When is it Appropriate to Outsource?

1. When is it Appropriate to Outsource? Steve Queisser, Vice President, Edamerica/Edfinancial & Mike Nylund, Director of Financial Aid, Capella University

2. Learning Objectives • Reasons to outsource • What problem are we trying to solve? • Create an evaluation team • Use University/College resources on campus to ensure diverse opinions • Good RFP’s • Is it nice or necessary? • Select your partner • Flexibility and good fit should be top criteria • Good contracts • How to measure performance • Successful partnership • Help your partner to help you

3. Key Steps to Outsourcing • Identify potential areas and reasons for outsourcing – can quality and service levels be maintained or improved? • Decide if RFP is needed • If so, develop your RFP & form your evaluation team • Decide when to inform your employees outsourcing is a consideration • Select your partner • Write a good contract – maintain a level of control • Manage your partner once the work has been awarded

4. Reasons for Outsourcing • Reduces cost/cost savings – easier to budget • Increased workload on current staff/capacity management • Increasing regulatory changes/avoid headaches of constant staff training • Staff turnover and training issues • Financial pressure that limits hiring • Lack of expertise – gain access to special expertise • Software and equipment needs – rapidly evolving technology includes hardware and software • Compliance concerns – ensures accountable results/risk mitigation • Increased customer (parents/students) satisfaction What & How much to outsource while maintaining control?

5. Advantages of Outsourcing • Expertise • Instant impact • Economies of scale • Policies and procedures/compliance • Training, development and advancement • Buying power and management of labor • Better tools and systems

6. Managing Outsourcer Misperceptions about Outsourcing • Loss of control • Employee resentment Manage Contractor Closely • Customer service issues • Parents and students • Quality personnel • Expertise and training • Financial issues • Savings

7. Areas for Outsourcing Call Center – One Stop Shop • Highly trained First Impression Specialists • May give contractor remote access to your system – read only or limited change access • Extend operation hours of office with minimal financial impact. • Improve internal productivity • Improve student service • Effective contractor training is key • Hold contractor accountable for pre-determined ASA

8. Areas for Outsourcing Financial aid processing • Verification • Contractor remote access to your system • School scans docs/contractor reviews them • Student follow up/contractor or school • DL Reconciliation • Document Collection • Highly trained staff, not just individual to ensure quality of finished product

9. Areas for Outsourcing Default Prevention Services • 3 yr cohort increase need for more active DPS • Few school have ability, staffing or systems needed to conduct DPS in house • Good partner can help extend counseling efforts of aid office and improve student satisfaction • Flexibility to custom design DMS program to fit needs of particular institutions

10. Creating a Realistic Timeline3 to 5 months • Develop your RFP • Inform your employees • Form your evaluation team • Identify potential contractors • Establish deadline for submission of proposals • Pre-bid conference and tour of facilities • Review & analysis • Committee review • Award contract • Develop transition plan

11. Developing Your Request for Proposal • Get copies from friends or national organizations • Set clear expectations • Don’t ask for more than you need (i.e 24/7 call center coverage) • Compile accurate demographic data • Incorporate anything unique about your school • Know your customer base – Is this service critical to our mission? • Know the rules and regs associated with RFP’s at your school or system

12. Types of Financial Arrangements • Management fee • Cost per • A la carte • Combination Flexibility to meet unique situations

13. Informing Your EmployeesOutsourcing is a Consideration • Solicit help from your HR department • Determine when you should notify your employees • Be open and straightforward • Explain why outsourcing is a consideration and potential impact on employees • To the extent possible have detailed answers ready for your employees • Encourage them to think positively about how they be more efficient and better serve students

14. Forming an Evaluation Team • Purchasing office • One or two managers from area to be outsourced • Human Resources • Information Services • Primary user of service • Possible faculty or student representation

15. Identify Potential Bidders • Local • Regional • National

16. Bid Meetings • Individual or group • Talk about culture • Operation concerns and unique items • Review process • Why outsourcing is under consideration • Clarify questions from RFP • Ask potential partner about their concerns

17. Reference Checks • List of current clients for reference checks • List of previous clients for reference checks • Check with friends

18. Selecting Your Partner • Questions adequately answered • Financial packaging clear • Reference checks • Good fit!!

19. Writing a Good Contract • Terms and definitions are clear • Outline expectations for • Customer service • Quality • Employees • Support • Marketing • State & legal requirements • Exit terms

20. Customer Service and Quality • Quality guarantees and incentives • Product selection • Hours of operations • Surveys • Input on management team

21. Managing Your Partner to be Successful Once Selected • Develop realistic transition plan • Manage expectations within the office • Reemphasize unique characteristics about organization and personalities • Introduce key members to the office • Have daily / weekly meetings to see things are going well • Treat partners as though member of your staff

22. Closing If you have set realistic and obtainable expectations • Involved your key constituents • Done your “homework” • Written a clear RFP and contract Outsourcing can make sense and improve your internal operation