CWS 3.0: July 9, 2014

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Do you have what it takes to run your own program?

When building or transforming a contingent workforce program, one of the most important decisions you will make is whether to outsource implementation and delivery to a managed service provider (MSP) or to deliver the program using in-house resources.

The cost of implementation and delivery is often the key factor in the decision-making process. Senior stakeholders may view existing management capabilities, possibly built around the in-house recruitment processes for employees, as sufficient for a CWP build. Here are some reasons for managing a CW program in-house:

  • Better culture fit and business knowledge from an in-house delivery team.
  • Cost avoidance (lower CWP/MSP management fees).
  • Enhanced company data privacy and confidentiality.
  • Re-use of existing HR/procurement workforce management skills and expertise.
  • Greater flexibility with program scope of service, KPIs and SLAs.
  • Able to maintain direct ownership of supply base for contingent talent.
  • Opportunity to create stronger working relationships between Procurement and HR.
  • Higher levels of engagement with senior stakeholders.
  • Better integration opportunities for technology needs.
  • Better opportunities to create a strategic in-house solution acting as a competitive advantage.

However keen you are to claim the perceived benefits of managing your program in-house, the first hurdle will be when senior stakeholders ask you what resources you need to deliver.

To answer such a question at a high level requires consideration of three important aspects of MSP delivery:

  • business requirements management;
  • business service management (services to be performed and their SLAs); and
  • resource capacity management (which includes estimating demand for services and the resource skills, expertise, experience and workload capabilities).

Together, these three aspects (or sub-processes) shed light on the limits of your resources, infrastructure and processes known as capacity management. Capacity management is a discipline that ensures how a service is provided — at the right time, in the right way, at the right price — taking efficiency and effectiveness of service delivery into account.

To develop a capacity management plan and service level management guidelines involves input from many different areas of the business. Key stakeholders are required to identify what services are or will be required, what resources are required for service support, what contingency levels are required, and what costs are involved.

Four key questions must be considered:

  • What program services are to be delivered?
  • What demand exists for such services?
  • What resources are required to deliver the services?
  • What performance and workload management is required to satisfy demand at acceptable cost?

Key to developing a capacity management plan is the processes and services within the scope of the program. Understanding the demand (and demand trends) for such program service is critical. Translating this knowledge into a workload plan helps provide the basis of a service delivery organization tasked with ensuring all current and future capacity and performance aspects of the program meet business needs at acceptable cost.

Identifying business demand and managing program capacity is one of the critical success factors for an in-house MSP. The program manager must ask whether the company has accurate capacity forecasts and appropriate capacity to meet business needs. Both questions must be asked and answered on a regular basis and form part of measuring service delivery success through the use of critical success factors (CSFs) and key performance indicators (KPIs).

A discrepancy between the capacity of the in-house MSP delivery team and the demands of the business for contingent labor and related services will result in inefficiencies, possibly under- or over-utilized resources and unfulfilled and dissatisfied customers. The goal of capacity planning is to minimize any business-related service discrepancy.

Capacity management has four main strategies, these help you to build a capacity model suited to deliver your chosen strategy:

  1. Lead strategy. You add resources, services and infrastructure in anticipation of demand (and increase in demand). A lead strategy is aggressive and implies higher delivery cost. The upside is customers adopt your CWP services more quickly and with higher levels of satisfaction.
    1. Lag strategy. You add resources, services and infrastructure only after the business prioritises requirements as essential and after the CWP delivery team are already running at full capacity. A conservative strategy, that may result in dissatisfied customers and unmet SLAs, but risk of waste and cost of delivery are reduced.
  2. Match strategy. A moderate strategy that incrementally adds capacity to deliver in small units and, at time of service establishment, does not apply any contingency to resource, infrastructure or technology needs. This strategy also applies to small changes in service delivery that are a response to regulatory or legislative requirements.
  3. Adjustment strategy. This strategy can add or reduce service delivery capacity to suit customer demands, or to major changes to SLAs, scope of services, technology architecture or procurement policy changes.

The strategy you choose will dictate how you respond to business service requirements, how you engage with senior stakeholders, and ultimately how many and what resources you need to deliver the program.

Next week, I’ll discuss how to go about executing the capacity plan.