Value from Non-Permanent Resources

Non-permanent resources fulfil a vital role in the delivery of change. It is preferable for most organisations to have between 10 and 20% of their change resources made up of contractors and consultants to enable them to flex their teams according to business demands. As a tactical response to a change in demand, non-permanent resources add immediate value to an organisation allowing them to deliver projects more quickly than they would be able to do with just permanent resources. Over extended engagements the amount of value that the organisation receives remains largely static save for some increase organisational awareness.

We believe that the value that an organisation gains from non-permanent resources should increase significantly over time with more of the output from their activities being used as a measure for financial reward. Ultimately the resource is assigned individual pieces of work and is paid on their successful delivery. We can make this a reality.

A Professional Approach?

Last week I talked about using outsourcing to provide specialist skills for specialist services. Resourcing is a hugely important part of any business and therefore should be treated as an area where specialist skills should be used to find and select the best people in the marketplace for specific positions. I do not believe that resourcing is treated as a specialist skill and therefore outsourcing agreements tend to focus on volume and cost rather than quality.

Specialist resourcing organisations are providing services at many of our largest financial services companies. However, in this context, specialist means that the organisation “only” supplies resourcing services and does not refer to the quality or depth of knowledge of the people who provide the services. It is like going to a specialist plumbing company to get new central heating installed but then finding out that the people who work there have little more experience than changing a washer. Why do we have an attitude towards resourcing outsourcing that is so much more tolerant of poor performance than we would have to an IT provider or security firm?

People cannot be treated as insurance claims and processed by computer and semi-skilled resources. Resourcing should be treated as a skilled and professional skill and companies should take this into account when looking for outsource partners.

People are not insurance claims!

Most companies have at some point looked at outsourcing some functions in order to become more efficient and to allow them to concentrate on core business activities. This has been successful in some areas and not so successful in others.

There are two reasons for outsourcing: that the process being outsourced requires little expertise, is not core to the business function of the client and therefore it is a distraction to the client and should be performed as cheaply as possible; and where the process being outsourced is a specialist process and requires expertise that the client would find it difficult or costly to buy in or is only required infrequently.

Perhaps the success stories in the first category are in back office processing of financial services such as insurance claims as well as facilities management on most large sites. In these examples the skills required by the function are widely available and therefore an organisation dedicated to providing them can gain efficiencies of scale. In the second category IT security and tax consultancy would be excellent examples of specialist skills brought in to improve business performance.

Resourcing has also been treated as a process suitable for outsourcing for many years and, interestingly, has been put into both of the above categories. Some organisations have outsourced all responsibility for permanent and non-permanent resourcing to large international companies at low per unit prices. Others have paid fees to search organisations for seeking out the best executives in their field and agencies significant margins for specialist IT resources. One could argue at length about the relative merits of these approaches and the quality of the people that are identified, and I can guarantee that I certainly have as a lack of quality in resourcing is one of my specialist subjects. However, both are potentially flawed for the same reason, that the interview process is conducted by someone with little or no previous experience of interviewing.

The results of this can be really serious for the business. It can lower standards, inhibit change, be extremely costly and stop a business ultimately succeeding in its strategy. I will be looking at some of these issues in my next blog and be discussing the ARM model which we use to accelerate and simplify the process of bringing in the highest quality external contractors and consultants.

More for less again!

It has been a while since I have posted a blog entry. We have been evaluating a number of external influences including the change in government so that we concentrate on delivering a set of products that are accurate for the market of the moment.

I have noticed a change in those clients we are speaking to who use large numbers of contractors within their management and analyst populations. Often these large groups have been delivered by a large managed services designed to follow processes rather than carefully select consultants for the assignment in hand. This results in a lowering of the standard of contractor on site which can in turn lower expectations of delivery; a very bad spiral of negative feedback.

These clients are now looking to reduce the number of contractors onsite but increase the quality of the output. This requires careful selection of high quality consultants from the market and management of those resources whilst on site to ensure performance is meeting expectations. The resourcing arm of our business delivers this using the Accelerated Resource Model and I will be talking about this on an ongoing basis during 2010 as uptake of the model gathers pace with our customers.

Will change open up Government?

This week there is generally expected to be a change in government but there is still considerable uncertainty about what that government will look like. Regardless of the political make-up of the government it is clear that considerable cuts are expected across public sector spending. As a company that has not traditionally gained a large proportion of its income from the public sector these cuts should not directly affect our business. However it may represent an opportunity to write more business if cost becomes a major factor in vendor selection.

In recent days I have completed documentation for two public sector contracts. I feel that both of these would normally be awarded to a brand name integrator or consultancy and I feel that the price tag would have been high. I have no doubt that we can provide an equivalent or superior quality of service and at a more competitive price. In addition, because we have fewer concurrent projects running we will commit key management resources to every one. This has be better for those organisations procuring services and ultimately therefore for every tax payer in the country.

If the outcome of the economic downturn is a more cost effective and competitive environment in the public sector then that will be a considerable silver lining.

Single Minded Purpose

There continues to be a buzz of activity in the consulting Market at the moment. Integration and regulatory programmes are ensuring that there is work available for high quality consultants but does mean that competition for the best people is more intense than it has been for a couple of years. Clients need to be single minded about their goals and not be complacent that they will secure high quality resource as they could be until recently. This includes being prompt to make requirement decisions, prompt to organise exploratory meetings and clear about the budgets that they can afford to secure the correct resource.

I have heard of at least three occasions in the last two weeks where clients have been less than successful in meeting the above criteria. This has resulted in delays in getting the correct consultants assigned which in turn has had consequences on delivery of key projects. We are working hard with our clients to ensure that this does not happen on their projects which so far we have been able to achieve.

Time to breathe out?

There is undeniably a shift in the marketplace for interim resources. Perhaps until this point it might have been isolated symptoms and sporadic activity but now there is enough momentum to suggest that there is a move to purchase services. An IT director once told me that you can only hold your breath for 2 years. After this time, no matter how severe the trading conditions have been for an individual business or for the marketplace as a whole, you have to run some projects. Without a modest amount of investment you risk the integrity of your infrastructure and this could ultimately affect the recovery of the business.

So since the new year the IT marketplace has taken a collective gasp of air and is doing running project repairs. Good news for the service industry and welcome relief to the interim market where there have been fewer opportunities. However, I would still be very cautious about long term recovery. We have an election coming up which looks like it has an increasingly uncertain outcome and this could significantly affect the overall economy. The result of two years of abstinence is that we have all breathed out and are enjoying it but are we about to take another deep breath and hold it for the rest of 2010? Let us hope not.