Over the past few years, we have seen a fundamental shift in how outsourcing contracts are being delivered. The days of the ‘mega-deals’ are gone, with clients now working with multiple niche suppliers.
There are a number of reasons for this, ranging from cost reduction, to a desire to be more agile. Adopting a multi-supplier approach offers a number of benefits, with suppliers selected based on their specialist skills in a particular area.
However, as more organisations opt for the multi-supplier route, a number of questions arise about how to manage the complex relationship between suppliers and client. How do companies best manage the increased number of ‘moving parts’ that need to work together to achieve the necessary business outcomes? And how can each supplier be clear on his or her contributions to those business outcomes? We recently undertook research to get to the heart of this question. State of Relations in Outsourcing, interviewing 200 senior managers and directors who are responsible for outsourcing in some of the UK’s largest companies.
The findings reveal that the quality of relationship between client and outsourcing partner is at best average. A large gap exists between what clients expect and what suppliers are delivering. As outsourcing moves beyond the old ‘mess for less’ model, the idea of partnership becomes ever more important. There is a real need to rebuild trust so that clients are prepared to empower their partners to make more decisions. This becomes even more critical when using multi-supplier models.
At the moment, around 75 per cent of organisations manage the SIAM (Service Integration and Management) process internally; yet just 11 per cent feel extremely confident that their organisation has the skills to manage SIAM effectively. Suggesting there is a lack of confidence around managing complex ‘multi-layered’ outsourcing contracts. Twenty nine per cent see the trend going towards outsourcing SIAM, and just over 10 per cent see it being brought, or staying, in-house.
Employing a broad range of suppliers can present a complex challenge. The key is access to up-to-the-minute information from across the business. No business unit works in isolation; finance affects operations, marketing affects production demand. It is essential to take a holistic view of the business, rather than viewing each unit in isolation. SIAM is all about brining disparate information together. It enables IT services together to seamlessly support an end-to-end business process and assure the outcome.
Clients and suppliers must work together to ensure the best business outcomes. Suppliers need to show they can deliver a return on investment if they want to win and retain business. To do this measurements and objectives need to be put in place that focus on the achievement of business goals. By tying metrics to business outcomes and strategic business objectives, suppliers are able to show clients where they are adding real value.
Big data doesn’t need to be a big headache in 2014