Part 2: Creating a Value Plan to Drive Positive Outsourcing Relationship Change

Earlier I posted the first installment of a two-part blog on the importance of using a value plan in performing value assessments and acting on their results. Today I address several steps you should take in conjunction with creating the value plan to help bring about a positive outcome for your company and your service providers. If you haven’t already done so, please read part 1 of the discussion here.

Having a value plan is crucial for successfully absorbing a value assessment and using it to improve outsourcing relationships. In addition to preparing such a plan, you can get the most out of the assessment process by taking the following steps.

Prepare your executive management. Whenever ISG goes looking for value leakage, we find it. Note that this may not be evidence of poor management on your part; we have found that value is lost in various ways in outsourcing relationships. If you start from a premise that “we are going to improve and this is a step in a quality process to achieve that objective” and you prepare your management for the overall program, you will be less likely to face hard questions on the initial exploratory research and findings.

When the overall plan is directed toward governance, management improvement and monitoring, your executive can see a process aimed at continued improvement and may indeed become more committed to the process as a consequence.

Engage your service provider. Assessments are like audits—nobody likes to see the auditor coming. You don’t want to create an environment of defensiveness with your service provider, because you are going to be asking the service provider to work with you to improve services and costs. When you have your value plan developed, invite your service provider counterparts to a meeting and explain your goals and the way in which you plan to go about it. Ask for their advice and support, and ensure that they know they are a vital part of the solution. Then engage them in your plan periodically as you determine what to do and how to do it.

You may also discover in the process that your own team is doing things that are preventing the service provider from delivering all the potential value. Be open to this finding and to making the changes that will enable greater value realization.

Don’t take on too much in the beginning. Although you may not be clear on exactly what your situation is when you start, you can make a conscious decision that you will only initially tackle a manageable set of problems. It is likely that to find value improvements you will need to make organizational or goal changes on your side of the fence. Bear in mind that these efforts can feel like witch hunts to your own team and can cause them to be demoralized or resistant—or both. Give everyone room to work on the problems at a reasonable pace, but identify metrics that are to be reported monthly to measure your progress.

Be conscious about what you are looking at. Studies such as a value assessment, depending on how they are performed, can sometimes veer close to being enhanced customer satisfaction surveys. This may not necessarily be bad, but be sure that you understand the distinction and how to drive value from the results (as opposed to merely recording dissatisfaction).

Create a positive goal. Service provider bashing is not the way to ensure or sustain value attainment, and an approach that puts a negative focus on your service provider will create a negative attitude in your entire stakeholder environment from which it can be hard to recover. You need their cooperation to make positive changes. Make the goal a win for both parties. This approach will require you to think carefully about what your service provider executive and team stand to gain, and it will help ensure their engagement in the positive goals.

By looking closely at the value achievement in your outsourced services relationship, you can find ways to increase value and relationship quality across the board—by viewing a value assessment in context, making a plan, and being realistic about outcomes. You may be surprised at the positive results of having a well-considered value plan.

Click here to read Part 1

About the author

Cynthia brings 25 years of experience helping clients develop their sourcing governance and service management design. Having worked with more than 50 organizations to improve business management and service management processes in both single-provider and multi-provider environments, Cynthia has become a recognized expert in sourcing governance, vendor and contract management. She currently serves as the architect for ISG’s service methodology and global integrator of its products and services. Cynthia works to leverage ISG’s accumulated intellectual property resources to help enterprises create effective transformation and governance capability, and maintains a continuing role in the Strategy and Organizational Change Enablement practice.