Why aren’t I happy with my outsourcer?

It's all about those regular delights...

We’ve had a lot of dialog (read here) about why most clients aren’t getting much more than they expected, when they signed an outsourcing contract.  And when you have someone one on staff who’s been dealing with the same issues for over three decades, you start to wonder what it’s going to take to drive customers to become genuinely ”delighted” with the service they’re receiving

 My personal take, based on our extensive research, is that an increasing majority of clients truly want to see some innovation developing in their agreement, but aren’t prepared to upset the applecart to make changes that could spoil their operational status quo. 

Our veteran professor of outsourcing, Mike Atwood, has a simplistic view of what needs to transpire for customers to actually receive regular delights… over to you Mike:

Why aren’t I happy with my outsourcer?

How many times have you heard someone say that all our service metrics are green, but the relationship is red?  This sort of non-specific concern about an outsourcer seems to be as old as outsourcing itself. It has certainly existed as long as I’ve been in the field. I recently attended an analyst conference for a major outsourcer andran into an old friend who I’d worked with at EDS andwe got around to discussing a mutual client. This client wasn’t to the point of saying the relationship was red, but he clearly didn’t believe he was getting the value he expected out of his outsourcing relationship.

In this case, the issue wasn’t that the wrong metrics had been chosen, or that some weasel words in the definitions had caused them to be upset. The problem was in the clients expectations. Those expectations are something that I think fits well into the frame work of the KANO model. (If you aren’t familiar Google it and you will be) . The model says that expectations come in 3 types;  

  • The first are “basic” elements, which are things that you just assume everyone knows and you don’t write down.
  • The second requirements are the “metrics” that outsourcers, consultants, lawyers, andproject teams spend forever trying to nail down. 
  • Lastly, “delights” are those things that you can imagine, but when they happen you are actually excited.

I believe all outsourcers spend most of their time andenergy working on making the commitments around requirements (2ndtype) that they signed up to in the contract. The smart outsourcers have figured out that the basics are real requirements, and long ago stopped asking “Where does it say that in the contract?” But I know of no firm that takes an organized, deliberate approach to developing delights. There are some individual relationship managers who do, but that’s about it.

This seems to me to get to the heart of the issue about “why aren’t outsourcers proactive?” There are also issues of sunk costs and unrealized depreciation, as well as operational risk, but beyond them all is this desire to have some creative thinking and changes beyond what I’m getting today. By the way, the deeper you get into an outsourcing contract the better the good old days will be remembered!

So what is an outsourcer to do? I’d suggest that every account team needs to set itself a goal of at least proposing, but better yet, implementing one delight on some periodic basis. The team out to have regular brainstorming meetings and the implementation of delights ought to be managed. To many of us this seems let basic account management, client partnering, but somewhere it has gotten lost andcustomers are sitting around wondering why they hired their outsourcer, even if things are all green!

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3 Comments

  1. Posted June 11, 2010 at 7:46 am | Permalink

    It’s a great point Phil, delights would go a long way. In the best relationships, delights are in there already. There’s two more things:

    1) In many cases these deals are constructed using incentive structures that aren’t fit for the purposes that they’re being used for, especially in BPO deals. This creates much of the red/green issue that you set out.

    2) The competitive process, initially set out by advisors and now perpetuated and in some cases toughened by procurement functions, routinely sucks the innovation oxygen out of the room – by taking all of the ‘fat’ out of the solution and price.

    There is a better way to get into these deals, but it requires different thinking about incentives and competition.

  2. Shekar Panchapakesan
    Posted June 14, 2010 at 1:17 pm | Permalink

    I would submit that there may be another reason for clients being vaguely dissatisfied with their outsourcers – the outsourcers are too focused on showing the ‘green’ to their clients. They are constantly on a quest to ‘spin’ the metrics in the best way possible – and the clients know it too, but can’t lay their finger on exactly what is wrong.

    Consider this – a scenario that I suspect many of your readers may be familiar with, especially around the QBR time with their outsourcers. The outsourcer produces a dashboard report that is showing that most of the metrics are green, but the sourcing manager, or others in the client organization continue hearing anecdotal reports from around their company of the outsourcer failing to meet commitments, or situations which have needed major remedial action. Before jumping to the conclusion that this is due to the lack of ‘delight’, would it be worth it for the client to reexamine the way that they are measuring their outsourcer? I think clients could become more sophisticated about their SLA’s and KPI’s – taking an active interest in setting them and not outsourcing that to the outsourcer, and constantly evaluating how the outsourcer’s metrics relate to their business and customer satisfaction.

    I am also rather apprehensive about making that ‘delight’ factor a part of the outsourcer’s KPI. It could become just another line item that the relationship manager will desperately cast about to fill in his/her dashboard report. In fact, I have actually seen that in one situation – and that resulted in something like this – in a monthly dashboard, under the heading “Value Adds from {Outsourcer Name} – “Implemented an Excel Macro to enable printing of daily report with one keystroke”!!!

  3. Posted June 22, 2010 at 4:52 am | Permalink

    Perception, perception, perception is the name of the game here. Don’t reply on the contractual KPI’s and SLA’s being Green, Amber or Red before you act. Get measuring the perception of your Service Provider from the outset along side those KPI’s/SLA’s and ask your users 5 questions:

    1. Service Performance: The delivery of services to agreed service levels and the management of service incidents.
    2. Responsiveness: Time to respond to incidents, requests or business initiatives and the quality of our response.
    3. Flexibility: The degree of flexibility demonstrated by the IT Team in relation to factors such as responding to changing business priorities and managing scope effectively.
    4. Communication: Quality, appropriateness and timeliness of our communication with customers.
    5. Trust: The trust the customer has in the IT Team in terms of factors such as the level of integrity they have shown and their willingness to take ownership of issues (and follow them up).

    Remember, you are measuring perception not figures here and you will soon see where your suppliers are not performing.

    Finally, get them detailing a plan of action in the form of the Service Improvement Plan (SIP) from which you can assess how well each supplier performs against these targets.

    Spice-IT provide this service, and others, to our clients to help them get the most out of their Service providers. See our web site http://www.spice-itsm.com.

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