The State of Relations in Outsourcing
by George Davies, CEO, MooD International
Thursday, March 06, 2014
Through our State of Relations in Outsourcing report we wanted to get to the heart of the issues affecting the relationship between clients and suppliers.
I have touched of these issues in previous blogs, in particular, the move to multi-supplier delivery and the skills gaps in outsourcing management. There is a clear gap in expectations between what clients want and expect, and what suppliers are delivering. This is particularly the case in areas such as transparency, understanding the business model, being trustworthy and innovation.
In this blog, I wanted to look at what can be done, and how the relationship between supplier and end user can go from okay to great.
Our messages to outsourcers
Offering a service where cost reduction is the key message is no longer enough. In today’s market clients take this as a given, and as such are demanding a greater focus on business outcomes, creating value and demonstrating innovation.
To deliver this it is important to start with objectives that reflect the business need – not figure-based performance measures. The structure of the agreement must embed reporting that is meaningful and demonstrates your impact on business outcomes. This must be established at the beginning of a contract and form the basis of the evaluation throughout the contract.
It also requires an attitude change. You need to be continually interested in what your client wants as their business will change over the years of the contract and they may well require different things from their suppliers. You need to remain responsive to them and not rest on your laurels.
Our messages to clients
Focus resources on delivering your strategic plan to enable you to meet new challenges. You can’t expect outsourcing partners to help you to innovate and grow if you don’t empower them to make decisions.
Innovation and trust must form the basis of how you measure their contribution to your business. You are seeking their input to the strategic plan and their understanding of your business model.
With the move to multi-supplier delivery, you need to demand a mechanism that gives a current and consistent view on what is happening; as well as who is delivering what, and how the different parts of the contract are linked. This mechanism must also be tied to the business objectives. By linking the business processes to the key data of the organisation, the outcomes and effect of any changes can be monitored, giving you the confidence that opportunity and risk can be managed.
But this is not just about systems; it is also about an attitude. The client needs to be continually involved in the outsourcing relationship; it is not simply a matter of handing over responsibility and leaving the supplier to get on with it. Much of the value in an outsourcing contract can take two to three years to be generated, and if you have stopped taking an interest in the contract, then these savings could be missed.
Having an ongoing dialogue between you and your suppliers, will build trust, enable supplier decision-making and help you meet future challenges.
So, no matter whether you are on the client or supplier side, the key is to embrace a collaborative and transparent way of working together.