Aligning outsourced solutions and managing outsourcing
People refer to outsourcing in many contexts. Many say outsourcing when they mean off shoring operations to another country.
There are many confusing uses of the term outsourcing
What is outsourcing? The top search engine entries say taking internal functions and paying an outside firm to handle them, and migration of service to an external provider. The definitions generally make it sound like when the enterprise outsources a function or service, it is completely separate, and the enterprise no longer has responsibility. We hear of many problems with outsourcing, particularly the alignment of outsourced business processes, information system application services, back office processing, and other performance solutions.
Result-performance Management (R-pM) provides the structure for outsourcing and outsourced service alignment
The R-pM definition of outsourcing is having another enterprise or outsourced solution provider provide one or more performance solutions in the enterprise performance structure transform an input result from the enterprise result structure into an output result that goes into the result structure. All results are under result management responsibility and all performance solutions, including those outsourced, are under performance management responsibility. This provides the structure to manage and align outsourced solutions through Result-performance Management. Visit the R-pM website for R-pm community downloads that explain Result-performance Management.
Outsourcing uses another enterprise performance solutions to transform enterprise results
Some enterprises have others execute their functions rather than doing it themselves.Some have shared service centers provide a common solution to their local enterprises. Others outsourced application systems, back office processing, product assembly, business processes, or other solutions to an outsourced solution provider.
Outsourcing provides economies of scale and lower unit costs, but many recognize that it can also create problems for the enterprise, such as:
- The objective of outsourcing to standardize rather than improve
- The need for the enterprise to adjust and maintain its operations to conform with the outsourced solution
- Lack of ownership on the part of the enterprise for the solution and the performance of the solution, and removal of internal capability and knowledge of the solution
- Difficulties in aligning the outsourced solutions with the internal processing of the enterprise
But, most enterprises outsource performance solutions without understanding what they are outsourcing. They usually outsource a combination of results and performance solutions, but this is not explicit in the outsourcing service agreement. There is no good framework for managing what the out-sourced solution provides in relationship to the internal operations of the enterprise. There is the well-known “alignment problem” between outsourced and internal solutions. The enterprise often creates additional processes in order to accept and make use of whatever they get.
Outsourced performance solutions cannot be aligned with internal solutions; solutions must be aligned with results
The only way to manage outsourcing effectively is to manage all enterprise results and performance solutions. The results we outsource are organized within the chain of enterprise results and performance solutions we outsource are aligned with other performance solutions used to produce the results in the chain.
An enterprise result managers is responsible for each enterprise result and an enterprise performance manager is responsible for each performance solution. This makes the enterprise responsible to see that outsourced solutions are utilized effectively to produce enterprise results.
When the enterprise organizes its results and performance solutions, it has a result-performance structure to manage the results and performance solutions it has outsourced.
Result-performance Management (R-pM) provides the method to managed outsourced results and performance solutions aligned with internal results
The method for corporations to manage their outsourcing is Result-performance Management (R-pM). R-pM enables business-based analysis of internal and outsourcing options to produce results. R-pm manages both internal and outsourced solutions as well as the results produced. To learn more about R-pM, review the articles under Learn the Basics of R-pm or visit result-performance-management.com to download documents on R-pM concepts and the application of R-pM for Outsource Solutions.
21st Century Management eliminates 20th century problems
Result-performance Management (R-pM) eliminates outsourcing problems and other costly 20th century problems. Slash costs, simplify business management, and boost competitive advantage through R-pM, the conventional method for 21st Century Management.
Download your 21st Century Management Manual today
Your 21st Century Management Manual, The R-pM Toolkit, is available today and is under continual development to expand and refine 21st Century Management. The R-pM Toolkit is offered at a nominal price to encourage wide use of R-pM. Get your R-pM Toolkit, and future updates, at result-performance-management.com.
