Last week I looked at the advantages and disadvantages of the ‘make or buy’ decision. Remember, the ‘make or buy’ decision is where you decide if it’s better to do the task or make the product in-house or whether you should contract with a vendor to do it for you.
There are pros and cons of doing both – but how do you decide for any particular deliverable on your project what the right thing is for you? That’s where you need a process to determine whether making or buying is the right route forward. Here’s an easy 5 step approach that you can use in your procurement discussions.
Review existing skills
What skills do you have in the team and do you have the skills to do the task with your in-house resources? For example, you may have some experienced software developers but no one really has the right blend of skills to build the new module for your system. Or you may have plenty of people with the right skills.
Do you need to have these skills in the team over the long term? This could be if you were looking at providing support for that new software module. If you do have the skills to provide that ongoing support already, great, but if not, it’s worth looking at whether you need to get them. If you decide that you do need the skills in-house to provide long term support, then you may have to produce a handover plan with your third party supplier if you decide to outsource
Review potential skills
If you don’t have the skills in your team already, how much would it cost to get them? How long would it take? Look at what training courses are available, how much they cost and whether they would truly give your team members everything they need to consider themselves an expert.
Alternatively, you could recruit a new permanent or temporary member of staff with the right skills. That gives you another option to outsourcing the work – the person becomes an employee with all the permanence and team cohesion that comes with that.
How much time would it take to deliver this work in-house? Do you have the time to do it internally? Even if you do, what would your team members be postponing if they take on doing this task? This, I think, is the critical question to ask. You can have the right mix of skills and experience to take on the delivery of this work but that does mean that those resources aren’t working on something else. Is the ‘something else’ more important? It’s worth spending some time answering this question with the people involved and some of the senior stakeholders. Get together with a tool like iMindQ and write out exactly what you’d be winning and losing if you took on delivery of this task too.
Once you’ve done that and got a full view of the time it would take you, you can then compare that to the timescales proposed by your suppliers. You’ll probably find they can do it faster! And that leaves your team free to work on other things.
Compare the costs of doing the work internally and externally. In most cases you’ll find that using a third party works out more expensive, especially if you include taxes and procurement fees which you wouldn’t have to pay when you use internal resources. But at least you’ll know and you can then use this data to help you make your decision.
The fifth step is to compare the quality of what you could do in-house (as far as you are able) with samples from the supplier. Get testimonials about their previous work. As they are the experts and do this work on a regular basis I would expect them to be able to do so at a higher quality than you can achieve in-house. However, if your team are all conscientious with great attention to detail and your supplier mass produces the widget you want, you may find that your own team will do a higher quality job! It’s up to you to decide if that matters to your project or not.