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Bundled or Unbundled
That is the Question. What's the difference and what's best for your company?
First let's define what we mean by bundled and unbundled in terms of how you outsource your benefits or other HR functions.  When we talk bundled we simply mean putting your various benefit delivery items in one package.   The package can be managed by a single vendor who performs all or most of the functions.  It can also include a single vendor who manages several vendors, e.g., primary vendor does Savings plans, but other vendors provide health and welfare, pensions, etc..

Unbundled is having several vendors who perform various benefits delivery products and you manage all of it.

I've seen other definitions, but for the purpose of our discussions, we'll use the above.

Single Vendor or Multiple Vendors to manage benefits delivery (including providing Services)

I think a key issue upfront is the concept of  how many vendors do you want to manage?  You can find the "best in class" for every single benefit service and then manage all of them yourself.   Or, you can select a single vendor to provide as many services themselves as possible and supplement what's left.  Then ask the vendor to help manage the other vendors.  Then, there are variations of the above concept between single and multiple vendors.

Needless to say, there is not a simple answer.  It takes analysis, understanding the vendors, you business needs and your willingness to really manage your vendors.

The "best in class" concept should achieve a great product overall, assuming you can manage multiple vendors and the issues surrounding the numerous feeds, multiple contracts, etc. etc..  Some companies seem to be quite successful at this approach, at least they say so in conferences.

The "put your eggs in one basket approach" can work if you commit to a strong internal control system and monitoring of the vendor.  In other words, you must build a strong basket for your eggs and this is certainly possible. This approach can have very positive economic advantages to your company because of economy of scale and fewer interfaces to manage and cause problems.  At the same time, as mentioned above, you must have strong internal controls to make sure the vendor is financially solid and meets your business needs. 

Bottom line...I believe both of the above concepts can work effective for your company.  The key point is to not to be mislead that once you outsource, your problems are over.  It takes daily work to keep outsourcing successful.  Vendors change, your business requirements change and what may be successful today may not be so tomorrow.

Best of Class or Eggs in One Basket Approaches
This page was last updated on: February 2, 2010
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