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111219 outsourcing

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(cc) BY NC SA, Rodrigo SEPÚLVEDA SCHULZ

Presentation prepared for the Founder Institute, Santiago
18 Dec 2011

Published in: Business, Technology
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111219 outsourcing

  1. 1. Outsourcing, Partners and Suppliers Rodrigo Sepúlveda Schulz, Dec 2011
  2. 2. 5W• why?• when?• who?• how?• what?
  3. 3. why? S
  4. 4. why?Revenue S
  5. 5. why?Revenue - COGS Supplier(s) S
  6. 6. why?Revenue - COGS Supplier(s) - Sales & Marketing Supplier(s) S
  7. 7. why?Revenue - COGS Supplier(s) - Sales & Marketing Supplier(s) S - Technology Supplier(s)
  8. 8. why?Revenue - COGS Supplier(s) - Sales & Marketing Supplier(s) S - Technology Supplier(s) - HR
  9. 9. why?Revenue - COGS Supplier(s) - Sales & Marketing Supplier(s) S - Technology Supplier(s) - HR - General & Admin. Supplier(s)
  10. 10. why?Revenue - COGS Supplier(s) - Sales & Marketing Supplier(s) S - Technology Supplier(s) - HR - General & Admin. Supplier(s)EBITDA
  11. 11. why?Revenue - COGS Supplier(s) - Sales & Marketing Supplier(s) S - Technology Supplier(s) - HR - General & Admin. Supplier(s)EBITDA from >100% of revenue to ~90%
  12. 12. • an “enterprise is defined by what is left when you’ve outsourced what costs more to do in-house than elsewhere”
  13. 13. Why?
  14. 14. Why?• as a startup
  15. 15. Why?• as a startup • you need expertise (Ruby on Rails, SEO/ SEM...)
  16. 16. Why?• as a startup • you need expertise (Ruby on Rails, SEO/ SEM...) • to move fast (recruitment takes time)
  17. 17. Why?• as a startup • you need expertise (Ruby on Rails, SEO/ SEM...) • to move fast (recruitment takes time) • make costs variable or use delayed payment
  18. 18. Why?• as a startup • you need expertise (Ruby on Rails, SEO/ SEM...) • to move fast (recruitment takes time) • make costs variable or use delayed payment • leverage the brand of your supplier (credibility)
  19. 19. Why?• as a startup • you need expertise (Ruby on Rails, SEO/ SEM...) • to move fast (recruitment takes time) • make costs variable or use delayed payment • leverage the brand of your supplier (credibility) • make a defensive move (exclusivity contract)
  20. 20. when ?• is cost of supplier < internal recruitment ?• or is flexibility of supplier > internal recruitment?
  21. 21. Is your time more valuable than the $ you pay?
  22. 22. Who?
  23. 23. Who?• professional services: lawyers, accountants, auditors, HR
  24. 24. Who?• professional services: lawyers, accountants, auditors, HR• marketing: PR, SEO/SEM, creative agency, media agency
  25. 25. Who?• professional services: lawyers, accountants, auditors, HR• marketing: PR, SEO/SEM, creative agency, media agency• tech: creative front-end, mobile, back end, hosting, infrastructure management, CDN
  26. 26. Who?• professional services: lawyers, accountants, auditors, HR• marketing: PR, SEO/SEM, creative agency, media agency• tech: creative front-end, mobile, back end, hosting, infrastructure management, CDN• industry related : supplier for goods
  27. 27. Who?• professional services: lawyers, accountants, auditors, HR• marketing: PR, SEO/SEM, creative agency, media agency• tech: creative front-end, mobile, back end, hosting, infrastructure management, CDN• industry related : supplier for goods• G&A: telecoms, phones, travel & lodging, rent,
  28. 28. partners or suppliers?• as a funded company, many will come knocking to your door• as an unfunded company, you will need to convince them to work with you • repeat business ? • solvability ?
  29. 29. how: rules of thumb
  30. 30. how: rules of thumb• get names from trusted advisors, or published information (google, crunchbase, press...)
  31. 31. how: rules of thumb• get names from trusted advisors, or published information (google, crunchbase, press...) • whenever possible, people with experience in your field
  32. 32. how: rules of thumb• get names from trusted advisors, or published information (google, crunchbase, press...) • whenever possible, people with experience in your field• always ask for 3 quotes : learn about market, current prices, methodologies, deliverables - mix proposals to get the closest to your needs
  33. 33. how: rules of thumb• get names from trusted advisors, or published information (google, crunchbase, press...) • whenever possible, people with experience in your field• always ask for 3 quotes : learn about market, current prices, methodologies, deliverables - mix proposals to get the closest to your needs• it’s not only about price, but professionalism + people + flexibility
  34. 34. don’t be greedy
  35. 35. don’t be greedy• it’s not about price paid, it’s about results to be achieved in your timeframe ! • leave money on the table in negotiation
  36. 36. don’t be greedy• it’s not about price paid, it’s about results to be achieved in your timeframe ! • leave money on the table in negotiation• remember: suppliers have to WANT to work with you • flexibility in payment, produce great work, bring great people
  37. 37. if you pay peanuts, you get monkeys
  38. 38. HOW?
  39. 39. HOW?• Ideally, work with specialists in each area • consider them as an integral part of your team
  40. 40. HOW?• Ideally, work with specialists in each area • consider them as an integral part of your team• but don’t over-stretch yourself managing them (contracts, steerco...) • try to standardize contracts • try to standardize steerco, operating procedures, tools
  41. 41. HOW?• Ideally, work with specialists in each area • consider them as an integral part of your team• but don’t over-stretch yourself managing them (contracts, steerco...) • try to standardize contracts • try to standardize steerco, operating procedures, tools• some large companies use >400 suppliers; go for 15-30 max
  42. 42. what to ask for ?
  43. 43. what to ask for ?• clear objectives, clear resources, clear schedule • who does what and when ?
  44. 44. what to ask for ?• clear objectives, clear resources, clear schedule • who does what and when ?• SLAs • escalation + termination clauses • use your own lawyer and contracts when possible • contracts have to be symmetrical, sue when necessary
  45. 45. tips• performance dashboards vs. agreed deliverables or SLAs - always track them vs. budget + contract• regular supplier meetings: they need to understand/track your business as well (ex: bank) - keep relationship as transparent as possible• sign 1 year contracts first; your business will evolve and you need to adapt
  46. 46. bringing it back in• I would only bring in-house what is : • core to your business (competitive advantage, flexibility, speed) • cheaper to do in-house mid-term• Look at your budget, are suppliers more than 50% of your expenditure? manage them with care
  47. 47. 5W• why?• when?• who?• how?• what?
  48. 48. Q&A• http://www.rodrigosepulveda.com• http://www.slideshare.net/rodrigo1971• http://twitter.com/rodrigo

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