Simple & Avoidable Outsourcing Challenges

A combination of industry research, from a variety of sources - particularly from the 2010 outsourcing study www.vestedoutsourcing.com  combined with our own 30 + years of sourcing experience  means that we are able to predict many of the main reasons why about 3/4 of outsourcing deals fail to meet their objectives.

Nowhere near this number fail completely of course, but a great many struggle to meet their originally stated objectives and need some gentle persuasion and guidance to help them get back on track.

Typical challenges are all relatively commonsensical and straight forward and can of course be easily avoided, but unless they are front of mind and being actively addressed it’s amazing how often then appear - here’s a list of 10 classics and how some expert guidance to can help you avoid the challenges occurring:

1) Commercial Model - lowest cost, misaligned incentives, limited or no supplier margin - how to achieve the right model

2) Unclear Vision & Objectives - confusion or ambiguity over purpose, objectives or vision - how to ensure the vision is shared

3) Communication Issues - at all levels on both sides, too much, too little, wrong focus - how to communicate the right message to the right groups at the right time

4) What’s being Measured? - outputs or inputs? the what or the how? how much detail? - how to avoid too much detail but ensure you have just enough

5) Customer Organisation Structure - has it changed and if so how? - how to ensure that the organisation and it’s people are in a position to support the supplier to do it’s job

6) Supplier Incentive to Achieve - incentives should be aligned for mutual benefit - how to align commercial models so that both parties benefit through successful delivery

7) Governance for Insight & Oversight - the governance model must add value - how to ensure that the governance model adds value and continues to add value over the lifetime of the deal

8) Us vs Them - Working together rather than against each other - how to ensure that both organisations avoid the blame game

9) Flexibility - How does the contract and the governance model handle change? - changes are inevitable, how to ensure that your deal can flex as necessary

10) Gaining Trust - the hardest and arguable the most vital - the measures you can take to foster an environment of trust