If your outsourcing relationship is on the rocks, one person who can provide some tried-and-trusted therapy is EquaTerra's Liz Campbell Evans, who actually does outsourcing marriage counselling for a living, running EquaTerra's transformation and governance practice.
Now Liz is one of those people who just makes us depressed - she's a triathlete, scuba diver, fluent linguist in both English and American, actually loves her job - and just gave birth to her first baby boy (and still managed to squeeze in this discussion with us). Her only flaw is she actually enjoys intervening in broken outsourcing relationships to earn her bread.
And before we go to the discussion with Liz, we'd like to invite you to meet Liz and the EquaTerra team in my home town of Boston on 14th - 15th October, where you'll get some serious advice on how to work more effectively with your outsourcing partner. Click here for for details on an excellent agenda and email Alison Norman for more details.
Phil Fersht: Hi Liz – so how, on earth, did you manage to end up in this business as a governance expert?
Liz Campbell Evans: Good question and one a ponder from time to time. I’ve been involved in outsourcing for a number of years now, over thirteen and I soon realized that while the seemingly exciting part of the process was getting to the “deal” the rubber really meets the road post deal. I have spent much of my time in outsourcing focusing on help organization work better together within the boundaries they jointly agreed and established as part of the contract. The frameworks and tools that I use on a day to day base really help to enable effective governance.
Phil Fersht: Is it fun at all, or just lots of stressful clients, and sorting out strained relationships?
Liz Campbell Evans: I’m going to confess it’s great fun, I often describe my job as an opportunity to meet interesting people and help them solve tough problems. No outsourcing relationship is the same, different people involved, with differing experiences and expectations. As you would say, Phil, it's a case of "horses for courses"! Having the opportunity to realign all of these difference and sometime, opposing perspectives is a challenge, especially to preserve a fair and sustainable way of working together. I also get to work across multiple functions / subject areas, IT, Procurements, F&A etc etc so I get to see how the marketplace is evolving and adapting to changes in deals. Helpful insights when you’re trying to fix things, believe me.
Phil Fersht: On a more serious note, are clients generally getting better at this?
Liz Campbell Evans: I honestly believe people are, mainly due to the focus on and expectation that the signature isn’t the final piece of the jigsaw. Look at any outsourcing conference and you’ll see a Governance or Relationship Management stream which was not the case even 5 years ago. Plus I must give the Service Provider credits, many of the more mature companies have done a good job in developing and refining their message to clients about how things will work, what’s normal, when pains points are likely to occur. As a result I believe that clients are more prepared and more willing to prepare themselves for the additional / new work of managing these agreements.
Phil Fersht: And how to do you typically advise client when it comes to multi-sourcing? When should they use multiple providers, and when’s it better to have a “single throat to choke”?
Liz Campbell Evans: Great question, from a governance perspective I am often told what the situation is, i.e. an organization is going the route of multi-providers. My job and the work many of the EquaTerra governance team is to make that solution successful. I see multi-provider environments commonly in IT. The key is for the clients to understand what they want and expect from each provider and the type of relationship they expect. I truly believe not all relationships are created equal, nor do they need to be for a successful outsourcing portfolio to function and deliver the benefits. Some of the most successful multi-sourcing arrangements are those that follow a specific strategy, often engaging multiple providers at the same time, perhaps in the Applications area. When the contracting is done in parallel there is an opportunity to align objectives and expectations of all parties regarding the interactions, hand-offs etc. However its more common for multi-provider environments to evolve over time, in my experience. They key for organizations engaging in multi-provider environments to know they have more work and more responsibility to ensure the interactions between the providers work effectively. This is a big responsibility and one that honestly a number of organizations do not give enough attention to before the new agreements are signed. So to actually answer your question, any multi-provider situation can be made to work, there is a different level of governance, effort and involvement needed from the client side.
Phil Fersht: How do you see governance models changing in the future?
Liz Campbell Evans: Great question and one I wish I had more time to contemplate. A couple of key changes I do believe will be needed in order to respond to the evolving services available in the outsourcing marketplace. As an example; Cloud computing and Software as a Service are very much commodity services, often associated with transactional types of relationships. Governance models will need to become leaning and adaptable to handle the true differentiation in the types of services being delivered. In today’s IT world (using IT as a good example); much of the outsourcing is a combination of staff augmentation on the applications side and varying degrees of traditional managed service in infrastructure. Introduce Cloud or SaaS and the nature of the interaction with the service provider changes. The time and access to managed, involved on the all service providers in supporting the IT organization plan for future needs etc. It may not be realistic for companies to expect the same levels of involvement and collaboration from all providers – that may not be what companies are paying for.
Phil Fersht: How can buyers get better at governing sourcing relationships? Is there a curriculum they can follow? Or it is more of a “trial by fire” experience for most?
Liz Campbell Evans: Clearly they could call EquaTerra :) Seriously there are a number of key areas which come up time and time again that if done effectively dramatically improve the sourcing relationships;
Get your owner house in order: ensure the client side organization has established where decision making authority lies with regards the new agreement, including issue escalation and resolution. Ensure roles and responsibilities for interfacing with the service provider and providing oversight (governance) are clearly understanding and communicated. Ensure you have the right people in the role governance roles. Not everyone wants to or can be good in governance positions.o Agree governance principles are part of the contracting process: ensure the teams that will be responsible for working together are given the opportunity to consider the governance principles; meetings, roles, communications, processes etc. Agree this up front and include as part of the contract
Give yourself and the service provider the best chance of success: communicate what is and is not part of the agreement and services. Provide training for your team in working with outside provider, how to resolve conflict constructively etc. Take the time and give your team the team they need to adjust and be successful in the new roleso Timing is everything: walk before you can run. Give some thought to how the governance framework, new roles, processes etc are rolled out to compliment the transition process rather than confuse and things. There needs to be clarify in how transition will be governed and managed and how the ongoing relationship will be managed. Recognize these are two distinct phases of the relationship and organizations will be able to leverage their provider experience, communicate to the organization and governance effectively.
Phil Fersht: What has been the most successful governance experience you’ve had, and the least?
Liz Campbell Evans: I think this may sound a little basic, but honestly companies that invest the time to think about how they want to work with their outsourcer and implement a practical governance structure which they sustain are the most successful. Not all governance roles and structure look the same and it’s important for companies to design and implement governance that really fits in with their culture (not too grand such that it can’t be sustained from a time or financial commitment perspective. One organization I have the opportunity to work with on an ongoing basis keeps a keen interest (and continues to do so) in having external validation that their governance structure and relationship with the service provider is fit for purpose and maturing. They invest the time jointly with the Service Provider to annually review the way in which they are working together. As a result they develop action plans with jointly agreed improvement opportunities and target timelines for delivery.· I’ve worked with a number of companies that do not give their outsourcing agreements and relationships the “care and feeding” needed to be successful. Outsourcing relationships are to some extent are like an expensive car; you would not buy a brand new car, drive it off the sales lot and never take it for a service, or oil change or use the owner’s manual, or clean / wash the car.
Phil Fersht: And finally, will you be nurturing your forthcoming child to follow in your footsteps, or would you prefer he or she focused on another profession?
Liz Campbell Evans: At this stage with a 3 week old baby I am absolutely in the “care and feeding” stage - and lots of it :) As for my little guy’s future career, who knows what the future holds. No early signs of preference at this stage other than potentially a food critic :)
Phil Fersht: Liz - congratulations on your new baby, and thanks for spending time with our readers this morning. See you in Boston!
As managing director of EquaTerra’s Governance and Transformation Advisory Services, Liz has more than a decade of experience working closely with organizations to establish appropriate governance mechanisms designed to ensure success in the management of long-term outsourcing relationships. In addition, she has led multiple transition initiatives, including global implementation. You can reach her at liz dot campbell at equaterra dot com.