To outsource forecasting - or not
There was an interesting debate that took place as part of one of the roundtables at our recent Pharma Forecasting Excellence Summit that has kept me thinking ever since.
By on Aug 19, 2009There was an interesting debate that took place as part of one of the roundtables at our recent Pharma Forecasting Excellence Summit that has kept me thinking ever since. Prompted by our organizers, the roundtables participants were asked to argue for and against outsourcing of the forecasting function.
To my mind, Martin Joseph, managing director of Rivershill Consulting and Bob Draper, forecasting director at Eli Lilly, made some bullet proof arguments for keeping the forecasting function an internal one (by the way, see our summary of Kuntal Bavejas talk at https://www.reutersevents.com/pharma/forecasting/forecasters-leading-organizational-growth on the internal role of forecasting for some interesting insight).
Draper says that while you might be able to outsource data collection and analysis, decision making is best kept in-house and I have to agree.
And while on the surface, Joseph says, there may be obvious cost savings in headcount, there are many hidden costs and inefficiencies that come with outsourcing such tasks, including the resources required for simply managing the relationship with a third-party provider.
Importantly, he adds, there are also concerns with how outsourcing forecasting might impact communication, something Baveja argues is critical to the success of forecasts in driving organizational growth. And Joseph raises the question of whether its wise to transfer critical information outside the organization. Doing so difficult and cumbersome and risks that the information is riddled with bias which a third party may be ill-equipped to recognize or remove. And he points to security concerns with sensitive information such as product launch dates.
Joseph also says timeliness is likely to be problem when you consider the extra layer that comes with involving a third party, particularly as forecasts must be updated.
Although Simon Fitall, president of consultancy Fitall & Associates, made some valid points about the stability vendors might be able to bring in light of the rapidity with which staffs change in pharma and corporate knowledge and memory is lost, Im not sure I buy his argument that consultants offer a longevity advantage.
As always, wed love to hear your thoughts, though. Is forecasting best kept an internal function or does it make sense to outsource the task?