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To access the health of your outsourcing relationship a thorough analysis is required.
About 57 percent of IT buyers are somewhat satisfied with their primary outsourcer and 22 percent are very satisfied, according to Forrester's research. But that leaves more than 20 percent indicating it could be better. But there is still lot of pain around in outsourcing deals. However there is tremendous scope of improvement and resulting benefits can be very promising.
This requires regular monitoring of the outsourcing relationship. It is not just the performance factor against service-level agreements or price benchmarking, but a more holistic assessment of outsourcing success or failure. One needs to assess the deal systematically beyond the cost or whether the service provider meets the SLAs.
The health of outsourcing relationship can be measures against the following basic criteria and the weight given to each unit
Outsourcing customers should assess six major areas, asking a variety of questions to score each category, including
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Business management capability
Are there regularly implemented continuous improvement activities related to lower cost of delivery, increased customer satisfaction, productivity improvement and quality improvement?
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Relationship and context
Is there a clearly defined overall structure of the management team (provider and customer)? Is there a deal chart? Is there alignment between provider and customer? Are account responsibilities clarified? Are there corresponding contacts between the customer and provider organizations?
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Provider market status
What is the provider's financial strength? How productive is the provider? What does the provider's portfolio of services look like?
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Expectation matching
What extent are the provider's and customer's expectations of the deal being met for price/cost related to transformation change projects/programs?
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Transformation capability
How well does the provider implement technical change without major disruption and according to plan?
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Delivery management capability
How mature are the provider's delivery processes? Are they meeting delivery obligations?
Each category (and individual criteria listed in each category) is scored on a scale of 1 to 5 and then given an appropriate weight. A meaningful quantifiable score is thus created for these skills.
This assessment will take few days if right people and customer are involved and agree on the methodology and criteria.
The goal is not just to grade the relationship. Doing an outsourcing deal assessment and not acting on it is a waste of time and money. Something like going to the doctor, getting his advice and not acting on it. It's a waste and you feel guilty about it later. This helps us to know why we are dissatisfied and take it from there on resolving these issues.
A quantifiable way to document disagreements, communicating these along with developing regular improvement procedures and measuring the results, will provide a good middle ground to improve outsourcing relationship health.
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