Outsourcing as strategy
Companies increasingly outsource specialist services and logistics; Accounting, HR, Delivery, server hosting, advertising etc. The arguments for such a strategy frequently refer to flexibility, access to unique skill and reducing employee costs. But services need to be managed. The outsourced work needs specifying. The output then needs judging and implementing.Who in the client organisation has the skills to manage and judge the work? Taking outsourced projects further, if the input of external suppliers is seen as valuable, then the logical extension is to get external input to strategy?
If you cant do it, can you manage it…?
One sector most frequently associated with outsourced projects is Digital; web build, optimisation, advertising, email marketing, content creation, search marketing etc.
The agencies can be very slick. The presentations are plausible, the data is extensive and the technicalities of proposed solutions appear thorough and the case studies (!) are wonderful…But is the whole story always told? Do the skills exist within an organisation to judge whether plans and designs are appropriate? Was the brief written correctly, the analysis carried out, and the numbers in a proposal benchmarked correctly.
Here’s a true story…
Specialist advertising proposal…from a national agency
An 8-page outline for targeted display advertising based on profiling. The numbers look great, the budget reasonable, the returns excellent.
If you know CTR stands for Click-through-rate then you may think 1.23% sounds ok? Except 0.06% is more usual for this type of advertising. The client should extrapolate the numbers based on conversion rates and cost of sale. The difference between normal CTR and the one quoted represents a variation in the cost per sale (or CPA) of a factor of 5. In this example it was the difference between £54 a sale, or £280.
Critically, the client didn’t have any benchmark for CTR, didn’t calculate the cost per sale (cpa) and didn’t spot the metrics quoted were not in the 4 page contract.
Who was going to make those judgements on the client-side and thus drive the best bargain, or choice of strategy?
Agencies basically do what clients tell them….so the brilliant case studies must have had good managers at the client side. When the client side manager has limited knowledge what happens…
- The business case isn’t worked through to define the objective
- Results in a badly written; not specific, no/unrealistic targets, based on a wish list
- The agency create a proposal to deliver the brief
- The resulting project solutions the client doesn’t like/recognise and needs amending; which is outside of brief; which costs more money
- The end product is launched, and results are not as expected.
- Client blames agency, agency blames client, invoice paid, both walk away.
Why does this happen?
Many businesses tightened budgets post 2008 crash. In some cases, middle managers were made redundant, with cheaper, juniors kept on. Subsequently skills and knowledge were lost.
Senior management no longer trust implicitly their business teams due to their general lack of seniority. So agencies are employed to plug the skills gap. But the juniors are expected to project manage the agencies; leaving the agencies in charge. Or worse, a director with little grasp of digital manages the project and tries to learn on the job.
Investment in training internally fell post 2008. Employees did not have the time, or budgets to keep up with the exponential leaps being made in technology and digital marketing
In parallel, the education received in schools and colleges cannot keep up. The standard of the potential recruits has declined.
“There are real skill gaps in the digital sector….the pipeline just isn’t delivering enough young people” Andy Burnham MP
A pyramid structure of ignoranceor, limited skills leads to bad projects;
- The manager doesn’t want their project to fold, or admit to poor preparation
- Directors who don’t have the knowledge to stand up to juniors with a little bit, or agencies who deliver techno-plausible arguments
- Agencies who fit briefs to their skill sets. Rare is it an agency refuses a project on anything other than price.
Who should manage the Project, the agency and the client?
The gap that needs bridging is between the skills of the agency, employed effectively, and the needs of the business. To do this, a third party is needed to run the project or strategy planning;
- Audit, identify needs, set objectives
- Plan; based on needs, resources and infrastructure
- Brief suppliers; audit responses; tailor project
- Project management; audit, identify needs, structure of project, deliver, measure…repeat
- Benchmark; consider solutions, question proposals, target best results.
Above all, act as Judge not Prosecution or Defence. Inform the client of the facts, ensure a decision is based on knowledge. If it’s a bad decision driven by ignorance, vanity or hope then tell them!
Acting as the Judge…
Braid acts as “Judge” for a number of clients. Companies in online retail, finance, construction and even the agency sector have worked with Braid. In one example, the strategy delivered by 5 different suppliers, and in-house project teams are being coordinated by Braid.
The Strata project began with analysis and audits of current digital developments and lead acquisition. This led to project managing the launch of a new website, and the development of a new suite of marketing activity online. Three years later, and multiple technical projects are underway, lead generation has diversified and delivers consistent, and sustained growth. The internal knowledge of the Strata team has grown considerably, and the digital team is expanding.
In such a role, its critical that all members of the team accept that proposals will be commented on in terms of worth and quality, regardless if its from internal or external sources. Only that way can a client trust that the answer they get is what’s best for the business.
On occasion that has also meant some hard truths; like drop a project (that would increased Braid earnings) or even, in one case, stop employing us if you don’t want to take any notice of the advise.
How can Braid deliver?
Braid has considerable experience in a range of digital project areas that combine to deliver digital strategy, execution and analysis. The experience spans back to 1998 (launch of first web build) in the case of Brian Schur, and 1999 in the case of David Ranby. Both directors of Braid have been involved in major digital/e-commerce businesses throughout the last 17 years.
Perhaps critically, both have the experience of making mistakes and running tests to be able to fall back on. Both also have had the opportunity to learn the impact of certain strategies across a range of businesses, both as client and supplier. Ask for a digital audit here