‘The deal starts when the contract is finished.’
That is a simple enough cliché that’s been espoused by many knowledgeable people in the Outsourcing industry for many years. It certainly is a key philosophical point in TBI’s consulting business.
So why don’t most client deal-makers and participants seem to get this message? Maybe it’s because we don’t emphasize the word ‘management’, as in ‘The deal management starts when the contract is finished’.
A lawyer friend of mine recently said that most people think that outsourcing is self executing and perhaps that’s why deals seem to fall off a cliff once the vendor and client contract teams disappear. This problem has existed since the Outsourcing phenomenon started, almost twenty years ago. That’s a long time for a bad practice to continue.
We used to say that vendors were weak in the transition planning and migration execution phases of the Outsourcing process. In retrospect, it’s obvious that we’ve been a little too harsh on our vendor friends. It’s actually been more of a cause and effect, chain reaction, where vendors have sold their services AND the concept that they are world class in managing the deal. The client, often ‘deal weary’ from a process that most find more time consuming, expensive and contentious than they expected, is ready to buy into that, begin transition planning and let go of their people as soon as possible. Often the vendor team is out the door as the ink is drying and on to the next prospect. What’s left is usually new people, on both client and vendor sides, to manage something they had little or no input in creating.
All of this is human nature! It’s easier to focus on definitive, tactical items like proposal evaluations and contract negotiations. What is much harder is dealing with cross-functional, departmental relationships, change management and vendor management. The latter endeavors are complicated, time consuming and intimidating to contemplate.
So we still see most companies lean on their ‘tried and true’ tools, namely operational SLA’s , master contracts with their terms and conditions and, possibly, one key individual left from the original team as the foundation of their post-deal management. Many who take this approach end up in challenging environments, constantly changing, with no substantive remediation processes in place and, ultimately, some form of adversarial relationship with their supplier. Often, the next step is the ‘slow dance’ towards early renegotiation.
You’d think, as we close in on twenty years of major Outsourcing transactions, that post- deal governance would be a staple. Instead, rather than being an established element, the concept is still in its embryonic stage. I don’t even see a definition of this practice on which clients, vendors, consultants and lawyers can agree. Words like Program Office, Vendor Management, Post Deal Management and Governance are being used interchangeably, as if they were all the same…and they’re not!