There are several contributing factors as to why outsourcing relationships can fail. Below are a few areas for consideration.
The IT service provider has outgrown their customer
Greater exposure to risk can be experienced due to lack of service provider scale to meet the demands of growing customers. Additionally, when dealing with IT service issues, a lack of an appreciation of business pain, coupled with poor service discipline and process maturity tend to be principal reasons for relationship breakdowns. This is why most growing customers, who have outgrown their service providers, seek providers that are well matched to provide the scale and IT assurances their businesses need to continue with their growth. Acora has a strong track record of working with clients within the mid-market, that are PE backed and focused on scaling their business operations.
Breadth of service
Businesses today seek to work with a single supplier that can be wholly responsible and accountable for all aspects of IT. Service Providers who have responded to their client demands without having the appropriate skills can endanger their credibility and relationship. In Acora’s experience, breadth of experience in services is as important as being honest and transparent about where skills and experiences are lacking. Where a service provider cannot demonstrate the capability to diligently source the right provider on behalf of their clients, and elect to undertake projects with limited resources, quality issues can arise that may have an impact on the relationship.
IT transition process
Ensuring that service providers deliver a strong plan for transition of systems is important to the success of the engagement. System migrations are complex activities that require a thorough examination of processes as well as the technologies, infrastructure and skills required to sustain processes in the new environment. Poor transitions can result in cost escalations, delays in outsourcing implementations and poor customer experiences and consequently, can be a major cause to outsourcing contract failure.
Expectations not being set correctly
Though clichéd and predictable, poor expectation setting from either party can result in cost escalations, delays and the quality of work delivered being poor. A major part of expectations can be set correctly by deciding on and agreeing on the right measurement metrics for success. It is also vital to the success of a long-term engagement, that a service provider has clear understanding of business drivers, plans and roadmap as it will enable greater appreciation and understanding of the business operation throughout the relationship.
Communication is also one of key reasons for outsourcing failures. All too often, conversations can get replaced with a reporting relationship, which can create barriers in partnerships. Acora’s success has been borne out of engagement with customers to address issues and identify opportunities and we believe that this is a significant area that has contributed to our growth in several outsourcing partnerships.