2012 GFOAz Winter Conference
February 16, 2012
 What
is it?
 What services can be ‘right-sourced’
 Pros and Cons
 When do you use it?
 How do you do it?
 Summary
 One
tool in the financial management
toolbox:
A combination of providing services
through outsourcing, multi-sourcing,
shared services, in-house staffing, and
elimination to achieve the best
balance of cost savings and customer
service
All services
performed
with inhouse staff
Elimination
of services
Right sourcing
Accounts Payable
Accounts Receivable
Engineering
Custodial/Janitorial
Police
Park Maintenance
Water Operations
Refuse Disposal
IT
Payroll
Permitting
Animal Control
Fire
Recreation
Sewer Operations
Transit
These are just a few
The list is endless
Any combination of service
delivery that works for your
organization and your
community
Choosing to eliminate a
service is always an option
 Outsourcing
– contracting with an unrelated
entity to provide a service
 Multi-Sourcing – contracting with multiple
vendors to provide different elements of a
service
 Shared services – aggregating service delivery
across different organizational units
 In-House – services provided only by
employees of the organization

Lower labor cost because of increased economics of
scale

Tapping in to a knowledge base for better innovation

Frees management time, allowing more focus on core
competencies while not being as concerned about
outsourced routine activities

Increases speed and the quality of delivery of
outsourced activities

Reduces cash outflow and optimizes resource
utilization

Possible loss of control over a business process

Problems related to quality and turnaround time

Sluggish response times coupled with slow issue
resolutions

Shortcomings in performance vs. expectations

Lower than expected realization of benefits and results

An irate customer base
 Lower
risk by having multiple contracts
 Economies
of scale
 Targeted
expertise - Selecting different
vendors for different components of the service
 Usually
applied for IT services
 More
management resources needed to
oversee multiple vendors and monitor
compliance
 Blame
 Large
game - finger pointing
vendors may be unable to provide
innovation or your ‘niche’ solution
 Economies
of scale
 Tapping
into a knowledge base for better
innovation
 Reduced
capital investment
 Turf
wars – clear lines of responsibility
need to be identified
 Loss
of control
 Possible
 Lower
delay in service delivery
than expected realization of
benefits and results
 Control
 Faster
over business processes
issue resolution
 Greater
influence over quality and
response times
 Increased
labor costs
 Management
time used to monitor
routine tasks
 Possible
lack of innovation – ‘We’ve
always done it this way’
Whenever you need to do a
faster
cheaper
better
more efficient
job than what you are doing now!
*****ALL THE TIME*****
 Evaluate
 Plan
 Implement
 Measure
and Report
 Feedback
 Evaluate and Adjust
 Organization’s
 Departmental
 What
 Fiscal
Strategic Plan
Operational Plans
matters to citizens
Constraints
 Everything
is on the table
 Feasibility Study –
• Cost/Benefit Analysis – including intangibles
• Risks
• ROI
• Barriers
• Cause and Effect Maps
 Choose
the best alternative for service
delivery
 Decide on :
• Liability issues
• Governance structure
• Time periods
• Service levels
• Dispute Resolution
• Performance metrics
• Termination clauses
 Develop
timeline for implementation
 Negotiate
performance agreements to
include measures and timelines
 Transition
 Monitor
from current to new
performance
 What
gets measured gets done
 Report
on progress and compliance
 Communicate
results to all stakeholders,
including the public
 Surveys
 Focus
groups
 Town Hall
 Interviews
 Customer comment cards
 Council
 Other departments
 Evaluate
 Modify
based on feedback
service delivery if necessary –
Keep what is working and change what is
not
 Outsourcing
 Multi-Sourcing
 Shared
Services
 In-House
 Any
service – nothing is off the table
 Evaluate, plan
and implement
 Measure, report, get
 Evaluate
and adjust
feedback
Questions?
A Performance Management Framework for State and Local Government: From Measurement
and Reporting to Management and Improving, National Performance Management Advisory
Commission, 2010
“Budgeting for Outcomes: Delivering Results Citizens Value at a Price They Are Willing to
Pay” by David Osborne and Peter Hutchinson, Government Finance Review, GFOA, October
2004
Public Participation in Planning, Budgeting and Performance Management, GFOA Best
Practice, 2009
Alternative Service Delivery: Shared Services, GFOA Best Practice, 2007
Managed Competition as a Service Delivery Option, GFOA Best Practice, 2006
Performance Management: Using Performance Measurement for Decision Making, GFOA Best
Practice, 2002 and 2007
Building a Financially Resilient Government Through Long-Term Financial Planning, Shayne
Kavanagh, GFOA White Paper, 2011
“Opinion: It's all about 'right-sourcing‘”, Simon Briskman, Silicon.com, October, 2005
“RightSourcing – Buzzword or Reality Settling In?”, Nari Kannan, Toolbox.com, April, 2004