Take a Business-Minded Approach to Sourcing Learning Partners

By: Gary Schafer
President, Caveo Learning

One of the most important tasks talent development leaders face is selecting outsourcing partners and product vendors. It also happens to be one of the most daunting.

The learning and development organization’s relationship with providers can be a major factor in the success of the business. Learning leaders must weigh many variables in the purchasing process, from the factual (pricing, experience) to the intangible (flexibility, dedication).

Navigating the procurement process can be tremendously difficult. How can a provider’s ability to flex with the challenging demands of the business be analyzed through a formal procurement process? How does one tell if an external learning partner is going to react to changing environments and truly be aligned with the business? How is the commitment of the supplier to the mission, vision, and values of the business measured? What about issues of scalability, global capability, and communication?

How to Develop a Learning Sourcing Strategy

Start by establishing a factual market intelligence base—understand the array of variables around learning services, from expertise to capability, and the rates associated with those services. Create your supplier portfolio, determine a list of qualification criteria, and then winnow your list of potential suppliers.

Identify the types of services your organization needs—learning strategy, audience analysis, curriculum design, instructor-led training, eLearning, change management, etc. Then, determine the demand across the organization, broken out by role.

Next, perform learning-spend and target-cost analyses. You’ll want to analyze supplier rates using both internal and external data sources.

  • Conduct some internal benchmarking with the same supplier—are rates equal across multiple projects? Does the firm charge premiums based on experience? Is pricing consistent across roles?
  • Do the same internal benchmarking across multiple suppliers. Find out if rates are similar for comparable roles and skill levels at different organizations.
  • Develop some external benchmarks using publicly available market data, comparing rates from market analyses and publicly available salary data. Factor for loaded cost (about 1.3 times base salary) to cover benefits, PTO, company-paid taxes, etc., and also allow some room for supplier margin.

Investigate the Intangibles

Before moving forward with sourcing service partners and learning products providers, conduct a supplier quality assessment. Create quality profiles for each prospective partner by evaluating the following factors:

  • Strategic planning—Will they assist with communicating and messaging to senior stakeholders throughout the business? Do they provide intelligence around industry trends and best practices? What do they offer in the way of post-project analysis, such as lessons learned and next-steps recommendations?
  • Experience—Does their team have expertise in relevant areas? What is the screening process for potential employees and contractors? How cohesive is the team, and how closely do they adhere to defined processes?
  • Responsiveness—Do they show a commitment to your business needs through effective communication? Is there a proven track record of adherence to deadlines? Do they offer strategic learning support?
  • Quality of work—What processes are in place to ensure solid instructional design? What methodology is used for quality reviews (test plans, style guides, etc.)? Does the supplier set clear review expectations for training deliverables and correct issues in a timely manner?
  • Flexibility—Do the suppliers have the ability and willingness to react to new or changing business needs? What is the capacity to scale a team with appropriate roles and volume?
  • Support—Do they have ready access to tools and templates necessary to speed development? Are there documented methodologies for executing common tasks?

Pricing as a Determining Factor

Suppliers’ rates often (though certainly not always) correlate with their quality profiles. If budget were no object, the learning sourcing strategy would simply mean identifying the most qualified provider; of course, budget is oftentimes the overriding factor, and so we must balance the need for quality with fiscal realities. Thus, try to optimize supplier usage based on rates, hiring high-quality suppliers for critical projects and project management, and settling for more cost-effective options, such as staff augmentation, for lower-importance projects and commodity roles.

Likewise, negotiate for spending reductions based on the type of support required. Each of the three main services models comes with its own potential cost-savings.

  • A project-based agreement can reduce per-unit costs and may be further cost-efficient due to greater opportunity to leverage offshore assets.
  • Contract labor ensures compliance across the organization, and the consolidated labor structure means negotiated volume rates are an option.
  • A managed services model will likely have optimized service levels and adjustable staffing levels, along with efficiencies gleaned from custom redesigned processes.

Be cautious with regard to electronic procurement. There are several tools now available and in use by procurement professionals to streamline the proposal process, but they are not always ideal for learning organizations. These tools are great for providing a uniform response with efficiency, but for learning services, not everything is uniform. E-procurement tools often create barriers for providers to be able to tell their full story, essentially reducing the proposal process to 100-word bites of information that make it difficult to recognize the provider’s true value. A good procurement professional can get around some of these limitations by still offering a face-to-face meeting opportunity of the top candidates for consideration.

Finally, take care to negotiate a favorable agreement with the external learning partner. Have a negotiating strategy before initiating contract talks, and be ready and willing to walk away if a better partnership can be found elsewhere.

Creating and implementing a learning sourcing strategy for learning will greatly reduce the stress of the services procurement process, helping identify the ideal partners for your learning organization’s initiatives while optimizing budget. Rather than an intimidating task, a well-prepared strategy plan can make sourcing service partners a cornerstone in your organization’s success.

Gary Schafer is president of Caveo Learning, recently named a top custom content company by Training Industry Inc. Gary was formerly a management consultant at McKinsey & Co., and he holds an MBA from Northwestern University’s Kellogg School of Management.

 

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