Is Outsourcing Worth The Risk?
The last few days have seen the publishing of a damning report from the Commons public administration committee into the failure of large outsourcing contracts to deliver value for money. The report was prompted by the recent collapse of Carillion and the fall-out for Government procurement departments that spend a reported £251.5bn per annum on outsourcing activity. The key findings point towards systemic failures, e.g.:-
- The processes for contracting and managing this spend are, overall, “unclear and ineffective”
- The data on which deals have been struck has, in some cases, been flawed
- The handover of risk has been ineffective and asymmetric
- Cost has trumped quality, leading to service degradation, affecting the lives of ordinary citizens
But the push for lower overall costs does not have to be at odds with quality; the two go hand-in-hand when quality and operations are well-managed. This ambition can also be achieved when two organisations operate in an outsourcing partnering arrangement. What is required, is a robust method for contract award, preparation and in-flight operation that involves both parties with common strategic aims and objectives, based on end customer satisfaction.
Advanced Service Quality Planning (ASQP™) takes the tried and tested approach used in industries such as Automotive and Aerospace, to build-in service quality from the outset. ASQP™ systematically brings recognised good practice to each of the six main elements that together provide the foundation for successful outsourcing:
In turn, service providers can benefit by getting better prepared for potential contract award and stress-testing the assumptions within their bids to avoid painful and costly ramp ups that were built on shaky operating model designs.
Both client and service provider can reduce risk and cost using this technique. Surely the prize is worth winning with multi-million-pound overruns reported in the press.
For more information on ASQP™ and how you can reduce the risks of outsourcing, contact Mike.Turner@TheOaklandGroup.co.uk