Richard Morrell, CFO at PandTL
In his career as a C-level executive, Richard Morrell has viewed outsourcing through two lenses: as the head of a technology firm making the case for fast, cost-effective software development, and as a CFO evaluating the merits of outsourcing investment decisions. Having managed both sides of the equation, he possesses expert insight into how to gain buy-in from finance for outsourcing.
“CFOs sometimes get stereotyped as only wanting to reduce costs but, in reality, we have other pain points just like everyone else and are likely to evaluate the entire outsourcing proposition holistically,” says Morrell, currently CFO of PandTL Inc., a fast-growing erosion control company based in Rock Hill, South Carolina.
Morrell describes a range of strategic considerations that would sell him on an outsourcing proposal. These go further than the “givens” of cost reduction, operating efficiencies, and ROI:
Outsourcing is a fast, effective way to fill skills gaps in technology teams. The capabilities of an Accelerance partner allowed Morrell to bring in server configuration expertise that would have been time-consuming to find, hire, and onboard in-house.
Outsourcing offers quick ramp-up and turnaround for initiatives that are mission-critical to business and financial goals. For example, with Accelerance’s guidance, Morrell deployed an outsourced software engineering team for fast development of a minimum viable product (MVP), in order to avoid diverting in-house resources from ongoing business needs.
With the right partner, outsourcing isn’t just about trimming the budget but delivering the same or even better quality at lower cost. In an Accelerance-sourced engagement, Morrell found the usual headache of cost control became almost a non-issue, because changes or additions in scope were certain to stay within budget.
The wrong fit between a company and its outsourcing partner can be a costly lesson. Accelerance helped meet Morrell’s communication and work-day expectations for an outsourcing partner by identifying those with high English language proficiency and nearshoring time zone advantages to create a shortlist of candidates for him to choose from.
Transparency is a big factor in influencing financial executives. Morrell cites an Accelerance partner that made every step crystal clear in their outsourcing engagement: “They were great at breaking projects into multiple components and scenarios, and breaking out the hours, timelines, and costs for each scenario,” he notes.
To facilitate effective analysis, Morrell also recommends that technology leaders present multiple scenarios and solution paths – a familiar decision-making framework in the finance function. CFOs are more likely to get on board when information is communicated in terms and ways that they understand.
He believes the best outcomes occur when technology leaders and outsourcing partners first work to understand the financial executives’ specific situation and requirements.
“I have had experiences where someone comes in and tells you why you should outsource, what the ‘right’ and ‘wrong’ reasons for outsourcing are, and what you should expect,” Morrell recalls. “To be told why I should care more about scalability versus personnel cost may or may not resonate. The truth is that various stakeholders have different needs, and therefore different priorities.”
That’s why it’s important to involve financial decision-makers early in the outsourcing process. Morrell sums up the ideal approach for securing alignment from all organization functions: “Listen to the stakeholder, learn their pain points, suggest other benefits they may not have thought of, and help them make a decision that will best fit their situation.”
Any outsourcing case will need to clearly outline how the investment will be measured and reported. The formula for success is to “agree upfront on a format for status updates and progress metrics,” Morrell says. “If finance doesn’t understand those metrics, either take the time to enlighten them, or the outsourcing team needs to take the time to learn and incorporate finance’s metrics.”
Along the way, regular reporting plus key milestone reviews are usually sufficient to keep the financial executive in the loop. But the end of the project brings a critical touchpoint for the outsourcing team and the finance leader. “It is imperative to clarify how the project went versus expectations,” says Morrell. “You want the CFO to understand and be able to explain what we did and how we benefited and how great it was, not have to tell people he has no idea what that was all about.”