August 14, 2010
PURPOSE/OBJECTIVE: The purpose of this executive summary is to outline the outsourcing / contracting process for Travel Magazine. This process will ultimately be used to determine which business processes at Travel Magazine will be outsourced and which will remain in-house. In addition, this summary will include various vendor selection considerations, such as evaluation criteria and performance measurements, for those processes that will be outsourced.
GENERAL OUTSOURCING INFORMATION: The following is some general information regarding the outsourcing of business processes:
* Outsourcing promises valuable opportunities, but may also ...view middle of the document...
GENERAL BENEFITS OF OUTSOURCING: There are several overall benefits that we hope to achieve by outsourcing some of our non-core business processes. Some of these benefits include:
* Reduced costs
* Access to better talent
* Solve potential staffing issues due to qualified labor shortages
* Access to better technology
* Improved processes and productivity
* Reduced risks associated with ineffective in-house processes (Krell, 2007)
RELEVANT FACT #1: The following chart shows the basic outsourcing decision model for our business processes. Each process will be stepped through this model in the table below this decision model chart to help determine feasibility for outsourcing.
BUSINESS PROCESS | Linked to Strategic Planning and/or Competitive Advantage? | Does Process Create Significant Business Risk? | Can Controls Be Implemented to Mitigate Risk? | Can Controls be Preserved by Vendor? | Is Impact of Process on Customers Critical to the Business? |
Accounting | No | Yes | Yes | Yes | No |
Editorial | Yes | N/A | N/A | N/A | N/A |
Photography | No | Yes | Yes | Yes | No |
Publishing | No | Yes | Yes | Yes | No |
Distribution | No | Yes | Yes | Yes | No |
Printing | No | No | N/A | N/A | N/A |
Layout | No | No | N/A | N/A | N/A |
Advertising | Yes | N/A | N/A | N/A | N/A |
Editing | No | No | N/A | N/A | N/A |
Articles | Yes | N/A | N/A | N/A | N/A |
Key: Green highlight = Potential Candidate for Outsourcing
Light blue highlight = Not a Candidate for Outsourcing Based on Potential Risk to Strategic Planning and/or Competitive Advantage
OPTIONS AND ANALYSIS: Based on the analysis of the business process decisions model above and the corresponding table, there are only three business processes that we feel would be in our best interest strategically to keep in-house as opposed to outsourcing. These three processes, highlighted in red, are editorial, advertising, and articles. We believe that we should keep our core business processes of writing articles and editorials internal. Both of these processes are important for us as a company as each provide a level creativity with which we want to keep. In addition, we believe that it would be to our competitive advantage to continue with our strategic marketing and advertising plan as opposed to outsourcing this process.
RELEVANT FACT #2: The remaining seven business processes are candidates for outsourcing based on the above strategic deductive reasoning technique. Based on this information, please see the table below for further analysis of these processes and the feasibility of each regarding outsourcing.
BUSINESS PROCESS | OUTSOURCING PROS | OUTSOURCING CONS |
Accounting (accounts payable, accounts receivable, payroll, general accounting, etc) | 1) Reduced personnel costs2) Access to better and more specialized talent3) Allows for better growth potential, particularly concerning shared services | 1) Takes away some...