Spend Matters would like to welcome a guest post from Vantage Partners
As we have shared in the previous parts of this five-part series, in order for an outsourcing arrangement to reach its potential value, you, as the buyer, must enable the provider to execute on their plan to deliver. For each method by which a provider plans to deliver, there are common ways that buyers inhibit successful execution and a number of steps that can be taken to mitigate these challenges.
Connecting Provider Selection to Enabling Success
As stated at the outset of this series, there are things you can do that either enable or inhibit your providers in achieving the results you are seeking. As a general rule, you need to get clear on your goals for outsourcing, understand how your provider plans to de¬liver on those goals, and act in a way that enables your provider's success. And you're much better off getting it right from the beginning. Regardless of the value you are seeking through outsourcing, you will need to take a few important steps with potential providers during the selection process in order to ensure that the relationship will achieve its key goals.
- Clarify the fundamental drivers for outsourcing.
Most successful arrangements start with a clear value proposition. What are you trying to achieve? What are you looking to the provider to do?
- Ensure there is common understanding of how the provider will provide that value and what it will take for them to be successful.
Be wary of providers who insist they can do it all with¬out your help. Ask your providers what they need from you in order to deliver the value you are seeking, and push them to be clear on the risks and dependencies in¬herent in their business case. Clarify how they plan to change service delivery, so you can be prepared to help them do so.
- Be clear about whether your organization can deliver on what the provider needs in order to be successful.
If you can't commit to making the kinds of changes or providing the kind of support the provider needs (e.g., change management, forecasting, knowledge transfer), consider whether this is the right relationship or deal structure, given your objective. If giving the provider the support they need will be a challenge, consider how your organization can improve its ability to help the provider be successful. Be explicit about what is expected from all parties and what challenges/roadblocks they may face in each side's organization. This will allow you to jointly brainstorm potential ways around those roadblocks and to determine whether or not a relationship with a particular provider makes sense.
- As a deal is handed off to those who will manage it, communicate, communicate, communicate.
All relevant information about the above considerations needs to be passed to those on both sides who will be responsible for making delivery a success. Encourage conversations about how both sides can help one another be successful, because ultimately, if your provider fails, you are not well served either (regardless of penalties).
- Danny Ertel, Partner, and Sara Enlow, Principal, at Vantage Partners