Current procurement practices are doing a disservice both to the organisations they represent and the suppliers they engage with.
There. I’ve said it.
But I think it is a widely held view. The way outsourcing contracts are negotiated almost guarantees a sub-optimal outcome. Requirements are traded on a tit-for-tat basis that passes for negotiation. In reality what is happening is that issues are being hidden or side-stepped. They’re still issues though and one day they will cause both sides a problem.
I’m seeing this at the moment in a service integration contract. The supplier’s proposal called for novel commercial constructs that were designed to foster collaboration amongst an eco-system of the client’s other service providers. The client had sought this in their Request For Proposal. Yet the client’s procurement organisation rejected them, intent on retaining their traditional firm grip over suppliers. This approach can be characterised as “when they perform well we beat them less hard”.
Two years later and the collaboration that is necessary for the desired end-to-end services is lacking. All of the suppliers, including the service integrator, believe they are doing what they signed up for but the client is dissatisfied. Tellingly the client has said “You might be meeting your contractual obligations but you are not meeting my expectations”. Well, sorry but you didn’t contract for unstated expectation fulfillment.
Successful service integration requires that all parties behave in a rational and adult way from the outset. It is difficult to address all of the issue that appear during negotiation but it’s better to take the pain then than to deal with it later. This requires some real rather than notional compromise on behalf of one or more parties; but it will support a more stable and productive relationship during the term of the service.
Note: This is the personal view of the author and does not reflect the views of Capgemini or its affiliates. Check out the original post here.