When the U.S. Chamber of Commerce, which represents three million American businesses before Congress, realized a few years ago that its legacy systems were facing massive Y2k problems, it knew the Chamber would not be able to meet its business obligations unless it found an effective solution. Stan Harrell, chief financial officer and chief information officer for the U.S. Chamber of Commerce, says the organization was just too far behind, technology-wise.
A lobbying organization, the U.S. Chamber of Commerce interfaces with its members in various urban areas about issues that interest those local chambers and the Congressmen involved in those issues. The U.S. Chamber's membership database holds various information about its members, such as meeting attendance, payment of membership fees and orders for various Chamber products. With the old software, though, no one knew what the daily sales and transactions were.
Although the U.S. Chamber had a prior outsourcing arrangement, it was headed in a different direction from where that service provider wanted to go. So they mutually agreed to go their separate ways, and the subsequent Request for Proposal for a new service provider yielded five "solid" responses. The scope of services included network support, software processing and maintenance, maintaining the telephony systems, and application support.
Forming the Team
During service provider evaluation, the Chamber examined each service provider's responsiveness to its needs. As Harrell, explains, their reactions to this fundamental request clearly caused the cream of the service provider crop to rise to the top. "We said to the bidders, 'If we ask you to parachute and help us, can you do that, and are you willing to take that chance?' Lockheed Martin's answer was 'yes.' Most of the others said they were 'not sure' or wanted to know exactly what we meant by that."
"We also told the bidding service providers we wanted to do a quick transaction - which meant less than six weeks to take over the operation of the legacy hardware and software from the prior outsourcer. We wanted that done as soon as possible so we would be in control of our destiny and then could decide together with the new service provider how to go forward from there." Most of the bidding service providers reacted with, "You want to do what?" But Lockheed had no objection to the plan.
The outsourcing agreement was signed in May 2000, and Harrell says Lockheed Martin "flew folks in from all over the country" and moved the legacy infrastructure to the U.S. Chamber's facility over Memorial Day weekend the same month the contract was signed.
Lockheed also ended up designing a quick technical solution for the Chamber's national telemarketing center located in Dallas, Texas. They were aware of the older equipment there, but it had not been part of the original plan to change the functionality in Dallas so soon. The plan changed because they realized the Chamber could immediately benefit from more revenue from sales if they incorporated the new software and procedures to support the sales operation. "They sent some folks to Dallas and some Dallas folks to us in Washington, D.C., and we agreed to a path on how to change it quickly," Harrell recalls. "We did it in six weeks. I was very impressed."
A Winning Team
Three months after the agreement was signed, Lockheed had tested and implemented the new software to use as the core membership database. But the outsourcing remedy for the Chamber's technology weakness was met with initial hesitancy from the Chamber's internal staff. "Like most organizations, our people were resistant to change," Harrell comments. "Also, a lot of them had negative views of outsourcing because of the prior vendor and, of course, some feared they would lose their jobs."
Up-front, the Chamber and Lockheed determined what "success" in their outsourcing relationship would look like. "It would be when the employees start wanting to use technologies to help them solve business problems. That would mean success - if we changed their hearts," states Harrell. Having discussed this problem during the service provider evaluation process, the Chamber felt confident of its selection of Lockheed Martin, as it was "by far" the most willing to approach this challenge in a win-win manner.
They were careful to point out to internal users that the new software allowed them immediate access to accurate data. "They've been able to see how the technology solves their problems, so we've come a long way in educating folks about what technology can do for them," says Harrell. "Now they are coming to us and asking, 'Can it do this or that?' This is a big change."
Lockheed also has educated Harrell. A CFO by training, he's a businessperson, not a techie. But he now has assumed the additional role of CIO. He says the service provider takes time to teach him about technology and where the problems are. It has been an unexpected added value.
The most valuable aspect of the relationship, from the Chamber's perspective, is Lockheed's willingness to partner. It's much more of a partnership than they had expected, Harrell says, and it clearly affects the return on investment for the Chamber. "They have brought us a lot of new ideas about how to make technology more financially effective for us. We look at absolute return." That's what they achieved together this year when Lockheed installed a VPN for the Chamber on a very cost-effective basis, changing the Chamber's entire network.
Their partnership in exploring different ways of doing things "even when there is not a total map before we go down the road" is invaluable. So they take a lot of swings at the bat together. That means the service provider must be innovative and flexible, and the Chamber must provide a confidence level that the outsourcing is a team effort and it won't blame the service provider for any strikes while batting.
It's the best strategy, Harrell believes, "because we need help. And they are helping us move this place forward."
Lessons from the Outsourcing Journal:
- The service provider's willingness to be responsive to unanticipated challenges and quick solutions is a key selection criterion.
- In an effective outsourcing relationship, the parties don't spend time saying why something is not their fault; they both plunge in and figure out what needs to be done and how to do it together.
- Where technology has not been a major component of a business process prior to outsourcing, the best way to fight internal resistance is to demonstrate how the technology will solve those individuals' business problems and make their jobs easier.