Keeping your workforce on top requires programs with scale, flexibility, and measurement.
By John Higgins
Several years ago when I was on the provider side of the LSO street, I was giving Cushing Anderson, program vice president, IDC our quarterly analyst review and update. During that briefing, Cushing made a statement that has stayed with me to this day. He said something to the effect, “You know, John, I get to listen to several of these provider reviews each quarter, and it’s darn hard to tell you guys apart. In fact, if you took your logo off your presentation and replaced it with that of your competitor’s, it’s likely no one would know the difference.” As I digested Cushing’s feedback and subsequently spent many hours reflecting upon what he had said, I pondered how difficult it must be to be a buyer in this LSO market.
Last month, this magazine published its annual Baker’s Dozen Customer Satisfaction Survey for learning providers. I personally know several of the companies on the list and I am well aware of their message to our market. Once again I thought, “How DO buyers make sense of selecting the right provider in a market with so many qualified companies?” So in this month’s column I strive to share perspectives and suggestions that may ease the confusion, or pain as it might be, in searching for, and finding the best LSO provider for meeting your LSO goals and objectives.
Having been in the role of both LSO provider and buyer, I want to first offer insight to several steps you need to have in place before inviting an LSO provider to the table.
1. Clearly define and document the business goals and objectives you wish to achieve with an LSO arrangement. Note I stated “business” as opposed to “learning” objectives. 2. Understand the nature of the service scope you wish to include in the arrangement—is this truly a complete end-to-end relationship, encompassing the processes we described in last month’s column, or is it simply a “one and done” project-oriented relationship? 3. Be prepared to cultivate and foster a true working partnership with your LSO provider. All too often, strict procurement policies and procedures, voluminous legal agreements, and an attempt at creating iron clad service level agreements (SLA’s), stymie and stall
an effective working partnership from the onset of an LSO relationship.
Having those steps in place, you now get to start a process that is akin to dating. You speak to your contacts in the market, you do some research, and you look to see whom you might wish to speak with about a possible LSO arrangement. You’ll likely invite your matchmakers into the process—your procurement chief and possibly outside, third-party advisors. After a courtship period (RFIs, RFPs, site visits), you begin to think about whom you eventually want to marry. I think you’re getting the visual, yes?
With so many suitors, how do you differentiate among suppliers? Asked about this, Ed Trolley, vice president of Managed Training Services, NIIT, offered an interesting point of differentiation: “Your provider needs to be able to demonstrate they are indeed in the business of training.” For those of you who know NIIT, you understand training is their exclusive domain. As you consider potential LSO providers, it is useful to see how they drink their own champagne. Several of the major suppliers in the LSO market have their own large, global workforce. Ask them to demonstrate how they as a company are achieving the same results they are promising you. Make sure you speak directly with their Chief Learning Officers (CLO’s).
As my conversation with Ed continued, he gave me the money shot; Ed said two other key elements of differentiation are, “flexibility and scalability. These two elements position the provider and the buyer to move at the speed of business, not the speed of training.” Think about what Ed said for just a minute or two. As we read Ed’s insight, “speed” is mentioned. Think about speed in your company and how it has become the new currency of competitive advantage. How powerful would it be if you could capitalize on the notion at moving learning at the speed of the business?
I also recently had a chance to have a conversation with my colleague, and well-known outsourcing industry thought leader, Mary Sue Rogers. Mary Sue is IBM general manager Americas & Global HR & Learning Outsourcing. During our chat, she shared a compelling perspective. “The value proposition for outsourcing learning is simple. It starts with the straightforward fact that companies that invest in training routinely outperform those that do not.” As I listened to Mary Sue I wondered how many buyers approach an LSO arrangement with higher performance in mind. I thought about the many conversations I have had with prospects that focused on cost take out, or what the industry calls, “your mess for less.”
Mary Sue went on to describe how value is created through an LSO arrangement. “Those companies focused on performance creation shrewdly reduce their investment in low-value, generic activities (typically through LSO) and free up dollars to invest in high priority, innovative training initiatives.” To me, Mary Sue’s perspective gives us pause to think about what I call the balance of trade in LSO. The balance that HR & Learning leaders strike between the need to reduce cost, and at the same time demonstrate the business impact that can be achieved through learning and development.
I asked Mary Sue to describe the key leverage in LSO. “With outsourcing, there are three key points of leverage. Shared services models and standard delivery platform provide cost-effective back office administration—design, development, and delivery functions offer the first point of leverage. The second point of leverage is the buying power of a large provider for software, hardware, courseware, and other assets, which enables them to buy at deeply discounted rates. The final, and most impactful leverage point, is the alignment of learning with business goals to ensure each dollar invested in learning has a measurable return.”
The perspective shared by Mary Sue offers us an opportunity to establish several more points of differentiation between LSO service providers. Does the provider you’re considering have a demonstrated, sustained, and quantified track record of cost reduction in back-office, transactional related tasks, a leverage in scale of purchasing power and expertise, and global enterprise performance enhancement through LSO? And can they achieve this while fostering a spirit of true partnership? Or are you begrudgingly forced into the LSO “one size fits all” black box. Remember Henry Ford? “You could have any color black model T you wish.”
Adding to Ed’s and Mary Sue’s perspectives, I encourage you to think about the role commitment plays in establishing differentiation between providers. Are your providers willing to structure agreements that indicate they are willing to be with you in the tough times as well as the good times?
It is common in LSO agreements to see terms that seek to establish minimum spend levels. Under the promise of the stronger the spend commitment, the better the long term discount, these clauses seek to lock in a predictable level of spend. At face value this may seem favorable for both the buyer and the provider. Come on now. How realistic is it that you can possibly commit to a spend level two, three, or five years in the future? How many of you have had to restructure your current LSO arrangement because of the rapid onset of the global economic crises? Is your spend today something you could have realistically forecasted three years ago? How different would your relationship be if your LSO provider were demonstrating a commitment of flexibility?
So what say you all? (Being from Texas, I am required to get an occasional “you all” into my column.) How do you go about differentiating between your suppliers?
Drop me a line. I’d love to hear your perspectives. Please join me next month for “The Voice of the Customer.” We will get to hear from several buyers who have traveled this LSO provider selection road.
John Higgins is founder of Higgins Learning Group and was previously global senior director for Accenture HR & Learning BPO Services. He can be reached at firstname.lastname@example.org.