Managing costs

Are you getting the most from your external advice and service providers?

External advice and service providers play a crucial role for many businesses.

But whether you are using yours for financial planning, marketing, or something else, how do you know  you’re getting the maximum benefits of outsourcing? 

The following approach to working with external support will help you get the most from the relationship.

1. Identify the current state of your organisation 

Start by identifying the internal and external systems and resources needed to operate your organisation in its present state.

 

2. Prepare for the unexpected

You must prepare to respond to external shocks that could cause serious issues for your organisation. Anything that could disrupt your business processes counts, and it’s good to have a plan in place should the worst occur. 

This should be outlined in detail in your risk management plan.

 

3. Find the balance

You will then need to decide on what internal and external resources strike the best balance between current performance and the future sustainability of your organisation.

Resources that are necessary to the current and future operations of your business systems should be maintained as internal resources or insourced as needed.

Other functions and resources are best outsourced by the organisation to a provider who can deliver the result required.

 

4. Make preparations

Before you begin any external provider relationship, you’ll need to make the proper preparations.

An external advisor will want to understand the current reality of your business before engaging with it. 

Both the organisation and any external providers have a common interest in answering the following questions at the start of any engagement:

  • What is the functional scope, context and environment in which the organisation operates?

  • What is affecting the organisation that gives rise to the need for the advisor?

  • What are the uncertainties or opportunities to which the organisation is responding?

  • What are the most important uncertainties that might affect the organisation?

5. Set goals

Develop a plan of attack with addressable objectives and the means to achieve them. 

Define clearly what success will look like and who is responsible for any tasks.

 

6. Create business processes

Implement the process, plan or solution that is intended to produce the desired result. While seemingly obvious, this is the step most often neglected.

 

7. Assess the results

Evaluate your success by comparing the outcomes to your initial objectives.

 

8. Make adjustments

What changed or needs to continue to change to hit targets and improve in the future?

Is further review, renewal or course correction needed?

 

Further key points and critical considerations

  • You are in charge of the outsourcing engagement, so you’re primarily responsible for the quality of the brief required. What systems and processes do you have to achieve this to a high standard of quality? For example, do you have high-quality data sources about the operation of your organisation?

  • In order to make sense of your current situation, you need to have an accurate understanding of your current environment. Who provides this to you?

  • Use a sense-making framework to manage the work of understanding what problems need to be solved and how.

  • The Cynefin theory provides a convenient place to start. Cynefin offers five decision-making contexts or ‘domains’ – simple, complicated, complex, chaotic, and disorder – that enable executives to see things from new viewpoints, assimilate complex concepts, and address real-world problems and opportunities. Using this approach, organisational leaders learn to define the framework with examples from their own organisation’s history and scenarios of its possible future. This enhances communication and helps executives rapidly understand the context in which they are operating.

  • Do you have someone in your organisation, or an external expert, who is responsible and prepared for responding agilely to external opportunities, shocks and uncertainties?

External resources will be most successful in delivering appropriate support to your organisation when your goals have been clearly defined and the outsourcer has been provided with all the necessary information to support its rapid and cost-effective engagement.

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