Buyers who play coy with service standards do themselves a disservice.
By John Higgins
Well readers, it’s equal time for the providers this month. Remember, it takes two to tango. Great LSO deals require having buyers and providers that are aligned and are working diligently toward common business goals. Likewise, when a deal collapses, there’s ample contribution on both sides.
In a recent conversation I had with Mark Hill, Accenture’s global executive director of learning BPO offering and business development, he described the desired LSO relationship as one grounded in open communications and fairness on both sides of the arrangement. Mark said, “We all know these LSO arrangements include several levels of complexity. The clearer buyers are describing their business objectives and the better providers align their capabilities with those objectives, the greater the likelihood of success over the life of the arrangement.” Mark’s perspective proved to be more than interesting. As I spoke with other industry providers, this notion of clear objectives and alignment of capabilities emerged as a core theme.
My experience in our LSO industry has afforded me the opportunity to befriend a number of buyers and providers alike. And I have to tell you, you’re all pretty nice people. As readers of this column—whether you are a buyer or a provider—your personal and professional goals are more similar than not. You are interested in challenging and fulfilling opportunities in your careers, you are committed to the well-being and growth of your company, you seek a work/life balance, and you care deeply about your families. And then, we all show up to work on an LSO arrangement, and somehow, all those similarities are tossed aside!
Yep, I know what you’re thinking, “Here goes Higgins again, wanting us to lock arms and sing some sort of uplifting song.” No, I assure you there is no need to sit in the hot tub together. There is a need to begin to move past the volume of terms and conditions that stymie candid and trust-based dialogue. Wading through SLAs requiring a background in both English literature and chaos theory is enough to cause heads to explode! It’s no wonder buyers and providers forget they are more likely aligned than not.
Given my premise that we’re all working toward similar goals, where does the buyer/provider tension take root? It’s simple really: The tension is built into the system.
For buyers, it is critical to keep spend within as reasonable a level as possible—some might even suggest the level of desired financial commitment comes across as unreasonable. And on the provider side, there is a goal to grow revenue and expand margins. There! I’ve pointed to the elephant in the room. Fiduciary responsibility on both sides of the LSO table is implicitly at odds. May I suggest we work on the meaning of life rather than take on that elephant just now?
Last month, I mentioned I had spoken with several buyers about what they expect in an effective buyer/supplier relationship. In the course of those conversations, buyers provided insight to the core elements they expect in an LSO relationship. This month, I asked several providers to reflect on the core elements they need to see in order to structure a sound working relationship. Here’s what our providers say.
When providing a request for information (RFI), or request for proposal (RFP), strive to set forth an explicit and clear statement of desired business objectives and outcomes. If you want to reduce operating expenses at the rate of X percent per year, over Y years, then say so. If you want to tie the success of the LSO arrangement to increases in quality, productivity, and revenue, then do so. Avoid sending providers on a fishing expedition.
Be clear on exactly how you will go about determining your final selection. I know there are those in procurement who view this as “showing your hand.” Wouldn’t it be interesting if you had your three finalists all in the same room when you explicitly described what it takes to gain the opportunity to do business with you? When buyers provide a transparent view to the evaluation and decision-making process, it assists the providers in clearly understanding what the buyer is seeking to achieve. There is everything right with this approach. Has the current approach of “keeping it close to the vest” served you well? I guess I won’t be writing for the procurement trade journals any time soon.
Finally, define a clear set of baseline financials in the RFI/RFP documentation. It’s difficult to develop a multi-year business case for value when the base is built on quicksand. Your proposing providers and third party advisors have a wealth of experience in financial due diligence and business case development. Leverage that expertise to mutual benefit and create LSO arrangements that build on solid financial foundations.
Regardless of which side of the LSO table you sit on, consider this perspective, and see what new approaches you may bring for a successful LSO arrangements.