lecture 9 (june 8): outsourcing (powerpoint)

LIS 901B: Summer 2005Lecture 9

Outsourcing Technical Services Functions

Outsourcing Definition

• Procurement of services from an outside vendor– to perform functions not core to the mission of

the organization– to perform functions the organization cannot do

itself– to deliver better services for less money

Outsourcing is not new

• 1853 Smithsonian catalog system

• 1901 LC distributed catalog cards

• Mid-20th century processing centers

• 1971 OCLC

• 1990s “discovery” of outsourcing as panacea for economic woes– “reengineering technical services”

Benefits of in-house processing

• Greater control over final product

• In-house productivity & quality may be better than outsource

• Stability of continuing status quo

• Maintaining in-house expertise

Benefits of outsourcing

• Greater productivity possible

• Greater quality possible

• Expanded expertise

• More flexibility

• Can re-focus on more important issues in-house

Common Outsourcing

• Use of library materials vendors– Vendor as middle man– Approval plans– Vendor-supplied cataloging

• PromptCat

– Vendor binding– Vendor authority control processing

Uncommon Outsourcing

• Vendor final selection of materials

• Vendor original cataloging

Famous cases in

Outsourcing

1983 OMB list of items to outsource

• Legal services

• Cost-benefit studies

• Data processing

• Janitorial services

• Laundry services

• Repair services …

• LIBRARIES

Federal agencies libraries contracted out since early 1980s

• National Oceanic and Atmospheric Administration

• Department of Energy

• Department of Labor

• Bureau of the Census

• Department of Housing and Urban Development

The question:

• Do limitations of contracts for information access affect ability to perform central activities

• If NOAA’s contract limits the amount of work that can go into answering questions, could this affect their ability to predict hurricanes?

Burt Kane & the Hawaii Public Libraries

• State librarian of 49 public libraries• Ordered to eliminate 100 positions• Eliminated local selection and cataloging of

materials• Placed whole contract with one vendor• Libraries ill-prepared (few details provided)• Vendor took advantage (provided poor service)• Legislature made outsourcing book selection illegal

Arnold Hirschon & Wright State University

• University Librarian 1990-1995• Library staff cut from 110 to 100• Outsourced all cataloging to OCLC• Staff reassigned elsewhere in university or retired• Money saved from staff used to pay for outsourcing

services• Net increase in cataloged items/net decrease in

expense• The full story

Fundamentals Necessary to Outsourcing Success

• Know what you want

• Know what it costs you now

• Know what you are willing to pay

• Articulate it fully to the vendor

• Get it in writing

• Monitor vendor performance

Steps to Outsourcing

• Service definition

• Cost analysis of present activities

• Cost-benefit assessment

• Assessment of remaining in-house responsibilities

• Determination of remaining in-house costs

• Decision to outsource or not

Steps to Outsourcing (cont.)

• Developing the RFP– detailed articulation of services sought

• Evaluating the bids

• Choosing the vendor

• Developing the contract

• Signing the contract

Outsourcing is here to stay

• And when done well can be very beneficial to the library

• When done badly, you can lose your job

Commercial Library Technical Services

• Acquisitions services– blanket/standing order plans– antiquarian and rare book services– out-of-print services– serials subscription plans – serials checking and claiming– deposit account plans– online ordering and electronic invoicing

Commercial Library Technical Services (cont.)

• Cataloging– catalog copy and MARC records– catalog cards– authority control– reclassification– retrospective conversion– binding– shelf ready books

Outsourcing Issues: Pros

• Buying expertise

• Core competencies

• Cost savings

• Evaluation process

• Institutional goals

• New service programs

• On-the-job injuries

Outsourcing Issues: Pros (cont.)

• Overhead costs

• Productivity

• Quality of products

• Staff reallocation

• Staff workload

• Supervisory workload

• Turnaround time

Outsourcing Issues: Cons

• Advance planning

• Compromises

• Cost oversight

• Loss of control

• Loss of expertise

• Policy/procedure

• Quality control

Outsourcing Issues: Cons (cont.)

• Staff morale

• Staff reallocation

• Staff reduction

• Start-up costs

• Transition phases

• Turnaround time

• Vulnerability

Outsourcing Guidelines

• Evaluate existing processes and costs (1-3 months)– Analyze current procedures-how is it being

done now?– Analyze current costs-what does it cost to do

the process in-house?

Outsourcing Guidelines (cont.)

• Look at outsourcing options (3-9 months)– Consider all options (in-house innovation vs.

outsourcing– Determine available vendor services– Discuss outsourcing strategies with staff– Write outsourcing plan-what do we need/want?– Determine time schedule


• Vendor selection (3-4 months for RFI; 3-4 months for RFP)– Carry out RFI (Request for information)-what

could vendors do for us?– Carry out RFP (Request for proposal)-what will

vendors do for us?– Select vendor based on proposals submitted

• Negotiate costs and review contract (1-2 months)


• Develop a profile and test vendor services (3-6 months)– Need to work closely with vendor– Usually involves reading the vendor’s

documentation and filling out forms– More detailed testing may be necessary if this is

a relatively new product for the vendor


• Evaluate vendor services-quality control (3-6 months initially; 6-12 months 2nd phase; periodically thereafter for life of contract)– Monitor 100% of vendor’s work for an initial

testing period– Gradually reduce percent as experience and

confidence with vendor and contract grow


• Assess cost and savings (3-6 months initially; 6-12 months 2nd phase; periodically thereafter for life of contract)– Can be a full-time job– Measure unit costs/savings– Measure aggregate costs/savings


• Library/vendor communications and relationships– VITAL to successful outsourcing– Relationship needs to be seen as a partnership– Library must provide feedback to vendor


• Other requirements for successful outsourcing– Willingness to adapt to change– Active management of library/vendor

relationship– Give process time to work– Sense of humor!– Focus on long-term benefits and goals


• Keep in mind:– Vendor goal = Profit– Library goal = Service to users at a reasonable

cost

– These are not incompatible

Six Phases of a Project

• Enthusiasm

• Disillusionment

• Panic

• Search for the guilty

• Punishment of the innocent

• Praise and honors for the non-participants