Business With Finesse
Whether it’s a sports or business arena, the masters leave nothing to chance. They know that what you get out of something depends on what you put into it. I think it’s an apt comparison to this year’s seven award winners for the world’s most outstanding outsourcing relationships. As always, it’s a pleasure for us at annual awards time to relate highly successful cases of outsourcing solving the business woes of a company. This year we even have examples of using outsourcing to solve crucial business challenges for entire cities!
When I spoke with Barry Wiegler, founder and managing director of Sourcing Interests Group, serving on the panel of judges, and hosting the awards ceremony, he said, “If one were to wonder about the health of the outsourcing industry, they would only need to look at the quality of the finalists and the high number of meritorious nominees for the 2003 Editor’s Choice awards for the answer.”
The Judging Process
Through a balanced scorecard approach, the nominations were narrowed from 90 entries to 30 semifinalists, then sent to our 2003 panel of judges. Some of the many criteria reviewed were: the way the parties work together to handle challenges; how they communicate; the ongoing flexibility of both parties; use of risk-reward pricing structures; extent of transformation of the buyer’s business; business objectives and desired outcomes clearly defined upfront; whether both parties are focused on creating and sustaining a mutually beneficial opportunity; successful implementation/transition; effective governance structure for relationship management; and whether the parties achieved value beyond their original objectives.
The figure below illustrates some of the characteristics shared by the semifinalists and winners.
Evaluating the 30 semifinalists, judge Lisa Ross comments, “The clearly demonstrated exceptional results achieved by every one of these relationships made me realize that extraordinary best practices and repositories of expertise exist in all facets of the outsourcing industry.”
Indicating the increased sophistication in use of outsourcing, there were marked differences in the 2003 nominees, compared to prior years. We noted the following trend indicators among the 30 semifinalist champions:
- Buyers referring to providers as “our strategic partner” or “our alliance partner” instead of “vendor,” “supplier” or “outsourcer;”
- An increase in both parties’ flexibility;
- An increase in outsourcing used as a strategic enabler for a buyer to enter a new market or provide a new product/service;
- Noteworthy examples of governments changing their prior “contracting out” methodologies and, instead, modeling their deals on successful commercial examples;
- A large number of excellent nominations with buyers in countries outside the U.S., (including the first-ever nominations from China, Ukraine and Hungary), clearly indicating significant growth in high-value, strategic outsourcing arrangements in all global geographic regions; and
- Many buyers looking beyond current needs, basing provider selection on ability to meet “potential” needs three to five years into the future.
Our 2003 award winners clearly demonstrate relationship finesse and strategic use of outsourcing to achieve business objectives. “These stories reinforce the importance of the proactive care and feeding of the relationship after the agreement is signed,” says Jones Day partner, John Funk, who served on the panel of judges. “It takes two partners acting in good faith with each other to make a complex arrangement like outsourcing successful.”
“It is clear that trust is a foundation in these relationships,” states Gartner analyst, Allie Young, who served on this year’s judging panel. “Trust was earned by providers’ over-delivering on client expectations, by clients and providers working through difficult problems together and by providers responding to new demands to raise the bar. These providers are acting as though their clients’ businesses were their own. There are countless examples that capture the true essence of a win-win relationship.”
We’re pleased to share with you their stories and lessons learned in how to achieve business objectives and ever-increasing mutual value as models for your own outsourcing successes.