What is the Outsourcing Decision Matrix, and what are best practices, tools and templates for teams and organizations?
Definition of Outsourcing Decision Matrix
An Outsourcing Decision Matrix is a tool used to identify which business processes and operations are worth outsourcing, with the goal of reducing costs, creating efficiency, and deploying more resources towards innovation.
Description of Outsourcing Decision Matrix
Using an Outsourcing Decision Matrix is vital for identifying the strategic importance of your business’s processes and activities and determining the best approach for conducting each one. The matrix is a 2×2 chart, with the X-axis based on overall contribution to the company’s operational performance, and the Y-axis based on strategic value. Activities that are high in value both strategically and operationally should be kept in-house, as those are essential to the company’s performance and competitive advantage.
Activities that are high in strategic value but lower in operational importance might benefit from a strategic alliance, where the activity is shared with a trusted partner that has the competency to effectively execute the activity and can take on some of the overhead cost.
Business processes that are high in operational importance but low in strategic value are those that are prime candidates for outsourcing. While they are still important activities that are critical for the business’s daily functioning, they are not essential to the company’s competitive advantage and pose minimal risk to outsource.
Activities that are low in both strategic and operational value should be considered for elimination altogether, as every business process should have a purpose that ties directly to customer value. Using the matrix is a helpful starting point, however it will be necessary to apply in-depth understanding of the business and its external environment to determine whether outsourcing will be truly beneficial.
Tools & Templates
An Outsourcing Decision Matrix is a standard 2×2 matrix, with the horizontal axis measuring operational value and the vertical axis measuring strategic value.
upBOARD's Online Outsourcing Decision Matrix Tools & Templates
upBOARD’s online Outsourcing Decision Matrix collaboration tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.
Learn more about upBOARD’s portfolio of other operations best practice tools and templates, including:
5 S System, Brainstorming, Business Process Re-engineering, Gemba Walk, House of Lean, House of Quality, Huddle Boards, Just in Time (JIT), Kaizen, Kanban Boards, Key Performance Indicators, Leading and Lagging Indicators, Lean Manufacturing, Objectives & Key Results, Operational Performance Management, Outsourcing Decision-Matrix, Performance-Based Budgeting, QDIP Board, RATER Model, Six Sigma, SQDC Board, SQDCM Board, Supplier Relationship Management (SRM), Theory of Constraints (TOC), Total Quality Management (TQM), Value Stream Mapping, and Zero Defects.