Buyers and Vendors: Quit Pointing Fingers at Each Other; Point Them At Yourselves

Today we welcome a guest post from Tony Filippone, blogger on (360 Degree Vendor Management) and the latest addition to the HfS Research team. Tony is a long-time vendor management expert and professional and is excited about his cross-over from the practitioner world to the dark side of the force.

As a long time Spend Matters reader (I even have a CPSM certification to prove my procurement geekiness), I have a critical message to all buyers of outsourcing services: It is time to stop pointing fingers at your vendor.

You know how culpable you really are. You gave them those wildly inaccurate forecasts. Your wildly inaccurate estimates of baseline productivity didn't help, either. It was you that asked for a 95% quality SLA, but now who's dealing with the aftermath of one out every twenty customers fuming with dissatisfaction in the escalation queue? Buyers, did you learn your lesson about those yellow stickies clustered around your employees' monitors? They are really inadequate documentation of your current workflow and business processes. Why do you spend nine months selecting and negotiating with a vendor, but insist on a two-month transition timeline? By the way, exactly what is the career path for the under-empowered "senior vendor management analyst" who works both your operation's hours and Indian operation hours, manages a $5M business unit with hundreds of FTEs completely on his own, and bears the blame whenever something doesn't work? Have you ever paid an invoice on time?

Buyers, you know exactly where what I'm saying. And while there is no one-size-fits-all situation, you could be your own worst enemy...if every story didn't have two sides:

Vendors, your sugar-tongued salespeople said you had done this before. However, the only "transformation" your client saw was its expensive mess being converted into a less expensive mess. The client really liked the fifth account manager you assigned to its account more than the sixth. By the way, you've proven workforce management isn't an easy task with those four shared service centers sharing the same tax-free technology zone, and the quality implications are obvious. Speaking of quality, you agreed to those SLAs -- bringing your contract negotiators to the quality rebuttal calibration sessions isn't the start of a good relationship. Buyers wish your team would be less creative with the timing and content of your invoices. Would you please stop scheduling time with the client's CEO to discuss "the partnership" and your desire to explore future opportunities instead of working through the governance team? Why did you locate your data center's backup diesel generators under flood level?

In other words, buyers are no more or less at fault than the vendors. However, if you spend half an hour by most water coolers, instead of joint problem resolution, you'll usually hear an endless flow of dissatisfaction and finger pointing by both parties stemming from day-to-day operational issues. In my opinion, the root cause for the challenge facing the outsourcing industry today is that no one has focused on developing comprehensive governance and vendor management capabilities.

In an environment where almost half of 2010's outsourcing contracts were renewals and extensions, I am baffled that almost the entire body of outsourcing industry literature, outsourcing professional certifications, and media coverage ignores what happens the day after a contract is signed. One would think that both parties would be far, far more interested in achieving their joint business goals. However, far more has been written on selling and negotiating the complex outsourcing deal than operating the outsourcing deal after transition.

Frankly, there is such a dearth of education and expertise in this area that some organizations have put together solutions to outsource your governance organization. That sounds like a lobotomizing your lobotomy.

My decision to come to HfS Research, the leading outsourcing advisory analyst firm, was based on my passion to change everything that is wrong in governance and vendor management today. It is time that buyer and vendor organizations work together better to ensure their joint objectives are achieved through the thoughtful implementation of joint governance. I've spent years leading strategic sourcing, outsourcing governance, and strategic supplier relationship management organizations. Now, I want to help lead the industry down a path that will build a robust, formal discipline for vendor management (and account management) professionals -- a discipline that is necessary to succeed at outsourcing.

I know this message will resonate in the industry because when HfS Research presented it to the HfS 25 Executive Sourcing Council, a group of 25 leading buy-side organizations, they were ecstatic about the opportunity to participate in the development process of building next generation governance and vendor management capabilities. My research agenda at HfS Research will focus largely on opportunities to define the business processes necessary for a client and vendor to effectively manage an outsourced operation. If you have the same passion and want to share your enthusiasm, I invite you to get in touch with me.

-- Tony Filippone, Research Vice President, Sourcing and Governance Strategies at HfS Research

Tony's prime focus is delivering research, practical advice, and imparting real-world vendor management experience to buy-side clients and service providers on what really matters -- how to govern outsourcing programs in a manner that creates real value to all parties. He also oversees the company's research in the healthcare industry BPO vertical and the document management and call center BPO horizontals. Tony can be reached at tony (dot) filippone (at)

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