10 Ways to Top Your IT Outsourcing Provider's Priority List

By Stephanie Overby, 19-Jul-2012

Being at the top of your IT outsourcing provider's priority list can be of great benefit to you. Here are 10 simple yet often-overlooked ways to get to the top of the list without having to buy your way there.

10 Ways to Top Your IT Outsourcing Provider's Priority List

While you may not want to be your outsourcing provider's favorite client (that probably means you're making them the most money with the least effort), you don't want to be on their black list either. The very important customer roster is where you want to be. "Being at the top of your provider's priority list will inevitably be to your benefit over the long haul," says Steve Martin, partner with outsourcing consultancy Pace Harmon. "And figuring out how to get there without having to buy your way into this elite club is worthwhile."

There are some simple, but often overlooked ways, to show your outsourcing provider a little love and get more attention in return -- without giving away too much.

1. Be Reasonable in Negotiations. You set the tone for the outsourcing engagement long before the contract is signed. "This is a long-term relationship. There's no need to fight for every point in the negotiation," says Shawn Helms, partner in the outsourcing and technology transactions practice of law firm K&L Gates. "Taking a hard line approach or asking for unreasonable, out-of-market terms creates ill will from day one."

2. Open Up. There's nothing like a post-nuptial revelation to ruin a good relationship. A coveted customer will provide full disclosure of their environment during the due diligence period, says Pace Harmon's Martin, including an accurate asset inventory, current performance levels, and number of resources supporting operations. "A subtle, but important, ingredient in the buyer-provider love fest is a buyer that has a solid handle on their process baseline and a definitive total cost of ownership model prior to engaging the provider," says Michael Engel, partner with outsourcing consultancy Sylvan Advisory. "Being able to provide a comprehensive view of value being delivered to your client, based on their data, is an absolute love potion for the provider."

3. Put the Contract Away. Avoid hyper-technical interpretations of the agreement. Valued outsourcing customers "live the spirit of the [outsourcing] agreement and not just the words," says Edward Hansen, partner and co-chair of the global sourcing practice at Baker & McKenzie. "If you conducted your contracting process in an optimal fashion, you should have a contract that embodies a great working relationship that you forged as you were working through the problems that arise during negotiations. Bringing this problem-solving attitude into the way you manage your vendor after contract signing is a great and fair way to keep the relationship on track."

4. Offer Rewards. "Providers will show you the love if you show them the money -- or at least the potential to earn it," says Martin of Pace Harmon. "Reward strong vendor performance and service with opportunities to pick up additional revenue and make clear the linkages between their financial prospects and their performance.

5. Go Public. Outsourcing can be a dirty word these days, but the sound of a satisfied customer is music to a supplier's ears. "Quality client references will win many more clients and help them move to higher value services," says Phil Fersht, founder of outsourcing analyst firm HfS Research. The customer VIP will go even further. "We have a number of clients where the executive sponsor has stayed so intimately involved in the initiative that they will go on sales calls with the provider," says Michael Engel of Sylvan Advisory. "We have another client who participates in an advisory capacity in the provider's internal service offering development process."

6. Be The Change. You want collaboration? Create a team-based environment. Seeing innovation? Invite key provider personnel to strategize. "Never underestimate the human side of the relationship," says Martin of Pace Harmon. "Providers are more likely to engage if they feel their customers are actively partnering with them everywhere from day-to-day tactical activities through executive business development initiatives."

7. Loosen Up the Purse Strings. If you want more, pay more. "Customers should understand that changes in scope can increase the cost to a service provider in a way that was not originally accounted for in the service provider's business plan," says Helms of K&L Gates. "The customer should want its service provider to make money and maintain its margins - that leads to better service." Give a green light to justified change control requests.

8. Lend a Hand. If your vendor starts failing to meet its commitments, hold off on the finger pointing and try to help them resolve the issue. "A well-executed outsourcing agreement is an ecosystem where everything depends on everything else," says Hansen of Baker & McKenzie. "If you allow your vendor to fail in one area, you are setting the business up for misery and the vendor up for failure."

9. Pay Your Bills (On Time). Sounds simple enough, but plenty of customers delay large payments to their IT providers to help their own cash flow. "Service providers have little recourse," says Helms of K&L Gates. "It ends up being a real annoyance -- or problem -- for the service provider."

10. Be Nice. It's not unusual to see a provider go above and beyond to create a smooth outsourcing transition only to get nailed to the wall by the customer the first time their performance lags. Don't be that customer. "This doesn't mean that you should tolerate suboptimal performance," says Hansen of Baker & McKenzie. "But it's important to remember that you are doing business with people, and people appreciate some good will every once in a while."

Source: CIO (US)

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