Value assurance...avoiding throwing the baby out with the bath water

22 Jul 2010 View Comments
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In an outsourcing relationship it’s not uncommon for there to be pain points or situations where expectations and delivery are not aligned.

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.    

Not only are questions asked such as, “To what extent are contractual obligations being met by both parties?”, but also, “are processes able to evolve to meet contractual needs?” and “To what extent is the spirit of the deal being delivered?”

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.

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