Best Practices for Managing Outsourced Business Relationships | Arab Business Review
Jun 26, 8 Secrets to Effective Outsourcing Relationship Management . 10 Tools and Techniques to Achieve PFI Savings via Efficient Contract. Sep 20, I often hear providers of outsourcing services and their clients talk about a need to be more objective in the way they manage their deals -- to. a service provider and client will work together to conduct business (the outsourced function) and manage their relationship. Traditionally, the relationship aspect.
As a result, vendor management oscillates between being a chaotic, ad-hoc process at some buying organizations to a well-defined, organized process at others. However, given the stakes, it is imperative for all buyers to have well established vendor management processes that are designed to maximize value creation for buyers as well as providers.
Best Practices for Managing Outsourced Business Relationships
Appended is a step by step approach on how to effectively manage and govern outsourced relationships, starting from the contracting and set-up phase to the on-going management phase. Define targets and SLAs: An important starting point for any outsourcing relationship is for buyers to list their expectations, and for providers to assess and communicate the degree to which those expectations can be met.
Establish performance measurement metrics: Once the SLAs are established, it is important to put in place the performance metrics that will measure success against the agreed targets and SLA. Select in-house vendor management team: Identify individuals within the buyer organization that will be responsible to overseeing the outsourced relationship on a day to day basis.
For small organizations and individuals, owners should usually assume this important responsibility to fill the void created by the lack of a vendor manager designate.
Outsourcing relationship management - Wikipedia
Integrate and incentivize the supplier and your in-house team: In such a situation, it helps to communicate the rationale behind your decision skill gap, cost saving, etc. Hold individual meetings or town halls, as necessary, but ensure that people hear from you directly and do not rely on corridor talk on this sensitive issue.
Remember that unless your existing teams come on-board with your decision, it is next to impossible to expect them to coordinate and integrate with your outsourced team. Now coming to incentives.We build smart outsourcing relationships
Remember that your outsourced team is an extension of your existing team, and therefore needs to be incentivized as much to outperform. So, draw up incentive structures which are fair and reward merit even in the outsourced team. Also, make sure to attach targets and rewards for your vendor management team so that they are incentivized to make the relationship work; these targets could be in the form of productivity gains, smooth delivery, innovation, etc. Ensure skill and knowledge transfer: Relevant for organizations outsourcing core tasks, e.
In such cases, ensure that the requisite skill transfer has been made, and the outsourced team is up to speed with your in-house processes which are critical to achieving the output that you have come to expect over the years.
Also relevant for individuals and small organizations that decide to outsource a specific task which they have been managing over a period of time. Develop governance framework to monitor progress: The governance framework is not limited to the performance measurement metrics developed in the set-up phase.
Instead, it is the agreed upon set of roles, rights, accountabilities, principles, procedures, and escalation processes that guide decision making, issue resolution, and changes in the outsourcing arrangement. Also, such a framework would establish a process for periodic review by the management teams of the buyer and the provider to: I often hear providers of outsourcing services and their clients talk about a need to be more objective in the way they manage their deals -- to "take the emotion out" and "just focus on the facts.
Outsourcing isn't just business, it's personal.
Client-side sponsors stick their necks out when they say to their skeptical constituents and bosses that outsourcing will help the company save money, achieve greater flexibility, and maintain or improve service levels. Provider account executives know that an unhappy client generally means they will be swapped to a different account, or worse.
Outsourcing Relationship Management
And those delivering the service and working along the interface between client and provider want to do their jobs well and be appreciated for their hard work, like we all do.
With all that is at stake for both sides, it's no wonder that when things go wrong, emotions run high and the tendency is to defend rather than listen. Unfortunately, it's when things aren't going so well that collaboration and good mutual understanding are most difficult -- yet matter the most. When everyone is haggling over who is at fault, emotions run high and it doesn't necessarily help to say, "Let's be objective and look at the facts.
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How do you set the stage for collaboration when it all feels so personal? And how do you promote joint problem solving when emotions are involved? Here are three things to try: Agree on shared goals A major IT system failure impacted thousands of end customers and resulted in a public relations nightmare for one transportation company.
It also led to a complete breakdown of the relationship between the company and its IT services provider. The parties spent the first few weeks after the outage pointing fingers, with the buyer touting the provider's contractual responsibility for uptime, and the provider waving all of the reports they had previously sent to the customer, saying they were paying for much less service than they needed based on the criticality of their systems.
Ultimately, the company's CFO and an SVP from the provider found a way out by settling on five key shared goals related to improving the company's availability and disaster recovery position, and putting in place new technology to enable greater flexibility.