Tommy was like every other kid who ever swung a baseball bat. He dreamed of hitting the winning home run in the World Series. Tommy even made it to the big leagues, but after two uneventful seasons, he was dropped by from his team. He was crushed.
If your company has outsourced the work your department does, you probably feel like Tommy. If you are lucky, you are like Tommy. Why? Because after losing his position as a player, he began one of the most successful coaching careers of all time. “Tommy” is baseball Hall of Fame member Tommy Lasorda, who managed the Los Angeles Dodgers to two World Series championships and led the 2000 U.S. Olympic baseball team to a first-ever gold medal.
So why be like Tommy? Because outsourcing programs absolutely require in-house managers who are focused on team building and guiding the new outsourcing relationship to success. Managing outsourcing relationships is a new and unique challenge that few companies have yet mastered. Defining and executing on this new discipline of outsourcing relationship management (ORM) is a significant new career opportunity for those that recognize the opportunity and meet the challenges.
Challenges
The relationship with your outsourcing provider is different than the other important relationships your company manages. Your providers are not an employee, although by definition they do the work that your employees used to do. Your providers are not contractors, because they are not specifically under your direction as to how or even where to perform the work. And your providers are not just vendors or suppliers; they are much more intimately involved in the day-to-day operations of your business and may even talk to your customers directly. The tried-and-true methods for dealing with employees, contractors and suppliers are not going to work with your outsourcing partner. But what will work?
The fact is that know one really knows, yet. The pace of adoption and the scale of responsibilities which many companies have outsourced is unprecedented. What might have been managed with intensive hand-holding when outsourcing operations were small will not work as they grow in size and complexity. If you are not convinced, check the Web site of the advisors your company used to help plan your initial outsourcing strategy. Chances are they now also offer services to help you define your ongoing outsourcing relationship management strategy. They might label it as a “outsource vendor governance” or “outsource management and governance” or even “business service management” strategy, but in whatever guise, it is a new category of service which almost all advisory firms now offer as part of a more end-to-end outsourcing approach. They know that companies are struggling with this type of operational problem, and they are eager to offer their experience and assistance.
Opportunities
However, whether or not your company hires a consultant to provide guidance and a beautifully constructed PowerPoint presentation that explains it all in living color (and if you are lucky, entertaining clip art), someone at your company must ultimately take the reins of this new relationship and make it work after the contract signing is done and the transition teams have moved on. That someone could be you. This is an opportunity to take on a new and vitally important role in your company – if you recognize the need and can match your abilities and qualifications to the job.
How do you know if you are qualified? What will an outsourcing relationship manager have to do? There are three primary, high-level challenges:
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Defining a successful relationship;
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Developing a methodology for monitoring and maintaining a successful, healthy relationship; and
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Building the team, processes and infrastructure required to implement your methodology.
Define Success
What does success mean to the outsourcing relationship manager? Defining success is more difficult than you might think. It is not necessarily best articulated in the lofty success criteria that were in your outsourcing vendor’s original proposal. For example, the dollars saved (or not saved) will undoubtedly be debated. Winning this debate is not your job and will not help your company build a successful outsourcing relationship. Rather, your task is to define success in terms of observable and manageable day-to-day objectives. You must set goals and track associated metrics to hold your outsourcing provider accountable, but do so in a way which doesn’t lead to an adversarial relationship. This will undoubtedly include the service level agreements negotiated in the original contract, but should also include appropriate leading indicators, performance measures and relevant qualitative metrics. The ultimate measure of success, of course, is whether the operations of your company continue to run smoothly. Projects must get completed on time, quality must be high and customers must be happy. These are the criteria that will make your company and you as a relationship manager successful. You will need to define a handful of quantitative and qualitative metrics that define day-to-day success and build your approach around them.
