Value Chain and NASA Term Paper

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NASA Value Chain Analysis

NASA

Inbound

Space

Outbound

Public / Fundraising

Materials

Operations

Relations

NASA Infrastructure

Human Resources Management

R& D

NASA Operations Procurement

NASA From an Outsourcing Consultant's Perspective

From an outsourcing consultant's perspective, NASA is absolutely rife for opportunities that could both grow the off-site provider and increase NASA's core competencies and successes.

NASA's vision is "to improve life here, extend life to there, and to find life beyond." Its mission is "to understand and protect our home planet; to explore the Universe and search for life; and to inspire the next generation of explorers." (www.nasa.gov)

Some commentators and critics such as Mark Wade observe that NASA has really reeled from a 'stop-start' approach to its human spaceflight programs. For instance, the Apollo spacecraft and Saturn family of launch vehicles were dumped in 1970 after billions of dollars had been expended on their development. Then in 2004 the U.S. Government proposed eventually replacing the Shuttle with a Crew Exploration Vehicle that would permit NASA to again send astronauts to the Moon. Despite the reduction of its budget following project Apollo, NASA has maintained a top-heavy bureaucracy resulting in inflated costs and compromised hardware -- and as critics point out, no private industry players would survive without getting leaner or meaner.

Currently, the ISS (International Space Station) relies on the venerable Shuttle fleet for all major construction shipments. The Shuttle fleet has lost two spacecraft, and their infinitely more valuable crews, in 1986 and 2003. While the 1986 loss was made up with a Shuttle built from replacement parts, there seems to be neither intention nor ability to replace the second loss. (But see also CEV.) The ISS, which was designed to have a crew of seven as of 2005, now has a usual crew of two, meaning that none of the research projects it was intended to support are carried out. There are few arguments to satisfy the other nations that invested heavily in its construction that its fate will not soon match the fate of Skylab.

Naturally, outsources cannot take on NASA's core competencies. Oddly enough, this is a trend in many other manufacturing and production heavy industries -- DaimlerChrysler, for instance, outsources a large portion of its car design. So, it follows that NASA may outsource its space ship design and even -- shudder to think -- its space operations and act as a clearinghouse of sorts for space travel.

An interesting concept, one that has even been floated by a few brave critics of NASA, but not at all one that is likely to gain steam.

Much more likely is the fact that outsourcing firms may take over the underlying aspects of NASA's value chain -- most particularly, human resources management and procurement. As a stretch, NASA could outsource its fundraising and public relations as well.

First, the most likely aspect to be outsourced is human resources management. An increasing number of major businesses are outsourcing their human resource operations today. Some of the services on offer are Payroll operations, benefits administration, employee data records and management, and also asset management services.

The nation that receives the brunt of this HR outsourcing work is India. One of the reasons to outsource HR operations is to streamline processes and make them more transparent to employees. Technology is usually a key enabler in achieving this transparency. Technology also helps preserve the sanctity of information between employee and employer.

Indian Internet IT service companies (software and web developers) are considered a viable outsourcing option today. What they offer is a strategic initiative to cut costs and access to intellectual capital not available in-house -- and of course, the price differential stands as the leading reason to outsource HR and Finance functions to India.

The increasing emphasis on customer response activities in the West have made Indian outsourcing service providers reinvent themselves and extend their web development activities to ASP (Application Service Providing) and other high-end outsourcing solutions -- this is a perfect example of technology catching up to costing needs and practices.

The HR department traditionally has been a cost-consuming function, but is now slowly contributing significantly to a government department's bottom line. This has led to outsourcing tasks like payroll, benefits, education/training, recruiting, personnel administration, organizational development and workforce management -- NASA is geared at space operations, yes, but it is understanding that its human resources are its greatest asset, and outsourcing human resources functions lower costs and allows greater service to NASA employees.

The outsourcing market is beginning to see HR as a preferred choice. A Gartner Focus Report (Outsourcing: Time to Deliver Results) echoes that thought: "Only those companies ready to address the necessary transformation of their HR processes will find that outsourcing will bring access to world-class processes, competitive advantage, and increased shareholder value." (Gartner, 2005)

Technology compatibility, confidentiality and cost are other challenges that both sides -- a government organization like NASA and the outsourcing firm, perhaps in India -- must work on. Mutual trust is critical, as human resources outsourcing is a long haul commitment. It is absolutely essential that senior management are involved right from the beginning and also drive the initiative. Consequently, a clear understanding of requirements and expectations from both sides is an important platform in building the relationship. Compatibility in culture and values along with an open and flexible approach go a long way in ensuring that the outsourcing venture is a successful one -- and this is the hardest challenge for outsourcers to understand from NASA, a not-for-profit government organization. Outsourcers are mainly used to working with for-profit firms, so this will be an adjustment.

As mentioned above, NASA can also outsource procurement. An outsourcing firm could help NASA decide which materials to buy on the open market.

This could mean infrastructure materials -- computers, desks, water coolers, etc. -- and even extend to core competency materials -- space ship parts, landing gear, and complicated products such as those.

Of course, procurement of core competency materials may be the hardest process to complete properly, as there must be so many checks and balances in place in ensure that the highest quality space-sound materials are procured.

Finally, NASA may outsource its public relations work and fundraising. In the shuttle disaster of 2003, for instance, NASA could have outsourced its efforts to regain the public's trust for another space mission with humans.

And today, NASA may outsource its fundraising efforts, as many universities and colleges do. NASA can help design the fundraising campaigns and then outsource only the implementation, or it may actually outsource the planning of the campaigns themselves.

NASA Challenges to Outsourcing

NASA's core competency, as listed above, is the desire to improve life on Earth by exploring other worlds. This, quite obviously, focuses on space travel, the research and development necessary to facilitate space travel and the research and development that emanates from successful -- and, often tragically, unsuccessful -- space travel. Any outsourcing efforts would only be undertaken if they do not impinge upon these core competencies.

But even the functions listed in the previous section involve dangerous challenges to the process of outsourcing. For instance, take the process of Human Resources outsourcing. It is one thing to outsource simple paperwork processing such as payroll processing, etc. However, it is another thing to outsource human resources management -- hiring, firing, promoting, demoting, etc. -- to a HR consultant.

That is a process that simply would not work at NASA as it would interfere with the organization's core competencies. NASA is, by definition, a losing-money proposition. Its goals are not to create value-added today, so much as to create value-added for sometime in the future, some amorphous era when we may actually benefit from NASA's research and development.

As a result, common human resources functions are not entirely similar to their brethren in for-profit sectors or even in other government organizations -- NASA is a different beast, one in which scientists, for instance, who have not created any marketable or useful product must still be kept around and even promoted if there are on the track to perhaps discovering something that will make landing on Mars with humans feasible thirty years town the road.

Also, so much of NASA's core competencies are inherently confidential and must be kept as state secrets and defense secrets. Outsourcing may unwittingly disseminate some of the information, and more dangerously, may open the door for terrorists or rogue states or even diplomatic enemies to gain knowledge they otherwise should not have -- by definition, outsourcing means opening up some percentage of NASA's books to third parties, and this is inherently dangerous.

Potential outsourcing of procurement is also dangerous to NASA's core competencies as implied above. This is especially true in outsourcing of space materials purchasing -- NASA has ultimate responsibility for the success or failure of its missions and efforts, and especially in situations in which humans go into space, it seems a stretch to outsource space-grade materials procurement.

If such…[continue]

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