2012 GFOAz Winter Conference

February 16, 2012

What is it? What services can be ‘right-sourced’ Pros and Cons When do you use it? How do you do it? Summary

One tool in the financial management toolbox:

A combination of providing services through outsourcing, multi-

sourcing, shared services, in-house staffing, and elimination to achieve the best balance of cost savings and customer service

All services performed with in-house staff

Elimination of services

Right sourcing

Accounts Payable ITAccounts Receivable PayrollEngineering PermittingCustodial/Janitorial Animal ControlPolice FirePark Maintenance RecreationWater Operations Sewer OperationsRefuse Disposal Transit

These are just a few

The list is endless

Any combination of service delivery that works for

your organization and your community

Choosing to eliminate a service is always an

option

Outsourcing – contracting with an unrelated entity to provide a service

Multi-Sourcing – contracting with multiple vendors to provide different elements

of a service Shared services – aggregating service

delivery across different organizational units

In-House – services provided only by employees of the organization

Lower labor cost because of increased economics of scale

Tapping in to a knowledge base for better innovation

Frees management time, allowing more focus on core competencies while not being as concerned about outsourced routine activities

Increases speed and the quality of delivery of outsourced activities

Reduces cash outflow and optimizes resource utilization

Possible loss of control over a business process

Problems related to quality and turnaround time

Sluggish response times coupled with slow issue resolutions

Shortcomings in performance vs. expectations

Lower than expected realization of benefits and results

An irate customer base

Lower risk by having multiple contracts

Economies of scale

Targeted expertise - Selecting different vendors for different components of the service

Usually applied for IT services

More management resources needed to oversee multiple vendors and monitor compliance

Blame game - finger pointing

Large vendors may be unable to provide innovation or your ‘niche’ solution

Economies of scale

Tapping into a knowledge base for better innovation

Reduced capital investment

Turf wars – clear lines of responsibility need to be identified

Loss of control

Possible delay in service delivery

Lower than expected realization of benefits and results

Control over business processes

Faster issue resolution

Greater influence over quality and response times

Increased labor costs

Management time used to monitor routine tasks

Possible lack of innovation – ‘We’ve always done it this way’

Whenever you need to do a faster

cheaperbetter

more efficient job than what you are doing now!

*****ALL THE TIME*****

Evaluate Plan Implement Measure and Report Feedback Evaluate and Adjust

Organization’s Strategic Plan

Departmental Operational Plans

What matters to citizens

Fiscal Constraints

Everything is on the table

Feasibility Study –• Cost/Benefit Analysis – including intangibles• Risks• ROI• Barriers• Cause and Effect Maps

Choose the best alternative for service delivery

Decide on :• Liability issues• Governance structure• Time periods• Service levels• Dispute Resolution• Performance metrics• Termination clauses

Develop timeline for implementation

Negotiate performance agreements to include measures and timelines

Transition from current to new

Monitor performance

What gets measured gets done

Report on progress and compliance

Communicate results to all stakeholders, including the public

Surveys Focus groups Town Hall Interviews Customer comment cards Council Other departments

Evaluate based on feedback

Modify service delivery if necessary – Keep what is working and change what is not

Outsourcing

Multi-Sourcing

Shared Services

In-House

Any service – nothing is off the table

Evaluate, plan and implement

Measure, report, get feedback

Evaluate and adjust

Questions?

A Performance Management Framework for State and Local Government: From Measurement and Reporting to Management and Improving, National Performance Management Advisory Commission, 2010

“Budgeting for Outcomes: Delivering Results Citizens Value at a Price They Are Willing to Pay” by David Osborne and Peter Hutchinson, Government Finance Review, GFOA, October 2004

Public Participation in Planning, Budgeting and Performance Management, GFOA Best Practice, 2009

Alternative Service Delivery: Shared Services, GFOA Best Practice, 2007

Managed Competition as a Service Delivery Option, GFOA Best Practice, 2006

Performance Management: Using Performance Measurement for Decision Making, GFOA Best Practice, 2002 and 2007

Building a Financially Resilient Government Through Long-Term Financial Planning, Shayne Kavanagh, GFOA White Paper, 2011

“Opinion: It's all about 'right-sourcing‘”, Simon Briskman, Silicon.com, October, 2005

“RightSourcing – Buzzword or Reality Settling In?”, Nari Kannan, Toolbox.com, April, 2004