Outsource Issue 30 - (Page 98)

TOP TEN MEASURING EFFECTIVENESS Our Top Ten series returns with some handy hints on how to measure – and drive – long-term value in outsourcing… Alasdair Ramage, Moorhouse Alasdair Ramage is Principal at transformation consultancy Moorhouse, helping clients to design and to deliver complex programmes of change. I n the words of Albert Einstein: “Not everything that can be counted counts, and not everything that counts can be counted.” Einstein may have been thinking about the universe, not business performance, but this statement can ring surprisingly true when it comes to outsourcing. To measure the effectiveness of an outsourcing arrangement, we must understand what is being sought from the deal. Capturing and measuring the benefits – tangible and intangible – can seem daunting. But only by establishing a credible baseline can the arrangement consequently be judged. Organisations are broadening the remit of outsourcing; from simple transactionalbased arrangements (such as cloud-IT- enabled ‘pay-per-use’ models) through to innovative outcome-based procurement and joint partnering arrangements. Cost reduction remains the single biggest driver, but buyers are increasingly looking beyond “same for less” to engage outsourcing partners for competitive edge: “different for less” is back on the agenda. As the voice of the customer is brought further into traditional businesses, other drivers can be equally compelling, such as improving service quality, and raising innovation or organisational agility. These drivers of long-term competitive "edge" are forcing a rethink of how to measure and predict outsourcing performance. The following tips relate to measuring and driving long-term value through outsourcing, beyond simplistic "cost and SLA" measurement. Start with the basics A sound business case is the crucial reference point to assess whether outsourcing is a success. It needs to be stated, in writing, and include all the tangible and intangible reasons for outsourcing, as well as the benefits they bring to the business (ideally quantified). It’s crucial these are regularly reviewed and updated to stay as relevant as possible at all times. The level of resource the buy-side puts into service management Services can be outsourced, but not performance accountability. As a buyer, you are required to invest time in actively managing this and participating in relationships with suppliers, working 1 2 “An acre of performance is worth a whole world of promise.” – William Dean Howells 98 www.outsourcemagazine.co.uk ●● ● http://www.outsourcemagazine.co.uk

Table of Contents for the Digital Edition of Outsource Issue 30

Peering through the fog
Who moved my world
Bringing on the beeb
Courting the commentariat
Everyone is responsible
Our survey says
Fast money
Smarten up
Seeing the biggest picture
NOA round-up
Embracing enterprise innovation
Customer matters
Application development outsourcing
India: rules for offshoring
Talent gap
The Professionals
Book learning
The outsourcing jigsaw
The legal view
Top ten
NelsonHall round-up
Online round-up
The deal doctor
Inside source
The last word

Outsource Issue 30