It is difficult to develop KPIs (Key Performance Indicators) that work well in practice. Unless you design KPIs carefully, they will have varying degrees of inaccuracy and incompleteness, or get implemented in ways that ‘get the numbers’ but not the results you envisioned when you set up the contract.
Like any other outsourcing areas, many experts in the field argue for and against Information Security Outsourcing (ISO). Some say information security should never be outsourced, while others say that using expertise of a security outsourcing supplier makes a great business strategy. Some claim ISO creates complexity, is less secure, and still requires the organization to take all the responsibility. On the other side, those for ISO say that it is more secure and cost-effective. In this Executive Update, we look at each side of the debate.
Outsourcing firms tend to market themselves as partners in innovation, and firms consider adopting an out- sourcing strategy as a way to attain competitive edge. While outsourcing is a promising approach, it can also be a risky endeavor, as it may deter the firm’s inherent ability to bring innovative products to market. The purpose of this Executive Update is to challenge the assumption that outsourcing is detrimental to a firm’s inherent ability to bring innovative products to market in the long run.
“Partnering” — besides being a mandatory buzzword — is a curious term. Nowadays, instead of taking over a company, we partner with them. We don’t sell anything anymore; we partner. And now, rather than outsourcing, we create strategic partnerships. While the goal of an amicable and mutually rewarding relation- ship is admirable, what each party truly expects from the other in an outsourcing arrangement formed under a “partnering vision” is quite different. In this Executive Update, we’ll examine two case studies where assumptions of a partnership and a lack of investment proved damaging.
Before you invest heavily in an outsourcing initiative, you must make sure there is a compelling rationale based on sound economic analysis. This Executive Update focuses on the financials — calculating the total cost of contract (TCC) and the payback — to get the total economic picture, which is much more than just the provider’s price.
Most client organizations expect that their providers will continually innovate or carry out some form of value-adding when there is an outsourcing contract. I write “some form” because a typical outsourcing contract does not specify what innovation is expected, let alone when it is to occur.
Most organizations are bitterly disappointed when there is no innovation, feeling that the provider has misled them or let them down. But when you examine a typical clause, you can see why it is so difficult to understand what the client expects.
We all know by now that the relationship between the parties of an outsourcing contract is paramount to the success of the deal. While there is a fair bit of advice out there, it is mainly process-orientated (e.g., communicate frequently, plan together, have improvement workshops). But what if you genuinely do not like your counterpart on the other side?
Imagine building a house without drawings or specifications, instead relying on various trades- people to use their experience to build what we have in mind. They’ve all done this before, so there is no need for a plan, really. Of course, this will sound extremely silly to anyone who has ever built a house, as well as to most of you who haven’t. The place would simply be unlivable. Nevertheless, this is exactly how outsourcing contracts are usually constructed.
Many client organizations nearing the end of an outsourcing contract start to consider whether they should retender the deal. Yet for most, these deliberations are mostly about whether to do so or not; very few go beyond the simple yes/no proposition to consider the “how.” This is important because the odds are stacked against new entrants (bidders other than the incumbent provider) unless your organization does something about it, and your organization risks expending time and resources on what ends up being a pointless exercise.
This Executive Update looks at debriefing the bidders after a competitive bidding process has closed. This is often treated as an optional process — and is usually one to be avoided. However, if done well, with the right intent, it is a valuable exercise for all bidders (unsuccessful and successful) and can also create support for your future bidding opportunities.