Successful Outsourcing

University administrators are choosing with increasing frequency to outsource a variety of campus support services. Today, all campus support services are being considered for possible outsourcing. This trend is the result of many factors. Those factors include, but are not limited to, difficulty in recruiting employees with the appropriate skills, training, commitment to the institution’s mission, institutional finances and/or declining capital improvement dollars.

Unfortunately, simply outsourcing a campus service does not assure the institution’s goals will be met, nor does it assure financial or operational success. Fortunately, there are ways to maximize the opportunity for successfully outsourcing any campus support service.

Administrators choosing to outsource one or more of their campus’s services should be prepared to dedicate considerable time both before the contract is signed and throughout the term of the agreement. Unfortunately, many partnerships between institutions and private service providers have failed as a result of the institution’s failure to commit the necessary time to the preparation of the Request for Proposal or failure to provide adequate contract administration and participation during the contract time. Following are practices that contribute to a successful partnership between the institution and a service provider.

Before the RFP

Data Gathering. Data gathering is critical to any decision-making process. In an outsourcing initiative, the need for information cannot be underestimated. A varied and expansive base of information must be actively and aggressively solicited. Following is a list of recommended data and input that minimally should be secured.

1. Collect data from students, faculty and staff. What are their perceptions? Benchmark other institutions that have outsourced the same service. Conduct a thorough financial and operational analysis of the service area to be outsourced. What are the strengths and weaknesses?

2. Review the product and service mix to determine if it currently meets the constituent’s expectations.

3. Review the current physical facilities condition. Again, what are strengths and weaknesses?

4. Estimate the effect on and response by local businesses.

Consensus Building. Consensus building is a frequently overlooked aspect of an outsourcing effort. Outsourcing should not be limited to the division that the service reports to or the employees affected by the decision, but should include all of the operation’s internal and external customers. On a university campus, this includes everyone!

More specificially, be sure to include student leaders and organizations, faculty, labor unions, affected employees, human resources, procurement officers and any other internally managed support service(s) the vendor may interact with after the contract is signed. The use of focus groups, campus surveys and informal discussions with these groups will pay dividends throughout the process. Remember that people support what they help create.

Goal Setting. Once you have gathered all the necessary data and built consensus, you should set attainable goals. Outsourcing is a strategic decision; therefore, goal setting for the future, not just the present, is critical. Goals should include financial, operational, growth, capital improvements and, of course, customer satisfaction.

The goals you develop should be measurable and practical. An example might be a reasonable but expected rate of growth or savings that will be attained by the vendor each year of the agreement. As is the case with any strategic plan, this should be reviewed periodically and adjusted appropriately.

Unreasonable expectations, whether financial, operational or otherwise, are the single biggest factor in outsourcing failure. Goals should be developed that will challenge the expertise and actions of the vendor, but ones that, with continuous commitment, can be attained. Most importantly, the vendor must deem the goals to be attainable.

Preparation and Completion of the RFP. The preparation and finalization of the Request for Proposal is the most critical element of the outsourcing effort. This document, when properly prepared, provides a snapshot of the institution and the status of its current operation, and details expectations.

The request for proposal should allow prospective vendors the opportunity to ascertain if they can meet the goals and expectations outlined based upon the current operation as well as the possibility for increased services or enhanced efficiencies. The RFP also allows vendors to decide if your institution is a viable business partner. Always remember that this is a partnership, and both partners’ interests must be satisfied for success to be assured.

Once you have developed the RFP draft, share it with those to whom you presented the outsourcing concept. Students, faculty, staff, administration, human resources and procurement personnel should be allowed to provide input and recommendations. You may even wish to share portions of the draft RFP with interested service providers. By allowing various groups to review and provide input and recommendations, you solidify the consensus building and you secure perspectives you may not have considered.

Once the RFP has been refined and released, a mandatory vendor conference should be held. At the meeting, vendors should be given the opportunity to ask questions, seek clarification, view the facilities where they will operate, meet with various constituents and simply view the campus.

Document. Following the review and ranking of the RFP responses, you should begin the contract negotiation process. While you should expect to sign an agreement with the top respondent, the ranking of the vendors’ responses allows you an alternative if consummation of a contract with the top respondent, for whatever reason, does not happen.

The contract is the document that serves as the guide for both the institution and the vendor throughout the term of the agreement. Whenever possible this should be a dynamic document that allows for amendment where necessary. The RFP and the vendor’s response should be part of the final contract document. Any variation between the RFP and response should be resolved in the contract. You should also provide that, in the event of future clarification, the RFP terms shall supercede the vendor’s response.

After the Contract Is Signed

The process is not complete when a contract has been signed. Knowledgeable contract administrators, while disagreeing on the practices they employ to supervise the contract, unanimously agree that participation with the vendor throughout the term of the agreement is essential to assure the outsourcing effort’s success.

Recommendations for consideration during the term of the agreement are listed below, many of which have been observed at various institutions with successful outsourcing programs. While this list may serve as a guide, your institution’s unique culture and operational philosophy will mandate a thorough customization of the practices you adopt.

1. Designate a contract administrator who has primary responsibility for monitoring agreement and acting as the university’s liaison. This individual should be knowledgeable about the process that was undertaken to secure the vendor and have the time to dedicate to the process. This person is expected to be the university’s expert on the agreement and work diligently in assuring its success.

2. As soon as possible, incorporate the on-site management team into the university’s system. This allows them to merge into the institution’s culture. Your goal should be to allow the outsourcing to become "invisible" to the campus community. When the vendor is "absorbed" into your culture, you can be sure you are well on your way to success.

3. Encourage the establishment of an advisory committee to provide needed input to the vendor. The committee should consist of well-respected and outspoken individuals from various segments of the institution. The vendor’s challenge is to satisfy this demanding group.

4. The contract administrator should conduct weekly meetings with the on-site manager to discuss observations and secure plans for the operation.

5. Conduct quarterly meetings with the on-site manager’s immediate supervisor to discuss the progress being made. These are beneficial to encourage and maintain the company’s support of the agreement.

6. Conduct an independent survey annually to ascertain the various constituents’ perceptions of the vendor’s performance. Share the results with the vendor, and develop a plan to address any deficiencies.

7. Review annually the accomplishments and disappointments experienced by the vendor. Assist the vendor by providing insight into the institution’s culture that may have contributed to the success or disappointments experienced.

8. Finally, continually monitor the goals that were set during the RFP process. Adjust where necessary, and establish new goals for each year. You should fully document this step and provide copies to your administration and to the vendor.

Nick Bruno is director of auxiliary services at Southeastern Louisiana University in Hammond.

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