Midwest Association of Student Financial Aid Administrators

When is it Appropriate to Outsource?Steve Queisser, Vice President, Edamerica/Edfinancial

&Mike Nylund, Director of Financial Aid, Capella University

Reasons to outsource

◦ What problem are we trying to solve?

Create an evaluation team

◦ Use University/College resources on campus to ensure diverse opinions

Good RFP’s

◦ Is it nice or necessary?

Select your partner

◦ Flexibility and good fit should be top criteria

Good contracts

◦ How to measure performance

Successful partnership

◦ Help your partner to help you

Learning Objectives

Identify potential areas and reasons for outsourcing – can quality and service levels be maintained or improved?

Decide if RFP is needed

If so, develop your RFP & form your evaluation team

Decide when to inform your employees outsourcing is a consideration

Select your partner

Write a good contract – maintain a level of control

Manage your partner once the work has been awarded

Key Steps to Outsourcing

Reduces cost/cost savings – easier to budget

Increased workload on current staff/capacity management

Increasing regulatory changes/avoid headaches of constant staff training

Staff turnover and training issues

Financial pressure that limits hiring

Lack of expertise – gain access to special expertise

Software and equipment needs – rapidly evolving technology includes hardware and software

Compliance concerns – ensures accountable results/risk mitigation

Increased customer (parents/students) satisfaction

What & How much to outsource while maintaining control?

Reasons for Outsourcing

Expertise

Instant impact

Economies of scale

Policies and procedures/compliance

Training, development and advancement

Buying power and management of labor

Better tools and systems

Advantages of Outsourcing

Misperceptions about Outsourcing Loss of control

Employee resentment

Manage Contractor Closely Customer service issues

◦ Parents and students

Quality personnel

◦ Expertise and training

Financial issues

◦ Savings

Managing Outsourcer

Call Center – One Stop Shop Highly trained First Impression Specialists

May give contractor remote access to your system – read only or limited change access

Extend operation hours of office with minimal financial impact.

Improve internal productivity

Improve student service

◦ Effective contractor training is key

◦ Hold contractor accountable for pre-determined ASA

Areas for Outsourcing

Financial aid processing Verification

◦ Contractor remote access to your system

◦ School scans docs/contractor reviews them

◦ Student follow up/contractor or school DL Reconciliation

Document Collection

Highly trained staff, not just individual to ensure quality of finished product

Areas for Outsourcing

Default Prevention Services 3 yr cohort increase need for more active DPS

Few school have ability, staffing or systems needed to conduct DPS in house

Good partner can help extend counseling efforts of aid office and improve student satisfaction

Flexibility to custom design DMS program to fit needs of particular institutions

Areas for Outsourcing

Develop your RFP

Inform your employees

Form your evaluation team

Identify potential contractors

Establish deadline for submission of proposals

Pre-bid conference and tour of facilities

Review & analysis

Committee review

Award contract

Develop transition plan

Creating a Realistic Timeline3 to 5 months

Get copies from friends or national organizations

Set clear expectations

Don’t ask for more than you need (i.e 24/7 call center coverage)

Compile accurate demographic data

Incorporate anything unique about your school

Know your customer base – Is this service critical to our mission?

Know the rules and regs associated with RFP’s at your school or system

Developing Your Request for Proposal

Management fee

Cost per

A la carte

Combination

Flexibility to meet unique situations

Types of Financial Arrangements

Solicit help from your HR department

Determine when you should notify your employees

Be open and straightforward

Explain why outsourcing is a consideration and potential impact on employees

To the extent possible have detailed answers ready for your employees

Encourage them to think positively about how they be more efficient and better serve students

Informing Your EmployeesOutsourcing is a Consideration

Purchasing office

One or two managers from area to be outsourced

Human Resources

Information Services

Primary user of service

Possible faculty or student representation

Forming an Evaluation Team

Local

Regional

National

Identify Potential Bidders

Individual or group

Talk about culture

Operation concerns and unique items

Review process

Why outsourcing is under consideration

Clarify questions from RFP

Ask potential partner about their concerns

Bid Meetings

List of current clients for reference checks

List of previous clients for reference checks

Check with friends

Reference Checks

Questions adequately answered

Financial packaging clear

Reference checks

Good fit!!

Selecting Your Partner

Terms and definitions are clear

Outline expectations for

o Customer service

o Quality

o Employees

o Support

o Marketing

State & legal requirements

Exit terms

Writing a Good Contract

Quality guarantees and incentives

Product selection

Hours of operations

Surveys

Input on management team

Customer Service and Quality

Develop realistic transition plan

Manage expectations within the office

Reemphasize unique characteristics about organization and personalities

Introduce key members to the office

Have daily / weekly meetings to see things are going well

Treat partners as though member of your staff

Managing Your Partner to be Successful Once Selected

If you have set realistic and obtainable expectations

Involved your key constituents

Done your “homework”

Written a clear RFP and contract

Outsourcing can make sense and improve your internal operation

Closing