professional development. Ultimately commercial enterprises, with their profit-making goals, could be at odds with the service-based goals of librarianship – a conflict that may be impossible to address through statements of work, directing performance and product requirements”

Outsourcing and privatization in American Libraries, ALA, 1999

A current case study

Bids to run Jackson-Madison County Library close this coming Friday Bidders being asked to provide additional

services, including 65hrs a week opening, Sunday afternoons, coffee shop, minimum materials budget of 20% (cf. current 5-6% of total budget)

Front runner bidder LSSI says : We only take on clients we can bring benefits to Any limits placed on material purchases or library

offerings as well as privacy controls are all dictated by the Library Board and not by the company

Concerns in Jackson

Staff “If [the successful] company retains

employees – and we have great employees – that would be no loss” – Jackson City councillor

Accountability The library board “is giving away something

that doesn’t belong to them – it belongs to the taxpayers of the county” – Madison County commissioner

What can go wrong?

I believe about 80% of the [outsourced] projects were incorrect and were sent back at least two to three times to be completed correctly. In some cases, it was easier to just fix the problem than to try to explain what the problem was for the contractors to correct themselves.

Software developer, quoted in Computerworld, September 2003

Some high profile examples from the world of business*

Inland Revenue ends contract with EDSChild Support Agency “The supplier alleged that the customer had

ordered 2000 changes from the original requirements” – Adam Ripley, IS Integration.com

Department of Work and PensionsCahoot

* widely written about in the computer press and online!

Define the requirement – but why?

The primary bug bear for suppliers in the outsourcing environment is often that the customer’s requirements can change vastly from what was originally requested

Constant changes to the system can have repercussions on the testing programme, so all changes have to be monitored carefully and appropriate testing procedures amended in accordance. 

IS Integration.com

The importance of definition

Remember that outsourcing should define the service, standards and levels of service but leave the supplier to decide how to deliver them

“Companies box themselves into a corner … they do not focus on standardisation internally, so it becomes difficult to manage projects. In desperation, they outsource. This strategy is likely to fail.” – Alan Frank, Hackett consultants, quoted Computer Weekly, 10 May 2005

Concerns cannot be addressed unless the specification deals with them – and the outsourcing manager will be blamed if there is a problemHow else will you know whether the supplier is delivering to target?!Is it included or is it an extra cost?

Deloitte 2005 survey on outsourcing user satisfaction found that 38% of participants had paid additional or hidden costs for services they thought were included in the contract costs

Reasons to define requirements

Establishing the service to be provided Helping the supplier to understand what’s

wanted, and to cost this reliably (and maybe keeping him in business)

Managing expectations on both sides Providing a benchmark for measuring success

Establishing that all parties are speaking the same language

Routing and circulation Urgent, Rush, Priority or [your trade name here]

Say what you want

Analysing the current service Essential / desirable / nice to have Core / non-core Professional / non(para)-professional Performed in-house / outsourced

Traditionally supposed that the non-core, nice-to-have items are outsourced but this isn’t now necessarily so

Say what you want

The discipline of the Service Level AgreementYou can never have too much precision Though you can have too much detail! Precision will let you judge better whether the offer

matches your requirement

Plan for failure (in the hope it never happens) Build in communication and escalation Plan for in-sourcing if things go wrong

Keep an eye on the market! Don’t forget that contracts have an end date

4 years under new EU regulations – shorter than you think!

Tell others what you want

Ensure that everyone understands the contract

Your bid team and customers The supplier’s bid team and front line staff

Communicate with the rest of your organisation as well as the suppliersBe prepared for reactionary reactionsBe prepared to support a supplier who is taking risks to support you

Risks and mitigation

Key risks : The size of the supplier market The ability of that market to offer a sensible

price and a viable service The Library’s ability to manage the supplier

relationship (and its internal customers)

Mitigation Monitoring the market, monitoring the contract Communication, communication,

communication Precision of definition, sensible negotiation

Outsourcing and the IT function

Ebbinghouse only identified PC managementLibraries also outsource :

IT systems (obviously, if part of a PFI or PPP) Website management and hosting Library management software (e.g. Essex)

Advantages keeping up-to-date sticking to the knitting – IT by the IT professionals can form part of a larger contract

Conclusions

Outsourcing is common and has a record of successThere is also however a record of failures which have a common thread of failure to specifyPrecision helps all parties to understand their roles and responsibilities

Precision of specification makes measurement easierOutsourcing is a partnership – the parties benefit from mutual supportCommunication through precise specification will allow expectations to be managed successfully

Resources

Managing outsourcing, (Pantry S and Griffiths P), Facet, 2004, 1-85604-543-9 £32.95 Chapter 1 available for download at http://www.facetpublishing.co.uk/documents/PG%202004%20Ch1.pdf Externalisation et sous-traitance dans les services d’information (Martin, I and others), Paris, ADBS, 2002 2-84365-076-3, 27€The Impact of Outsourcing and Privatization On Library Services and Management : A Study for the American Library Association (Martin, R S and others) Available online at http://www.ala.org/ala/oif/iftoolkits/toolkitrelatedlinks/outsourcing_doc.pdfInternet outsourcing using an application service provider : a how-to-do-it manual for librarians (Matthews, J R) New York, Neal Schuman, 2001 1-555-70422-0National Outsourcing Association www.noa.co.uk