There is much discussion online about the move from Outsourcing 1.0 to Outsourcing 2.0 – what’s it all about? Who knows – I guess we will start to get some sort of clear view over the next couple of months. I would venture that there are some definite trends emerging
- the move to cloud computing will greatly enhance the options available to firms looking to reduce costs,
- passage of time has driven the development of increasingly mature capability models for sourcing (things like eSCM) – this is very welcome as clients no longer have to learn from their own mistakes! I really like eSCM because it is free!
- some sourcing is becoming commoditised (I know the service providers will hate me saying this!) – this is inevitable. There will still be plenty of high value outsourcing – as firms look to push the boundaries on what else can be outsourced
All of this has one clear impact- client organisations are receiving services from more and more external firms….and they are becoming increasingly flexible in the way they can switch from one service provider to another. Overall the sourcing landscape is getting more and more complex. These firms recognise that visibility of the performance of all service providers is critical. It is a well established fact that high performing and best practice users of outsourcing and shared service business models manage SLAs effectively. TOday most BPO and IT Outsourcing firms drive the way in which adherence to SLAs and KPIs are reported. They do this with good intentions and good reason. In most cases they have extremely detailed and effective tools to report on KPIs. However I would respectfully suggest that most of these tools have a few systematic and unavoidable characteristics which are perhaps no longer aligned to the client need
- they only report on the quality of service delivered from that Service Provider (by defintion)
- they focus on drill down reporting helping you to understand the operational issues in the service – rather than necessarily providing a clear view on trends and service issues over time
- they report on operational metrics which have been driven by the Service Provider.
I see a few things happening as a result of the move to multi-sourcing and Outsourcing 2.o
- Clients will want to be able to see how all Service Providers are performing against their SLAs in one place!
- Clients will want to have equal access to the ‘tool’ where all data is stored on performance
- Clients will want a solution which they can use to drive reporting by all their Service Providers (internal and external)
- Clients will want solutions which can store business metrics and value metrics (as well as the traditional more operational metrics which are produced by ERP systems)
In addition clients will want an Service Level Management solution which can be deployed quickly and easily (more like LinkedIn and Facebook than the traditional clunky approach). Do I see this happening? Yes – slowly. It will start to happen more – many big firms are now entering their second and third generation sourcing deals on IT, they are also starting to see more and more sourcing deals across Finance, HR, Recruitment, Facilities etc. They are finding it difficult to undertake meaningful cross organisational sourcing assessments – why? – because they don’t have all the information in one place. They have it in 270 spreadsheets or 12 vendor systems.
Ongoing measurement of all these sourcing deals will be essential for clients to maintain control and manage cost. SLA Management is not the only activity necessary as part of ongoing relationship management – however I think we all know that it is definitely an important part of it.
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