How to manage outsourcers after the contract's ink is dry

Here's how to build a good relationship after the contract's signed

1. Choose the Provider With Care

Vetting service providers will become one of IT's top responsibilities, McInnes predicts, as companies realize the importance of aligning their own visions, goals and objectives with those of the provider.

A big reason for SEMI's success with CenterBeam, he says, is the ease with which their business models meshed. For example, CenterBeam offered a flexible pricing model that will enable SEMI to add capacity as its membership grows, without having to hire additional staff; other providers could only discuss pricing based on full-time staff equivalents. "That didn't have any meaning to me," McInnes says. "It wasn't a unit of measurement I was interested in."

2. Manage Cultural Differences

An often-overlooked area of alignment is culture, Emery says. Clashes can arise not just from, say, differences in nationality, but also from differences in company structure, such as cases where one party is entrepreneurial and the other is process-driven, or one is hierarchical and the other collaborative. Challenges can also arise when younger workers are mixed with older ones. If such differences are not dealt with, "they will cause intractable problems with the working relationship down the road," Emery warns.

3. 'Socialize' the Contract Talks

The writing of the contract is another area rife with pitfalls that can impede healthy relationships, Emery says. For instance, it's typical for contracts to be hammered out by executives in the purchasing and legal departments and then "thrown over the wall" to the managers working with the provider day-to-day. Instead, Emery says, operational staff and process owners should be involved early on, helping to create performance metrics and statements of work that really measure what you want to accomplish.

Kane agrees that it's important to work the requirements and expectations of business users into the contract. "If all of a sudden Fred from the help desk is gone, and [employees are] given a phone number to call for tech help, people will rebel," he says. Instead, ask representatives of the affected business units what they need and how they would like to see the process work so you have their buy-in. "You need to socialize the changes," Kane adds.

Ditto for the provider's side, he says. During the RFP and negotiation processes, insist that personnel who are going to manage the project be involved, not just salespeople. "You want people managing the contract who you've gotten to know, looked in the eye and believe can do the work," Kane says.

You also need to find a balance between working within the contractual framework and getting overly legalistic, Kane contends. "You won't be successful if you pull out the contract and get out the lawyers every time you need to talk about something," he says. "If you've hired the right supplier, you can work more with the spirit of the law than the letter of the law."

4. Refine Internal Processes

To ensure that a provider can work smoothly with your company, you will likely need to adjust your internal processes for incident management, change management, project management, contract management and requirements capture, says Bea Schrottner, a research director at the CEB. "This should enable you to interact with someone outside the organization that doesn't have strong knowledge of how things work in your organization," she says.

These are functions that many organizations don't outsource, Kane says. "It's common to retain a layer of integration staff for architecture, design, maybe security, contract management and relationship management," he says. There needs to be someone in-house who's intimately familiar with the contract; if providers are asked to do things they're not paid to do, or they get the customer to do work they're supposed to do, slowdowns, duplicate efforts and wasted money can result.

In some cases, it makes sense to adopt the provider's processes. That's what McInnes did for the help desk functions he outsourced to CenterBeam. "We had our own escalation processes, and there were things we monitored that CenterBeam did differently, but it worked well for them and their customers," he says. "Once we understood them better, it also worked for us."

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