Long term key-supplier framework deals and outsourcing arrangements have long been a feature of the IT landscape, but far too often we read in the press about the high-profile fallings out and terminations. Are there secrets we can all learn from these to make sure the relations we enter into in the coming years blossom throughout their life?
Recently I have been involved in a number of re-lets of large pieces of outsourced work and framework agreements. The common background with these was that they were let to a particular supplier or suppliers three to five years ago, and the customer is now reviewing those relationships in the light of all that has changed in the current market. Very often, the supplier you feel would be in pole position in the re-let - the incumbent - is in the worst possible position at the point of the re-let, and this has started me identifying some themes to get right on both sides, if these long term and often mission-critical partnerships are to work.
1) It's not wrong to have high aims at the start
In looking for vendors to outsource significant services and projects too, it is quite right to expect some value add and innovation at the start of the relationship. The suppliers work across many sectors and customers and they should be bringing some thought and knowledge from that experience to bear. Particularly in the new market economy you should be looking for specialism within your sector, as well as technical innovation.
2) Risk and reward has to have an upside
A common theme in negotiations at the moment seems to be the transfer of risk to suppliers. Sitting on the supply side of the fence, I understand and buy in to this concept, but there does have to be an upside for the supplier in doing this. We suppliers have boards of directors too, and whilst our boards are happy to sign up to well-thought-through business models where the risk is shared and there is potential for margin upside if we over-perform, it is far harder to sell a straight transfer of risk.
3) Complacency works both ways
What saddens me in much of these dialogues with customers is that contracts signed and celebrated, in many cases tend to end in a feeling of disappointment. I've then started looking at the ones that work and continue beyond the original terms, and it is startling to spot that in all of these a very simple thing happens. Individuals on both sides care and put in the effort to keep the relationship fresh. The supplier worries about its stakeholders within the client, and communicates constantly, transparently. The old adage of ‘no surprises' goes a very long way in keeping your champions on your side. The supplier also brings new ideas to the table, and ensures that any investment available flows in the direction of that client. On the flip side, the customer team keep their supplier in the loop on major changes in their business, take the time to visit their facilities, and give supplier staff the ‘Big Picture' view of where their work fits in. And they act as a willing advocate of the relationship where appropriate.
4) Things change
A deal that was great for both parties at the point of signing, won't remain great throughout the life of the deal. If you imagine everything that has taken place in the last five years that can effect a deal- the global recession, material currency fluctuations, increased need for security, lack of public trust in certain market segments and greater regulation across many- then you will quickly realise that you need to regularly review contracts with your supplier and ensure that such situations are taken into account and at least discussed in light of the contractual T&Cs you both committed to.
5) People Change
Often great deals come about because of a good personal working relationship between a group of people. The danger with this is that people change roles on both sides of the relationship, and often the baton of the good working relationship is not passed on. Again it takes both sides to avoid such problems. If the supplier is transitioning key players out of the deal, wherever possible they need to take their time and go at a pace that the customer is happy with. The individuals involved need to take personal responsibility for handing over not just the technical and contractual information, but the more subjective things that have absolutely made the partnership work up until that point- the values, the ways of working, the spirit of the deal.
So the secret is simple, like all relationships, good mutually beneficial IT partnerships need a lot of work from both sides!!!