August 14, 2010
PURPOSE/OBJECTIVE: The purpose of this executive summary is to outline the outsourcing / contracting process for Travel Magazine. This process will ultimately be used to determine which business processes at Travel Magazine will be outsourced and which will remain in-house. In addition, this summary will include various vendor selection considerations, such as evaluation criteria and performance measurements, for those processes that will be outsourced.
GENERAL OUTSOURCING INFORMATION: The following is some general information regarding the outsourcing of business processes: * Outsourcing promises valuable opportunities, but may also pose substantial challenges and risks * One of the top reasons for outsourcing failures is due to the mismanagement of agreements * The outsourcing market is still overall relatively immature (Krell, 2007)
OUTSOURCING DECISION MAKING PROCESS: Before deciding whether or not to outsource any of our business processes, we decided to use three evaluations, other than cost, to ensure that a sound outsourcing decision will be made. We want to ensure that our decision ultimately aligns with our overall strategy, objectives, capabilities, and plans. The three evaluations include: * Identify Strategic Drivers – Identifying the company-specific strategic drivers for the outsourcing decision of each business process is essential to keep everyone on the same page throughout the process. * Evaluate the Full Range of Options – A thorough evaluation of the full range of options includes considerations of shared service arrangements, as well as all sourcing possibilities. * Assess Internal Capabilities – Assessing the internal capabilities of each sourcing option must include an honest evaluation of systems and controls, as well as the skills necessary to transfer and effectively manage the outsourced process (Krell, 2007).
GENERAL BENEFITS OF OUTSOURCING: There are several overall benefits that we hope to achieve by outsourcing some of our non-core business processes. Some of these benefits include: * Reduced costs
* Access to better talent
* Solve potential staffing issues due to qualified labor shortages * Access to better technology
* Improved processes and productivity
* Reduced risks associated with ineffective in-house processes (Krell, 2007)
RELEVANT FACT #1: The following chart shows the basic outsourcing decision model for our business processes. Each process will be stepped through this model in the table below this decision model chart to help determine feasibility for outsourcing.
BUSINESS PROCESS| Linked to Strategic Planning and/or Competitive Advantage?| Does Process Create Significant Business Risk?| Can Controls Be Implemented to Mitigate Risk?| Can Controls be Preserved by Vendor?| Is Impact of Process on Customers Critical to the Business?| Accounting| No| Yes| Yes| Yes| No|
Editorial| Yes| N/A| N/A| N/A| N/A|
Photography| No| Yes| Yes| Yes| No|
Publishing| No| Yes| Yes| Yes| No|
Distribution| No| Yes| Yes| Yes| No|
Printing| No| No| N/A| N/A| N/A|
Layout| No| No| N/A| N/A| N/A|
Advertising| Yes| N/A| N/A| N/A| N/A|
Editing| No| No| N/A| N/A| N/A|
Articles| Yes| N/A| N/A| N/A| N/A|
Key: Green highlight = Potential Candidate for Outsourcing
Light blue highlight = Not a Candidate for Outsourcing Based on Potential Risk to Strategic Planning and/or Competitive Advantage
OPTIONS AND ANALYSIS: Based on the analysis of the business process decisions model above and the corresponding table, there are only three business processes that we feel would be in our best interest strategically to keep in-house as opposed to outsourcing. These three processes, highlighted in red, are editorial, advertising, and articles. We believe that we should keep our core business processes of writing...