- Outsourcing News
- Outsourcing Press-Releases
- Outsourcing Events
- Outsourcing Analytics
Outsourcing relationships are often like a marriage where the people realize after they get together that there are aspects about each other and the relationship they hadn’t anticipated and planned for or issues about which they had mistaken assumptions. Those moments when the buyer becomes aware of such circumstances are what I call “aha” moments. The buyer’s thought process is: “Aha; I now realize we need to change the way we are operating together.”
Those are crucial moments.
If the parties don’t manage to satisfactorily address such issues by changing the way they work together, they will end up going their separate ways.
Outsourcing Center’s 2010 Outsourcing Excellence Awards program surveyed buyer participants about the timing of their aha moments, the root causes, and outcomes from addressing the issues uncovered in their aha moments.
Of the 64 buyers surveyed (whose outsourcing relationships had been in existence for longer than one year and had moved beyond the transition phase), one reported a significant aha moment 10 years after signing the contract. Two buyers said their moment occurred two years after contract signing, and one was four years into the relationship. They are unusual cases. The remaining 60 buyers reported their aha moments occurred during the transition phase.
In fact, the study revealed that nearly all of the aha moments occurred in the early weeks or months of an outsourcing relationship – when it’s crucial to achieve some “wins,” crucial to develop mutual trust.
Root causes of aha moments
It’s important to note that all of the relationships studied had aha moments, regardless of the buyers’ prior experience in managing outsourcing relationships. The root causes of most of their aha moments lie primarily in incorrect planning and expectations up front.
Among the causes of aha moments that led to a change in the way the parties worked together, the most frequently cited cause was that the buyer’s business (or its IT system) was so complex that it required more communication and collaboration than originally anticipated. Seventeen percent of the surveyed buyers encountered this situation.
Ranking as the second most frequently cited root cause (six percent) is the fact that the parties began their relationship without financial incentives to motivate the service provider to achieve continuous improvement.
At five percent, the third most frequently cited source for an aha moment was that the buyer failed to realize at the outset that the service provider could do more work and at a higher level than had been contracted.
Some of the other triggers for aha moments the surveyed buyers mentioned include:
All of these factors, if left unresolved, would lead to one or more of the following outcomes:
Addressing the issues
When and how the parties addressed the issues depended on (a) whether the issue was a critical matter they needed to resolve in a short time frame, and (b) how much informality existed in the relationship’s communication patterns.
The study found that 50 percent of the buyers raised the issue during a regularly scheduled daily or weekly operational meeting or in daily conversations at the work level. This discussion around observations of an issue led to fact-finding, which then led to escalating the issue to executives in a formal governance meeting or a project management meeting to resolve the issue.
Twenty-nine percent first brought up the issue in a regularly scheduled monthly or quarterly formal governance meeting and then assigned a task force or scheduled additional sessions to resolve the issue.
Twenty-one percent handled the issue entirely in informal conversations between the relationship managers and did not escalate it to a governance meeting.
Outcomes of aha moments
Bringing the issue to light and discussing how to resolve it, whether in an informal conversation or a formal meeting, achieved more than resolving the actual issue. It also resulted in the parties turning a corner and going in a different direction together.
For example, some of the buyers studied in the Outsourcing Excellence Awards program stated their aha moment resolution discussions had the following outcomes:
All 64 study participants reported that their aha moments became a major positive factor in the way their relationships developed thereafter.
When it comes to facilitating success in outsourcing, those are crucial moments, indeed.