Carlos Gonzalez-Yanes describes his vision of what an efficient startup looks like: a lean machine, stripped of all non-essential elements. Carlos believes that most major operations can be outsourced when working in an earlier-stage startup. Furthermore, he explains how to best select partners and suppliers as a fledgling company. This content was produced for the 2012 Geneva Summer semester of the Founder Institute by Founder Institute mentor Carlos Gonzalez-Yanes, founder of Criterion Strategic and innovation strategy expert. Check out Carlos' Linkedin to learn more: https://www.linkedin.com/in/gonzalezyanes

1. Carlos González-Yanes
Managing Partner
CRITERION Strategic Services Group
Founder Institute
Puerto Rico Summer 2012 Semester
August 29, 2012
Outsourcing, Partners and Suppliers…

2. Why?
• Speed and Scalability
• Expertise (Hyper-especialization and
†echnification)
• Cost Structure and Cost Reduction
• Flexibility
• Competition…

3. What?
• Define what is REALLY Core and Strategic.
Everything else is Support…
… and can be Outsourced.

4. Then, what is CORE?
• Where Competitive Advantage is.
• Where Intellectual Property is.
• Where Mid-term Growth is.
• Where Flexibility, Speed and Control are game
changers…

5. CORE is…
• Software Design and Architecture
• Business Intelligence / KPI Control
• “Code Integrity” and Standarization
• Corporate Strategy / Funding
• …

6. So, what to Outsource?
• Professional Services: Legal, Accounting, HR, …
• Marketing: SEO, SEM, Advertising, PR, Lead
Generation, Graphic Design, …
• Technology: Infrastructure, Web Design,
Mobile, Back-end Apps, Hosting, CDN,
Support, Testing, …
• Operations: Administrative, General, Input
purchases, …

7. Typical Enterprise App. Portfolio:
• Portal/CMS
• Payments/eCommerce
• CRM/ERP
• Project Management
• Analytics/BI
• Collaboration
• Administrative
What is the level of control that I need with these?
Outsource the tool, but control it inhouse

8. Selecting Vendor
• What service?
• Can I start small and cheap?
• Can it scale up?
• How is the level of support?
• Where will it be in 5, 10 years?
• Support & Development Ecosystem.

9. How to do it?
• Identify
• Evaluate and Compare
– Not only price
– Trusted advisors/references
– Expertise/specialization
– Flexibility/Fit-to-need
• Be prepared: study the market, understand
current prices and trends, methodologies,
proposal structuring, mix & combos, …

10. How to set it up?
• Standarized, performance-based agreements
• Trials/Pilots (start with something!)
• Prizes, penalties for delays, thresholds, …
• Service Level Agreement (SLA): Quality,
milestones, evaluation, termination, …
• Performance monitoring/dashboarding
instead of final deliveries
• Review, review, review (weekly, monthly, Q.)

11. Software Development & Coding
Employee Contractor/F
reelance
Insourcing/lo
cal Out.
“Near
shoring”*
Offshoring
Benefit Control Some Control
Faster
Replacement
Some Control
“Packages”
Warranties
Lower Cost
Packages
Joint Venture
Price
Risk Expensive
Rotation
Availabilit
y
Retention
Commitment
IP loss
Conflict of
Interest
Long Term
Commitment
Overhead
Preassure
Language/Culture
Learning Curve
Project
Management
High risk for
very small/lean
businesses
Expertise
/ Skills
Required
Vendor Management, Project Management, Architecture, Web Design, Software
Development, Testing, Operations, Support, …
(Availability / Cost :: High – Low)

12. Important:
• Use Technology to control and enhance
Vendor/Partner relation
• Business & IT Strategies must be aligned
• Do not depend on one sole vendor but be
careful not to overstretch
• Keep in mind that a robust communication
structure (seriously!) has to be in place
• Never give away your IP and your Core

13. Thank You!
1200 Brickell Ave., Suite 1950
Miami, FL 33131 USA
+1-305-310-2928
carlos@criterionstrategic.com
Carlos González-Yanes