Future of Sourcing - Service Provider https://futureofsourcing.com/tags/service-provider en “People-First” Approach is Key to IT Managed Services Transition Success https://futureofsourcing.com/people-first-approach-is-key-to-it-managed-services-transition-success <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://futureofsourcing.com/sites/default/files/articles/ITMS_Management%20624x325.jpg"><a href="https://futureofsourcing.com/sites/default/files/articles/ITMS_Management%20624x325.jpg" title="“People-First” Approach is Key to IT Managed Services Transition Success" class="colorbox" rel="gallery-node-1295-5teObiJNSqA"><img typeof="foaf:Image" src="https://futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/ITMS_Management%20624x325.jpg?itok=4MEPvDSz" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <div>Successful <a href="http://www.futureofsourcing.com/it-managed-services-mitigating-risk-and-maintaining-leverage" target="_blank">IT managed services (ITMS)</a> transitions require an equal amount of due diligence and effort from the enterprise as well as the new service provider. Most of today&rsquo;s market leading service providers bring tools, templates and processes that are very similar on paper and are table stakes for competing in the industry. The key differentiator is the quality, experience and adaptability of the people-based resources involved in the transition from both the enterprise and the service provider. The more both sides can work as a single team &ndash; with objectives and incentives aligned &ndash; the better the chances are of achieving an on-time and on-budget transition without negative impacts on the end-user experience. &nbsp;</div> <div>&nbsp;</div> <div>Ensuring the right talent on both sides of the transition from the start is critical in a managed services environment. On the service provider side, having qualified resources enables them to conduct thorough knowledge acquisition while adhering to the transition plan and maintaining clear and frequent communications with the client enterprise team. On the other hand, having the right internal talent is key for enterprises as they learn to adapt both technically and culturally to an outcome-based governance model, where the enterprise must manage service levels rather than specific tasks and resources. Here are five best practices to ensure the right people from both sides are set up for transition success.&nbsp;</div> <div>&nbsp;</div> <div><strong>Interview the Service Provider Transition Team to Ensure the Right Resources&nbsp;</strong></div> <div>&nbsp;</div> <div>Before an <a href="http://www.futureofsourcing.com/it-managed-services-mitigating-risk-and-maintaining-leverage" target="_blank">ITMS transition</a> begins, the enterprise should invest due diligence in qualifying the key personnel that the service provider has proposed to lead and manage the transition. The quality of the transition project team should be part of the final service provider selection process. This helps ensure that service providers give proper attention to the caliber of the team being proposed and not just the proposal&rsquo;s commercial elements and technical solution. Performing this interview and selection process up front helps avoid a sub-optimal start to the project. Don&rsquo;t settle for a transition team that does not meet expectations. When a service provider knows that top talent is required to win the business, they will be more likely to bring their best personnel to the table.&nbsp;</div> <div>&nbsp;</div> <div><strong>Set the Internal Transition Team Up for Success&nbsp;</strong></div> <div>&nbsp;</div> <div>Similarly, enterprise IT teams should apply the same level of due diligence in selecting the internal transition project team lead and managers. Partnering the best internal resources with the service provider&rsquo;s top talent is critical to the success of the transition. This includes assigning an internal team lead to clear organizational roadblocks and escalate issues early for timely resolution. Effectively coordinating stakeholders is a common challenge for any project, but ITMS transitions can be culturally sensitive and technically complex, so it is critical to have an experienced leader with a solid reputation. &nbsp;The transition to managing outcomes, not the resources performing the work, can be difficult for the internal teams. Don&rsquo;t rely on service providers to self-govern the transition project &ndash; assign your best internal resources to work collaboratively with them.&nbsp;</div> <div>&nbsp;</div> <div><strong>Outline a Clear Change Management Plan&nbsp;</strong></div> <div>&nbsp;</div> <div>An ITMS transition must be treated as an internal project and the enterprise must allocate resources from all teams, including business, technical, operational, financial, HR, communications, security and procurement personnel. Not assigning the right resources and the requisite time to accommodate the extra work load and deadlines impacts the ability of the service provider to move quickly and productively. There should be a clear demarcation of work to be performed by internal personnel, particularly IT resources, versus service provider personnel. Ambiguity and assumptions on either side will result in project delays and team friction. Change management resources should be embedded in the project team from the start. A lack of proper communication, or worse, no communication, can be detrimental to the project success and lead to resource flight risk. &nbsp;</div> <div>&nbsp;</div> <div><strong>Know the Deal Before Work Begins&nbsp;</strong></div> <div>&nbsp;</div> <div>To get the project off on the right foot, it is important that the delivery teams start with a common and clear understanding of the mechanics of the contract. If not, they will struggle to institutionalize the contract into daily operations. Similarly, internal project management teams should be fully aware of the contract terms and conditions to keep the project compliant with the intent of the deal and avoid potential value leakage. Verbal changes or handshakes that alter agreements should be avoided. It is critical, yet often overlooked, to document and update contracts with any changes that affect the steady state. Agreements that are not formalized via proper contract management protocols can lead to issues down the road.&nbsp;</div> <div>&nbsp;</div> <div><strong>Find Time for Team Bonding&nbsp;</strong></div> <div>&nbsp;</div> <div>Bonding and establishing a cultural fit between the service provider and enterprise IT teams are also critical success factors. Enterprise IT stakeholders that overlook the human element of the ITMS transition increase costs both in the short and long term. Giving both teams an opportunity to connect early in the project should be a priority, because asking people to work together before proper introductions and social interactions have been established is challenging. Address the &ldquo;us versus them&rdquo; mindset and set expectations on a collaborative effort. Off-site team meetings and proper onboarding of the service provider personnel should be one of the first orders of business. This includes scheduling time and budget for sending key stakeholders to the service provider delivery site to meet with the larger team and establish a healthy working relationship. Boosting team morale and establishing a collegial and collaborative approach to the project will go a long way in meeting the project outcomes on time and on budget.&nbsp;</div> <div>&nbsp;</div> <div>Don&rsquo;t overlook people as a difference maker in a transformational ITMS transition. This includes securing top talent in your negotiations and also making resource changes early on if need be. Don&rsquo;t settle for sub-par transition work for the sake of the go-live date; it sets the wrong precedent regarding what is acceptable and the project will be better served with the right resources in place. Having a &ldquo;people-first&rdquo; approach is critical to effective change management and ensures these often intense projects are set up for success.&nbsp;</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/it-managed-services-itms" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">IT Managed Services (ITMS)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/service-provider" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Service Provider</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/talent" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Talent</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/contract-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Contract Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/change-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Change Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="&amp;ldquo;People-First&amp;rdquo; Approach is Key to IT Managed Services Transition Success - Future of Sourcing" addthis:url="https://futureofsourcing.com/people-first-approach-is-key-to-it-managed-services-transition-success"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 17 Oct 2018 01:51:24 +0000 Bilal Shahabuddin 1295 at https://futureofsourcing.com https://futureofsourcing.com/people-first-approach-is-key-to-it-managed-services-transition-success#comments Partners or pawns? (Part 1) https://futureofsourcing.com/node/729 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>&ldquo;We are nothing more than a bunch of pawns on this outsourcing checker board,&rdquo; Jeanette said.</p> <p>&ldquo;I think you mean &lsquo;chessboard&rsquo;,&rdquo; I said smiling at her.</p> <p>&ldquo;You know damn well what I mean, Dean. Hey, that rhymes,&rdquo; Jeanette said, returning the smile.</p> <p>&ldquo;Sadly I do understand, and, from what you&rsquo;ve described, I have to agree with you.&rdquo;</p> <p>&ldquo;We have worked here for 13 years in a real partnership with the plant in good times when we were making engines seven days a week around the clock, and in bad times when we were lucky if we could keep one shift running,&rdquo; Jeanette stated, obviously agitated.</p> <p>The door to Jeanette&rsquo;s office opened and Alvin walked in. Alvin had been part of Jeanette&rsquo;s team for almost ten years. He was a real source of pride for Jeanette as she had hired him as a cleaner. Over the years he was promoted, and today he was the housekeeping manager responsible for the upkeep of all five plants within the facility.</p> <p>&ldquo;Hey Dean, where have you been hiding?&rdquo; Alvin asked, giving me a punch in the shoulder.</p> <p>&ldquo;Been pretty busy lately,&rdquo; I responded, getting up to shake his hand.</p> <p>&ldquo;Trying to straighten out those idiots in Detroit?&rdquo; Alvin asked, dropping some papers off on Jeanette&rsquo;s desk.</p> <p>&ldquo;Something like that,&rdquo; I said, sitting back down.</p> <p>&ldquo;Used to be the slaves were sold to the highest bidder. Today we&rsquo;re sold to the lowest bidder,&rdquo; Alvin muttered, shooting us a salute as he walked out the door.</p> <p>&ldquo;Wow, that&rsquo;s an awfully strong sentiment. Does everyone feel the same way?&rdquo; I asked Jeanette.</p> <p>&ldquo;Like I said earlier, we&rsquo;re pawns, and I&rsquo;d say Alvin speaks for how all the hundred-plus of us feel,&rdquo; Jeanette responded, not smiling at all this time.</p> <p>Jeanette worked for Wilkinson Solutions, an inside-outsourcing service provider who started providing housekeeping services to the engine plant thirteen years ago. Over the years Jeanette and her team work diligently to provide value-added services, and were especially responsive to taking on new challenges. Plant management referred to Jeanette and her team as one of the group. They had successfully become true partners, willing to take on additional services in an effort to keep the plant competitive as it struggled to stay open and competitively build engines. The plant was located in a small town, and was one of a handful of plants still open in the area. It was an important source of employment for a lot of people, including Jeanette and her team. Like many manufacturing plants in smaller towns, unions can be a true source of competitive advantage or disadvantage. Jeanette and her team worked with and alongside her UAW counterparts for the betterment of the plant. There were times of heated squabbles and disagreements, but under Jeanette&rsquo;s leadership her team always found ways to work in harmony alongside plant personnel.</p> <p>&ldquo;Jeanette, I think I have the general gist of what transpired over the past 12 months, but would you mind filling in the blanks?&rdquo; I asked.</p> <p>&ldquo;You&rsquo;re obviously aware of the initiative by Detroit to put the inside-outsourcing activities at all of their plants under the leadership of one company at each plant,&rdquo; she said.</p> <p>&ldquo;Very aware, and also very aware the initiative is not overly successful,&rdquo; I said, jotting down some notes.</p> <p>&ldquo;Exactly, and the plant management here was hopeful they would not have to adopt this new Detroit-driven model as they could not see the benefit for them.&rdquo;</p> <p>&ldquo;So what happened then?&rdquo;</p> <p>&ldquo;Easy. The plant lost and purchasing won,&rdquo; she stated.</p> <p>&ldquo;How can a company exist where manufacturing and purchasing have a win/lose relationship?&rdquo; I asked rhetorically.</p> <p>&ldquo;Don&rsquo;t ask me. We don&rsquo;t get it, and the plant people here don&rsquo;t get it either. Dean, as you know, when we started we only performed housekeeping. Today we provide maintenance, grounds keeping, production support, engineering support&hellip; We are active in virtually every department of the plant.&rdquo;</p> <p>&ldquo;I didn&rsquo;t realise just how far your services had expanded in the plant,&rdquo; I said, looking up.</p> <p>&ldquo;Do you think the other departments would have given us opportunities if we were not performing? Not a chance, Dean. With every addition, we had to work with the union to ensure a good level of harmony while implementing our management systems,&rdquo; Jeanette stated flatly.</p> <p>&ldquo;Lot of work,&rdquo; I said.</p> <p>&ldquo;Yeah, and for what? To be sold out to the lowest bidder just like Alvin said. We all feel very unappreciated. We&rsquo;re pawns, not partners&rdquo;.</p> <p>Jeanette spent the next thirty minutes describing what they&rsquo;d experienced over the last 12 months. The process began in August of 2015 when purchasing out of Detroit announced the plant was going out for bid, and Wilkinson Solutions, Jeanette&rsquo;s company, would not be invited to participate in the bid as they were deemed incompetent. The battle began. The plant management team fought with Detroit to include Wilkinson, outlining the fact that they were successfully performing all of the duties outlined in the new bid and were fully integrated into the plant. After several rounds of debate, purchasing reluctantly agreed to allow Wilkinson to bid, more as a step to pacify the plant&rsquo;s management team and keep their initiative moving forward than anything else. Jeanette&rsquo;s team started to feel undervalued the minute purchasing refused to allow Wilkinson to bid. They could not grasp why they were excluded. After a decade of proven service, why was her team being pushed to the side lines, allowing other companies, who were all failing at other plants, to come to her plant and ruin all of her hard work?</p> <p>&ldquo;So after you were able to get included into the bidding process, what happened?&rdquo; I asked, taking notes to establish a bit of a time line to the story.</p> <p>&ldquo;In September of 2015 the bidding process began. Three bidders showed up at the plant to review the scope so they could prepare proposals,&rdquo; Jeanette said.</p> <p>&ldquo;How&rsquo;d that go?&rdquo; I asked.</p> <p>&ldquo;It was pretty much a cluster, and it was very obvious to all the service providers that purchasing did not know the scope of work. They struggled to answer even the most basic of questions,&rdquo; Jeanette said, smiling as she recalled the meeting.</p> <p>&ldquo;Then what?&rdquo;</p> <p>&ldquo;You&rsquo;re going to get a kick of of this next part. Purchasing got in all of the bids, then the service providers made presentations, and then it all stopped dead. Next thing we knew, our contract had been extended for six months,&rdquo; Jeanette said, still holding onto her smile.</p> <p>&ldquo;Why did the bidding process stop?&rdquo; I asked, my curiosity taking hold at this point.</p> <p>&ldquo;The discrepancies between the bids was so big, purchasing couldn&rsquo;t figure out one bid from another. We actually were getting calls from the other service providers to find out what we knew because they couldn&rsquo;t get a straight answer out of purchasing. It&rsquo;s like they all got back in to their space ships and went home to planet Detroit. You know they&rsquo;re really aliens don&rsquo;t you?&rdquo; Jeannette said, her smile broadening even more.</p> <p>The one thing that was becoming increasing apparent was that Jeanette&rsquo;s respect for purchasing had faded. Jeanette and her team felt under-valued, and had been put through a tremendous amount of stress for half a year only to end up in limbo. Her team members were very uncertain of their future, and their focus had moved from finding better ways to improve operations at the plant to worrying about whether they had a job or not. All of Jeanette&rsquo;s team had been solicited by the other service providers during the bidding process. The service providers had promised each of them a job if they were to be awarded the business. This just confused Jeanette and her team even more. If a new service provider was to hire her whole team, what&rsquo;s the point in making the change? They just couldn&rsquo;t shake the idiocy of the exercise.</p> <p>&ldquo;So if the bidding process was idled, how&rsquo;d did you end up losing the business?&rdquo; I asked.</p> <p>&ldquo;In their infinite wisdom, after rounds and rounds of debate with plant management who still didn&rsquo;t want to be involved in this initiative, purchasing started the entire process over again in March of 2016,&rdquo; Jeanette said, losing her smile.</p> <p>She went on to describe how three more rounds of bidding dragged on for another three months. At the end, purchasing had their winner and it wasn&rsquo;t Wilkinson Solutions. Jeanette, her team, and the plant were devastated. The new service provider was appointed and was given 30 days to transition the plant from Wilkinson Solutions to themselves. The first thing they did was start the process of hiring Jeanette and her team at lower wages and reduced benefits. By doing a bit of digging, Jeanette found out that the difference between Wilkinson&rsquo;s bid and the bid accepted by purchasing was only $200,000 dollars, roughly 4%. She then quickly tabulated the wage and benefit reductions the new service providers were implementing, and woke up to a terrifying conclusion. Jeanette and her team were going to be footing the bill for this change. The team that had given their hearts and souls to this plant was now going to have to take a wage and benefit reduction in order for the new service provider to make their cost model work. She was livid.</p> <p>&ldquo;Dean, you know what is even more frustrating?&rdquo; she asked, not smiling at all anymore.</p> <p>&ldquo;What?&rdquo;</p> <p>&ldquo;The new service provider would not accept any of our training records, so they&rsquo;ve eaten up hundreds of man hours re-certifying our teams, which has cost them thousands. Our team cannot understand why they need to go back and re-do what they&rsquo;ve already done, so they are demoralised. Last year our team submitted nearly $750,000 dollars in cost savings, better than ten per cent of our revenue. This year with all the crap we will be lucky if we submit $35,000. Why can&rsquo;t purchasing see they have not saved the plant money, but rather cost them almost a million dollars?&rdquo; she stated.</p> <p>&ldquo;Don&rsquo;t know. Wish I did. Like you said earlier, they live on their own planet,&rdquo; I responded as the gravity of the situation hit me.</p> <p>&ldquo;Dean, I&rsquo;m at a loss as to what to do. Me and my team lived for this plant. It is one of the few good employers in our town, and we all care about our town. This pill, though, is tough to swallow. Like Alvin, I&rsquo;m struggling to get my head to a better place and see the big picture, but the more I see the big picture the more I realise it&rsquo;s not me who cannot see the big picture, it&rsquo;s purchasing. Their stupid, ill thought-out initiative has cost them more than they will ever recover. My team will never get fully back on board,&rdquo; she said, obviously feeling defeated.</p> <p>We sat for a few moments in silence. I didn&rsquo;t have one reasonable suggestion for Jeanette, who was obviously looking for direction or to wake up from this bad dream. Sadly, it was not a dream. Jeanette and her team, who were once proud members of Wilkinson Solutions, had been sold. Sadder to say, but Alvin was probably right.</p> <p><em>(To read the second part of this article,&nbsp;<a href="http://outsourcemag.com/partners-or-pawns-part-2/" target="_blank">click here</a>.)</em></p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/engineering" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Engineering</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/facilities-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Facilities Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/human-resources-hr" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Human Resources (HR)</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/service-provider" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Service Provider</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/manufacturing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Manufacturing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/sourcing-strategy" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing Strategy</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Partners or pawns? (Part 1) - Future of Sourcing" addthis:url="https://futureofsourcing.com/node/729"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 13 Jul 2016 13:05:12 +0000 Damian Scallon 729 at https://futureofsourcing.com Avoid or Approach Those Who Purchase? https://futureofsourcing.com/avoid-or-approach-those-who-purchase <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Another rainy trip up north, I thought to myself, turning on the windshield wipers. A recent phone call from Anne, the head of global purchasing, requesting my participation in reviewing some ideas to build stronger partnerships with their inside-outsourcing service providers (IOSPs), was the reason for the trip. Over my forty years as an IOSP, I&rsquo;d become very cynical and prejudicial towards purchasing departments. As an IOSP to the auto industry, I&rsquo;d witnessed countless purchasing initiatives resulting in bankrupting IOSPs due to a complete lack of foresight.</p> <p>Often I&rsquo;d joke with colleagues that those who chose to be in purchasing were actually from another planet, spoke a completely different language, and used their own dictionary. We&rsquo;d go into sessions and talk about value add, but purchasing heard lower invoice cost. We&rsquo;d discuss collaborating, and they heard dictating. We&rsquo;d say competitive, and they heard low-cost. Over the decades, relationships between IOSPs and Purchasing became increasingly strained. Initiatives such as target pricing slowly eroded any level of trust or loyalty. The recent phone call from Anne, however, was different. The tone was different. The arrogance normally present was replaced with a level of humility, a real sense of gratitude for my agreeing to make the trip and spend time with her team.</p> <p>I pulled into the visitors&rsquo; lot, grabbed my bag, strode through the lobby, and signed in with security. In minutes Anne herself met me, and escorted me to a small conference room to meet her team.</p> <p>&ldquo;I&rsquo;d like to introduce you to Dean, my nemesis,&rdquo; Anne said, offering me a seat at the table in the middle of the group.</p> <p>&ldquo;Good morning. I&rsquo;m Mandy, our contracts administrator.&rdquo;</p> <p>&ldquo;Pleasure to meet you. I&rsquo;m JP, our contracts engineering liaison.&rdquo;</p> <p>&ldquo;I&rsquo;m Ben, the indirect purchasing specialist. We&rsquo;ve heard a lot about you from Anne.&rdquo;</p> <p>&ldquo;Nemesis?&rdquo; I asked, looking at Anne.</p> <p>&ldquo;Yes. You have always provided me with a rival perspective over the years, which is the reason I sought you out to help us today,&rdquo; Anne replied, taking her seat.</p> <p>&ldquo;We&rsquo;re in trouble with our inside-outsourcing service providers. Specifically, we are struggling with getting them to be our partners,&rdquo; Mandy said, eyeing Anne as she spoke.</p> <p>&ldquo;Dean, you&rsquo;ve been around too long to sugar-coat the issue. We&rsquo;ve managed to lose the loyalty of our IOSPs. We cannot even get them to approach us with new ideas or solutions, and we&rsquo;re hoping you can help us see their perspective,&rdquo; Anne stated in a pretty solemn tone, making eye contact with each member of her team.</p> <p>&ldquo;We prepared a presentation for you outlining key performance metrics and how our IOSPs stack up against those metrics,&rdquo; JP said, as Ben opened up his laptop to project their charts and graphs on an overhead screen.</p> <p>&ldquo;JP, I&rsquo;m sure your presentation is very good, but I think you need to take a step back and consider the one troubling thing I&rsquo;ve heard so far. Your IOSPs are avoiding you. Is that accurate?&rdquo; I asked.</p> <p>&ldquo;Very accurate,&rdquo; Ben exclaimed.</p> <p>&ldquo;Then your solutions start with that problem. What you probably don&rsquo;t want to hear is that the fix will take time. You did not lose the trust and loyalty of your IOSPs overnight and you will not get it back overnight, but you can get it back,&rdquo; I said, surveying the room for comprehension.</p> <p>My mind wandered to an article I&rsquo;d read in the&nbsp;<em>Neuro Leadership Journal</em>&nbsp;by David Rock. In the article, he&rsquo;d simply laid out a model to encourage collaboration. I&rsquo;d worked with this company as a customer for decades and knew their love of models. I felt this might be the best path forward in today&rsquo;s situation.</p> <p>&ldquo;We can&rsquo;t argue your point. We actually came to a similar conclusion ourselves, but we need your help for us to understand how these service providers think,&rdquo; Anne said, receiving nods of agreement from her team.</p> <p>&ldquo;I recently read an article which resonated with me. I think it will give you a framework to resolve your problem. Let me start by asking, why do you outsource the management of your facilities to service providers in the first place?&rdquo;</p> <p>&ldquo;To reduce cost,&rdquo; JP quickly replied.</p> <p>&ldquo;Cost is important for sure, but we also need a level of expertise that we just do not have in-house,&rdquo; Ben added.</p> <p>Mandy chimed in, &ldquo;I agree with cost and expertise, but we also need someone who will focus on non-core areas, allowing us to focus on building cars.&rdquo;</p> <p>&ldquo;I agree with what you all said, but frankly we really suck at it. Our internal cost to perform the work ourselves was out of control, and we were not able to internally rein it back in,&rdquo; Anne said, staring directly at me and conveying a very strong sense of transparency.</p> <p>&ldquo;Okay, very honest response. You are looking for a service provider to accomplish what you cannot, at a competitive cost, who brings a level of expertise to the table, and focuses on innovating how you manage your facilitates. Do I have this right?&rdquo; I asked.</p> <p>&ldquo;Perfectly put,&rdquo; Mandy said.</p> <p>&ldquo;As I service provider if you came to me and shared what I just heard, I would feel honoured to be chosen to help you. You would inevitably increase my status as an expert service provider.&rdquo;</p> <p>&ldquo;We&rsquo;ve done that with little to no improvement,&rdquo; Ben said.</p> <p>&ldquo;Did your commercial arrangement align with your message, or did your commercial arrangement follow a strict, out-of-date scope, advising your IOSPs to put numbers in cells of a spreadsheet next to each activity line?&rdquo; I asked.</p> <p>&ldquo;Not quite as bad as you make it sound, but in theory you&rsquo;re right,&rdquo; JP said, jotting down a note.</p> <p>&ldquo;So on the one hand you build up the status of the IOSP, and your RFQ tears it back down, making the IOSP feel subservient and not the expert you are looking for,&rdquo; I stated.</p> <p>&ldquo;Am I to assume status is the first part of this model?&rdquo; Anne asked.</p> <p>&ldquo;Absolutely. If you want experts to innovate, you need to treat them as such and keep treating them as such if you wish them to approach you with new ideas,&rdquo; I said</p> <p>&ldquo;I can see where we missed this and where our current commercial model also misses this,&rdquo; Mandy said.</p> <p>&ldquo;The next step on the path is to provide some level of certainty to your IOSPs. Please don&rsquo;t take this the wrong way, but your past practices were to keep your IOSPs on their toes by threatening them with the loss of business. Is that still the rule of thumb, or has it changed?&rdquo; I asked, staring at Anne.</p> <p>&ldquo;It&rsquo;s changed corporately, but we&rsquo;re still fighting that issue at the local plant level. On some of the data JP wanted to show you, you&rsquo;d see how IOSPs alter their pricing based on the geography of the site and not the volume of activities being outsourced. That led us to believe and understand they wish to avoid working at those sites, and those sites have also turned over more IOSPs than other sites,&rdquo; Anne said.</p> <p>&ldquo;Excellent observation. When there is a lack of certainty in a business 100% reliant on people, you are going to have a problem. IOSPs need to know that if they meet the goals, they have a future with you.&rdquo;</p> <p>&ldquo;So a level of certainty is the next part of the model?&rdquo; Ben asked.</p> <p>&ldquo;Absolutely, followed by a level of freedom to be the expert. If you want experts, you must allow them to be experts. In many cases, IOSPs are forced to take direction from people on your staff who are not experts but who think they are. This leads to a lack of autonomy for the IOSP, and they need autonomy. It is a key driver for them to bring you new innovative ways of performing services.&rdquo;</p> <p>&ldquo;So the next step is autonomy. We hire experts, we ensure a future, and we give them the freedom to be experts. I&rsquo;m having a &lsquo;duh&rsquo; moment,&rdquo; Ben said.</p> <p>&ldquo;You&rsquo;re not alone,&rdquo; Anne retorted.</p> <p>&ldquo;The fourth part is the one nearest and dearest to my heart. Your IOSP needs to relate to why you are outsourcing this work in the first place. The purpose needs to be made very clear, and desired outcomes must be documented with measurable success factors,&rdquo; I stated.</p> <p>&ldquo;Won&rsquo;t that hurt their status?&rdquo; Mandy asked.</p> <p>&ldquo;No. You are not telling them how to do the work. You are telling them why you need them and what you need them to do. As you progress, you can invite them to help you define what you need done to improve your desired outcomes. The more you do this, the more they will relate to you. The more autonomy you give them actually increases their status.&rdquo;</p> <p>&ldquo;What a different way to think!&rdquo; JP exclaimed.</p> <p>&ldquo;Macro versus micro managing?&rdquo; Ben threw out to the group.</p> <p>&ldquo;We&rsquo;ve been sewn into a rut of operating transactionally and not focusing on the bigger outcome, the real value associated with well ran facilities services,&rdquo; Anne said to the team.</p> <p>&ldquo;Is that it?&rdquo; JP asked.</p> <p>&ldquo;Not quite. You must realise IOSPs are in business to make money &ndash; a reasonable and fair return on their investment. If you continually chase IOSP&rsquo;s costs to you, what you are invoiced, at some point you hit a point of diminishing returns. The service business is 90% plus people costs, and your IOSPs can only provide you with improvements if they&rsquo;re able to engage their people. In the past you dictated bill rates that were poorly investigated and resulted in poor-calibre talent being placed into your facilities, and here you are today wondering why no one approaches you with innovative ideas,&rdquo; I said.</p> <p>&ldquo;We reaped what we sowed. We understand that, Dean,&rdquo; Anne said.</p> <p>&ldquo;The final piece of this conundrum to collaboration is to be fair. Let it be known you are looking for your IOSPs to make a fair return on their investment. It is not fair for you to assume they are making a killing and the money they make is yours. The money they make is theirs. It is their return for managing an innovative, efficient service business. Allow them their profit, and seek out value.&rdquo;</p> <p>&ldquo;This mindset is aligned with where we want to go. You have presented it in a concise manner, something we can model. Our struggle is the starting point. The portfolio of what we outsource to our IOSPs is extremely large,&rdquo; Anne said.</p> <p>&ldquo;Anne, you need to change how you are viewed. Identify the IOSP you trust, one with history, with the right culture, and seek their help to run a pilot.&rdquo;</p> <p>&ldquo;Then what?&rdquo; JP asked.</p> <p>&ldquo;Then you do it again. So one site becomes two, two becomes four, four becomes eight, and so on. During this time you&rsquo;re proving to your IOSPs that you really are a partner. You respect their status, you provide them certainty, give them autonomy by allowing them freedom to run their business, ensure they relate to your true needs, and be fair with them. A decade from today you will have what you once had, a loyal group of IOSPs dedicated to improving your competitive advantage,&rdquo; I said in summary, glancing at the clock.</p> <p>&ldquo;Time does fly when you&rsquo;re having fun! We are just about out of time,&rdquo; Anne started to say, just as JP chimed in.</p> <p>&ldquo;We can&rsquo;t wait a decade.&rdquo;</p> <p>&ldquo;We already did,&rdquo; Ben pointed out.</p> <p>&ldquo;Good point. Maybe even two decades,&rdquo; Mandy said, looking towards JP.</p> <p>&ldquo;The key is to run the pilot, build your confidence and that of your chosen IOSP, and develop a tipping point where trust and loyalty are foundational to your business dealings, and not fear,&rdquo; I said.</p> <p>&ldquo;Dean, let me express our sincere thanks, and let me walk you back down to security,&rdquo; Anne said, getting up from her chair.</p> <p>As I walked down with Anne, she again thanked me for the time, and I began to believe that possibly those in purchasing did not come from another planet, and with continued support we could improve our vernacular and all define value in the same manner.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/advisory" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Advisory</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/service-provider" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Service Provider</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/purchasing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Purchasing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/relationship-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Relationship Management</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Avoid or Approach Those Who Purchase? - Future of Sourcing" addthis:url="https://futureofsourcing.com/avoid-or-approach-those-who-purchase"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 03 Jun 2016 12:57:09 +0000 Damian Scallon 954 at https://futureofsourcing.com https://futureofsourcing.com/avoid-or-approach-those-who-purchase#comments