Global Outsourcing
Commentaries: Building Better Deals
Submitted by Michael Mensik
In This Issue:
- Alternatives to “Scorched Earth”:
- Collaborative Contracting
- Remember the Larger Purpose
- Keep It Simple
- Play Fair
- Respect the Other Side
- Nomenclature Matters
- Clean Up Your Own Mess
- Beware of “Worst Case” Thinking
- Remember Who’s in Charge
Alternatives to “Scorched Earth”
The ritual has become all too familiar - like a weird mating dance.
A major company decides to outsource. It engages seasoned consultants and attorneys, armed with forms, templates and processes galore. They conduct an assessment, construct a “base case” budget, then issue a request for proposals, complete with the
latest, most stringent terms known to the attorneys. After bidders’ conferences, sales presentations and other rituals, proposals are submitted, scrutinized and discussed; until one or two finalists are selected for the final “death march” toward signature documents.
Few prisoners are taken (although some participants taken from their day jobs for months at a time may think they have been held hostage).
Many observers now believe that the process has become too costly, protracted and contentious. From start to finish, the whole rigmarole may last eighteen months. Professional fees may run well into seven figures. The participants emerge exhausted, with business relationships bruised. Cynics mumble about costs and even the advisers’ motivations. No reputable professional merely runs the meter, of course, and knowledgeable observers understand that fat closing binders actually contain important protections. Nonetheless, the question is symptomatic and disturbing.
More to the point, the results often disappoint. Customers grumble that costs exceed expectations, but performance does not. Suppliers may struggle to make acceptable returns. Both sides have difficulty managing relationships successfully. Expectations may or may not be well aligned, and in any event, when the ink is dry, the original
requirements may be out of date. The contracts themselves increasingly resemble government contracts: acres of turgid prose, laden with obscure terminology. Their complexity defies both easy comprehension and efficient administration. Time that might be devoted to planning the future is spent quibbling over wording and remote contingencies.
Might there be a better way? We think so.
Get the complete whitepaper
|
