Ensuring I Don’t Keep You from Helping Me

Spend Matters would like to welcome a guest post from Vantage Partners See previous posts in this series here: Part 1, Part 2, and Part 3.

In continuing with this series, we offer some suggestions on how buyers can enable, rather than inhibit, the achievement of several other outsourcing goals.

Accessing Needed Skills
Many organizations outsource because they are unable to attract the talent they need. Some small- and medium-sized enterprises, for example, have difficulty attracting and maintaining top IT talent because they are unable to provide room for career growth or they aren't able to pay the salaries that other ?rms can pay. Other organizations need specialized resources for a speci?c set of activities but conclude it doesn't make sense to have that expertise in-house. Either way, outsourcing can be an attractive option to gain access to skills an organization wouldn't otherwise be able to tap into.

Relying on a relationship with a provider to gain access to this requires clear communication about the specific skills you need and why. As many experienced services buyers know, outsourcing is different from hiring contractors, or even consultants. It implies a different de¬gree of complexity. You're turning over a speci?c pro¬cess to an external provider, and paying for the results. Be clear about what you need.

Similar to focusing on core capabilities, micromanagement is the big risk here. Some buyers seeking specific types of expertise are tempted to demand a certain num¬ber of people or want to review resumes and approve each individual. But if you have outsourced to gain access to skills and expertise you don't have in-house, do you re¬ally know how many people are needed, or what their speci?c experience should look like?

Seek and listen to the guidance of your provider regard¬ing how many resources are required and in what combina¬tion. Often they can tell you what makes the most sense. You should also keep your provider abreast of changes in your focus, strategy, and/or goals, as this can impact the kind of support you will need.

Companies are increasingly looking to their service pro¬viders to drive innovation in the outsourced function. To do so, a provider needs to combine their in-depth exper¬tise with an understanding of your business and goals to drive signi?cant change. Unfortunately, such efforts are often thwarted by the fear of disruption. Many buyers push for a seamless ex¬perience for their end users, implying that not much can change (at least not such that anyone notices). Additionally, even if some degree of disruption and transparency is allowable, poor change management can delay results, lead to pushback, strain cooperation, and thus stall or preclude innovation altogether.

Relying on your provider alone to drive change is a recipe for failure. If you are seeking innovation through outsourcing, you need to carefully plan for and actively manage change internally. Rather than work around naysayers, com¬municate directly with those who will be affected by the relationship about the possible changes and aim to get their buy-in early on. Also, be explicit with potential providers about your organization's willingness (or not) to adopt change so that you can jointly develop a realistic implementation plan and timeline, including a change management plan.

Improving Quality

Some organizations outsource because want higher quality service than they could provide on their own internally, and many are even willing to pay a pre¬mium for better service. But delivering higher quality results that really matter requires joint effort.

Some providers learn (often after investing significant money and time in service improvement) that their ef¬forts were in areas that, unfortunately, don't matter much to their customer. Does answering a help desk call in two rings instead of three make a significant difference to your business? In a facilities management relationship, does providing an online meeting space reservation system matter much to a company that has excess space, so there is always an open room to be found?

In order to help your provider deliver more in areas that have a significant impact, be prepared to:

  1. Equip your provider with the infor¬mation necessary to allow them to make informed decisions on how best to adapt their expertise to your unique circumstances,
  2. provide them room to perform without a significant amount of interference, and
  3. be open to real change!

You should be conducting joint assessments and analysis with your provider to drive continuous improvement, looking at activities on your side (upstream from outsourced activities) that could be modi?ed to achieve a better result. You should also begin with a clear de?nition of your current state and desired future state (i.e., what kind of improvement are you seeking, why, and by when?). Doing so will help both parties clearly understand the end goal and develop appropriate metrics to measure whether or not quality is truly improving.

In the final part of this series, we'll tie all the pieces together and share a comprehensive table that can be used as a quick reference guide, plus discuss how you can enable success from the start with provider selection.

- Danny Ertel, Partner, and Sara Enlow, Principal, at Vantage Partners

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