Enterprises today need real value and innovation from their service providers. To create a contractual relationship that undeniably adds value, sourcing buyers must take a hard look at the performance of both parties. It’s easy to point fingers across the divide and find fault with the way the provider delivers contracted services or fails to meet service levels and project milestones. But the more productive move for enterprise sourcing buyers is to look at their own behavior and accept responsibility as an active partner in a living, breathing relationship. This begins by carefully asking even the most basic of questions: how well does the organization understand the nature of the services it’s contracting and how a contract relationship works?
We have found this fundamental element of outsourcing – understanding the nature of the services being outsourced – is often missing or insufficient. Healthy relationships depend on consistent introspection between and within both the client and provider organizations. The failure to evaluate a sourcing relationship from the perspectives of both parties limits the potential of that relationship, whether it is a traditional sourced services relationship or a more complicated digital sourcing relationship.
ISG research shows that improving an enterprise client’s engagement in its sourced services relationships is the only sure way to produce the innovation it is looking for. Focusing on the relationship also functions as a risk-management activity; it improves outcomes, matches expectations with service delivery, and reduces the long-term costs of changing providers, which is an expensive and time-consuming activity that disrupts continuity and introduces transition risk to the enterprise. ISG calls this improved relationship condition Coactive Governance.
This ISG white paper The Client-Provider Relationship: A Secret to Innovation and Growth looks at the state of sourcing relationships today and how both parties can work toward a state of Coactive Governance, in which both clients and providers can thrive in a competitive market, achieve greater innovation and generate growth.
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About the author
Cynthia Batty is the ISG’s Chief Knowledge Officer. In this role she is the ISG service methodology architect and global integrator of the company’s products and services, and is the leader for developing, growing and leveraging ISG’s accumulated intellectual property resources. Prior to this role, Cynthia was a lead in ISG’s Governance and Transformation practices, and maintains a continuing role in the Organizational Change Management practice. She brings 25 years of practical experience to advise clients on their sourcing governance and service management design, as well as organizational change management and maturity development. She is a recognized expert in sourcing governance, vendor and contract management. She has helped more than 50 governance organizations with business management and service management processes in both single-provider and multi-provider environments.