Back From The Summit
Towards the end of last year, Outsource partnered with our good friends at Forum Events to promote the latter’s Outsourcing Partnership Summit, and I was honoured to be invited to chair a panel at the event looking at issues impacting upon the outsourcing space and the practice of outsourcing. Both during and following the panel – which featured Michael Clarke of ADAS Group, David Pridmore of the London Borough of Newham, Lee Tribe of the Metropolitan Police and Joel Walker of Vodafone – a number of issues arose which led to some great debate amongst the assembled delegates, and in advance of the next instalment of the conference (which we’re again partnering with, and which will take place on October 10th 2013 in London) I thought it might be valuable to share some of these issues with the broader Outsource audience.
Perhaps fittingly considering the name of the event, the nature of partnership was a matter for much discussion. “Partnership” itself is of course a much-bandied term in this space, but a question often arises over whether or not the relationship between provider and buyer is actually a true partnership or if, when the chips are down, the old servant-master dynamic perpetually rears its ugly head. In my own experience, everyone will say they’re looking for a genuine partnership but perhaps not everybody is prepared to walk that particular talk.
One of the buy-side delegates at the event told me quite frankly that “partnership is something we say but not something we do” – his organisation was prepared to pay lip-service to the idea of “partnership” if it meant getting a better relationship (and presumably better terms) from their suppliers, and was willing to allow this to be reflected in the governance structure in terms of regular meetings, working groups etc, but was absolutely insistent upon waving a very big stick whenever matters of significance arose which could result in any form of dispute.
This didn’t seem to be an especially uncommon attitude, which if disappointing is perhaps understandable especially amongst first-time-round outsourcers: fears over loss of control are of course often prominent in organisations looking to outsource for the first time, while the possibly more complex mindset required to permit, for example, gainshare agreements to be put in place might not be at the forefront of the thinking of the less-enlightened executives tasked with getting the very best price from potential suppliers. Nevertheless, as the work of luminaries such as Kate Vitasek has shown, the willingness to operate under a genuinely win-win philosophy can result in getting the very best out of a provider as opposed to “merely” hitting all the KPIs. Perhaps it’s too much to ask that first-time outsourcing buyers in particular immediately throw their arms wide and call for much more than just a “do this now, and this then” agreement; but I can’t help feeling that unless the cynicism represented by “partnership is something we say but not something we do” is dispelled, then neither side of an agreement will ever get too much more than what’s contracted for – which should of course be merely the starting-point for a potentially transformative relationship.
Closely tied into the issue of partnership is that of contract, specifically the ways contracts are evolving to reflect the increasing complexity of the outsourcing landscape. The rise of multisourcing, the trend towards shorter-term agreements, the emergence of cloud and a plethora of as-a-service delivery models and several other factors are all combining to impact upon the nature of the contracts upon which the entire towering edifice of an outsourcing project is founded.
Several of the delegates at the event were able to share their experiences of multisourcing environments and all without fail emphasised the importance of the legal efforts that had gone into creating the frameworks within which those environments had been built. Likewise, the (smaller) number of delegates who were currently utilising cloud services of one form or another pointed to the critical nature of the contracts they had in place. It appeared that in general – and of course there are always exceptions – the expertise simply wasn’t available in-house to cater for the legal minefields created by the rapidly developing, increasingly complex structures now available to organisations and specialist legal advisors (who are of course almost invariably brought in anyway in “traditional” outsourcing negotiations) were viewed as being indispensable and, crucially, were now being sought out specifically on the basis of their proven understanding of, and ability to deal successfully within, the multisourcing and as-a-service landscapes. Law firms unable to demonstrate such an understanding, it’s easy to conclude, will be left behind as the trend continues towards as-a-service delivery by several different providers (or indeed many of them: one delegate stated that his company currently has over a dozen different outsourcing providers in the finance function alone, although he didn’t necessarily view this as an ideal situation…).
Always a big issue for those involved anywhere in the outsourcing space, talent – or rather worries around the lack of it – was high up the agenda for many of the event delegates. While there were of course concerns on the buy-side over the quality of those likely to be supplying the services being outsourced, these tend to be somewhat arms-length issues (in that it’s up to the provider to ensure the requisite capabilities at its end); more pressing were the challenges around finding and retaining the right people for the retained organisation following an outsourcing, and especially having the right skillsets in place for the transition itself.
The classic conundrum facing a buyer organisation is that the skills required to oversee both the transition and the post-facto service delivery are not necessarily those which have been in demand up to now in the pre-outsourcing structure; for organisations with no or limited experience of outsourcing, working out who needs to be brought in and why can be a very big challenge (and here the reliance upon third-party advisors was testified to by several of the attendees). But one delegate went further: the problem, she said, wasn’t just getting the right skills in place for now and later; it was around understanding what skills now needed to be developed in-house for further down the line, and what would be the critical skills required for the next wave of service delivery (for example, how different if at all is the retained structure required to cater for, say, an offshoring involving 200 FTEs from that needed to cope with a fully automated onshore delivery platform which may be just around the corner?). There was a fear voiced by some that a proportion of the gains gleaned from outsourcing might be frittered away via some injudicious hiring of people with inappropriate or obsolescent skillsets – and, again, those organisations with limited experience of outsourcing appeared most susceptible to this kind of pitfall.
From these and certain other issues discussed at the event, it seemed obvious to me that while an understanding of the outsourcing model continues to deepen and broaden it’s not happening at the same rate for every organisation (and that some in particular remain very much on the first rung of that particular ladder). While these bodies remain behind the curve, the importance of third-party advisors (the prognosis for whom often seems rather gloomy at present) will remain high, while specialist legal firms in particular continue to be seen as indispensable. At least, however, even the most comparatively backward buying organisations seemed to be cognisant of the lacunae in their understanding (in Donald Rumsfeld’s immortal words, there was a good awareness of the “known unknowns”); and it was heartening to see a real willingness to learn and engage with those who’ve walked that path already. All-round, there was plenty of good debate and I’m looking forward to the next instalment in October.