With so much written about the failure of major outsourcing relationships and mounting evidence that buyers are increasingly moving toward early renegotiation of their ITO agreements, providers and buyers alike are struggling to find how to build more sustainable working relationships.

Organizations by their very nature are best at making analytic decisions and usually do so based on hard facts and measurable data. The relationship between a client and provider however is harder to measure once you go beyond cost benchmarks or savings realized, because human relationships deal with the "softer" people side of performance whether it be at an individual, project or organizational level. Nonetheless, softer variables often are at the heart of why a sourcing relationship does, or does not, succeed over time.

Recent Alsbridge research points to client/provider relationships as being one of the ten most significant challenges facing providers today. Several key findings coming out of a collaborative workshop held with leading outsourcing providers earlier this year as part of an Alsbridge Outsourcing Leadership Forum - 2007 Provider Viewpoint of Challenges in the Outsourcing Industry, indicate that from a provider perspective the sourcing process is seriously flawed and in need of an overhaul.

Three-quarters of the providers participating in the Alsbridge workshop viewed both the sourcing process itself and today's client/provider relationships as having a neutral to negative impact on their client's business. When asked to consider the relative impact of the sourcing process and client relationships on profitability, 75 percent of provider's who participated in the forum considered the sourcing process to have a neutral to negative impact on their profitability while client relationships were viewed more positively .

Additional research conducted by Alsbridge in August 2007, provides insight into how buyers view the importance of client/provider relationships as a factor contributing to the success or failure of an ITO engagement. In that study, buyers placed relationships among the top five in their evaluation of factors contributing to relationship success or failure. Buyers pointed to "flexibility in their relationship with the provider" as being the second most important factor of those considered.

We know from our research into successful and failed sourcing relationships that the nature of the sourcing process is critical to how client/provider relationships are formed and whether they are sustainable over time. Unfortunately, ample evidence exists to suggest that today's sourcing process does not promote open communication or collaboration between client, supplier or advisors. Today's arms-length approach to procuring outsourcing services makes it much harder to achieve sustainable relationships. The amount of time organizations spend on preparing detailed specifications, crafting adversarial negotiating strategies and squeezing every bit of cost out of an outsourcing deal makes it all but impossible for the parties to build strong, positive foundations for relationships that stand the test of time.

So how should the sourcing process be changed to provide for greater alignment of expectations between the parties, create an environment where more collaborative decision making can take place and promote the development of better frameworks for governance and outsourcing change management?

Alsbridge has developed a proprietary decision making process, called Sourcing Alignment SessionsT (SAS), that results in stronger levels of understanding and commitment between key stakeholders in the selection process. SAS sessions are a series of facilitated sessions designed to encourage open communications, more natural dialogue, promote consensus building across both client and provider organizations, speed decision making and build the foundations for a sustainable relationship.

It enables organizations to achieve faster decisions, reduce manpower allocated to sourcing projects and increase the financial return on their outsourcing transactions -- all through the power of collaboration.

Alsbridge routinely uses facilitated workshops as an integral part of its engagements to increase collaboration between clients and providers. Typically, four sessions are conducted over the course of an Alsbridge engagement as noted in the graphic below.

Additional sessions may be conducted particularly in large or complex outsourcing projects as may be needed to ensure common strategic vision, alignment of goals and that both the scope of work and buyer expectations are clearly understood and agreed.

To better understand the power of these sessions it is important to note that SAS sessions are built on the following key principles Focus, Participation, Modeling and Dialogue.

Focus - Multi-tasking is the way most people work today, however it can be very inefficient and often becomes a barrier to getting things done when groups need to deal with new, complex or highly emotive issues like outsourcing. SAS provides both a framework and a process for the client, and when appropriate providers, to direct focused energy on the sourcing project over its' extended life. By engaging the client project team in focused sessions at key stages of the process, we ensure a comprehensive understanding of both the work being performed and the continuing development of the sourcing solution.

Participation - People own what they help create. Participative decision making is counter-cultural in many companies today, while others have built organizational leadership models around it. SAS gives every organization a structured way of enhanced participation by focused project teams. Organizations are encouraged to involve managers from their entire value chain not just a few senior decision makers. With all decision makers, influencers and stakeholders in the room, real and actionable plans are crafted in sessions resulting in greater traction and commitment.

Modeling - When you ask someone to create or use a 'model' as part of a decision making process you give them more freedom to be creative and less fearful of making mistakes. SAS is a proven methodology allowing issues to be addressed at individual, team and systemic levels. Throughout the experience, participants review, refine and integrate solution models that address organizational challenges and opportunities. Solution models are reported to the entire group for feedback, challenge, agreement and refinement. Work is done in parallel to address multiple aspects of any given challenge simultaneously, and rapidly speed up decision timeframes.

Dialogue - Much of the interaction between buyers and sellers, or members of a project team in the traditional sourcing process is not inter-personal communication. More commonly today client/provider communications consist of formal presentations, project status reports or briefings based on facts and perceptions of real or projected outcomes. Experience indicates that effective dialogue is not a 'monologue', nor is it purely directional, it requires give and take, is dynamic and at times may be highly emotional. Our experience also tells us that meaningful, two-way dialogue is required between members of the client sourcing project team as well as between the client and provider teams to achieve best results. SAS sessions are structured to create an environment to ensure that meaningful dialogue between all parties takes place and that results include greater alignment, ownership and commitment around outcomes.

The seeds of sustainable sourcing relationships are sown very early in the buyer's decision making process and are highly dependent upon how open and collaborative the provider selection process is. Furthermore, strong evidence suggests that today's traditional client/provider relationships and sourcing process fall well short of the what is needed for more open and collaborative relationships between buyers and providers.

The answers to complex sourcing problems do not come from "arms-length" consulting, stacks of final deliverables, or PowerPoint presentations. Achieving different results and more sustainable client/provider relationships is an active process that must be experienced and practiced in the context of real work in a more collaborative environment.