CHAPTERS

CHAPTER SUBHEADINGS

Overview of Strategic Outsourcing

What Is Outsourcing?
Outsourcing Reasons and Benefits Sought
Levels of Outsourcing
What Is Strategic Outsourcing?
Outsourcing History
Outsourcing Trends
Outsourcing Growth

Another Reason to Outsource: Obtain Expertise, Skills, and Technologies That Would Not Otherwise Be Available

The Seven Steps to Successful Outsourcing
Outsourcing Success at JLG Industries (Case Study)
Planning Outsourcing Initiatives
Exploring Strategic Implications
Analyzing Costs and Performance
Selecting Providers
Negotiating Terms
Transitioning Resources
Monitoring Performance
Inhibitors to Outsourcing
The New Provider Relationships

Another Reason to Outsource: Increase Flexibility to Meet Changing Business Conditions, Demand for Products/Services, and Technologies

Planning Initiatives

Risk Assessment
Senior Management Acceptance and Support
Powerful Opposing Forces
Employee Announcements
Choosing the Project Leader
Choosing the Project Team
Project Management Issues

Another Reason to Outsource: Improve Operating Performance

The Need for Outside Advisors
Decision-Making
Potential Advisor Roles
Outsourcing Training
Outsourcing Advisor Skill Sets
Lawyers
Other Specialists

Another Reason to Outsource: Reduce Costs Through Superior Provider Performance and the Provider's Lower Cost Structure

Morrison Knudsen Corporation and Techtronics, Inc. (Case Study)
Organizational Objectives
Outsourcing Targets
Outsourcing Initiative Plan Objectives
Criteria for Evaluating Outsourcing Success
Management Acceptance of the Plan

Another Reason to Outsource: Enhance Effectiveness by Focusing on What You Do Best

Exploring Strategic Implications

Overview
The Vision
Size and Vertical Integration
Functional Hierarchy Structures
Process Structures

Another Reason to Outsource: Transform the Organization

APAC Teleservices, Inc. and Farmers Insurance Group (Case Study)
What Core Competencies Are
Exploiting Core Competencies
Examples of Core Competencies
Method of Identifying Core Competencies

Another Reason to Outsource: Reduce Investments in Assets, Freeing Up These Resources for Other Purposes

Arthur Andersen and Camp Fire Boys and Girls (Case Study)
Outsourcing Related to Other Outsourcing Tools
Focused Restructuring
Transformation
Overcoming Resistance
Alternatives to Outsourcing to a Provider

Another Reason to Outsource: Improve Risk Management

Overview
The Provider Relationship
Assigning Decision Rights
Contract Length and Termination Date
Testing What Might Be Outsourced

Another Reason to Outsource: Gain Market Access and Business Opportunities Through the Provider's Network

Analyzing Costs / Performance

Overview
Measuring Existing Costs
Identifying Activities
Activity-Based Costing
Scenarios on Projected Internal Costs
Cost-Level Comparisons and Standards

Another Reason to Outsource: Improve Management and Control

Ryder Transportation Services and Deere & Company (Case Study)
Measuring Current Performance Levels
Estimated Cost of Poor Performance
Scenarios on Projecting Internal Performance
Performance-Level Comparisons and Standards
Specific Risk Analysis
Setting Outsourcing Priorities
Contribution Value

Another Reason to Outsource: Improve Credibility and Image by Associating With Superior Providers

Asset Identification and Capital Budgeting
Asset Values
Make or Buy Decision
Cost of Invested Capital
Estimated Impact of Poor Performance
Costs That Don't Disappear with Outsourcing
Additional Costs with Outsourcing
Other Financial Implications
Pricing Models
Financial Engineering

Another Reason to Outsource: Expand Sales and Production Capacity During Periods When Such Expansion Could Not Be Financed

Selecting Providers

Identifying Potential Providers
Provider Qualifications
Evaluation Criteria
Decision Time

Another Reason to Outsource: Turn Fixed Costs Into Variable Costs

Computer Sciences Corporation and DuPont (Case Study)
Overview
Reasons to Outsource
Outsourcing Scope: Service Specifications
Potential Pitfalls
Provider Qualifications
Performance Measures
Pricing
Other Special Terms and Conditions
Request for Innovative Ideas
Communications, Meetings, and Information

Another Reason to Outsource: Commercially Exploit the Existing Skills

Sodexho Marriott Services and Allegheny University Hospitals MCP (Case Study)
Restate All Proposals in Common Terms
Qualifications Evaluation
Performance Commitments
Price Comparison and Evaluation
Make or Buy Financial Decision: Update
Decision Time

Another Reason to Outsource: Acquire Innovative Ideas

SPS Teleservices and Eddie Bauer (Case Study)
The Relationship Team
Due Diligence on Providers
Short-List Contenders
Confirming That the Proposals Are Final
Selecting the Prime Candidate

Another Reason to Outsource: Give Employees a Stronger Career Path

Negotiating Terms

Overview
Principled Negotiating
Preparing for Negotiations
Negotiation Levels
Face-to-Face Negotiations
Principles of Fairness
Decision Time

Another Reason to Outsource: Increase Commitment and Energy in Noncore Areas

Transitioning Resources

The Relationship Team Takes Over
Transition Roles
Communication Issues
Human Resources Issues
Transition Issues

Another Reason to Outsource: Generate Cash By Transferring Assets to the Provider

Managing Relationships

Greaver and Associates and Roberts Ryan and Bentley (Case Study)
Relationship Management
Oversight Council
Meetings
Performance Reports
Audits
Personnel Replacement
Other Changes

Another Reason to Outsource: Accelerate Expansion by Tapping Into the Provider's Capacity, Processes, and Systems

Resolving Disputes
Third-Party Intervention
Termination
Provider Issues in a Recompetition
Organization Issues in a Recompetition
Streamlining the Recompetition Process

Another Reason to Outsource: Increase Product and Service Value, Customer Satisfaction, and Shareholder Value

Appendices