The Money Files

In this video I talk about the different types of complexity that you might face on your projects, as inspired and defined by Cranfield University.

I hear a lot of negative stuff about outsourcing. How it’s hard work, and not cost-effective, especially if you are in the charity sector or another sector with tax breaks. That’s because of tax rules (at least, over here) that say while you can’t charge VAT on services such as healthcare, you have to pay suppliers VAT. Moving services inhouse and not relying on outsourcing partners can chop a 20% bill (or whatever your tax bracket is) off services.

But you can make it work. If commercially it’s right for you and you’ve made that leap, you still need to put some effort into making sure that the partnership is a positive experience on both sides.

Here are 5 tips for making outsourcing work for you.

1. Negotiate The Right Payment Terms

Link your desired outcomes to how you are going to pay your outsourcing partner. In other words, think about how your payments can be structured along business benefit lines. For example, if you hit x% of target the payout above the basic rate is $y.

Think about ways that you can incentivise your outsourcing partner to have goals that are totally aligned to yours through their payment structure.

2. Manage Them Closely

You can’t put an outsourcing agreement in place then walk away.

Or, you could, but you shouldn’t expect great results if you do that.

Make sure that you manage specialist contractors in the same way that you would your own team. Use governance and oversight to keep an eye on what they are doing on  your behalf. Track their progress regularly.

If you do go ahead with outsourcing remember that you can’t (or shouldn’t) outsource responsibility for tasks or processes. Especially on a project: you’ll still remain the person ultimately responsible for the outputs and outcomes. If something goes wrong, it’s your project that will suffer, so keep a close eye on the work that is going on.

This isn’t about micromanaging; more about making sure that you’re goals are met. You wouldn’t expect to give someone else a task and hefty salary and then never check up on them, would you? So don’t do it with third parties either.

3. Choose Your Partners Carefully

If you can find partners who have a similar work ethos and company culture to yours it will make the process of partnership far easier.

Ideally, look for people who will help you achieve your business goals in ways that support your own efforts. Your tendering process should help you identify companies that are a good fit, so make sure your questions and tender documentation address the important questions in this area.

4. Don’t Outsource For The Sake of It

So all your industry peers are busy outsourcing? Outsourcing is cheap? That doesn’t make it the right solution for you. You could still find more value or a better outcome by upskilling your existing team, hiring someone to work in-house, changing your delivery model or doing something else.

Outsourcing isn’t always the answer!

5. Know When To Break It Off

Don’t be afraid to switch out your partners if they aren’t giving you the service or return you expect. What might have worked for you both 12 months ago may no longer be the model that you want to use.

It is always better to leave agreements like this on good terms. Talk to your partner about your intentions and how you intend to manage the work going forward. Ask how they can help you do the transition and put together join plans to move smoothly into your new operating model. Don’t burn bridges if you can help it: the professional world is a small place and you are very likely to cross paths with either the company or the individuals you worked with in it at some point in the future.

Having and maintaining a good working relationship for the life of the outsourcing agreement is something that will make exit that much easier. Even if you have no intention of parting ways right now, think about how you would in the future. The strong ties you build now will help you when (if) the time comes to move on.

Do you manage your projects ‘in the cloud’? It’s the buzzword that has stopped being ‘buzz’ and is now a critical part of being able to operate successfully as a project manager – even if you don’t manage software projects.

Growing up in cold and rainy Hamburg, Mauricio Prinzlau had a semi-legitimate excuse for passing his time in front of the computer as a kid. After a degree in Business Communication Management, he joined the Cloudwards.net team as a managing editor and backup expert, where he's in charge of the cloud backup and storage reviews section.

I asked him what project managers need to know about cloud computing, starting with the really, really basic stuff.

Mauricio, what is 'the cloud'?

The cloud is obviously a very trending topic with a variety of definitions. The cloud leverages computing power and makes it available via the Internet so that businesses, organizations, and even individuals can use the cloud to solve business problems, upload photos, or host a website.

What else do people use it for?

Project managers use it for hosted project management collaboration tools but also other, non-project management apps that they are using in their day jobs or deploying to others.

For example, businesses use the cloud to make operations more efficient and leverage the computing power of servers to store and archive files cheaper and more secure. What used to be a complete on-site infrastructure that needed maintenance, security patches, and staff is now outsourced to cloud data centers that are off-site, thus reducing cost and risk for businesses and organizations.

Outside of work, you probably use the cloud on a daily basis without really noticing it. Facebook relies on cloud infrastructure, iCloud uses the cloud to backup people’s photos, Google Now helps us with day-to-day tasks. And there are many more examples we could come up with where the cloud plays a central role in people’s lives now.

So let’s say I need to back up all my project files. How do you choose the right cloud storage solution for your project?

How do you choose the right car? Just kidding, of course, it is very hard to give a general answer. What do you need the cloud for? Do you have a team of 5 people who need to collaborate and share files? Then you need to look at solutions such as Dropbox or Google Drive.

But what if security is a major concern? Then Dropbox and Google Drive are not an option. Project managers need to look at solutions such as Sync.com, who put security at the forefront of their business model.

Think about what your project teams and organization needs regarding features because it’s easy to overpay for a cloud service that you don’t need.

Mauricio Prinzlau

And what about the projects I might be delivering? Outside of file sharing and back up, what sort of things am I going to be hearing my tech architects talk about?

If you need virtual computers in the cloud to do calculations, then you you might hear them talk about Amazon Web Services because they offer great flexibility and scalability of computing power.

There are other options, of course, and what I would say is, there is no one-size-fits-all cloud. You need to compare features carefully, decide on your budget and then make an informed decision.

Can the cloud or online solutions be a cost-effective way to back up files?

In one word: yes. Online and cloud backup are terms used synonymously because there is not a real difference. Cloud (online) backups are one of the cheapest ways for businesses to get files off-site and protect them from disasters (theft, fires, flood etc.).

There are even services such as CrashPlan or Backblaze, who offer unlimited cloud backup, so they put no limit as to the amount of storage you can send.

Sounds great. Surely there are disadvantages we should know about?

There can be risks associated with cloud storage. That’s why I recommend my clients not to rely on one single cloud with all their data. Data loss can happen even to the best companies, so a fallback (ideally with a local backup) is always best.

Security is a concern if a cloud backup or storage company does not encrypt files before they are sent to the cloud (sometimes called end-to-end encryption). Always make sure you choose a service that supports this feature.

If your company has certain limitations as to the location of where the data is hosted then most companies have to be aware that the majority of cloud storage companies are located in the US. This is not ideal for most European businesses.

Yikes. So much of my project data is confidential. Is it safe to put stuff in the cloud?

It is safe if a) you encrypt files yourself before you send them, or b) a cloud storage service offers local encryption (or zero-knowledge privacy). I would personally recommend Sync.com, which is a Canada-based service, they work in the same way Dropbox does, but with zero-knowledge privacy.

I don’t even know what zero-knowledge means!

Oh, sorry! There’s a detailed explanation in this article but it’s too much to cover in this interview today, but it’s a way to store your data so that even the storage company can’t get into it.

OK, I’ll look at that later, thanks. How do you balance accessing work files on your work cloud and your personal stuff in your personal cloud, like Dropbox, for example?

Well, for one you could create two different accounts, one that you use for personal and one for business.

Dropbox and other cloud storage service offer business versions with enhanced privacy and collaborative features. For business collaboration, I tend to use Google Drive because my team and I can work together in real time on documents and spreadsheets, but I do not use the public clouds (Google, Dropbox) for very sensitive files like contracts. That’s where I would personally choose a zero-knowledge cloud.

Can you give me a short answer to what do managers need to know about the private/public cloud overlap and how best to manage it so that employees don't put confidential business records at risk?

That’s one of the major problems larger organizations face: the consumerization of the cloud. Employees use Dropbox, OneDrive or Google Drive to share business files. That’s why enterprises need to offer their employees a solution that is as easy to use as the public clouds. We have been working with Autotask Workplace as a solid solution for enterprises because it offers the same flexibility and ease-of-use as Dropbox, but without the security holes. Users can synchronize files (personal or business files) and managers can keep an eye on what gets in and out.

It sounds like an industry that is moving a lot. Where is next for cloud storage - what are the trends that you are seeing?

Cloud storage services do not focus on storage anymore, because, well, some argue that there is no money to be made with storage.

We clearly see a development into intelligent solutions for project and document management. Dropbox has hundreds of millions of users, all using their service in different ways, so in a couple of years, I believe we’ll be seeing a lot of artificial intelligence added to it, which helps us organize information automatically based on our specific business.

Thanks, Mauricio. Any final words?

I would say, don’t put all your eggs in one basket, especially when using the cloud for backup. But also, think about what your project teams and organization needs regarding features because it’s easy to overpay for a cloud service that you don’t need.

Overall, I’m excited to be close to seeing the developments in this industry and am looking forward to more innovative features and services based on the cloud.

Thanks!

Outsourcing on projects isn’t without issues, whether you’re outsourcing part of the project delivery or managing a project to put in place a process to outsource something for the company such as a shared service centre.

Here are 5 issues that you might face when outsourcing and what you can do to mitigate them.

1. Partner Is Not Creative

According to Deloitte’s 2016 Global Outsourcing Survey, 35% of respondents are already focused on measuring the value of innovation in the partnerships they have with outsourcing firms.

That means 65% of people are not.

Creative thinking and innovation can help solve problems with capacity, give you global scalability and provide access to assets that you wouldn’t have otherwise. Innovation can look different to different organisations but you could leverage your outsourcing partner to:

• Transform processes
• Reduce implementation times
• Deliver better, or different functionality

Manage the issue: Talk about it. Have you specifically asked your outsourcing partner to think creatively? Make it part of your conversations with them. Ask how they are support innovation, and then work with them to help them deliver it. Otherwise they may be following what they consider is good-enough levels of service delivery. Be explicit about what you are expecting and what you would like.

2. Quality of Service Is Poor

One of the biggest concerns with outsourcing is that once the initial honeymoon period is over, the results will be…mediocre. And this can happen.

Manage the issue: Training. Set your expectations and offer training to help your partner meet them: it’s in both your interests.

You can also escalate the issue to the vendor management team, starting with your account manager. No one wants their company to be thought of as mediocre. Sometimes suppliers don’t know that you rate them in that way. Other times you need to accept that you aren’t a big enough customer, or you don’t pay for a higher quality service, for them to offer you anything more than they already do, which might be what they are contracted to do.

You can renegotiate the deal if it’s the arrangement that’s at fault (and your expectations) rather than the fact that they aren’t meeting the basic terms of the agreement.

3. Reactive Approach To The Service

You outsourced because you wanted someone to be totally on it, in a way that you couldn’t be for whatever reason. Unfortunately, what you’ve got is a partner that is reactive. They deal with things, but there isn’t any preventative work or proactivity. You aren’t seeing any additional benefits from the arrangement.

Manage the issue: This could be because the overall governance is poor. You can put in place more levels of communication or knowledge sharing or governance to ensure that there’s the framework for proactivity and they have the access to the people and processes they need to be able to work in a proactive way. You could also look at changing the metrics for measuring success of the agreement. If they are tasked on resolving service desk tickets in 4 hours, for example, they might not be compensated for reducing service desk tickets by x%. If you want proactivity, you might be better off incentivising for that.

4. Unskilled (Or Poorly Skilled) Resources

One of the reasons people outsource, especially on projects, is to quickly get access to skills that you don’t have in house. The people you met during the vendor procurement process certainly showed you that they knew what they were talking about.

But  when you are into the project proper, the resources you find yourself working with daily might not be as good as those that you met at the beginning. And then there comes a point where you think that they really aren’t the right people to offer you what you were hoping for in terms of a skilled resource base.

Manage the issue: Additional training might help when the problem is specifically to do with your processes, but it isn’t much help if you are facing a partner project manager, for example, who doesn’t seem to know a Gantt chart from a RACI matrix. I’d be to say that it isn’t your job to train their staff in non-company specific skills like project management, business analysis, team leadership and so on.

Either ask your account manager to sort out the problems of competency or ask for the poorly skilled resources to be removed from your account. You should be able to do this under the terms of your contract – check first, and if you don’t have this kind of clause in your contract you should negotiate to get it in.

5. Partner Does Not Communicate

Communication can be something that falls through the cracks. When things get busy on projects, often (and wrongly) communication is the thing that suffers most drastically, most quickly. Everyone is off doing what they think needs to be done and those regular supplier/customer meetings get shortened or postponed or just cancelled.

Manage the issue: Better communication might start with you. Are you able to spend more time on it from your side? Can you make the right people available, or set better expectations about what you want to hear about and how? Collaboration tools or shared software might help, or even simple things like making sure people have direct contact details for each other.

If you’ve done all this and the communication you have in place is still not adequate for you, then you need to escalate this to the vendor management.

Have you hit any other problems managing your outsourcing arrangements? Let us know in the comments below.

In this video I talk about the 5 project costs you might have forgotten to account for in your budget.

For more details, this article has more about the costs you might have overlooked.