Capgemini renews $250 million outsourcing agreement with General Motors. Reader’s Digest and HCL Technologies finalize seven-year $350 million services deal. Proctor and Gamble signs ten-year $3 billion deal with Hewlett-Packard.
Big global service provider contracts generate big headlines. Veteran Fortune 500 and high tech start-up companies have realized the benefits of outsourcing for decades, with the scale and scope growing alongside acceptance and diversity each year. These buyers have learned that highly complex engagements are not successful without a strong vendor management program. But what about small and mid-sized organizations?
The Importance of Partnerships
Over 90% of all North American businesses surveyed externalize some business functions. Whether it is manufacturing, logistics, legal, back office processing, warehousing, technical, accounting or human resources, smaller companies are clearly no stranger to contracting with outside parties for strategic services. The questions however, remain; are they the right services, for the right reasons, with the right partners, and managed using the right processes to deliver the right outcomes?
With less scale to insulate them from underperforming engagements, small and mid-sized organizations have as much, if not more, riding on successful relationships with key service providers and suppliers than their billion dollar counterparts. Similarly, successful partnerships are often critical for the sustainability, growth and profitability of smaller businesses.
Contract Management is Key
There are countless success stories, but many times complacency from a “good” relationship with someone whom you are comfortable doing business with passes for success. That’s no longer good enough. Buyers and providers of business services need to understand how due diligence, oversight, contract management, communication, change control and compliance tie together to manage risk, drive real value and keep moving the needle in a positive direction for parties on both sides of the agreement.
Too often the process of contracting with suppliers is focused only on the work to be done and at what price, with little investment or consideration for how you will be working together.
A structured vendor management program paired with the right technology is vital in helping realize the full ROI from strategic sourcing and shared services engagements. Experienced subject matter experts provide insight into the hallmarks of successful relationships that help even the smallest companies efficiently quantify and maximize the value for all stakeholders.
- Thoughtful definition on which aspects of service delivery are of the greatest importance and value.
- Objective due diligence practices to minimize risk
- Centralized processes and tools that increase effectiveness without additional resources
- Collaboration around what actions are put into motion to capitalize on what is working well and mitigate/remedy issues when things are not.
- Communication and information flow that is timely, consistent and relevant. Aiding decision-making and creating a culture of partnership, rather than reactive postures, which are often destructive and mask underlying issues.
- Change management protocols tailored to help both parties understand what is driving change and its impact to process, cost, or other aspects of the engagement. Instilling the confidence needed to take advantage of time-critical business opportunities.
Whether you are an organization looking for better execution through more efficient and concise relationship management or a growing business that is ready to establish a strong foundation from which to build upon, leveraging the expertise and perspective of a seasoned vendor management professional with the proper tools can help you make headlines of your own.