Jump to content

Virtualizing & Outsourcing Operations


Recommended Posts

In another topic, I brought up a point about opportunities for contracting, outsourcing and virtualizing many aspects of running a drum corps which could help to reduce overhead and improve efficiencies. Sort of pointless if I don't provide more details, so, here goes:

Telecommunications & Web Hosting

Grassroots.org offers great free to cheap resources for non-profit orgs.

Grassroots is created by founder of Phone.com, so provides free phone services and phone system for startups (this is pretty cool).

In addition, they also provide free email and web hosting for non-profits, with capabilities to host sites with CMS like Wordpress or Joomla.

FREE!!! Organizations can take this money saved and invest it in higher quality web and merchandise designs which will increase revenues.

Graphic Design, Copywriting & Marketing

It is possible to create high-quality custom designs and content very easily and inexpensively through crowdsourcing via sites like Crowdspring. Submit the project ideas and budget and designers and writers willing to work within that budget will create concepts and submit. This is perfect for inexpensively designing logos, Websites, T-shirts/Merchandise and creating web copy, press releases, etc.

Regarding the Web site specifically... once you have the design done, it is possible to simply upload to a service that will take the designs and then turn them around to finished code that is then a custom theme for Wordpress, Joomla, Drupal, Magento, etc. They can even publish the finished site to you to your free hosting account with Grassroots.

Highly professional branding & web site designed, fully-coded and published for less than $2,500 ($500 branding, $1,000 design, $1,000 coding). T-shirts designed for about $300 each, which will generate 10 times that in sales compared to homegrown designs (they pay for themselves 10 times over).

T-shirt Printing & Merchandise Fulfillment

Instead of printing, holding and shipping inventory for t-shirts and wearable merchandising, Amplifier allows the ability to print merchandising on demand and handles all fulfillment from their facilities as a white-label solution. Their solution also integrates with Magento to allow integrated ecommerce with direct fulfillment.

No need to tie up cash in offseason with inventory, to take up space storing on site or have the overhead/distraction required for fulfillment. Amplifier will do this on a % of transaction model for less than current cost of fulfillment.

Accounting & Administration

There are some great and inexpensive account tools out there now that are much better than things like Quickbooks and offer much greater flexibility. Xero is one that really stands out and is perfect for running an activity like drum corps.

Xero can separate various roles from bookkeeping to reconciliation, generating reports for filing, etc. All of this can be performed securely and remotely by various individuals. Instead of hiring a local accountant, it is now possible to have a specialist that is able to work remotely via Xero, for example the accountants at LucidBooks for a very low monthly fee ($150/mo).

In addition, there are many add-ons that allow the ability to automatically integrate with bank accounts, paypal, Magento, etc. so that information is automatically entered into the accounting system without need for costly human input. Xero also integrates with Vend, a perfect POS system for managing on location sales.

With Shoeboxed, it is possible to take physical paper receipts and turn them into proper expense entries in Xero by either dropping them in a special envelope in the post, or by scanning or taking a photo from iphone app and uploading them. Xero also integrates with CRM solutions like Capsule, which can also automatically import customer histories from both Magento and Vend POS, as well as web forms, eliminating the need to manually enter records into accounting or CRM systems.

Everything mentioned above can be done for under $150/mo, add in accounting services and you're at $300/mo... 10 times less than many orgs are currently spending to get the same result.

-----------------------------

I could go on and on about many things like this for other aspects of operations (and probably will)... stuff than can save organizations running corps loads of money. Corps should not be afraid to outsource and virtualize any possible aspect of their operations outside of actually teaching the kids.

Any other ideas out there to help reduce costs through virtualization, outsourcing or any other tips, tricks?

  • Like 1
  • Haha 1
Link to comment
Share on other sites

Daniel,

It appears you're making an assumption that Corps haven't been looking at these options and have not cited any authoritative knowledge that you know the answer. These may be better options for smaller Corps because bigger Corps may have reasons to keep certain operations within the organization.

You said nothing about oversight. Who's going to make sure these services are doing their services for you properly? I have been in operations that do 10s of thousands of dollars per month in business with contractors. Some are flops.

There are also legal implications under the Fair Labor Standards Act that if not handled knowledgably can cause serious legal liability. Contractors at Microsoft in certain job functions filed a charge that they were actually employees and not properly paid Federal Overtime. They case ended up in Court and the plaintiffs won with a large settlement and employment with MS.

Many things to consider before broadly using outside services.

Kevin

Link to comment
Share on other sites

Here we go again... :ph34r:

  • Like 1
Link to comment
Share on other sites

Daniel,

It appears you're making an assumption that Corps haven't been looking at these options and have not cited any authoritative knowledge that you know the answer. These may be better options for smaller Corps because bigger Corps may have reasons to keep certain operations within the organization.

I have had conversations with several directors about things like this, even got some to try a few things. I'm aware of exactly what some of them are and are not doing. Some groups do have some valid reasons for using a specific set of tools or developing proprietary ones (mostly due to specifics of the other supporting businesses they operate).

You said nothing about oversight. Who's going to make sure these services are doing their services for you properly? I have been in operations that do 10s of thousands of dollars per month in business with contractors. Some are flops.

How is oversight done now? For most, some of these suggestions could be a considerable leap forward in terms of presenting a more detailed view of their activities.

There are also legal implications under the Fair Labor Standards Act that if not handled knowledgably can cause serious legal liability. Contractors at Microsoft in certain job functions filed a charge that they were actually employees and not properly paid Federal Overtime. They case ended up in Court and the plaintiffs won with a large settlement and employment with MS.

Many things to consider before broadly using outside services.

Kevin

It was actually the other way around. Many of these contractors actually did not want to be blue badgers, but preferred being v-dashers because of pay. They would actually lose overtime if they became a blue badger. It was the government that forced the issue, not the contractors. This row actually lead to Microsoft threatening to move a number of jobs to Vancouver.

I'm very familiar with the Microsoft contractor issue, as one of our portfolio companies had a significant number of contractors on campus in Redmond. This restriction did not apply to all contractors, just those that were physically present on campus for more than a certain number of hours per month. The compromise with the government lead to a mandatory requirement of 3 months off every 18 months, which essentially reset the clock. Some took that time off, others were contracted temporarily to one of my companies overseas, then subcontracted them back to the previous vendor and back on Microsoft projects.

Anyway, were talking about using contractors here in a much different way than Microsoft case. Instead of acting as on-site supplemental resources, they would be very task specific, performing tasks occasionally (in some cases only once) and 100% remote.

Edited by danielray
Link to comment
Share on other sites

Daniel,

You didn't say what size the organizations were that you talked to. (Thanks for acknowledging my point about keeping things in house).

Oversight is done by managers and accountants within the contracting organization. You still have to keep people in house to do it.

Re: MS, the Government does not usually act without a complaint. If the complaint has gone through the regulatory administrative steps and is not resolved, and the regulators agree with the complainant, either party - complainant or company may take the case to Court. Then the caption becomes, e.g. US DOL v. MS. It does mean there wasn't a complainant.

Also, if the Court certifies the action as a class action, everyone is in, but there are usually opt-out provisions, but only for the purposes of filing your own action, provided it is timely.

If a Court decides MS violated FLSA and they say the remedy is to make the affected contractors employees of MS, there is not much choice, but perhaps some (Not going into it). The obvious choice is to quit if you don't like it, and become an independent contractor.

Kevin

Link to comment
Share on other sites

Daniel,

You didn't say what size the organizations were that you talked to. (Thanks for acknowledging my point about keeping things in house).

I've engaged with directors of corps of various sizes and in both classes.

Oversight is done by managers and accountants within the contracting organization. You still have to keep people in house to do it.

I'm still not following here. Of course someone in house is going to review books. I am just talking about preparing them and the process of things integrating.

As far as things integrating properly, it is pretty easy to evaluate with these sorts of systems.... as it is broken down very clearly and easy to see if they are populating correctly and you can reconcile raw source against the line items it effects.

Re: MS, the Government does not usually act without a complaint. If the complaint has gone through the regulatory administrative steps and is not resolved, and the regulators agree with the complainant, either party - complainant or company may take the case to Court. Then the caption becomes, e.g. US DOL v. MS. It does mean there wasn't a complainant.

Also, if the Court certifies the action as a class action, everyone is in, but there are usually opt-out provisions, but only for the purposes of filing your own action, provided it is timely.

If a Court decides MS violated FLSA and they say the remedy is to make the affected contractors employees of MS, there is not much choice, but perhaps some (Not going into it). The obvious choice is to quit if you don't like it, and become an independent contractor.

Kevin

I think we are talking about 2 different events here. I think the one you are talking about is the one from the 90's that was centered around stock options. That one was well before my time.

The issue I am talking about was several years later, was resolved about 6 or 7 years ago and was raised by the Washington state tax authorities.

Link to comment
Share on other sites

Have they instituted your ideas? If not, why?

Some. Different reasons. Sometimes idea is not the right fit, timing, inertia, resources, other priorities, etc.

I'm just throwing out ideas and information. If any of it is useful, great. If it isn't... cool.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...