Outsourcing

Outsourcing options range from simple call accounting to complete responsibility for telecommunications (staffing, provisioning, negotiating with carriers, and efficiency studies). QuantumShift, for example, offers to become the telecommunications function of its customers. By negotiating with carriers, understanding the details of cost savings, and managing assets, the high-end service provider can presumably offer a better total package than end customers can obtain for themselves. All the usual pros and cons of outsourcing apply:

• Pros:
  • The provider is specialized in telecommunications and cost management, and thus develops expertise.
  • Costs are controlled by leveraging relationships with other providers (e.g., AT&T, MCI, Avaya).
  • Outsource staff have a career path in their specialty, whereas within the client organization telecom staff have limited upward movement opportunities.
  • The provider can leverage processes learned across multiple clients.
  • The provider may make specialized software and hardware available so that the client avoids some up-front capital expense.
  • Reporting, cost distribution, and call accounting are well developed and usually provided via Web browser screens.
• Cons:
  • The interests of the customer and the provider may not exactly match.
  • There is some loss of control over the process.
  • Technology enhancements could take a back seat to well-defined, transaction-oriented charges. In other words, if the entire contract is written so that the service provider is paid solely on a defined transaction basis (interstate minutes, number of T1s, etc.), there could be a tendency to maintain the status quo. Codicils should be put in place that maintain incentives to continually review new technology and implement as appropriate.

The Request for Proposal/Request for Quotation

The individual responsible for initiating an RFP/RFQ should consider the following "philosophy" questions before moving forward:

• What is the end result? Lower costs, better service, specific functional requirement, or perhaps (legitimately) to demonstrate that the current provider is the best and no others can compete.
• Is it worth it? RFPs/RFQs are time-consuming for all parties. Sometimes it is better just to buy a hammer at the nearest store, regardless of its price. What economic or "political" conditions would make an RFP/RFQ mandatory?
• Is the document to be highly detailed? Is there enough information to write a worthwhile RFP, or will vendors be spending fruitless hours guessing what is required? For example, when bidding on a large PBX installation, the vendor needs to understand the number of digital and analog lines required because these drive the quantity of line cards, shelves, etc. If the RFP is too high level, one of two outcomes will result: (1) some potentially strong vendors will not participate or (2) bidding vendors will increase their prices to cover unforeseen costs. A third, less-savory practice is the deliberate underbidding on a vague RFP with the expectation that profits will accrue from the many change orders that the vendor knows will be required.
• How can a good list of suppliers be obtained? Should a two-step process be followed, with a first wave of perhaps ten respondents and a second tier of three for the most thorough review?
• How is the evaluation to be done? Who has the time, qualifications, and objectivity to do it?
• How much education is required from the respondents? Does the organization need key evaluators to attend demos, talk to references, etc.?
• What can be done to make an admittedly "fuzzy" evaluation process more fair? Will the "non-winners" be provided with a full explanation of the final decision?
• Will proposal content from the winning bidder go directly into the contract? This is an important requirement for the buyer because it ensures that the features and benefits presented in the proposal become contractual requirements.
• Will price increases be allowed? If the bidding and evaluation process takes several months, it is possible that the respondents' costs have increased in the meantime.