Outsourcing - Delivery View

Contract Management and Delivery Management are two sides of the same medal - one can not exist without the other. While the Contract manager handles high level and financial issues, the delivery manager has the duty to handle changes, escalations and projects.

We have tried to put the essence into this page.

Outsourcing Delivery Management

Delivery Management is the attempt to create a successful team providing services to the end-user ruled by a contract.

The Greek language has a good word for the necessary mindset: Xenos.

In the Greek language Xenos means "Foreigner" and "Guest" - actually it means "The unknown person that becomes a guest/friend by entering the door!". In the Greek culture there is no difference between a foreigner and a guest.

This mindset helps to establish a win-win-situation in an outsourcing deal. Unfortunately the world is not ideal and companies more often than not focus on "earning money" and not on "delivering service". Therefore the "Xenos"-approach is only one side of the medal.

The other side of that medal is that the service provider also needs to behave like a "Guest" and not like a "Robber". As always there is "trust" and "control". The problem with control is that usually the outsourcer is the only instance to deliver service level reporting. If you want to be in the driver seat, you should make sure that you have the possibility to actually check the correctness of the reported data.

The delivery manager has "his ear at the user". He needs to inform the contract manager if reported and observed reality do not match. Together they perform contract management. Depending on the magnitude of the outsourcing scope, these two roles could be condensed in one person or span an entire international department.

Outsourcing Contract Management

Contract Management is the challenge to live the described contract. It involves:

• Governance
• Analyzing Service Level Reporting
• Financial Controlling
  
  • Invoices
  • Penalties / SLAs
   
• Conflict Management
• Outsourcer Motivation
• Escalation Management

"Golden Rules of Outsourcing Contract and Delivery Management"

• Make sure you have experienced delivery managers in your organization.
   
• Make sure that your delivery manager knows the contract in and out. - Most supplier staff does not and usually requires some "hints" to actually perform all contractual obligations.
   
• The "RTFM - Rule" (Read The Fine Manual) applies.
  People with the ability to read have a clear advantage!
   
• If you really need to stress the contract, your outsourcing arrangement is on the edge of failing.
   
• Getting an outsourcing deal to deliver smoothly requires at least 6 months until the outsourcer and the customer organization have adjusted pace and expectations.
   
• Do not hesitate to educate and train your outsourcers' staff! - It will be necessary to really get the benefit out of the deal.
   
• Make sure that you have IT-architecture and project management skills at hand. - By default an outsourcing arrangement includes "hands" but is mostly lacking "brains". This is due to the pricing arrangements that usually specifies a (low) fixed hourly rate. That rate is very often too low to allow the outsourcer to involve really qualified staff in the solutions to your problems.
   
• Be aware that (large) outsourcing suppliers are usually good at operating an existing environment according to clearly described rules. - The change process has been an "alien concept" to all (large) outsourcing suppliers we have worked with until now.
   
• Put a high emphasis on staff continuity. Otherwise the risk is high that outsourcers' staff will rotate away as soon as they have been trained to deliver according to your needs.
   
• Make sure that you have the possibility to check that the reported SLAs actually reflect reality in case you get a feeling that experienced reality and reported reality do not match.