22 Jul 2010
Today, organisations
that I speak to are increasingly willing to invest their energy in tackling
these issues to maximise the value of a contract rather than ending a contract
which is not delivering to its full potential.
But what’s
the best approach to getting the most out of your relationship? A benchmarking
exercise and review of key performance indicators can show that the contract
represents good value for money and is meeting targets, despite there being room
for improvement in reality.
A value
assurance exercise offers far more and is a popular solution for client
organisations that I speak to as it offers a route to effectively aligning
service expectations, perceptions and realities in a long term agreement to
maximise value - and typically involves a review of both service provider and
client in equal measure. It takes a more holistic view and includes an
assessment of areas of the relationship including people and governance,
perception, process and performance.
Value is
assessed at three levels: strategic (the senior relationship between business
and supplier), operational (day to day management of the service and steady
state operations) and project (activities with a defined scope of work and time
frame) - again to take a holistic view of where problems may exist and the
causes.
Most
importantly, for a value assurance exercise to be effective, it needs to be
jointly owned by the service provider and client organisation, and of course,
there needs to be an appreciation of the fact that both parties typically need
to make changes. But the reward for this effort is to get a contract back on
track in a sustainable way, which has to be time well
spent.
In future
blog posts I’ll dig a little deeper into value assurance. If you’re currently
managing an outsourcing relationship, this subject should be of interest in
helping you to move the performance of the contract towards an optimal state.
The question lies whether a business would compromise quality of outsourcing just so it could cut down cost. However, not all outsourcing companies do not deliver what it is expected by the client. Employees are still screened and trained by these outsourcing companies.
Posted by: SEO Outsourcing 16 Aug 2010
I have been closely associated with the Outsourcing Industry for years, and I have realized that the service providers strive to give their best and try to live up the expectations of the clients, as they cannot afford to lose one. However, there are situations when the deliveries a not aligned with expectations. But then even in-house processes are not flawless.
I will surely be following future posts of this blog.
Posted by: Brickwork India 13 Aug 2010
While I agree with Lee Ayling (Value assurance...avoiding throwing the baby out with the bath water) on the benefits of a value assurance exercise, there are a number of elements of the process that clients cannot afford to be naive about.
Before the client gets involved in any value assurance exercise for an outsourcing agreement, they must be absolutely clear about the expectations of the existing contract and how the obligations may have altered during the life of the contract. If you want to avoid value assurance becoming a dispute resolution process, you must firstly take a close look internally as to how the contract has changed and whether your requirements have altered.
The second key consideration is to identify priority issues and deal with them one at a time, over a series of value assurance exercises. If you bundle assessment exercises together, you risk distraction from the major goal - which is running an efficient outsource service.
Thirdly, whilst the client may be undertaking a value assurance programme to improve some of the supplier’s behaviours, or to be better able to communicate the value of the outsourcing service internally, your outsourcing supplier is likely to have a different agenda . That agenda is generally about protecting their revenue and margins. So, unless the client has some commercial leverage with that supplier, for example follow on business, they need to be aware that a value assurance process may well be seen as a threat. The client must therefore recognise that the value assurance process is essentially a commercial activity and they need to be fully prepared with representation of key IT, procurement and business stakeholders.
Mark Raphael
Outsourcing specialist
PA Consulting Group
www.paconsulting.com
Posted by: Mark Raphael, Outsourcing Specialist, PA Consulting Group 28 Jul 2010
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