Outsourcing needs trust and transparency

Colin Craig says long-term outsourcing deals may sour if there is not sufficient transparency from the outset

My conversations with senior managers in IT organisations – whether public or private sector – inevitably drift to the poor quality of the relationships they have with their IT suppliers. They commonly see these relationships as attritional, too commercially focused and, worst of all, built on a shaky foundation of over-promising and under-delivering.

When I meet major account teams on the service provider side, they have equally negative views – albeit more diplomatically phrased. They believe they are beat up over rates, focused on commodities rather than outcomes, offered no opportunity to add value, and that clients tend to be indecisive.

No relationship is perfect, but outsourcing relationships can surely be managed to ensure the benefits initially envisaged are delivered.

It is vital to get the hard aspects of governance right, including the processes for decision-making and the resolution of disputes. It is equally important to get the softer aspects right as well – especially trust and transparency.

Trust is fundamental to any relationship, particularly a complex one. Establishing contracts should mean identifying each party's deliverables and obligations at the outset of the engagement, but it is unrealistic to expect to define these completely when a contract could last 10 years and be subject to changing requirements and markets.

Robust change control processes can be put in place to help guide any additional spend, but the degree of trust between the parties can also affect the cost.

In my experience, more trusting relationships mean the parties understand each other better, with a greater focus on the long term and a desire to share risk rather than simply avoid it.

Decisions should be based on evidence, rather than opinion. One way of ensuring this is by demonstrating that all decisions, on the performance of both the client and the service provider, are based on meaningful facts available to both parties.

I would argue that as trust and transparency become ever more critical in large organisations, governance will be increasingly important in outsourcing arrangements.

Indeed, strong governance will be the key differentiator between effective, efficient outsourcing relationships and those failing to deliver benefits and eventually turning sour.

Colin Craig is UK governance services line leader at Information Services Group