Lecture 9 (June 8): Outsourcing (PowerPoint)
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Transcript of Lecture 9 (June 8): Outsourcing (PowerPoint)
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LIS 901B: Summer 2005Lecture 9
Outsourcing Technical Services Functions
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Outsourcing Definition
• Procurement of services from an outside vendor– to perform functions not core to the mission of
the organization– to perform functions the organization cannot do
itself– to deliver better services for less money
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Outsourcing is not new
• 1853 Smithsonian catalog system
• 1901 LC distributed catalog cards
• Mid-20th century processing centers
• 1971 OCLC
• 1990s “discovery” of outsourcing as panacea for economic woes– “reengineering technical services”
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Benefits of in-house processing
• Greater control over final product
• In-house productivity & quality may be better than outsource
• Stability of continuing status quo
• Maintaining in-house expertise
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Benefits of outsourcing
• Greater productivity possible
• Greater quality possible
• Expanded expertise
• More flexibility
• Can re-focus on more important issues in-house
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Common Outsourcing
• Use of library materials vendors– Vendor as middle man– Approval plans– Vendor-supplied cataloging
• PromptCat
– Vendor binding– Vendor authority control processing
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Uncommon Outsourcing
• Vendor final selection of materials
• Vendor original cataloging
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Famous cases in
Outsourcing
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1983 OMB list of items to outsource
• Legal services
• Cost-benefit studies
• Data processing
• Janitorial services
• Laundry services
• Repair services …
• LIBRARIES
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Federal agencies libraries contracted out since early 1980s
• National Oceanic and Atmospheric Administration
• Department of Energy
• Department of Labor
• Bureau of the Census
• Department of Housing and Urban Development
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The question:
• Do limitations of contracts for information access affect ability to perform central activities
• If NOAA’s contract limits the amount of work that can go into answering questions, could this affect their ability to predict hurricanes?
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Burt Kane & the Hawaii Public Libraries
• State librarian of 49 public libraries• Ordered to eliminate 100 positions• Eliminated local selection and cataloging of
materials• Placed whole contract with one vendor• Libraries ill-prepared (few details provided)• Vendor took advantage (provided poor service)• Legislature made outsourcing book selection illegal
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Arnold Hirschon & Wright State University
• University Librarian 1990-1995• Library staff cut from 110 to 100• Outsourced all cataloging to OCLC• Staff reassigned elsewhere in university or retired• Money saved from staff used to pay for outsourcing
services• Net increase in cataloged items/net decrease in
expense• The full story
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Fundamentals Necessary to Outsourcing Success
• Know what you want
• Know what it costs you now
• Know what you are willing to pay
• Articulate it fully to the vendor
• Get it in writing
• Monitor vendor performance
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Steps to Outsourcing
• Service definition
• Cost analysis of present activities
• Cost-benefit assessment
• Assessment of remaining in-house responsibilities
• Determination of remaining in-house costs
• Decision to outsource or not
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Steps to Outsourcing (cont.)
• Developing the RFP– detailed articulation of services sought
• Evaluating the bids
• Choosing the vendor
• Developing the contract
• Signing the contract
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Outsourcing is here to stay
• And when done well can be very beneficial to the library
• When done badly, you can lose your job
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Commercial Library Technical Services
• Acquisitions services– blanket/standing order plans– antiquarian and rare book services– out-of-print services– serials subscription plans – serials checking and claiming– deposit account plans– online ordering and electronic invoicing
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Commercial Library Technical Services (cont.)
• Cataloging– catalog copy and MARC records– catalog cards– authority control– reclassification– retrospective conversion– binding– shelf ready books
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Outsourcing Issues: Pros
• Buying expertise
• Core competencies
• Cost savings
• Evaluation process
• Institutional goals
• New service programs
• On-the-job injuries
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Outsourcing Issues: Pros (cont.)
• Overhead costs
• Productivity
• Quality of products
• Staff reallocation
• Staff workload
• Supervisory workload
• Turnaround time
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Outsourcing Issues: Cons
• Advance planning
• Compromises
• Cost oversight
• Loss of control
• Loss of expertise
• Policy/procedure
• Quality control
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Outsourcing Issues: Cons (cont.)
• Staff morale
• Staff reallocation
• Staff reduction
• Start-up costs
• Transition phases
• Turnaround time
• Vulnerability
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Outsourcing Guidelines
• Evaluate existing processes and costs (1-3 months)– Analyze current procedures-how is it being
done now?– Analyze current costs-what does it cost to do
the process in-house?
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Outsourcing Guidelines (cont.)
• Look at outsourcing options (3-9 months)– Consider all options (in-house innovation vs.
outsourcing– Determine available vendor services– Discuss outsourcing strategies with staff– Write outsourcing plan-what do we need/want?– Determine time schedule
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Outsourcing Guidelines (cont.)
• Vendor selection (3-4 months for RFI; 3-4 months for RFP)– Carry out RFI (Request for information)-what
could vendors do for us?– Carry out RFP (Request for proposal)-what will
vendors do for us?– Select vendor based on proposals submitted
• Negotiate costs and review contract (1-2 months)
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Outsourcing Guidelines (cont.)
• Develop a profile and test vendor services (3-6 months)– Need to work closely with vendor– Usually involves reading the vendor’s
documentation and filling out forms– More detailed testing may be necessary if this is
a relatively new product for the vendor
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Outsourcing Guidelines (cont.)
• Evaluate vendor services-quality control (3-6 months initially; 6-12 months 2nd phase; periodically thereafter for life of contract)– Monitor 100% of vendor’s work for an initial
testing period– Gradually reduce percent as experience and
confidence with vendor and contract grow
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Outsourcing Guidelines (cont.)
• Assess cost and savings (3-6 months initially; 6-12 months 2nd phase; periodically thereafter for life of contract)– Can be a full-time job– Measure unit costs/savings– Measure aggregate costs/savings
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Outsourcing Guidelines (cont.)
• Library/vendor communications and relationships– VITAL to successful outsourcing– Relationship needs to be seen as a partnership– Library must provide feedback to vendor
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Outsourcing Guidelines (cont.)
• Other requirements for successful outsourcing– Willingness to adapt to change– Active management of library/vendor
relationship– Give process time to work– Sense of humor!– Focus on long-term benefits and goals
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Outsourcing Guidelines (cont.)
• Keep in mind:– Vendor goal = Profit– Library goal = Service to users at a reasonable
cost
– These are not incompatible
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Six Phases of a Project
• Enthusiasm
• Disillusionment
• Panic
• Search for the guilty
• Punishment of the innocent
• Praise and honors for the non-participants