Outsourcing a practical alternative in all departments

BY DONNA A. LOPOLITO AND ANN M. VICKERS

You are a member of the board of directors of a public or private company. Management has just finished explaining why development of the new software product will be a further six-month delay (beyond the original three-month delay), or why the protocol for Phase II testing is still not finished (and at this point patient enrollment was to commence), or why the financial forecast hasn’t been overhauled (even though significant events have occurred and no one yet understands the true dollar impact).

You immediately start calculating the impact of these setbacks: the time to market, the stock price, your exit strategy or cash flow.

When asked why these delays continue to occur, management responds that they do not have sufficient financial or human resources to get the work done any faster, or that they do not have the qualified resources to do the job right.

You know that increasing headcount is not an option at this time. What can you advise the company to do? Outsource the last phase of the software programming; outsource the technical clinical or regulator y writing for the protocol; and, yes, even outsource the finance projects.

The compelling arguments for outsourcing are many, including lower cost, specialized training, hiring and firing when specific skills are needed, and rightsizing. Hiring the right outsourcing professionals at the right times ensures that the company is receiving quality and experience without making an expensive, long-term commitment to hiring and developing permanent employees.

In a growing number of companies, outsourcing everything from bookkeeping to marketing is built into the business plan, and stockholders and investors are embracing these plans. With daily, weekly, monthly or project-based contracting, outsourcing can help bring in the finance, IT, clinical, regulatory, HR, marketing or public relations excellence that you demand in your own business.

Some of the more common problems that can occur if you don’t use qualified and experienced professionals include:

• Finance: paying vendors twice, maintaining records that are not in compliance with generally accepted accounting principles, year-end adjustments, unfavorable contract terms, or not closing a round of financing
• IT: delays in development of new products, inefficient use of technology to conduct daily business, or improper access to company records
• Clinical or regulatory: poor site selection, protocols that are not acceptable to regulatory authorities, or contentious regulator y relationships
• HR: outdated or overly expensive benefit plans, legal time bombs or inappropriate training programs
• Marketing: inef fective marketing programs, missed targets or loss of

market share

• Public relations: bad news becoming worse because of the manner in which it was handled, inappropriate perceptions of the company, or lack of awareness of products.

Consider the impact of these problems on cash flow, on stock price, on opportunity costs. With the right level of expertise advising the company on strategy, strong systems and controls, and daily execution, the business will grow more soundly and avoid potential headaches for management and the board of directors.

Hire the expertise you need only when you need it. Hire by the day, week, month or project.

Management may not know how or where to find the right outsourcing professionals. They will turn to their board members for advice. Or you can guide them to their auditors, attorneys and organizations to which you or they belong. Have them search the Internet, too.

Recommend that management talk to each resource. Why? Because each one will probably have a different recommendation and management will need to select from a field of professionals.

By outsourcing, you can have the right talent, the best talent, when you need it.

Ann M. Vickers is the founder and managing director of Wellesley-based AccountAbility Outsourcing Inc. She can be reached at accountab.com. Donna A. Lopolito, a certified public accountant, provides interim CFO services through AccountAbility.

© Mass Tech Communications, Inc., February 16, 2004. Reprinted with permission. All rights reserved.