In new outsourcing engagements when determining the delivery method many companies pursue the path of least resistance for reasons of time constraints, lack of oversight, or they are simply testing the water and don’t want to invest the effort. Little do these companies know that the easiest route in the beginning can become the biggest drain on their critical resources down line. I use the analogy of neighborhood yard work to highlight the differences between staff augmentation and fixed bid delivery methods, which are the two most prominent delivery methods in IT outsourcing.
The charts embedded below are intended to depict the evolution of delivery models beginning with Staff Augmentation and moving to piecemeal Out-tasking and then finally to a full blown Managed Services. Each chart indicates the roles and responsibilites between the contracting company and the vendor, as well as probably services levels that can be established.
Option #1
One option you have is to hire my 14 year old son to do your yard work and it’s a fairly easy process. You call him on the phone or catch him when he’s outside and ask him if he’s interested in making some extra money. The offer is usually met with a wide grin, a nod of the head, and the response, “Sure, when can I start?” This process requires little effort on your part to get started and the work can begin almost immediately. What follows is an inexperienced wet-behind-the-ears young boy shows up at your house with no mower, no gas, but with a pair of gloves and a desire to get going. This also happens to be the point in which your work begins. You have to ensure that your mower still works and that you have gas. Is the blade set at the right level? If not, then you’ll also have to adjust the wheels for the right cut. You then have to follow my son around showing him the layout of your yard and explaining where to mow and where not to mow among other details. Also, you might have to get out the rake and find some bags, oh, and you might as well start picking up the garden hose and the chairs since you’re out there anyway. You’ll probably get some extra monitoring by me checking in how things are progressing and to ensure things are going well and my son is doing a good job. At the end of the day you’ll have your grass mowed per your direction and the clippings bagged and placed at the curb. You will likely have paid a fair amount for the work, but certainly below market rates. The downside is that all the plans you had for the day will have been pushed out to later in the week, because you had to be engaged in the effort and part of the delivery. Also, if you want your trees or hedges trimmed, well that probably means you’ll need to contact another boy in the neighborhood, since my son really isn’t old enough to be working on a ladder with sharp instruments.
This scenario is “staff augmentation” delivery method.
Pros:
- Easy to get started
- Pay for only the work performed
- Flexibility of adjusting to your schedule
- You are part of the delivery
- Turnover takes its toll on productivity
- Plans are focused on short-term deliverables
Option #2
The other option you have for yard work is to engage a landscaping service to provide regular yard maintenance. This means you’ll need to research local companies who offer yard service in your area. You’ll probably want to make a list and check out any references. You may want to drive through your neighborhood and if you see a crew working at a house, then stop by later and ask the homeowner about their service. Once you narrow your list down to two or three business you may want them to come out to your house for a quote. After you have made your final selection then you’ll need to meet one more time with the service provider to agree on a start date, price, and frequency of visits. You may also agree on non-recurring activity, such as tree trimming, and what type of service you’ll need during the winter. From that point on you’ll get your lawn mowed on a recurring date and once a month you’ll get an invoice in the mail for an entire month’s worth of service. The service is provided whether you are at home or not, so your time is freed up for other more important activities. The downside of this option is you’ll pay a little more and you lose some flexibility. For instance your grass will get cut once a week whether you need it or not.
This scenario is "managed services" or sometimes call “fixed bid” delivery method.
Pros:
- No price fluctuation
- Guaranteed delivery meeting minimum quality standard
- Equipment and variable costs covered by service provider
- Difficult to start and stop service once initiated
- Customized service becomes a challenge
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