We Need Outsourcing Marriage Counselors

CIO Magazine had a very interesting article by Stephanie Overby published this week entitled “Don’t Mess with Texas: 7 Lessons from State IT Outsourcing Disasters”. Her 7 lessons learned from IT outsourcing debacles in Texas, Virginia and Indiana included:

• You Get What You Pay For
• You Get What You SLA For
• When the Going Gets Tough, The Tough Go Public
• You Can’t Sue Your Way to a Better Relationship. But You Can Try
• Outsourcing Means Never Having to Say You’re Sorry
• Outsourcing Will Not Cure Internal Inertia
• If At First You Don’t Succeed, Try Again. And Again

The article goes on to say “It took San Diego County two outsourcing contracts—and three different CIOs—before it got its outsourcing deal on the right track”, which is a reference to a May 2006 article that Stephanie wrote (“Government Outsourcing: San Diego Tries to Learn from Contract Mistakes”).

The problem with Stephanie assessment, especially the idea that San Diego got it right the second time around, is the belief that the outsourcing contract is the basis for success. My argument is not that having a sound contract is a bad idea but simply that any third party relationship has to be based first on a solid foundation of mutual respect, empathy and trust.
The contract is like a prenuptial agreement, if things don’t go well it’s the basis for resolution of any disputes. Once the marriage is consummated and the deal signed, the players on both sides need to work on developing their relationship.

The starting point for this relationship is mutual respect. The client needs to understand that they have hired expertise in IT from the outsourcer because IT is not their organization’s core competency and that their organization has made the outsourcing decision based upon a belief that the outsourcer will provide more efficient and effective IT services. Anyone in the client organization that is not committed to these fundamental principles should not be involved in the outsourcing relationship.

From the outsourcers perspective, they need to demonstrate from the get go their core competency in IT and clearly document the ways in which they are improving the efficiency and effectiveness of the IT services they are providing. The profitability of their relationship should be the result of the superior services they are providing and not the principle goal of the relationship. Here again, any member of the outsourcing vendor that doesn’t embrace these principles should be removed from the account.

Empathy is a second essential element of the third part relationship. The client needs to understand that their outsourcer is not a charity and needs to generate a reasonable profit if the relationship is going to be sustained over the long run. The outsourcer needs to understand their client’s cost concerns and make sure they are clearly demonstrating that their services are competitive. Empathy implies flexibility on the part of both parties. The client’s demands must be reasonable and not place an unfair burden on the outsourcer and the outsourcer must be willing to give when there are issues with the quality or effectiveness of the services being provided. If the outsourcer has over promised the services they can provide for the price they quoted, not an unusual situation, then these issues need to be addressed head on. The question can best be addressed by determining a fair price and an appropriate discount that reflects the outsourcer’s prior commitments.

If mutual respect and empathy have been established, then the conditions exist to build the third leg of the stool – trust. Trust clearly takes time to develop and is the most valuable element of any relationship. Any actions by either party that would violate the others trust is a strategic relationship issue and needs to be effectively addressed by the senior management of both parties. Nothing can cause a relationship to unravel faster than the loss of trust.

If your considering outsourcing or have already entered into an outsourcing relationship, develop a sound contract and then put it on the shelf. Focus on developing a solid relationship based upon mutual respect, empathy and trust, and my bet is you’ll never need to refer to the contract again or at least only in the most unique circumstances. If problems develop, consider working with a marriage counselor before ending up in a failed relationship.

William A. Crowell
wcrowell@asuret.com
twitter: billcio
LinkedIn: Bill Crowell
My Blog: https://bcrowell.wordpress.com/