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It is possible to develop a methodology for outsourcing. The methodology needs to contain a number of elements:

• There will be a number of phases, each of which will produce a major deliverable, in the form of a product or outcome.
• Within each phase, there will be a number of tasks, each of which will contribute a deliverable required for the completion of the phase's major deliverable.
• There will be a mapping technique, to be used for each outsourcing project. The mapping technique will be used to examine the nature and scope of the major deliverables required for that project and thus to determine the nature and scope of the individual tasks that will need to be performed. In some instances, a number of tasks might be omitted, where their deliverables were not required for the project.

The methodology will therefore not operate as a set of tasks to be performed in all circumstances; rather, it will be a recipe book. The important aspect of applying a methodology is to use the recipe book to plan the project, and not to become overly "creative" nor to include or exclude items from the recipe without good reason.

The draft outsourcing methodology contains three phases.

The understanding phase

Traditionally, the first, understanding phase has been used by an organization to gain a full understanding of the way in which its business operates, before it approaches an outsourcer.

The tasks within this phase are:

• Define the reasons for outsourcing.
• Define the services required.
• Define the expected quality.

The organization would prepare a list of services, with their required levels of performance and their performance measures. These would then be included in a Request for Proposal sent out to various outsourcers. The selection of an outsourcer would be based upon the responses to that RFP.

Under the new methodology, I have a different approach. The understanding phase is now an opportunity for the organization, together with a number of outsourcers, to gain an understanding of the business. I suggest two outsourcers be involved.

This approach does involve more time, and can be more expensive. The organization will have to pay for two teams of outsourcers, instead of getting a single outsourcer to do the work within the outsourcing contract. It will also have to involve more of its own people, because of the need to support the two outsourcers' teams.

The main reason for paying for the services of the two outsourcers is so that the organization will own the results of their work. One of the difficulties with the RFP approach is that the outsourcer will usually retain all rights in the proposal. As a result, the good ideas from a losing proposal cannot be incorporated into the winning proposal. This means that the organization may not always get the best solution. By using two outsourcers, the best ideas can be combined into a single solution. A future issue of "Acquisition" will explain how this can be done.

At the end of the phase, the organization should have:

• A set of reasons for outsourcing.
• Descriptions of the outcomes required.
• Descriptions of the processes and services that currently produce those outcomes.
• Descriptions of the processes and services to be provided by the outsourcer.
• Descriptions of the performance measures for the outcomes.
• Descriptions of the required service levels.

The agreement phase

The agreement phase translates the understanding of what needs to be done into an agreement on how to do it.

Using the traditional method of acquiring an outsourcer, this phase would be marked by the organization and an outsourcer working through the RFP and the proposal to reach a situation with which they were both satisfied. The outsourcer would be the one who had scored highest in the organization's evaluation of their proposal.

If agreement could not be reached with the preferred outsourcer, the next highest scoring outsourcer would be selected and the agreement phase would start again with them.

Using the new methodology, there is a temptation to omit this phase and begin building a contract. It is essential, however, that a clearly recognized phase of reaching an agreement is included in whichever approach is adopted.

With our recommended approach, the Memorandum of Understanding (MoU) could be incorporated into a Memorandum of Agreement (MoA). At the least, one or more outsourcers should be confirmed as "preferred supplier" by the end of this phase.

The major strength of this approach is that it does allow more than one outsourcer to be appointed, based upon the results of the understanding phase. Also, the agreement phase is used much shorter, although the understanding phase may have been much longer.

The contract phase

The contract phase does not need any description. Once agreement has been reached, with one or more outsourcers, the contracts can be drawn up and signed.

In the outsourcing methodology, there are no "last minute surprises", so the contract phase should simply be a matter of the parties and their consultants, advisers and lawyers getting together to ensure that the existing agreement can be translated into a formal contract.