Thursday, November 11, 2010

Outsourcing and Social Media

Outsourcing of business processes and activities can cut costs, spread risk and allow access to best industry practice. Whatever the business motivation or objective there are number of key considerations, not all of them contractual.

Typically IT services and Customer Service centres have been the first to be outsourced but now there are a new breed of real-time web based services that are being handed over to third party providers.

One of the most interesting of these services being outsourced is a business’ Social Media communication.

Social Media is in essence a communication tool that facilitates conversations between a business (or its employees) and individuals who may or may not be customers. In that respect social media can be seen to be a Customer Relationship Management (CRM) tool.

If a business outsources social media and allows the service provider to communicate with customers and potential customers on its behalf, it is trusting the supplier with both the reputation and voice of the company. This creates to challenge of how to extend your corporate voice, and even corporate culture to a third party service provider?

Setting boundaries and communication guidelines for the provider will assist but I suspect ‘due diligence’ in relation to corporate values or culture will be much more important than the traditional commercial due diligence. Perhaps appointing a provider with similar corporate values/culture training should be the primary criteria with joint training and recruitment a close second.

The other uncertainty is how you cost such an arrangement and measure its success. Key performance indicators and usage models are used but more frequently the question is being asked should charges be focussed on defined outcomes rather than quantifiable usage. Obviously, defined service levels and outcomes can be difficult in the social media context particularly if the platform is discontinued or unavailable. Twitter often crashes (and displays the ‘Twitter whale’) when it is over capacity – this would play havoc with defined response times using that medium.

Whilst it may seem pessimistic to discuss it at the outset, exit is still one of the most important contractual areas in outsourcing. For example, do you receive the username and passwords for the social media profile on exit and will there be an automatic transfer of the outsourcing providers employees on migration to a second generation supplier? Such an event could easily happen under employment law.

Behind the scenes outsourcing is all about relationships, managing change and commitment to making it work. The really successful ones work as a partnership with continuous communication – the agreement should set the expectations and understandings out clearly. Of course, there will be a terms to apportion risk and set out who is responsible for what, but there is a wider commercial and brand alignment picture that can not be ignored in the online world.

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