The Worcester Group, Inc. Blog

My business is providing consulting services to small and medium-sized enterprises to develop business intelligence systems.  It is a simple fact that this stuff is not rocket science.  The expertise that I and my associates have in this field can be obtained by any of our peers within the clients we seek to serve.  Some may already possess the requisite skills and experience.  So we always have to deal with the obvious question: “Why should we hire you to do what we could do ourselves?”  It is a fair question, and a much harder one to answer than “Why should we hire you instead of your competition?”  In simplest terms The Worcester Group, Inc., and other consultants like us, are “outsourcing providers”.  The reasons a customer avails himself of our services, then, should be the same as those for entering into any outsourcing arrangement.

The Outsourcing Management Zone lists 21 rationales:

 
• Lower costs due to economies of scale
• Ability to concentrate on core functions
• Greater flexility and ability to define the requisite service more readily
• Specific supplier benefits. For example, better security, continuity, etc.
• Higher quality service due to focus of the supplier
• Improved internal management disciplines resulting from the exercise itself
• Less dependency upon internal resources
• Control of budget
• Faster setup of the function or service
• Lower ongoing investment required in internal infrastructure
• Greater ability to control delivery dates (eg: via penalty clauses)
• Lack of internal expertise
• Increase flexibility to meet changing business conditions
• Purchase of industry best practise
• Improve risk management
• Acquire innovative ideas
• Increase commitment and energy in non core areas
• Improve credibility and image by associating with superior providers
• Generate cash by transferring assets to the provider
• Gain market access and business opportunities through the supplier’s network
• Turn fixed costs into variable costs

The Outsourcing Institute, on the other hand, gives the top ten reasons companies outsource as:

1. Reduce and control operating costs
2. Improve company focus
3. Gain access to world-class capabilities
4. Free internal resources for other purposes
5. Resources are not available internally
6. Accelerate reengineering benefits
7. Function difficult to manage/out of control
8. Make capital funds available
9. Share risks
10. Cash infusion
As I see it, there are really only four valid reasons:

1. Jumpstart the initiative with purchased expertise
2. Keep the project focused
3. Free up internal resources
4. Innovative solutions to ongoing problems

Let me examine these one at a time. 

Jumpstart

A Business Intelligence initiative comes about because one or more decision makers in the organization have identified a shortcoming in the available information they use to run the business.  This usually results from the pain of some loss in the market place, so in a sense the initiative is already too late.  The objective is to prevent another such loss in the future.  Getting a new initiative approved – that is, getting the money to pay for it – can be a lengthy process, possibly requiring a full budget cycle.  To make up for lost time, once the approval has been granted, the project has to be staffed with people who can walk in the door and start building.  There is no time for on-the-job training.  That kind of expertise is relatively expensive.  The compensation required may be such that future incentives allowed by company policy (including raises and bonuses) will be inadequate, making it difficult to fill the position, or if filled to retain the talent for very long.  Outsourcing the expertise eliminates this issue, except for retention.  But since you know the arrangement is temporary, part of the project plan will involve knowledge transfer to in-house resources.

Focus

I have pointed out elsewhere that “scope creep” is endemic where internal resources are applied to a project.  They will bend over backward to accommodate a great many requests from their colleagues that end up slowing down progress and increasing costs.  Outside resources are generally isolated from these kinds of peer requests.  Nobody knows them.  They focus on the specification they have been given.  They have established deadlines that must be met, because there are other customers to be served.

Free Internal Resources

Most companies, especially since 2001, have reduced their headcounts to the point that operating departments don’t have the manpower they really need to meet their objectives.  IT departments are typically the hardest hit.  So implementing a BI initiative with internal IT resources just stretches those resources beyond reason.  Something has to give.  Either day-to-day operations so overwhelm them that they can devote no time to the new initiative, or the day-to-day requirements are neglected in favor of doing the sexy new stuff.  This is potentially disastrous.  At one major consumer products company, the IT department devoted all their decision support resources to implementing SAP’s data warehouse.  When client departments requested projects, they were told that everything would be provided by SAP.  This went on for a year, the SAP data warehouse missed its target delivery, and the client departments gerry-rigged there own solutions.  It is tempting to shrug this off as poor project management, but that’s just smoke.  The manager had insufficient internal resources to do both jobs.

Innovation

The consultant coming in from the outside has to learn, if not the industry, at least your enterprise’s specific mode of operation.  The downside of that is that a learning curve takes time.  The upside is that while the outsider is on the curve, he may see an opportunity you have missed.  I once consulted for a company that relied on a mainframe computer to perform certain daily processes.  These processes had become so complex, and the volume of data so great, that they could not complete in the CPU cycles allocated to them on the mainframe.  As a result, daily reporting was not getting out to the field.  What I pointed out was that the processes could be easily moved to a network server and the mainframe completely cut out of the equation.  We did this in a couple of weeks, and problem was solved for good.  The people I was working with were at least my equals in terms of their skill with the software.  It was only my perspective as an outsider that highlighted a solution to a problem.

So, why should your company hire The Worcester Group, Inc. to implement your Business Intelligence initiative?  Because:

We’ll jumpstart your project.

We’ll keep the project focused.

We’ll free up your internal resources.

We’ll bring fresh ideas to bear on your ongoing challenges.