Firefighter Quits, Takes Job as Innovator

The pundits are everywhere espousing evidence of the failure of outsourcing. Look at all the “failed” relationships, they say.

These same commentators don’t seem to have the numbers to back up their pronouncements, but let’s agree that much smoke has been created around this topic. There’s even some fire. Except it doesn’t always – or even frequently – start where you might think. And it doesn’t have to burn down the house.

Conversations with many experienced client executives – the people who manage active outsourcing arrangements – do reveal some ongoing “fire fighting” in their relationships. The causes and severity vary, but one theme typically emerges: Most clients just aren’t equipped to manage all the dimensions of commercial outsourcing arrangements.

In fact, the skill sets and nuances required go well beyond what you need for standard contract management. And even if a client has the DNA for the job, he or she may not have the tools to stay on top of the relation and make it produce results beyond the basic service being provided.

Service providers heartily agree. They document how clients and providers enter into a relationship whose complexity may not be understood up front. That builds up stress over time as expectations don’t match and the stuff that really matters – and that may not be in the contract – gets ignored.

We recently were asked to measure several client governance teams to see how well they performed the essential activities that contribute to a healthy buyer-provider relationship. Participants were able to benchmark their organizations with those of their peers. At the risk of fanning flames, here are some results: 

• Only 19% of clients feel they provide enough training for members of their governance organization
• Only 25% of clients did a formal assessment of the skills and capabilities of their original governance team members against a defined job description for the new role
• Only 10% of clients have intra-company best-practice forums for outsourcing management (suggesting that most activities are "stove piped" and re-created multiple times across a company)    
• 60% of clients believe their internal organization is as much to blame or more so for root causes of outsourcing dissatisfaction (versus dissatisfaction caused by the service provider)
  
  

What this tells us is that the time has come for the science of governance over outsourcing relationships to become more prominent. We all know that service providers sometimes don’t measure up. But we also are learning that clients need to be accountable in managing their relationships if they want to move from the role of fire douser to a position of leadership supporting innovation.

TPI’s Governance Excellence Program, including the benchmarking facet, is described here [http://www.tpi.net/knowledgecenter/governanceexcellence/] for anyone interested in learning more.