HfS Network

Monthly Archives: Oct 2010

Outsourcing - death by boredom?

October 30, 2010 | Phil Fersht

I was sitting through a conference the other day and I realized I've been listening the same old "how to do outsourcing" presentations for years.  Each presenter just  kept reeling off the same old dull-as-dishwater drivel about "labor arbitrage", "transformation" and "how to eliminate risk".  TELL US SOMETHING WE DON'T KNOW!  JEEZ - THIS IS THE SAME FLUFF WE WERE BEING SERVED UP TEN YEARS AGO.

Seriously, if our industry doesn't pull its head out of the sand and start talking about how businesses can innovate, how they can leverage a globally-sourced environment to be more successful,  how new developments in Cloud computing can turn global business models on their heads, we will kill ourselves with freaking BOREDOM.

Maybe I should read the old man's patter instead... am sure it's far more inspiring.

Posted in: Uncategorized

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HfS Research will be talking Cloud-sourcing in London this November

October 28, 2010 | Phil Fersht

Euan Davis, Managing Director, European Practice, HfS Research

Euan Davis, Managing Director of our European Research Practice, joined us a month ago, and is already having a big impact over in the land of bowler hats and snaggle-teeth.

What's more, you'll have a chance to see him in action up close on November 18, when he's on a panel at the IIAR London Forum in Central London from 3:45 – 6:30 pm. The session is imaginatively dubbed the "Cloud," and Euan will be giving the HfS Research view of the Cloud, based on brand-spanking new data our joint study with the London School of Economics, which covered the views and intentions of 1043 companies.

Euan will be chomping at the bit with insights on sourcing via the Cloud, its role in services integration, "Cloudifying" contracts, and - most importantly - the impact of Cloud business services on the Future of Work.

If you'd like to attend, head on over to the IIAR site.

Posted in: Cloud ComputingIT Outsourcing / IT ServicesOutsourcing Events

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Up in the air with Ritesh Idnani... Part III

October 26, 2010 | Phil Fersht

Ritesh Idnani is Chief Operating Officer for Infosys BPOI actually managed to watch "Up in the Air" the other day, and never truly realized how your can forge such a happy little existence for yourself on the road, away from all the stresses and strains of real life.

You can even relocate to a little apartment in Omaha and save on all those living expenses. Not to mention having a 757 named after you. You just need to pray that video conferencing technology doesn't get too much better in the near term...

Anyways, we digress...when last we left Infosys BPO COO, Ritesh Idnani, in Part II, he was expounding on the shifting BPO landscape, with the increased need for providers to develop their  expertise in vertical industries. In our final part, Ritesh elaborates on communication and interaction, and how our industry can rapidly improve collaboration through social media.

Phil Fersht: You mentioned social media impacting things quite considerably. How do you see that impacting our industry - and how is Infosys leveraging it?  Do you also see social media presence and expertise becoming increasingly important when servicing your clients?

Ritesh Idnani: There is no denying the fact that the relevance of new media is making a growing imprint on the way we do business. Infosys has a specific unit called “Setlabs,” an organization that

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Posted in: Business Process Outsourcing (BPO)Outsourcing HerosSocial Networking

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Will customers buy CSC’s vision?

October 25, 2010 | Phil Fersht

Euan Davis, Managing Director, European Practice, HfS Research

Many of you sent us mail today regarding the new HfS RAPIDInsight on CSC's new services integration strategy (see earlier post). Our European research lead, Euan Davis, was at the unveiling of the new strategy in Prague a few days' ago, and outlines his thoughts further...

I liked what I heard at CSC’s European analyst event. The provider outlined two strategies dealing with the short and long term realities of how you, the customer, buys IT and business services:

1. CSC’s cloud strategy is a short-term play, and I liked it because it recognizes the realities that many customers running down their existing contracts face today –i.e. to radically lower the cost of service delivery and create more flexible sourcing strategies. CSC offers a clear adoption path with lots of tools and support for its customers so they can begin shifting manageable chunks of their existing contracts to the great data centre in the sky. Nice.

2. The more intriguing long term play is CSC’s positioning to be your “Service Integrator.”

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Posted in: Buyers' Sourcing Best PracticesCloud ComputingFinancial Services Sourcing Strategies

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CSC stakes its claim to prosper in the new IT services ecosystem

October 24, 2010 | Phil Fersht

CSC recognizes the need to move away from "old world" thinking... but can it change with the times?

CSC has struck out in a new direction sketching out a long-term position as a “service integrator” and laying out a cloud strategy that goes beyond the usual hype.

CSC needed to realign and refocus as the large outsourcing opportunities declined and its customers transform and trigger demand for new, agile services. It’s a step change for the company— and the right one—as it looks to ditch the baggage from its large outsourcing business and emerge as a trusted partner for its clients. It understands that customers are sourcing cheaper and faster in a fragmenting market and that they want to consume services, while minimizing risk. The real test is whether CSC can channel its pricing and engagement models, its service management frameworks and—critically—its sales team in the same direction as the new IT services ecosystem emerges.

CSC has struck out in a new direction sketching out a long-term position as a “service integrator” and laying out a cloud strategy that goes beyond the usual hype.CSC needed to realign and refocus as the large outsourcing opportunities declined and its customers transform and trigger demand for new, agile services. It’s a step change for the company— and the right one—as it looks to ditch the baggage from its large outsourcing business and emerge as a trusted partner for its clients. It understands that customers are sourcing cheaper and faster in a fragmenting market and that they want to consume services, while minimizing risk. The real test is whether CSC can channel its pricing and engagement models, its service management frameworks and—critically—its sales team in the same direction as the new IT services ecosystem emerges.  The vision is right but the implementation is critical...

Download our latest HfS RAPIDInsight to read our full analysis of CSC's challenges and opportunities ahead.

Posted in: Buyers' Sourcing Best PracticesCloud ComputingFinancial Services Sourcing Strategies

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Building your governance team: if you hire monkeys, you get...

October 23, 2010 | Phil Fersht

a well defined sourcing strategy :)

Obviously bears no resemblance to real life governance models... ahem

Posted in: Absolutely Meaningless Comedy

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The Sport of Kings - Why Euan Davis decided to run with the horses

October 21, 2010 | Phil Fersht

And sneaking up on the inside is...

We all make curious decisions in life, like when you accepted your mum's Facebook invitation... or when Bill O'Reilly decided to be born.

However, these pale in comparison when one of Europe's finest services analysts traded the corporate upper-echelons of Forrester Research to help kick-start a quirky little feisty research upstart, that was launched out of a blog - with a name no-one the left side of the Atlantic understands.  But it happened:  Euan Davis really did join HfS Research!

Euan spends so much of his life writing analytical stuff, that he's never been so nervous as when he's had to (gasp) put analyst protocol aside and actually write a blog post for the bagel-and-coffee delights of the interested sourcing onlooker.  So over to you Mr Davis, to tell us...

Why I decided to Run with the Horses

At the start of April every year my fellow Brits gather in their homes (and the lucky ones, in the pubs) to enjoy one of the greatest spectacles in the horse racing calendar: The Grand National.

Horse racing may well be the sport of Kings, but compared with the Kentucky and Indian Derbies or the Melbourne Cup, the Grand National is the most royally gruelling race, with 30 fences set over a distance of four and a half miles.

Days gone by saw horses and their riders suffer terribly on the National’s staggeringly high jumps. I remember watching in 2001 as only 4 horses finished out of a 40 strong field as the bad weather coupled with the course’s treacherous jumps took their toll—that year a 33/1 outsider won and by luck I liked the name so I backed it. Last year, the bookies favourite won but plenty of times I’ve seen upstarts enter the race and collect the trophy after a spell-bounding 10 minutes later….

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCaptives and Shared Services Strategies

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Sal-sourcing in the real world, Part II

October 20, 2010 | Phil Fersht

Mike Salvino, Group Chief Executive for Business Process Outsourcing, Accenture

Many of you were wondering what happened to Sal since we kicked off our discussion last month.  Well, he's been on a shopping trip for Ariba's services organization, in between his tour of the North Carolina junior basketball circuit.

Anyhow, we caught a time-out from Accenture's BPO overlord to get a glimpse of his vision for the future of the BPO industry..

Phil Fersht: Picking up from where we left off last time, how are you seeing this kind of cross-over between this thinking around Cloud and companies pushing forward with business-focused offerings – what we’re calling business-process-as-a-service, (BPaaS)? If you take out your crystal ball, how do you see this ultimately coming together when you to look at the way this industry is going to be in a couple of years time? Do you think we are going to see deals happening where business processes are literally running in the Cloud?

Mike Salvino: I think it’s going to be longer than a couple of years. Everybody wants to throw away the existing offerings and talk about the future, but the existing offerings still work. There will still be a lot of demand for core horizontal offerings, and there are still companies that are doing it at a scale. Now, having said that, you can’t ignore the cloud. It’s going to be like the Internet. Somebody is going to figure out how to exploit it, and it’s going to give people increased computing power.

So look at our premium technology support business. We’ve hired very smart resources in our offshore delivery locations, given them access to information, and within a 24 to 48 hour period we can start debugging calls for clients. That’s compared to saying to clients, “Yes, I can put in a little call center business, here is what we are going to do and here is your six-month transition plan.” That’s a game changer. Not all processes can be on-demand, but invoice processing, sourcing, e-auctions, debugging computers and mobile devices, answering customer complaints all can be on-demand. Now, how you actually get there, or what kind of service to provide, that’s what we as an industry need to very quickly sort out.

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Posted in: Business Process Outsourcing (BPO)Cloud ComputingOutsourcing Heros

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Strange Things Happen at the Negotiation Table

October 18, 2010 | Phil Fersht

Do you have any idea what you're committing to?

According to HfS analyst Esteban Herrera, he's seen weeping, object-throwing, suicide threats, uncontrollable roll-on-the-floor laughter, walk-outs both staged and unplanned, and even a handstand.

So let's hear more from Esteban about about that strange place - the negotiation table...

As an outsourcing advisor for about a decade, my favorite part of any deal was the negotiations phase. Now, I realize that for many of you, that sounds like a serious illness, but it was, without a doubt, where I had the greatest impact in building a healthy relationship between two enterprises that would actually last. I’ve had the opportunity to work with some great attorneys, colleagues, clients and providers. I’ve also worked with some that would not be accurately described by the last sentence. With triple-digit deal negotiations behind me, I’ve learned a few tricks of the trade, including how to manage my famously fiery temper!

There are hundreds of great books on negotiating theory and practice, and HfS is not here to rewrite any of them, but we can shed some light on how to apply these tactics successfully in an outsourcing negotiation. A big part of it comes from saying what you mean, but it also requires accepting that buying outsourcing is not like buying a car, or toilet paper, and that your experience at the local Chevy store or purchasing MRO may not give you enough to be successful.

Negotiations need not be miserable:

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesIT Outsourcing / IT Services

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Innovation in F&A BPO? We have it all right here folks...

October 17, 2010 | Phil Fersht

Innovation? That's soooo old hat...

This new HfS report (click here to view) dives into the experiences and expectations of a selection of today’s most experienced enterprise Finance and Accounting (F&A) BPO buyers, when it comes to achieving innovation.

We spoke to a collection of major F&A BPO customers which have achieved some form of innovation as they went through the F&A BPO experience with a major service provider. Here’s what we cover:

- We look at Microsoft’s BPO experience with Accenture, as the software giant leveraged a global BPO model to consolidate and transform multiple global finance and procurement operations.

- Then we examine Cognizant’s work with a major multi-billion dollar grocery retailer, which had doubled in size through an acquisition in June 2007 and needed to make its post-merger finance organization more effective.

- We investigate Genpact’s endeavor with a global manufacturer to deliver process improvements to improve days to pay.

- We look into Wipro being called in after two multi-billion dollar retailers merged, to help consolidate and modernize the disparate financial operations.

- We examine how Infosys worked with McClatchy Newspapers to develop a custom application to manage advertising billing, accounts receivable, and scheduling of ads for newspapers.

- We take a look at how Vengroff Williams & Associates worked with a US manufacturer to improve its collections processes, which were previously held back by its technology.

- And finally, we see how WNS worked with Ally Financial (formerly GMAC) to accomplish dynamic corporate objectives against a backdrop of economic peril.

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesFinance & Accounting BPO

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Up in the air with Ritesh Idnani... Part II

October 14, 2010 | Phil Fersht

Ritesh Idnani is Chief Operating Officer for Infosys Airways

When last we left Infosys BPO COO, Ritesh Idnani, in Part I, we were discussing the priorities of businesses in today's sluggish economy.

In Part II, Ritesh explains the changes in the BPO industry from his perspective - with particular emphasis on the advantages providers can gain by investing in industry-specific nuances to their BPO offerings.

Between parts I and II, he actually purchased an airline with his airmiles account...

Phil Fersht: Some people have joked, in the past, that Infosys is the Indian Accenture. But for our readers, how do you view Infosys as differentiated from your prime competitors? If you have to really put a nail on it in a couple of simple point forms, how do you do that?

Ritesh Idnani: We certainly have a lot of respect for Accenture, we hold them in very high regard. Having said that, we do believe there are three or four things that differentiate us from the rest of the pack. We have a broad array of solutions that we believe will allow us to enable client outcomes that extend far beyond cost reduction and business efficiencies. Our ability to address all ends of the spectrum be it  impacting client revenues, gross margin or net margins -  these are critical differentiators because a lot of our competitors don’t necessarily claim that state. There aren’t too many companies out there who have been able to effectively converge operations and technology, and demonstrate a business benefit that is tangible. We have more than 90+ proven case studies in the system that quantify the business value that we have been able to drive in the client ecosystem I don’t think our competitors have nearly the same kind of capability that we have in terms of demonstrating this across different ends of the spectrum whether it is technology solutions and process that can address a specific area within a process toPlatform & Cloud-led BPO that addresses an end to end spectrum in the client process matrix.

Our ability to maintain a high degree of nimbleness and responsiveness to the market place despite a rapid growth in size and scale is another key differentiator . I think that’s something that allows us to differentiate ourselves very rapidly because we are able to be much more adaptable to clients needs and yet, at the same time, call a spade a spade if you will. I think that is something that is different from a lot of our competition.

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing

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Just when you thought this week's New York event was cancelled... Rocket-fuel Frank saves the day

October 11, 2010 | Phil Fersht

Wake up chaps! Rocket-fuel Frank has saved the day...

It's been quite a few days in the world of New York outsourcing events... first-off, the Global Sourcing Forum was cancelled over the weekend when the organizer had some sort of to-do with the Marriott hotel venue (I'll never forget how they downgraded my status while I was on my honeymoon...).

Then, the most unlikely of heros, realizing everyone had already bought non-refundable flights, stepped in to save the day.  Yes, Frank Casale, the rocket-fuel behind the Outsourcing Institute, has pulled together a last-minute event this Wednesday (tomorrow).  I didn't write this, so please forgive me in advance for the self-promotion :)

The details are as follows:

Date:                Wednesday, October 13, 2010
Time:                9:30 Registration; 10:15 Start
Place:               The law offices of Kelley Drye, 101 Park Avenue, New York, New York 10178-0022
Program Fee:     Waived (that means free)

Agenda Summary:

  • Outsourcing Institute: Marketplace Exchange Roundtable.
  • Exchange Best Practices, Exchange Experiences , Exchange Business Cards
  • Keynote Speaker: Phil Fersht, CEO for HfS Research, well-recognized outsourcing analyst, strategist, blogger, advisor, and practitioner across BPO and IT services worldwide. Phil will kick off the day with an industry insider's commentary and analysis: "Desperately Seeking Innovation."
  • ITO/BPO Case Studies: Actual Case Studies and Lessons Learned, from the people who lived them
  • Outsourcing Trends and Opportunities, and How your Company Can Leverage Them
  • Cloud Computing: Realities and Fantasies
  • Built-in time for networking and learning with senior level executives

If you would like to reserve your spot, please RSVP - ASAP by simply dropping an email to [email protected]

Posted in: Outsourcing EventsOutsourcing Heros

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Up in the air with Ritesh Idnani... Part I

October 11, 2010 | Phil Fersht

Ritesh Idnani is Chief Operating Office for InfosysBPO

Several people at Infosys have told me that noone spends more time traveling across the globe than the COO for their BPO business... Ritesh Idnani.

So when we teed up an interview with him, I asked him how many airmiles he has racked up, and his response was simply "am getting close to George Clooney's character in the movie Up in the Air."  I assume he's referring to the airmiles account...

Ritesh has been a constant energy behind Infosys' development as a BPO provider for a number of years, leading both the sales and operations for the group, which has multiplied its revenues 10-fold during his five years tenure for the business.

It must have proven quite a ride to be involved with an aggressive market entry, a mini-boom, a Recession, and now a quickly-maturing business. We managed to divert Ritesh from his very fine single malt collection to talk about his experiences and where he sees this all heading down the road.

Phil Fersht: Thank you so much for spending time with us, Ritesh.  I think we have come off the initial good feeling of coming out of the Recession, and a lot of the companies are grappling with the reality of today’s business climate.  Are you seeing lethargy on the buy-side or are you beginning to see some momentum being built from your customer base with regards to growing business?

Ritesh Idnani: If I look at the last18-24 months, most of our clients have essentially focused on the cost side of the P&L quite extensively and done some of the standard things that they would do whether its around work force reduction, sale/ leaseback of real estate etc., all of which has contributed tremendously to the bottom line if you will. But if I would look at the one factor that is still a question mark for a lot of firms, it is the fact that the revenue side of the equation is still very sluggish for them.  The new normal in some ways is the fact that unemployment still continues to be hovering around double digits.

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Posted in: Business Process Outsourcing (BPO)Finance & Accounting BPOHR Outsourcing

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HfS Research hires a new dynamo analyst, the likes of which you have never experienced...

October 10, 2010 | Phil Fersht

We've scoured the globe to source the finest talent, and are delighted to unveil some unbridled expertise...

Posted in: Absolutely Meaningless Comedy

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Accenture bags Ariba's sourcing practice to extend its global category management capabilities

October 06, 2010 | Phil Fersht

It's trunk-time for Ariba, as it sources its managed services business to Accenture

Procurement technology and services provider Ariba has found a heavyweight home for its outsourcing business with Accenture.

Having made the decision, in recent years, not to expand its outsourcing business beyond its not-inconsiderable client footprint, Ariba also attempted a partnership with HP's BPO business which never got off the ground.

Today, Accenture announced a significant move to incorporate Ariba's managed services business into its own global procurement and sourcing operations, which adds considerable category expertise to both Accenture's existing European procurement services operation in Prague, Czech Republic, but also Ariba's onshore procurement services center in Pittsburgh.

HfS Research views this move as significant for a number of reasons:

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Posted in: Business Process Outsourcing (BPO)Procurement, Engineering & Supply Chain Outsourcing

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Sole sourcing and the Lindsay Lohan experience

October 05, 2010 | Phil Fersht

You can lose your sanity during a non-competitive transaction...

When a customer decides it has already found its provider-to-be, and wants to avoid the conflicting emotions of exploring what might-have-been with its competitors, it can inadvertently offset a spiral of sanity-losing issues for both parties, as they prepare to walk down the aisle.

One man who has lived the sole source experience - and survived to tell the tale - is HfS Research's own Esteban Herrera, who's new HfS Best Practice Report reveals some war-wounds most of you will definitely want to avoid getting...

The Trouble with Sole Source...

Consider the following two messages:

1) At the client organization: “Congratulations! As the senior functional executive for _________(fill in the blank : F&A, IT, HR, Procurement, Claims, etc.) you’ve personally been selected by the CEO to lead an exciting cost-reduction program involving outsourcing your very own department to a service provider! It gets better: the provider has already been picked for you based on their promise of superior service and bargain-basement pricing that has never before been granted to any client—really! Over the course of this important initiative, you will have to convince your peers and customers that this is a great idea; you will spar with lawyers, your own sourcing department, the provider’s sales staff, and possibly an advisor or two. You will need to collect terabytes of data and perform multiple analyses on it to then hand it over to our new partner so they can tell us how poorly we perform today.  Oh, and your team will come to despise you, but we know you are the right person for the job! We are counting on you to double service levels and halve the cost. You have 30 days to get it done—what a fantastic career opportunity!”

2) At the provider organization: “You lucky dog, you! As the top performing sales executive last year, our chairman herself has decided to hand you the sweetest deal ever! After personally fostering the relationship with the CEO of Amalgamated Inc. for the last 18 months, she has secured a deal and all you have to do is shepherd the troops to a solution design and get a signature on the deal—it doesn’t get any easier than this! Of course, the executives at our soon-to-be new client have promised full access to their resources and their data, so it should take you no longer than two weeks to build the solution. We expect you to close this deal within the quarter. This is a fantastic opportunity to build our top line and increase our margins! Because this is so easy, you won’t have much of a solution team, but who needs it when the deal is already done? Oh, I am sure this goes without saying, but this is a career making deal for you. The chairman, the CEO, his pet parakeet, the EVP of Sales, each and every one of your insanely jealous peers, and everyone who stands to get/keep their job as a result of this mega-deal is watching YOU! Needless to say, if this doesn’t sign, well…

So begin most sole source deals. The problem, of course, is that these two messages are about the same deal. There is a lot of sole-source going on in the industry, and for good reason, but talk to anyone who has done one of these deals and they will regale you with tales of pain and suffering.

Reality, as they say, bites. Most of the seasoned sales pros I know in the industry have a war story or two about sole-source deals. Most begin with the story of the two CEOs of the parties meeting and agreeing to do a deal on a handshake. Then they turn it over to some “lucky” subordinates and tell them “make it happen.” Here the problems begin. The subordinate and his/her team may have no desire to make it happen. In all likelihood, no data has been collected, and it will need to be collected from the people whose jobs are at risk—so even if you get anything useful, it likely has some “omissions” that will come back to haunt you. The client has not had adequate denial time to get past the “…but my business is unique, and different from everyone else in the industry” objection. The provider CEO has promised “market” or “preferred” pricing but nobody stopped to define what that means.  He also promised the deal would be done in about half the time it will actually take. And the poor sales pro assigned to the deal will be blamed for not closing quickly a deal that “was already done for you.” Blow a sole source opportunity, kiss your career goodbye. You get the picture…

I was thinking the other day that I have known of five outsourcing-related serious health incidents: three stress-related hospitalizations (2 providers, 1 buyer) and two heart attacks (1, provider, 1 buyer). All five came during sole-source deals. So this is a serious matter. Sole source drives people to do irrational things:  A former client, against my advice, accepted an eleventh-hour offer from a provider when they magically reduced $27 million from TCV overnight, after an ultimatum that the deal would go competitive. Where did all that money come from? Was it margin? Risk? Services? More importantly, could this provider be trusted after this stunt?

In another sole-source war story, I asked the provider to come up with pricing for increasing FTEs in the deal above the deadband—what if we bought 75 instead of 50? They came up with a higher price for the increased volume! Similarly, I have seen a client CEO demand a “no-turnover” clause for the entire offshore team on the account. Who would like to sign up for that deal?

Despite what many believe, sole-source deals are not easy for either side. There’s little structure, unreasonable expectations, no understanding of how value may actually be created, usually a very recalcitrant client, scared provider delivery people and Lindsay Lohan-like visibility for everyone involved.

To read more about the complexities of sole source deals, and how you can keep your sanity (and stay out of the mental hospital) regardless of which side of the deal you are on, read the new HfS Best Practices Report, "The Trouble with Sole Source: Five ways to keep your sanity during a non-competitive transaction" (please click on the report link and register for our research, if you haven't done so already).

Posted in: Buyers' Sourcing Best Practices

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