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A Step by Step Guide
Successful outsourcing depends on three main factors: it should be the right strategic decision; the match needs to suit both parties; and the relationship needs to be well managed. Although the formal association between buyer and provider starts when the contract is signed, successful relationships begin much earlier. Exploratory conversations can provide the foundation of a good match if parties are candid about factors crucial to a sourcing relationship.
Setting Goals and Expectations
Each party should discuss short and long-term goals and expectations. These influence how performance will be measured. Discuss cultural and geopolitical differences. Talk about what a mutually beneficial relationship might look like and whether the scenario is feasible.
Partners foster successful outsourcing relationships when they explore their respective expectations, capabilities, and cultures, appreciate one another's goals and requirements, and understand what deficiencies must be overcome and what differences must be reconciled. These conversations, together with due diligence, reduce the likelihood of failure.
If the conversations suggest that a mutually beneficial relationship can be forged, use the outcomes of these conversations to develop and document a vision of a relationship that suits each party. Documenting this shared vision provides clarity and a reference point to which the parties can return.
Measure Performance
Focus performance measurements on outcomes, value, and accomplishments. To be meaningful, the measurements must benefit the buyer and be achievable by and motivate the provider. Performance measures should be clear and manageable and readily evaluated with data easily collectible at a reasonable cost.
Periodic cost benefit analysis can help assess progress. A balanced scorecard, with a quadrant for degree of alignment with the buyer's strategic goals or value contributed by the provider, will also further this assessment. Benchmark performance at the commencement of the contract to establish a baseline for ongoing performance measures.
Although consistent performance measurement is crucial, circumstances change over time and metrics may need to be modified. Increasing volume or complexity in the service, growing ambiguity in targeted outcomes, a new buyer initiative, or an increased need for collaboration may necessitate a review of performance measurements.
Partners who understand how their respective businesses work and what each can realistically expect from the other, are more likely to work through such changes....