Set up to fail?

One of the greatest mysteries of business life is how to make the most effective use of external partners for delivery of important and sensitive business processes. By sensitive processes we mean activities that have a strategic impact on the success of the client company, and the most important are those related to business development, because they impact directly and immediately on the bottom line.

For a start, few topics are as subject to the ups and downs of fashion. You could be excused for thinking that herd instinct is the key factor in some aspects of outsourcing: one year, management will do practically anything to externalise the work in order to get fixed costs off the balance sheet; one or two years later, the pendulum swings and the work is brought back in house, where it stays until market pressures lead to another reversal of policy.

Despite the maturity of the market, there is still a surprising amount of confusion about what does and does not work in terms of sensitive business processes and, in particular, about how to integrate external specialists with internal functions and how to manage their work. In many cases, in fact, key outsource contracts are virtually set up to fail.

So how do these problems arise? And what could we do to manage the relationships better and cut down on the number of predictable, certain failures? We think there are three main reasons why sensitive outsource projects fail:

Over the wall
The roots of outsourcing lie in the desire to rid the client company of back office functions in order to improve the balance sheet by cutting out fixed costs dedicated to routine or non-profit generating activities. Times have changed since those early days but management attitudes sometimes have not. There is still a temptation to throw the outsourced resources and processes “over the wall” and let them get on with it.

Where business development, sales support, account building and all those other activities that relate to profit and loss are concerned, it just doesn’t work like that. You cannot afford to treat the external partner as if their task were simple workflow in a routine process. Either you are serious about involving external resources in your strategic tasks (in which case you have to stay very close to them) or you are not (in which case why are you doing it?).

Closed channels, closed minds
Successful processes are always based on a high level of integration. There are very few activities in any large organisation that can possibly happen in isolation. Where business development is concerned, an integrated approach is a basic requirement. Sales, marketing, pre-sales, demand generation, account management, finance, and HR: all of them must fit neatly together and support each other.

It does not matter if some of these activities are in-house and others are outsourced: they must still be seamlessly connected. Where outsourcing is concerned, too many client companies still permit a wall to be built between insiders and outsiders. In doing so, they are also building barriers between different parts of a core process. There is no practical reason why integration should not cross company boundaries but in practice it rarely happens.

> part 2