It’s Not A Talent Gap Holding Back Outsourcing

It seems to me that HfS Research and Accenture are drawing the wrong conclusions in urging investment to close ‘a talent gap’ that is preventing outsourcing buyer organizations from driving innovation and getting beyond cost reduction:

“Barely a third of enterprise outsourcing customers believe their current governance talent – the people responsible for managing the service relationship – can drive innovation or define business outcomes.”

HfS’s prescription is training for outsourcing governance teams:

“The majority of governance teams are comprised largely of procurement professionals, contract negotiators and project executives who are not learning the necessary skills to shift their focus from tactical project management to strategic business alignment. Enterprise leaders fail to develop the necessary strategic business skills as their engagements mature and their needs move beyond managing tactical operations.”

What’s really holding things back is that the business is usually at least one stage removed from the outsourcing relationship.

It’s the business alone – the owners and stakeholders for the end-to-end business processes – that has the visibility, understanding and insights that can drive innovation and optimize the blend of outsourced service providers.

And it’s a process management platform that can bring this to life.  It simplifies so that everyone can see the big picture. It provides a framework for effective collaboration within a unified governance wrapper. It enables everyone involved, both in the retained organization – GPOs, IT stakeholders, Lean teams, Risk and Compliance folks – and in the service providers, to work together on the design and implementation of change.  It engages people with process and makes continuous improvement easy.

A current example, to illustrate that this isn’t hot air. A global organization with a major HRO contract that wasn’t working has been able to turn on a sixpence (as we say in Northamptonshire) and re-source at pace by leveraging its process platform and disciplines. It has been able to rapidly capture the As-Is HR processes (without much cooperation from the exiting incumbent); in parallel, to design the To-Be processes; to define and manage all the necessary variants; to orchestrate the necessary ERP re-implementations; and then to execute, in-sourcing some activities while re-outsourcing others.

You need procurement and contracts people to do this.  But without a framework for effective collaboration that engages all the stakeholders and puts the business in the driving seat, it’s always going to be slower, more expensive and more risky.

It seems like bad manners to trash free research. Hats off to HfS for its continued thought leadership in many aspects of this debate.  But on this one, I think the HfS/Accenture diagnosis is wrong.

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Making Sustainability Stick

True story – and I wouldn’t have believed it, if I hadn’t heard it myself…

The global head of a Lean/Six Sigma team was explaining why a presentation to his senior leadership team didn’t go entirely brilliantly. After years of leading performance improvement projects, he’d come to see that what really mattered is sustainable improvement.

He knew how difficult it is to make cost cuts stick. He had seen for himself what McKinsey described last year: that many cost-reduction programs are “illusory, short lived, and at times damaging to long-term value creation”. And that only 10% of cost reduction programs show sustained results three years later.

So he was pitching Nimbus to his exec team, as the platform upon which to build sustainable operational excellence across the enterprise. But in the Q&A there had been some unexpected resistance, focussed on how disruptive and expensive change would be. After some dialog, the underlying objection came out:

“Yes – but if we go down this route, we are going to have to keep all our documents, everything in fact, up to date!”

You might expect that the exec who said this was taken for questioning by the Chief Compliance Officer in a corporate dungeon. But it went unremarked and was taken as legitimate. It was left to our hero to note that keeping things ‘up-to-date’ might not be a bad idea anyway (this is an FDA-regulated organization).

Accenture - The Sustainable OrganizationReading the The Sustainable Organization, published this week by Accenture, it’s easy to run away with the theory and forget how far this is from quotidian reality in many organizations.

You can’t build a sustainable high performance culture overnight. The organizational process maturity that delivers sustainable continuous improvement is a set of capabilities that can take many years to develop. One vital provision for the journey towards a culture of continuous excellence – to borrow Nestlé’s famous phrase – is a process platform. But nothing can happen without vision, understanding and leadership. And, in far too many organizations, it’s folks at C-Level who have yet to join up the dots…

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