In training, we always have a choice of how we use resources for training. We can either choose not to train and let our learners figure it out on their own – and we know how that usually works out – or we can use internal resources, which is great when training requires a high degree of proprietary information or we have the internal capabilities to do it.
But sometimes we need help, and that’s where outsourcing comes in. In this episode of “The Business of Learning,” Doug Harward, founder and CEO of Training Industry, discusses:
- How to approach decisions about when to outsource.
- How to manage and develop requests for proposals (RFPs) for training products and services.
- How procurement technologies are affecting the RFP process.
- How to collaborate effectively with a procurement team.
To download an RFP guide, please fill out the form below:
The transcript of this episode follows.
[Podcast Intro]: Welcome to “The Business of Learning,” the learning leader’s podcast from https://TrainingIndustry.com.
TARYN OESCH: Hello and welcome to episode 15 of “The Business of Learning.” I’m Taryn Oesch, managing editor of digital content at TrainingIndustry.com, here with my co-host, Scott Rutherford, head of digital operations and marketing for Training Industry.
SCOTT RUTHERFORD: This episode is all about sourcing for corporate training. We’ll talk about how to approach decisions about when to outsource and also how to manage and develop requests for proposals (RFPs) for training products and services. So, today our expert on training outsourcing is Doug Harward, the CEO and founder of Training Industry. This episode of The Business of Learning is sponsored by the Certified Professional in Training Management credential.
[Sponsor Message]: Hi, I’m Brandi, and I’m the learning program administrator for the Certified Professional in Training Management program. The CPTM was designed to convey the essential competencies you need to manage a training organization. And when you become a CPTM, you gain access to alumni resources like monthly peer roundtables and a full registration to the Training Industry Conference & Expo. If you start today, you can earn the CPTM credential in as little as two months. To learn more, visit https://cptm.TrainingIndustry.com.
SCOTT RUTHERFORD: Doug Harward, thanks for being on The Business of Learning.
DOUG HARWARD: Thanks, Scott and Taryn, for having me.
TARYN OESCH: This is a topic that’s close to the heart of Training Industry. We grew out of a business that Doug founded that focused on the outsourcing of training, and that’s one reason that Training Industry continues to focus on connecting the people who design, deliver and manage training programs with the companies that provide the products and services for the training sector.
SCOTT RUTHERFORD: So, let’s get started. First, Doug, maybe you can give us some background on your career as a learning leader and how you first started to look at outsourcing as a capability or an important part of the training function within the business.
DOUG HARWARD: Sure. My career actually started in industrial engineering and production management. I actually got into training somewhat happenstance, as I’m sure many training professionals have somewhat similar experiences. I was leading a factory transformation project. Our company didn’t have a training organization at the time to train employees on the changes that were coming down the platform, and so I had to start a training group as somewhat a secondary activity to what I was doing, just so I could make sure the project would be successful.
My career then progressed over time to where I was leading the global employee learning team for the same company, and then I was asked to work on a team that was basically tasked to transform how we managed all corporate services for a 90,000 employee company. What we started doing was researching – going around the globe, looking at companies, how they managed them in different continents and trying to try to understand what would be best for us. What we learned during this exercise was how important it was to have very, very good information not only just about suppliers but also about process and how you do things. What was kind of surprising to us when we actually did this particular engagement, it turned out that it was the largest trading outsourcing deal that ever been done. So, not only do we kind of cut our teeth, and trying to understand what we were doing, we also found scale in what we’re doing and we got a lot of attention.
So that’s when I decided that and learned that maybe we had something to offer to other companies, and I left there and started Training Industry about 16 years ago now, with the focus on doing research and providing information to both buyers and suppliers, of what are the best practices in the training industry, how do you source, who are the right suppliers or best suppliers, all those kinds of things that we now do at TrainingIndustry.com.
TARYN OESCH: Let’s start by defining what exactly outsourcing means, Doug. Can you describe what that means in the corporate training context, in particular?
DOUG HARWARD: Sure. So outsourcing is essentially a business model for how you use resources to get things done. So in training, we always have a choice of how we use resources. We can either choose – and this is kind of not best choice – but we can we can choose not to train it all, right, which basically means, don’t use resource to do training – just let the learners figure it out on their own, and as you guess, we kind of know how that turns out. Or, we can use internal resources to get things done, and that’s great when training requires a lot of proprietary information, or there may not be resources in the open market to be able to do that work for you. The third alternative, of course, is when we use external resources, and that’s when we need talent or expertise that we may not have internally to get things done. And sometimes that talent can even be less expensive than what we can do for ourselves.
And with that, then when we use extra resources, there are many, many different forms of outsourcing. There are models such as what we call comprehensive BPO or comprehensive business process outsourcing. This is basically when we use a supplier to manage all aspects of the training function. Then we have what’s called selective BPO or selective outsourcing. This is where we may use one supplier to manage certain components of training, but not but not all of the training processes of the organization. And the last is what we call outtasking. In outtasking, you have two basic forms, what we call licensing or transactional type of sourcing, or contracting. Licensing is the right to use someone else’s intellectual property, whether it be their courseware or a technology. Contracting is when we’re hiring or renting resources to manage something, so we may be, you know, contracting with Company X to do instructional design or to do delivery or something like that. Understanding all of these forms of outsourcing and all these forms of sourcing models is really, really critical to trying to figure out how you’re going to get the best partner for your particular business.
SCOTT RUTHERFORD: So with that, how does an organization start to evaluate suppliers? There’s a model on TrainingIndustry.com, the Competitive Differentiators Model, that can help guide this decision, but maybe you can take us through the outsourcing decision-making process.
DOUG HARWARD: Years ago, we began researching why some sourcing engagements worked well and why some didn’t. And what we learned was that many training leaders didn’t understand, well, how to evaluate one supplier from another and the factors that really differentiate suppliers. So through this research, we created this model to help us in the selection and supplier evaluation process, which we call the Competitive Differentiators Model. The model basically identifies the most critical factors you should use to evaluate suppliers on, and it breaks those factors into three basic categories.
So let me explain the three categories, real quickly. First is what we call process capabilities, and process capabilities are those factors such as content development, delivery, technology, administration. It’s basically the capabilities the suppliers have that that allows them to do the work that we need for them to do. The second category is what we call business attributes, and these include factors like geographic reach, financial viability, cultural compatibility and several more. These are basically factors that are directly related to the company’s culture and how they provide their services but really doesn’t have anything to do with training itself. It’s just – an example would be, let’s say we’re going to, we have an engagement. That’s going to be a $5-million-a-year-estimated-cost engagement. Well, we probably wouldn’t want to source that with a company that does $2 million in revenues now, because they may not have the financial viability. Another kind of way of thinking about it, too is, for example, let’s say we need a partner to deliver training in South America; we probably wouldn’t want a company whose limited geographic reach is in Europe. Right? And so those attributes are they may not necessarily be directly related to training, but they’re critical in how to select a supplier.
The third category is what I call general attributes, and general attributes are those time-tested kind of ways of evaluating suppliers, and that’s price, quality and speed. Unfortunately, we find ourselves all too often migrating to these particular factors first, instead of understanding those business attributes and process capabilities. Right? So what we teach in our process in evaluating a supplier is to start first with process capabilities, identify the companies that can do what you need for them to do. Then, you’ll narrow that list down based upon those companies whose business attributes fit your culture, the culture of your organization. Can that organization do the work where, financially, that you need from to do, and then you get to price, quality and speed, right? Instead of starting with the price and choosing the lowest price supply – and we know what happens sometimes when we start with price – we get what we pay for.
TARYN OESCH: Let’s say I’ve decided to outsource a particular process for my training organization. Should I start by defining the business need? And then what’s the next step?
DOUG HARWARD: Absolutely. You start with need. The way I like to think about it is, first you must understand you, before you begin trying to understand the supplier. Right? So before you go out to a supplier and start talking to them, before you create any kind of request for information [or request for] proposal, you have to define what it is you need to get done. And so it’s somewhat of a self-discovery, a reflection process, understanding what your requirements are: how you want it to be done, how you expect it to be done, how you would expect a supplier to perform in your business. And then you can get into the proposal process and start defining for another supplier, or for many suppliers for that matter, how you want them to get it done and what you want them to propose.
SCOTT RUTHERFORD: So as we talk through this process, we’re, I think, trying to resist using too many undefined acronyms, but you’ll hear the term ROI, RFP, or RFQ sometimes. Can you take us through what those mean and how they’re different?
DOUG HARWARD: Happy to do it. And it’s a great question, because I think they’re oftentimes very misunderstood. Let’s start with RFI, which is Request for Information. Request for Information is generally the first step of going out to the market and soliciting information for suppliers. At this time, you’re not going out and telling a supplier or communicating what it is you want done; all you’re looking for is for them to communicate to you what their capabilities are. And in the RFI stage, you may be very open to soliciting information from many, many suppliers. Right? But what we don’t recommend is that that you use the same kind of approach to reaching out [with] an RFI and RFP.
So now, let’s look at RFP – Request for Proposal. That is where you communicate your needs that we just spoke about just a second ago. This is where you go out and you communicate to a supplier, “This is what I’m looking for, and this is what I want you to bid on. This is how I’d like for you to perform, this is where I want you to do it, this is when I’d like you to do it.” This is where you kind of open up your kimono and put all the information out there and say, “This is what we need for you to do.”
An RFQ, which is a request for quote, is actually something that that kind of entails each of those. An RFQ often attached or done within the process of Request for Proposal. An RFQ is basically when we are just soliciting information such as a price. Now, if you do an RFQ independent of an RFI or RFP, you’re basically communicating to the market that you’re getting ready to buy a commodity. Now, let’s be real; training is not a commodity.
There’s very important differentiating factors that all suppliers have, and also about the performance level you expect of a supplier. So let’s take RFQ and put it in the background and say, “You know what, we may do that after we’ve already identified suppliers.” Oftentimes, we’ll do that, you know, somewhere downstream, when we already have a relationship with the supplier.
TARYN OESCH: What advice do you have for someone who wants to assemble an RFP, and maybe they’ve never done it before?
DOUG HARWARD: Well, first, begin by doing your homework. You know, the process of selecting a supplier is probably one of the most important strategic decisions you’re going to make as a training manager. And don’t get me wrong. There are many, many important strategic decisions you’re making your lifetime as a training manager. But it’s one of those where you’re spending the company’s dollars. You’re impacting many, many resources around the business. So, do it very well; be very deliberate, do your homework, understand the process. First off, sourcing, and there’s a very detailed seven-stage process that you can get on training outsourcing that you can find on our website at TrainingIndustry.com, on our Wiki, and that walks you through the seven stages, and when the proposal should be sent out, when should negotiations begin. Those kinds of things. So, do your homework.
The next thing I would I would also advise is, think about training from a very process perspective. We oftentimes put training in the perspective of, “It’s an event. It’s a course. It’s a program. It’s a time and place.” Learning is a very extended process. It happens through a period of time. And so the process of managing learning or managing training, whether it be on constituents’ behalf, on your company’s behalf, requires a lot of processes that come to play.
We also have a model on our website that we call the Training Process Framework. If you look at that framework, what it does is it defines the 27 business processes of managing a training function, and we drew it in somewhat of an orchestra graphical view. The reason we did that is, think of yourself as a training manager as being the conductor of the orchestra. Your job is to understand all the processes and put them all together and get them to work in a very harmonious way. And the more harmonious, the more effective, you can do that, then the more effective your learning is, and maybe also the more efficient it is. The other advice I would give is, again, don’t focus on price too early; understand, clearly, that that price is always going to become an important factor, [but] focus first on a supplier’s capabilities; next on their attributes; and then kind of make that decision on price, quality and speed. I think there’s some of the most important things to consider in sourcing.
SCOTT RUTHERFORD: That gets into another topic that I wanted to talk about, which is the question of, how do you publicize your RFP? Once you’ve understood the need, is it best to identify companies and reach out directly, or do you advertise it broadly, or what’s the best approach to get the best results?
DOUG HARDWARD: Great question, because there are so many companies out there, you know, narrowing down the playing field and kind of make those determinations is a tough, can be a tough task. Here’s what we recommend. Use the RFI, in its broadest sense, use the RFI as your means to reach and touch a lot of companies now. “A lot” is kind of a relative term. What is a lot? Well, maybe 10, maybe 15, maybe 20. It depends on what will work for you. If you don’t know who you should be reaching out to, we provide a list of top companies in a number of different capability areas, we do that, and we created that list for the sole purpose of helping companies like yours identify companies who they may want to send either their RFIs or RFPs to.
So, I would start the process with an RFI, and after you do that, then you go to narrow the field. I would recommend that when you get to the RFP stage, I would really narrow that down and probably not send to more than five companies at a time. And that depends on the nature of your engagement, how complex it is, but remember this: It costs you money to evaluate an RFP, and it costs suppliers money to respond to an RFP, and you don’t want to do is be guilty of adding costs to a process that are unnecessary. For example, we sometimes hear people saying, well, you know, as a courtesy, we’re an issue an RFP to Company X. Well, I’m going to advise against doing the courtesy RFP. I mean, I understand there might be some political factors that you need it to be considerate of, but when you do courtesy RFPs, or issue to companies because you’re trying to be nice or respectful, you’re really adding cost, and not doing favors. You’re actually hurting the process. So, with that said, an RFP can go to 10 to 20, that’s your call what the number is; use that as a way to scale that down. I recommend issuing RFPs to no more than five. Using that process, you’re going to go into what we call the negotiation phase. You may choose to down-select and only going to negotiations with one. Some companies choose to go into negotiations with two and kind of competitively work each of those against each other. That’s going to be your call and what, you know, what your procurement officer recommends you do.
SCOTT RUTHERFORD: So, you mentioned some of the resources we have available on TrainingIndustry.com, and certainly the Top 20, or the top training companies, Lists are one of them. It’s also worth mentioning that we have a referral service that actually works from the data that drives those lists that can help match need to vendors that specialize in that. So, what we’ll do in the notes for this episode of the podcast is, we’ll put links to the models and to the resources that we’re talking about here to make them easier to find.
So, with that said, I wanted to get into the procurement process within this topic and talk a little about the fact that it’s changed over the years, and what we have now is e-procurement other tools like SAP Ariba and Oracle. How have those changed the procurement process?
DOUG HARWARD: You know, I think it’s a really, really important topic to talk about because, you know – no surprise – in any business model, any business process technology is really changing how we do things, and it sure is changing how we source training suppliers, and any supplier for that matter, in the company. There are a number of e-procurement tools – literally dozens and dozens, you know, most notably companies like SAP Ariba – and these guys that are providing a technology that allows you to sort or to issue an RFP, allows suppliers to then submit their proposals through the platform.
Now, the good news is, these e-procurement platforms are standardizing the process. And that’s really good for the procurement officers. They love that, right? The issue is, for us, it sometimes can be limiting on how open-ended we can get responses to questions that we may put in a proposal, and how detailed a supplier can articulate their approach towards solving our problem. Because that’s really what we’re looking for in the proposals process, is to get their solution proposal to how they’re going to deal with it. So that’s kind of the limiting factor.
There’s another important component of the procurement tools that we need to be aware of, and that is that these tools, oftentimes, have a capability that we call reverse auction. And what a reverse auction basically allows us to do is to put a number of suppliers in a pool together where they are real-time competitively bidding on our business. And they can, they may be able to see what the other bids are, but they may not be able to see who the other company is or those kind of things. And, you know, this reverse auction is, in economic terms, it’s a very efficient process. Again, the issue is it minimizes our ability to select based on those other factors that we’ve already talked about. So, I would advise you to support your procurement team; they’re going to oftentimes require it, but be very open and honest with them about the importance of understanding these other variables and how you can do that evaluation. You may be able to do that outside of the procurement tool, but make sure that’s going to be in line with how your procurement officer wants you to work.
TARYN OESCH: Speaking of that, what do learning leaders need to know about how to work effectively with their colleagues in purchasing?
DOUG HARWARD: Well, you know, working with your procurement group is critical. And what we recommend is that you really look at your procurement group as your business partners, not as your enemy. And I say that lightly, because I have seen, oftentimes, where training managers kind of get frustrated, because the procurement office is expecting you to jump through hoops, provide certain types of information. And what I advise you to do is recognize they’re doing that for the business’ best good, and you should support those types of things. But when you start the process of sourcing, don’t wait ‘til the end, when you’re ready to down-select and choose a supplier, and then bring procurement in and say, “Hey, can you go cut a purchase order for it?” That’s a little bit late in the process. Engage them very early. Have them to be a partner in the process, from every stage that you’re going through; have them work with you on the outsourcing process, and I guarantee you’ll get to a better place at the end.
SCOTT RUTHERFORD: It’s probably easy to forget that procurement is supporting many other facets of the business, other than L&D.
DOUG HARWARD: That’s exactly right. Now, we happen to be one of the bigger spenders in a lot of organizations, but you’re right. We’re just one of many they’re supporting. Make them a good partner.
SCOTT RUTHERFORD: Any final thoughts before we wrap up the conversation here today?
DOUG HARWARD: Yes. As I mentioned earlier, I’d like to reiterate the idea sourcing is one of the most strategic decisions and important decisions you’re going to make as a learning leader. And remember that that virtually every training manager, at least [that] we’ve worked with, in every company we’ve ever worked with, sources something within training. So, you’re going to do it. It’s going to be an important part of your everyday work life. You may make bigger decisions, depending on the nature and engagement of a partner, or you may make a lot of smaller decisions, meaning a lot of transactional decisions. But, the bottom line is a training supplier can really make you a hero. And I think that’s the way to always go into that relationship, thinking about how can they be a great business partner, how can they really, really help us do what we need to do.
The second thing, as I mentioned earlier also, is do your homework. Be very deliberate about how you manage the process. If you do it in a very ad hoc way, you stand the risk of making mistakes. The probability increases. Be very deliberate; follow the process. There are a lot of research, a lot of people that’s gone through this, and detailed, good approaches to follow and good guidelines to do that.
And also, I’d like to close with this is, remember that Training Industry is here to help. Right? This is what we do. Every day, we evaluate suppliers; we evaluate the market; we evaluate best practices; we have tools and resources on our website, either to help you with the process, or to help you with decision-making models, and also to help you find the suppliers. We have, thousands of suppliers are listed with us. We’re very objective in how we look at those and how we put those forward, so use the resources that are out there. And there are other places you can get information, too. And, as Scott mentioned earlier, you know, feel free to call us. We do have a referral service and can try to offer up ideas for you.
TARYN OESCH: Doug, thanks for joining us today on The Business of Learning.
DOUG HARWARD: Happy to be here.
TARYN OESCH: And for more resources on outsourcing and procurement, visit our website. On the episode page for episode 15, you’ll find a list of all the resources that we’ve talked about today, including a downloadable RFP guide. That’s at https://TrainingIndustry.com/training-industry-podcast.
SCOTT RUTHERFORD: And we hope you’re enjoying listening to “The Business of Learning,” and we would really appreciate it if you could take a minute to rate and review us on Apple Podcasts. And if you’d like to suggest a future topic for the podcast or just want to share some thoughts, you can always send us a note at info@TrainingIndustry.com. Thanks for listening.
[Podcast Outro]: If you have feedback about this episode, or would like to suggest a topic for a future program, email us at info@TrainingIndustry.com, or use the Contact Us page at TrainingIndustry.com. Thanks for listening to the Training Industry podcast.
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