Skills gaps in outsourcing management
by George Davies, CEO, MooD International
Thursday, February 20, 2014
Although some may consider the business adage, “You can’t manage what you don’t measure,” a cliché, this doesn’t make it any less true. It is a lot more difficult to judge whether something has been a success or a failure when there are not clear benchmarks to judge against.
While many in the outsourcing world would think this has nothing to do with them, believing that everything is covered in the service level agreements (SLAs), this is not really the case. Our State of Relations in Outsourcing report exposed many gaps in reporting between outsourcers and their clients and the need to improve the management skills in outsourcing relationships.
As touched on in a previous blog the move towards service integration and management (SIAM) is throwing up new challenges for those managing outsourcing processes. While our research found 75 per cent of organisations manage the SIAM process internally, only 11 per cent feel extremely confident that their organisation has the skills to do so effectively. SIAM sees many different suppliers collaborating to deliver services to a client and effective dialogue with and between the suppliers is essential to success. Each must be familiar with the others’ commitments to ensure collaborative support is received.
As well as this, the management layer in SIAM needs to receive and consolidate timely information and to run an analysis against SLAs and key performance indicators (KPIs). They will need to compare performance levels and, crucially, understand the cause and impact of the diverse dependencies that now exist.
Our research also found that while cost-reduction was the most popular original business motivation for outsourcing (65 per cent), this doesn’t really paint the whole picture of what clients are looking for. When asked to identify which was the most critical task outsourcers were involved with in the organisation, cost-reduction was considered the most critical by only 17 per cent, with the most popular area being strategic alignment, on 26 per cent. It’s clear that clients are looking for more than a box ticking exercise; they want their supplier to really work with them to generate the best business outcomes. To get the most value from an outsourcing relationship they need to move beyond simply having clients on one side and suppliers on the other, and instead become a collaborative partnership.
To move to a collaborative partnership there needs to be an ability to deliver a transparent business ‘flight deck’ that becomes a single lens for everyone involved. This allows teams across on each side to review performance, understand the impact of transition and transformation and allow for effective communications that will support and encourage innovation to ensure all parties benefit from the relationship. Decision-makers both side of the fence having access to the same timely information will greatly improve the relationship and outcomes for both sides.