2009 has seen a huge increase of activity in the training outsourcing market. This means there are lots of training, procurement, and business executives involved in selecting a strategic training partner that has never done this type of business deal before. Training BPO (business process outsourcing) is very different than contracting a training company to deliver courses or manage development projects. Yes, both engagements are considered outsourcing; but the process of managing a multi-year BPO engagement is more complex and involves critical steps to reduce your risks. And most importantly, your costs.
And many believe that outsourcing training is similar to outsourcing any other corporate function. What they misunderstand is the processes are very different from Finance, HR, or IT; and some are more complex. In addition, the questions asked in an RFI/RFP are different, pricing models are different, and contractual terms are different. Costs of these deals run into the millions of dollars and the financial risk from failure can be staggering.
So managing this activity should not be underestimated. It should not be done in an adhoc way. Before going to the market for proposals, you should focus on undersanding your own capabilities and the business requirements of a potential supplier. I've seen so many companies beginning the process by issueing an RFP, they get bad proposals, and then can’t figure out why they’re not getting the results they hoped for. It is critically important to follow a process that minimizes risks and the costs of engagement.
Good news is there is a process. Follow it and I guarantee you will save lots of money and time. Don't follow it - and you go into it at your own risk.
The process I recommend for managing a complex training outsourcing engagement involves 7 stages of activity. The processes are not linear; but they are somewhat sequential. There is overlap of some of the tactical activities involved in each stage. For example, much of the planning effort for one stage occurs while the implementation activities are being managed in the next stage.
To understand the 7 Stages of a Training Outsourcing Engagement better,
I’ve provided a brief overview of the model below.
Stage 1: Organization Assessment – objective assessment of your internal organization’s capabilities and business needs; define processes which your organization will continue to manage, and which processes you want to source.
Stage 2: Proposal – RFI/RFP/RFQ’s are the documents you use to get potential suppliers to submit bids. The most important process and what most companies do the most poorly.
Stage 3: Due Diligence – the dating stage prior to a contracted relationship; it’s about learning as much about your partner as possible.
Stage 4: Contracting – everyone wants to do this and they all think it’s about negotiations. It’s more about documenting who’s doing what!
Stage 5: Transition – transitioning responsibilities and deliverables requires great communications and process management. You can’t take it for granted.
Stage 6: Governance – so now you are married, how to make the best of the relationship.
Stage 7: Transfer/Repatriation – all contracts should have an exit plan. Don’t wait until it doesn’t work to figure out how to get out of it.
Last but not least. I highly advise you use an advisor to help you through the process. The cost is minimal in comparison to the risk. A good advisor can be as low as $5k and cost as much as $100k, depending on the size and complexity of your engagement. If you need help here, feel free to let me know. I can steer you to some good advisors, and keep you away of those who sell snake oil.
If you would like a copy of the 7 Stages of an Outsourcing Engagement Model, please send me an email at firstname.lastname@example.org. And I always welcome your comments.