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Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
Lecture 9 (June 8): Outsourcing (PowerPoint)
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Lecture 9 (June 8): Outsourcing (PowerPoint)

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

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