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Hiring a consultant is helpful says Diane Schwarz, vice president of information systems at Ultrak, who recently chose the Everest Group to assist her though the selection process. Everest provided Schwarz with someone to lean on as she devised an outsourcing plan, sent out quotations and negotiated a thorough contract with the vendor. She came away from the entire process feeling good about the decisions that she made. "Having a consultant provides a tremendous level of comfort throughout the entire process," she says. "I feel really good about the foundation that I have developed with my supplier and I think that my new supplier feels the same way. We have rummaged through each other's closets and know everything about each other's skeletons. This is helpful because we don't have anything to hide anymore. When we come to the table everything is exactly as it appears. There are no hidden agendas and we both roll up our sleeves and go to work as partners. Choosing a ConsultantUltrak, a designer, manufacturer and purveyor of security and surveillance systems, had never outsourced before, but was looking to do some significant pieces. And because the initiative was new to Schwarz she didn't have a lot of knowledge about what resources were available. After scouring the Internet she spoke with two consulting groups about helping her through the process. "When I compared Everest against this other company Everest looked great," she says. "After talking to the other group in regards to handling the outsourcing, I found that they were too narrow in the scope they could help us with and didn't really meet our requirements." Ultrak and Everest went to work in June. Ultrak wanted to begin an e-commerce initiative, but in order to do that it would have to have around the clock support for the IT environment. At the time, Ultrak had a single shift working and Schwarz knew that if Ultrak kept the support inhouse that it would need to triple its infrastructure. So finding a vendor to provide the SAP infrastructure, the hardware, operating system and database for the SAP system seemed the logical solution. Moving Through the ProcessThe first thing that Everest did was help Ultrak define the scope of what the company intended to outsource. After the scope was formalized a request for quotation was sent out to a number of providers. When the quotations were returned, the consulting group then helped Ultrak sort through them, compared them objectively, and selected a short list of providers. After choosing Plaut-Syntacom, an IT-services company, Everest then assisted with the negotiation. "The key thing that Everest did was help me define my requirements and also put together the service level agreements," she says. "The other key thing was that they provided a base contract from which to negotiate with the service providers. When you compare Everest's template against a service provider's template it is amazing how many holes are in the service provider's standard template." Schwarz says that Everest also provided a legal team that sat through the negotiations. "If we were to bring our lawyer up to speed on outsourcing in an SAP environment he would have a steep learning curve, so they brought an outsourcing-literate legal team to the table to help the negotiation process," she says. Signing the Deal and Beginning the RelationshipUltrak signed a contract with Plaut in August and is now in full transition mode. The plan is to physically start shipping the hardware up to Plaut's service center in Waltham, Mass. in November. But what Plaut is doing in the meantime is dialing into Ultrak's system and doing remote monitoring of the system with the hardware still at Ultrak's site – in order to get to know how each other operates. Schwarz has an extremely high level of confidence that she selected the right supplier and that this is a long-term relationship that will work out great for both parties. Ultrak is now considering more outsourcing and is talking with Everest to assist them in that. "All of the general books and articles I read, when I realized that outsourcing was going to become a reality in my organization, pointed towards getting help if a company has never done outsourcing before. And now I have a better understanding of why that is strongly urged," she says. "A company can be very naive and allow the suppliers to take them for a ride." But she feels that the supplier is also grateful for the stability a consultant can bring to the table. "The vendor appreciates the consultant because they help articulate very plainly what the company's requirements are, so there is very little guess work on their part about what I want," she says. "In a sense it makes my company much easier to support and therefore makes their job a lot easier." Lessons from the Outsourcing Primer:
Publish Date: November 1999
Copyright © 1999 - Everest Partners, L.P. |
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Companies that outsource often find
themselves with buyer's remorse. They are uncertain about whether or not they paid a competitive price and negotiated optimal service levels. And often the customer and the supplier come out of
negotiations knowing very little about each other. It is dangerous to learn about a vendor after the contract has been signed because an organization might not like what they find.
