Managing the Life Cycle of a Outsource Vendor Partnership
June 4, 2009
In my view, there are two distinct advantages with ensuring the longevity of a outsource vendor-client relationship, especially a long-distance one.
The first and the most obvious one is business continuity. Finding a suitable vendor who can deliver to your specs and with whom you share cultural compatibility (despite the geographic barrier) is no mean feat in itself. On many significant counts, its like looking for a life partner To lose such a relationship, means bitter acrimony, or worse, you have to start your hunt all over again.
The second benefit in sticking to one or two time-tested and trusted vendors is business expansion at an international, strategic level. You continue to benefit from the vendor’s superior domain knowledge, while minimizing the cost and risk factors in looking for new ventures.
A very interesting concept relating to this is “Earned Value Management’ (EVM) mooted by a veteran by the name of Suresh Malladi. Another good resource on how to improve the lifecycle of a vendor-client relationship can be found here.
All this calls for a no-fuss relationship where you two have somehow managed to strike the right balance on major performance parameters. Hiring full-time staff can be an expensive proposition if you add up wages, insurance coverage, office equipment and supply needs, training costs, etc. Finding an outsourcing partner allows you the flexibility of bringing on talented, knowledgeable experts when and where you need them.
To ensure that you continue to have a good, solid understanding with your business associate, it is therefore vital to:
• Select your vendor with care. It should be a strategic decision based on mutual gain and objective market assessment. Be market-led instead of vendor-led. Your company’s reputation is at stake, the moment you sign a vendor agreement. From this point on, he or she would be your brand ambassador — well, in a manner of speak!
• Go by the vendor’s track record and market references rather than by its company size or profile. At times, this may mean bypassing an obvious choice in favor of a vendor with a greater willingness to commit in terms of time, money and effort.
• Treat the vendor as a long-term business associate rather than a short-term project delivery vehicle.
• Support your vendor’s efforts by committing resources, monetary, people, management and time to this partnership. Initiatives often take time to deliver successful results; therefore it is foolhardy to put it on autopilot.
• Maintain tight, quality controls at every step of the way. If you have the right people in the right roles and you are still not delivering, perhaps you need to examine your resource line. Set up formal reviews because in global software development results have to be delivered in real time. Make sure your vendor furnish detailed progress reports at fixed, regular intervals. In a creative field like application development, lack of control can be catastrophic. Standardize processes to your specific business needs. In fact, map your processes end-to-end rather than wall-to-wall. If you follow a product from the factory conveyor belt to the user, or the paper trail that documents this process, you will be surprised by what you learn.
• Define what you mean by service defects and how you are going to measure those. Keep in mind, the advice of late quality guru W. Edwards Deming, whose management theories became the foundation of Six Sigma: “People don’t cause defects, systems do.”
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[...] original here: Managing the Life Cycle of a Vendor Partnership | Outsource Portfolio Posted in Object, Outsource, business, software. Tags: business, cost, Object, optimization, [...]
Any outsource relationship big or small must have a governance team and the team should have members from the company and outsource vendor. They should resolve any issues that comes in the partnership. If not their will not be any long-term relationship will continue.