John runs a small marketing firm. He, along with five other employees, manages most of the company's operations from sales to customer service. When John decided to use Internet as a marketing medium to attract more customers, he knew he didn't have the expertise to build a website himself nor could he afford to hire someone full time. He decided to outsource this activity. But where will he find someone who can do this work? He could ask around or advertise his requirement. Then, he remembered purchasing his computers over the Internet on eBay. It was easy. He went on the website, searched for computers, bid on them and got them delivered. It was cheap and faster too. |
Introduction
John runs a small marketing firm. He, along with five other employees, manages most of the company's operations from sales to customer service. When John decided to use Internet as a marketing medium to attract more customers, he knew he didn't have the expertise to build a website himself nor could he afford to hire someone full time. He decided to outsource this activity. But where will he find someone who can do this work? He could ask around or advertise his requirement. Then, he remembered purchasing his computers over the Internet on eBay. It was easy. He went on the website, searched for computers, bid on them and got them delivered. It was cheap and faster too.
He thought of looking for website specialists on the Internet. He visited marketplaces that help him find them and found quite a range. Specialized design firms to one-person shops. The cost also varied a lot. He didn't know how to do this. This wasn't as simple as purchasing computers.
When Relationship Matters
The real difference between buying computers on Internet and getting your website done on Internet is same as the difference between "transaction" and "relationship". Products such as computers are tangible and easy to understand. When you talk about a Dell Pentium V 1.2GHz, 120GB memory computer, you are sure that irrespective of where you buy it from, you will get the same product. The product's specification and performance is standardized.
That's not the case with buying service like website design. There are three big unknowns here. A) Your requirement itself, B) a provider's capability to do it, and C) Provider's actual performance.
First let us talk about your requirement. What is it you want? Is it a simple 10 pages HTML website? Or is it a complex website with Flash, Javascripts and forms to capture lead information? What you want is not as straight forward as saying Dell 1.2GHz Pentium computer. Many times, you may not even know your requirement. Discovering your exact needs is itself a part of the process. The solution you want and which provider you end up going with depends a lot on your requirement.
Second is the provider's capability to meet your requirements. There are three broad parameters to evaluate provider's capability: cost, time and quality. Can the provider deliver what you want within the budget, in time and of good quality? These parameters are never debated when John bought computers online because all of them were pre-determined. So, all he had to worry about was the price. In services, one size doesn't fit all. The right provider depends on your requirement so you may look at 5 proposals but the right provider may not be the cheapest one.
Third is the provider's actual performance. When John bought Dell computer, all that was remaining after the deal was made was for the provider to ship it. When John opened the box, he wasn't surprised. He saw exactly the same Dell 1.2GHz, 120 GB computer that he had anticipated. However the story wouldn't have gone the same way with his website. Either the website is half of what he wanted or of poor quality or would have cost him twice the original amount. It would be a miracle if he got it all right.
Services Marketplace
This is the crux of a “products” marketplace versus “services” marketplace. Product marketplaces are transactional in nature. Typically they are one time “transactions” focused on finding the cheapest product. Services marketplaces are “relationship” oriented. When you strike a deal it is only a promise to deliver. Nothing has been delivered yet. You then work on it to make it happen – your changing requirements, your assumptions about provider and above all, a continuous working relationship between the two until the website is delivered.
Many companies struggle with outsourcing services because they approach it like buying computers online. That’s where a relationship based services marketplace like nineMotion.com helps. Key aspects of a relationship-based marketplaces are as follows:
Template based approach eliminate assumptions
To begin with, simple template based processes will help John spell out his requirement in greater detail so that both John and the provider don’t have to make assumptions. This also means that provider can estimate the work better. When you start off on the right foot, things tend to go well. The relationship marketplace also helps providers write good proposals using templates covering all delivery details which otherwise would have been missed out. It also helps John evaluate proposals using the right parameters (cost, time and quality).
Template based approach eliminate assumptions
To begin with, simple template based processes will help John spell out his requirement in greater detail so that both John and the provider don’t have to make assumptions. This also means that provider can estimate the work better. When you start off on the right foot, things tend to go well. The relationship marketplace also helps providers write good proposals using templates covering all delivery details which otherwise would have been missed out. It also helps John evaluate proposals using the right parameters (cost, time and quality).
Built in business terms helps reduce engagement risks
A service engagement has a longer duration where buyer and provider interact with each other. This requires a robust business terms protocol of how the engagement should work. Many small businesses tend to ignore this to their peril. Robust business terms which govern each engagement reduces engagement risk and protects both buyer and provider by stipulating the terms. It determines who owns the intellectual property, how they will communicate with each other, how they will resolve conflicts and much more. This framework is flexible enough for buyers and providers to extend and customize it to their specific engagements.
Collaborative project management streamlines working relationship
Of all the risks in a service engagement, the biggest one is the execution. Once a deal is made buyers tend to slack off thinking that their job is done. Not until it is too late do they realize that things have gone wrong. By then it is delayed, too expensive and the benefits of outsourcing is not realized. Collaborating often during the engagement either prevents this or helps catch things early on and correct the course.
Conclusion
John can benefit immensely by outsourcing his website design and development. It lets him focus on his core business; reduce his costs and speeds up his time-to-market. However businesses like his have to be wary of treating service engagements like purchasing products. Unlike product marketplaces which are transactional and focuses on finding the cheapest product, services marketplace like nineMotion is relationship based, which helps in a) bringing clarity to the requirement b) finding the right provider based on parameters other than cost and c) collaborative engage with them for a successful working relationship. The end result is that outsourcing providers become your partner for life.
Bala Girisaballa is a co-founder and Vice President of nineMotion.com, an online services marketplace.
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