Building traditional, highly detailed RFPs (Requests for Proposals) in isolation from service providers and a client’s wider business community wastes time, money and effort.
Detailed, highly technical RFPs restrict discussing the art of the possible with service providers, commercial and legal advisors and of course, the client’s business leaders.
Consequently, there is minimal definition of vision, strategy and objectives and little understanding of what success should look like.
The problem with traditional over-the-fence RFP processes is that they are confrontational and inhibit collaboration and business understanding. They stifle creativity and innovation and constrain delivery of transformational business benefits.
To achieve these benefits, clients must adopt a better way, one that focuses on business outcomes and enables service providers to gain a detailed understanding of the business strategy and objectives.
The approach must enable the best service provider to be selected (rather than the worst eliminated) and provide the client with the ability to realise sustainable business value within a mutually beneficial relationship.
The process employed in most outsourcing transactions drives clients to spend too much time documenting technical requirements and not enough understanding true business needs.
All too often, advisors supply boilerplate documents, technical descriptions and SLAs. While these standard documents might get clients to contract, they are unlikely to be the foundation for successful relationships or a deal that captures the best the market can provide.
Worryingly, the traditional, confrontational RFP approach is predicated on a perspective that service providers must never be in a position to win.
Clients and service providers are kept at arm’s length, which perpetuates a lack of trust.
The process also presumes that the advisor always knows best. Conversations with service providers, solicitors and business leaders to identify clever ideas or to seek their perspectives are extremely rare.
In addition to a lack of collaboration, traditional processes drive clients to document in unnecessarily high levels of detail and complexity exactly what the service provider must do.
This adds little to the overall effectiveness of the contract but consumes enormous amounts of resources, stifles creativity and detracts attention from the real needs — those of the business.
The opportunities for creating truly innovative solutions are further hamstrung by compliant box-ticking, with clients often assessing service providers on the number of boxes ticked rather than the quality and appropriateness of the overall solution.
This technically focused, highly detailed box-ticking process provides minimal face-time with service providers — typically as little as two per cent of the total project timeline is spent on meaningful dialogue — before responsibility for services is handed to the service provider for the duration of the contract.
The only intense period of face-to-face time occurs during the finalisation of the contract; this is hardly the most effective way to build a relationship based on trust and mutual understanding.
Clients must focus on business outcomes. They need to approach outsourcing with a hawk-like focus on the vision, strategy and objectives of the business and use business outcome-based language rather than technical jargon.
Ultimately, they need to simply and clearly articulate their true business needs. Just as importantly, service providers need to demonstrate a deep understanding of these requirements and to focus their intellect, time and resources on supporting these.
Clients need to build collaborative relationships with the service provider, ones that support closer, earlier, more meaningful engagements.
These engagements should enable greater face-time, deeper understanding of client requirements, greater opportunity to demonstrate capability to clients and increased opportunities for innovation and creative thinking.
Sadly, traditional approaches typically view innovation as an optional extra, with suppliers being informed that they may offer alternative approaches in addition to the compliant bid.
It takes a brave and probably foolhardy service provider to do that, and one with a surplus of staff to find the time to bring true creativity and innovation as well as carefully ticking all the compliance boxes.
In short, clients need to adopt an approach to outsourcing that enables them to realise sustainable, long-term benefits that are tested and measured throughout the entire sourcing lifecycle.
Colin Lawson is founding partner at specialist sourcing consultancy This Partners