Outsourcing Partnerships
Focus On The Results
Perfecting process performance |
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Lean systems thinking requires an in-depth understanding of the end-to-end network of processes required to design, develop, produce and maintain the product or service, whether such processes add value or not. In a perfect process alignment, work flows continuously, piece-by-piece. Value is always delivered “just-in-time” without excessive stock-piling.
Perfecting process performance in an extended supply chain requires collaboration and matched capability between customer and supplier. Engaging a knowledgeable third party to broker an effective partnership brings objectivity and independent specialist expertise to contract negotiation, delivery and performance management, avoiding wasteful disputes and complex contractual terms which do little to ensure successful business outcomes for either party. |
| An independent Scope Manager acting as “expert witness” gives customers assurance of value for money, and facilitates a constructive collaborative dialogue on the delivery of business outcomes. | |
Working in Partnership: The Trusted Supplier and the Intelligent Customer |
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| It is the customer’s responsibility to clearly define and communicate the business goals of software projects for new development and enhancements. It is the suppliers responsibility to use their professional knowledge and expertise to deliver the desired outcome as effectively and efficiently as possible. To achieve this, the supplier needs the client’s engagement in understanding and managing the end-to-end process of delivering value.
Traditional outsourcing contracts encourage an adversarial stance which detracts from the delivery of business value. Creating a collective focus on delivering the results the business needs requires a business transformation that encompasses all the stakeholders in the supply chain. |
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The Trusted Supplier Organisation:
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The Intelligent Customer Organisation:
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It is the supplier’s responsibility to provide the client with assurance that their delivery process provides value for money. Such assurance requires open and honest accounting of performance, typically including:
Delivering Value: ProductivityCollaborative partnership requires a good degree of trust between customer and supplier. While it is incumbent on both parties to agree contract terms which incentivise the supplier to maximise efficiency, the customer needs to have objective assurance from the start of the relationship that the supplier is committed to delivering value for money and eliminating wasteful practices. Data from the International Software Benchmarking Standards Group and other industry surveys show generally poor levels of software performance. The perception of many working in the industry is that attempts to improve the development and delivery process are frequently frustrated by the structure and management of the organisation. Either way, all the Rightshifting data suggests that improving the effectiveness of software-intensive systems will also significantly improve the efficiency. Measurement-driven process improvementIt is SMS’ observation that one of the key reasons for the failure to grasp the nettle of software productivity and performance is a lack of reliable and objective data. Many studies have shown that few organizations effectively embed a measurement-based approach to improving performance and predictability. Despite the proven benefits of such an evidence-based approach, the metrics that are gathered tend to be those that are easiest to collect, not those which are needed to support improved performance. Measure twice – cut once. | The customer should always be in control of the outsourcing relationship. Suppliers frequently have stewardship of knowledge that is vital to the customer’s business, making an “absentee landlord” approach to vendor management a very high-risk strategy.
SMS know-how supports informed management which demands and achieves high performance levels from suppliers. Understanding ValueUnderstanding value from the customer’s, user’s and stakeholders perspectives is a key principle of Lean systems thinking. Delivering value from an outsourced supply chain requires customer and vendor to work in partnership on understanding and delivering value to the end customer of the extended supply chain. A supplier cannot deliver good value without the engagement of an informed and committed client management team. The more layers of management that exist between the business user and the development team, the greater the threat to the integrity of the value stream. Shared Values, Shared SuccessOutsourcing partnerships have two sets of business stakeholders to be managed: the stakeholders in the customer’s business and the stakeholders in the supplier’s business. To foster the stable, long-term relationship that the knowledge-rich nature of much softsystems outsourcing demands, the needs of ALL stakeholders must be met. Outsourcing partnerships work when client and supplier are a good cultural fit. Shared business values and shared strategic positioning are crucial. Procurement processes must support informed consideration of value over transactional cost. Too narrow a focus on transaction costs increases whole-life costs, decreases effectiveness, and significantly ratchets up the risk. The customer organisation should make an informed assessment of the nature of the work to be outsourced – is it a commodity service which should be procured at the most competitive rate? Or is the client seeking an innovative and collaborative supplier prepared to share risk and reward?
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