In the digital era, technology is a business differentiator. This means it must be closely aligned with the business strategy. And it means enterprises must embrace a new way of thinking about how they source and build relationships with the provider ecosystem. This thinking hinges on what are commonly thought of as “squishy” elements: trust, transparency and collaboration.
As shocking as it may sound, the overall value of an IT investment may be unrelated to cost. Sourcing needs to solve the business value optimization puzzle first, including capability enablement, speed and results that require new ways of working with providers. And, many know from experience, an organization can select the right set of services and the right provider and even have the right contract without having what it needs to achieve its sourcing objectives. True return on investment demands authentic collaboration.
Why do we care about collaboration?
Collaboration leads to better outcomes for both parties. Relationship failures are a significant cause of problems in sourcing engagements. Innovation and collaboration can’t thrive without a healthy relationship – and both parties are equally responsible for sustaining it. If sourcing is all about cost savings or cost avoidance, the relationship will be sub-optimal. Focusing on differentiating capabilities – beyond traditional commodity pricing – requires shared client-and-provider commitment to shared beneficial outcomes. This relies on trust, transparency and collaboration focused on accelerating speed to value.
How to encourage collaboration up front?
Driving collaboration throughout the sourcing transaction and transition lays a critical foundation for a happy, sustainable long-term relationship. Enterprises can follow seven steps to encourage collaboration up front:
- Structure opportunities to “test drive” provider solutions and clearly express your needs, so providers have a chance to fine tune their proposed solutions.
- Assess the providers’ cultural fit and envision what a long-term relationship might look like.
- Require providers competing for Agile/DevOps services to share case studies that prove their record of collaboration with previous clients and adoption of new ways of sourcing. Can they work with less prescriptive SOWs and minimum viable contracts with the flexibility you need to focus on speed and results?
- Expect providers to demonstrate their track record collaborating with other providers given the increasing service integration requirements in today’s smaller deal sizes and growing desire for multi-sourcing.
- Equip your employees to engage collaboratively as “one team” with the selected provider(s) by conducting educational sessions, scenario-based discussions and role plays.
- Take a broader view of transition so that you regard it less as a program-centric approach and more as one that instills the operational and behavioral change required to set the relationship up for success.
- Conduct interactive client-provider workshops during transition to gain alignment on critical incidents and new ways of working that reinforce the case for change with key stakeholders and agree on clear handoffs that facilitate collaboration.
What are indicators of collaborative behaviors for success?
Collaboration, like transition, is always a mutual endeavor. Enterprise clients and providers alike ask of the other: “Can they help me meet my goals?” and “Will they help me meet my goals?” Mutual trust and respect are required for mutually beneficial outcomes. Clients and providers must align on realistic expectations. They must temper excessive skepticism due to past relationship disappointments and resist being naïve, pedantic or overly concerned with minute details at the expense of a practical and balanced posture.
Changing the way the enterprise client works is at least as big a challenge as changing the provider’s service delivery performance. For enterprises to align with their providers, they must first align internally across IT, its business partners and the supplier management function. Sourcing clients must speak with “one voice” to providers so they avoid confusion and divergent directions. Successful clients prepare for the cultural changes needed. They learn to “just say no nicely” to unrealistic internal demands, refrain from micromanaging the provider and engage in truly collaborative ways to create the conditions for the provider to become their full partner in achieving the objectives of sourcing.
Successful sourcing clients also anticipate some discomfort and ambiguity in the partnership, especially at the outset of the transition. The ability to constructively broach tough issues in a way that builds confidence is a valuable trait during transition. This extends to steady-state governance practices and makes it clear that governance is far more than a monitoring, compliance and enforcement activity.
The ISG FutureSource methodology builds collaboration into sourcing transactions and transitions from the beginning via a series of collaboration and alignment sessions. It is designed to expand the input clients need for provider selection and instill joint accountability for transition governance, outcomes and scoring of quality gate phase exits. Collaboration during the transaction and transition portions of the sourcing lifecycle sets the table for a sustainable win-win relationship.
About the author
Beth Anderson is a sourcing transition and change management leader who is passionate about ensuring that clients are equipped to realize the full value of their sourcing relationships. Her decades of experience span IT and shared services sourcing and insourcing, managed services transition, supplier management and governance optimization, operating process alignment, retained organization design and employee readiness, and sourcing communications across multiple industries.