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 Contract Expiration: Opportunities and Pitfalls of an End-of-Term Strategy
eSeminar |
Category: Strategy & Business Case Benchmarking IT Infrastructure & Applications...
Did you know a typical sourcing contract becomes less and less effective the longer it is in place? This is because most sourcing contracts remain fundamentally unchanged through the course of a sourcing relationship, failing to adapt to fit the changing needs of both the client and the ever-evolving sourcing industry.
Solving Outsourcing's Value Equation
White Paper |
Category: Benchmarking IT Infrastructure & Applications
Measuring the value of outsourcing has evaded even the savviest buyers of outsourcing services. Often, the intense initial focus on cost inhibits the discovery of outsourcing’s real impact on the organization as well as how well the organization is embracing the new sourcing operating model.
In addition, as the outsourcing relationship evolves and matures, new drivers of value appear and other value drivers supplant the original cost arbitrage objective. Measuring the value of outsourcing based on the terms of the contract (e.g., scope, pricing, and service level performance) may provide some level of comfort, but for CIOs and CFOs who are looking for continuous value identification and hard evidence of value creation, these measures fall short.
As with any business competency, companies should be able to measure the value of outsourcing capabilities and determine how to best improve their sourcing performance. Any assessment should be designed to help identify areas of weakness and priorities for improvement. Tools and processes should be designed to get a deeper understanding of the capabilities and performance around each of the four quadrants for sourcing success.
Many contracts only marginally address some of these value metrics, and most don’t consider them at all. Often, in long-term relationships, the relationship deteriorates because the parties are focused on measures of performance that don’t really matter to the business. All the time that providers spend on reporting service level performance, and for all the metrics that business service management dashboards splash on fancy graphs, few companies have captured and measured the economic value of outsourcing.
Companies that do not regularly evaluate the four quadrants of sourcing performance often find that 40% to 70% of the original contract value has been lost. But most disturbing, they do not realize they are losing value and continue to pay for services they are not receiving. Surprisingly, this is not the providers’ fault. The lack of a vendor management structure and poor contract and relationship management contribute to value leakage.
This white paper offers a self-assessment that provides insight into potential areas for development and areas to consider when evaluating whether or not your organization is experiencing value leakage as well as tools and methods to help buyers of outsourced services capture and measure the economic value of outsourcing throughout the course of the sourcing relationship.
Balancing the Risk and Reward of Outsourcing
White Paper |
Category: Strategy & Business Case RFP Development Provider Selection...
The best outsourcing agreement for your organization is not necessarily the one with the lowest price. Your primary goal when negotiating and structuring an outsourcing contract is to develop an agreement that achieves your business objectives not just on day one but throughout the entire term.
This white paper will help you understand the overall construct of a good outsourcing contract so that you can make certain you balance the overall risks and rewards in order to receive the services you need, at the levels you require, and within your price constraints.
 How to Implement the Results of a Benchmark
eNews |
Category: Benchmarking IT Infrastructure & Applications Outsourcing
A benchmark can seem like an easy answer to improving the price performance of your outsourced operations. By finding out the market price of your services, you should be able to simply change your pricing to reflect the market, right? Wrong!
A sourcing benchmark needs to investigate the causes of any price differences to market, rather than just show the price difference itself. Without an analysis of causes, it is nearly impossible to make any changes to the price of your services because there could be multiple issues at stake. Will the provider agree to the change? What will that change do to the pricing mechanism? How will the price change impact the service? What effects will it have on the client/provider relationship?
To be effective in these circumstances, a sourcing benchmark needs to uncover the drivers of any price difference, such as volume changes, asset refresh rates, residual transformation charges, etc. These sourcing price drivers will determine the ability of either party to derive price benefits from the agreement.
This article describes how considering sourcing price drivers is essential to finding the best way to implement your sourcing benchmark results.
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