Rainmaker spotlight: Transitioning to more meaningful outsourcing metrics

Katie Gove Trellis

Katie Gove TrellisHenry Fellow and business analyst Katie Gove set up Trellis five years ago to address a gap in the market for consulting on outsourcing practices that cuts across business unit segments. We(RF) met with Katie(KG) to see how the outsourcing industry’s most recent adventures have translated into insights.

RF: Congratulations on over 20 years in delivery, consulting and analysis! Biggest difference in your role between 1993 and 2013?
KG: In 1993, I was working as an analyst at a venture capital company in Boston. It was a terrific opportunity to strengthen my analytical abilities. I hadn’t yet “arrived” at the outsourcing party. I moved into technology, R&D, and business consulting over the ensuing decade before I pulled these threads together. In my work with strategy consulting and R&D, I was amazed to find that vendors weren’t being pulled into the discussion at the early stages. Instead, buyers would singlehandedly develop strategies and specifications that they then just “issued” to the vendors. I thought that there was a tremendous amount of value that could be gained by opening up a dialog with key partners and vendors at an earlier stage, allowing them to contribute with technical and market knowledge to both product and market development. Eventually, that lead to me founding Trellis.

RF: What is your “super power?
KG: My “super power” is that I am a non-Dane working in Denmark, across industries and functions. I notice differences and trends that most Danes might just take for granted. Because my references are not Danish, I don’t necessarily accept seamlessly that this IS just the way things are. I know that there are alternatives. Funnily enough though, my “super power” is also my Achilles heel. I stick out. This isn’t always an advantage in the culture of my adopted home.

RF: Hottest outsourcing trends heading into 2014?
KG: Without a doubt, there is a big trend that will be quite noticeable in 2014. Companies are shifting from a one-stop shopping model for outsourcing to a portfolio management model. This is a really big shift and has big consequences, primarily because it demands that the internal outsourcing management competencies at the buying organizations must be much much stronger than they have been to date (whether or not they actually are is a different conversation). The development of the portfolio management model is a sign that companies acknowledge a range of differentiated needs across their organization and they wish/need to accommodate them. The companies that will “win” will be those companies that come to market with above average internal outsourcing management competencies.

RF: What is challenging outsourcing executives today, and can better and stronger communication help?
KG: Oh yes, absolutely. In the outsourcing arena, there is an over-focus on contracting, negotiation and specification at the expense of true communication. These things are important, no doubt. However, many people seem to feel that these things are a kind of or a proxy for communication. They are not. One of the most significant investments a company could make, should they wish to improve outcomes in outsourcing, would be to strengthen the lines of communications.

RF: You have argued that measuring and evaluating as it currently exists in outsourcing is at best ineffective and at worst deeply contradictory to delivering value across organisations. Why?
KG: Measuring and evaluating in outsourcing is deeply skewed towards operational and technical indices; that is, when there is any kind of measuring and evaluating at all. Many companies believe that they don’t need to measure and evaluate because they have signed a contract. And many companies that do engage in measuring and evaluating do so at very technical and quantitative levels. Most companies yearn to achieve quality and value in their outsourcing activities but very few companies have done the hard work necessary defining these terms and establishing methods for tracking and evaluating. There are a whole host of companies that can prove that all KPIs are green and yet, if you ask them if they are getting value and/or quality, they will answer no. Companies that aren’t able to track value indicators are companies that are not able to achieve value (or at least as much as they otherwise could). These companies also lack an ability to explain to their own organizations, shareholders and stakeholders the value that they are achieving via outsourcing and external value chains.

RF: How has technology changed enterprise outsourcing buying patterns/habits?
KG: Technology is clearly the single biggest enabler of outsourcing. In many industries, e.g. software development, technology has de-coupled proximity from necessity. It is now par for the course to have development teams spread across locations both as a means to access talent and as a means for leveraging continuous development. But, compared to what’s come before, there’s an even larger technological transformation coming that is enabled by Cloud and mobile technology. The x-As-A-Service model has barely scratched the surface but it will be huge. Cloud and mobility enable access anywhere, everywhere. This further enables companies to dis-aggregate functions and processes for a range of reasons, e.g. process optimization, better customer service, data analytics etc. The trend will be to outsource single processes and/or to engage in aggregated service offerings. This trend will boost outsourcing and will transform organizational processes.

RF: As an analyst and part of the broader umbrella of ‘influencers’, what have you seen change in the way outsourcing vendors produce content to persuade buyers?
KG: There are many great vendors with deep deep benches of talent. Yet, fundamentally, they are in a position of reacting to whatever wind is blowing in the buying arena. Many vendors want to talk about value but buying organizations often limit that discussion by focusing on price. Many vendors want to talk about value and long-term relationships but buying organizations often feel trapped into some kind of single-provider model. There is an unavoidable tension in the dynamic. I think that the biggest change isn’t necessarily with the way that vendors produce content to persuade buyers but that many buying organizations have had the experience of going for the low-cost provider and have learned through this experience that it is actually worth putting a bit more emphasis on value and relationships. This insight is what has qualitatively lifted the dialog and has persuaded buyers to include other critical decision criteria in their buying decisions.

RF: We know you maintain a network of professionals from very large companies. Do you experience a need for companies improving their opinion maker abilities?
KG: Yes. The market really needs input from buying organizations. The reality is that the thought leadership space is overwhelmingly occupied by vendors. This is of necessity but it doesn’t always benefit buying organizations. Buying organizations truly need to get input and learn from their peers. Our TON network is founded on this principle. But at the end of the day, none of the buying organizations outsourcing professionals are getting paid to be thought leaders so this truly meaningful source of insight and knowledge will remain under-developed. It’s truly too bad as their own organizations could benefit greatly by developing these internal resources as thought leaders to spread the word internally, if not externally.

RF: What’s bubbling in your consulting pipeline?
KG: We are starting to see some really interesting movements into process outsourcing. The bulk of the current activity centers on standard business processing and shared services. We see this as a necessary enabling step to more adventurous process outsourcing that gets closer to core business processes. That promises to be an exciting new phase for outsourcing.

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