Archive for May, 2008
Wouldn’t it be great to ask world-class companies about outsourcing, contracting and buying?
Lucky you. Today’s blog gives you the opportunity to do that.
You can ask Microsoft, Yahoo and Expedia about governance, vendor selection, contract management, or procurement.
GUEST INTERVIEWEES
I’ll be interviewing several directors and managers at those companies for upcoming Revenue-IQ articles. You give me your questions, I’ll ask them.
- Senior Director, Strategic Sourcing & Procurement, Expedia Inc.
- Procurement Manager, Microsoft Corporation
- Director, Business & Asset Protection (security), Yahoo! Inc.
RUSH DEADLINE All right, not so rushed
There’s a time crunch for this.
Submit your questions by 1:00 p.m. EST /11:00 a.m. PST this Friday (5/23) here when you can.
HOW TO SUBMIT QUESTIONS
Figure out what you want to ask and post your questions as a comment online here.
See, if you want your questions asked you’ll have to post a comment to this blog. Which isn’t frightening, but probably not something you do often.
Click here for instructions how to.
Or, call me and I’ll walk you through the process over the phone. Ah hah, but here’s the hard part!
I’m not collecting your questions over the phone, or in email. They have to be submitted as comments to this post.
Consider it enforced learning. If you have a question you’d like asked, you’ll post it in a comment. Again, here’s how to.
Go on. Give it a try.
MISCELLANEOUS
Just to state the obvious, practical stuff:
- No guarantee that all questions submitted will be answered
- Questions will have to pass an appropriateness test (can’t ask “wrong” questions, i.e. where they live, what high-school did they go to, etc.)
That’s pretty much it.
~~~~~~
Chris Arlen
President, Service Performance
Technorati: contract management, Expedia, governance, Microsoft, outsourcing, procurement, vendor management, Yahoo
May 21st, 2008
Sack of potatoes <–compared to–> Boeing 787 outsourced components
Commodity <–compared to–> Respected high-priced solution
Basic service <–compared to–> Strategic service
Facility services <–compared to–> IT & Business Process outsourcing
Like you, I’m constantly looking for ways to improve facility service engagements. Such as how to increase value, improve performance and better manage relationships.
Been reading a lot recently.
And there’s a lot written about outsourcing and governance, mainly about Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO).
It’s because ITO and BPO deals are often for millions of dollars over several years. Lot’s of money, lot’s of attention.
What about Facility Services?
Why isn’t there a lot written about facility services? How to improve, increase, manage and govern?
Facility service contracts can be for millions and multiple years too.
There seems to be a lack of respect for facility services’ business contributions. They’re the spinster aunt. Part of the family, but not as interesting as the more glamorous members, such as IT, finance, production, etc.
Large facility service contracts do get eyeballs. They get Procurement’s attention for the initial bid, and then again if contractors fail legal compliance.
But the business owner (the lonely Facility or Property Manager, or Security Director) spends a great deal of time putting out fires and justifying budgets. Not basking in the glow of valued contributor.
It’s about the Connection
I’m guessing facility services have an image problem. Their performance is not connected to their organization’s business success, or survival. Not in a dramatic, compelling way at least.
What’s compelling? Think Department of Homeland Security.
Business owners of facility services know their place. They see it in the size of their budget, access up the executive food chain, and in their personal compensation.
So it’s understandable why business owners may not create or promote that compelling story about their services’ importance.
Can Contractors Help?
That’s where contractors can step in. Who better to articulate the contributions a facility service makes to a business than the provider themselves.
Contractors want to reaffirm their value to business owners. To reconfirm why they were chosen in the first place. And business owners want to validate the contractors contributions and performance.
Well, here’s an opportunity for creating that “better story”. The one that upgrades that facility service’s image within the organization. It only takes connecting business importance to the service.
Isn’t that what contractors present to business owners in contract performance reviews?
Isn’t that what business owners monitor in their contract governance?
When contractors articulate and package that message for their own benefit – business owners can use it upstream. As part of their on-going efforts to raise the organization’s valuation of their contributions.
Dare I say it, but this is a win-win opportunity.
So why aren’t more business owners and contractors promoting the importance of their contributions upstream?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: contract governance, contract performance review, procurement, outsourcing, facility services
May 14th, 2008
This is a drama about outsourcing, procuring and managing contract services.
It’s based on real life. And like a good melodrama, the hero prevails in the last reel.
It was prompted by a conversation this week with the Corporate Director of Procurement for one of the major travel web sites.
Cast of Characters
These are the typical suspects.
Company: A business that outsources non-core services.
Procurement: A company employee who sources, vets, bids and negotiates with Contractors.
Business Owner: A company employee who manages the outsourced service. Goes by the name of Customer sometimes. Confusing, yes.
Contractor: A business that provides outsourced services.
The Storyline
Here’s the overly simplistic storyline. Stay with me for a moment.
- Procurement bids out a service contract.
- Procurement, with input from the Business Owner, selects a Contractor.
- Procurement finalizes a contract with the Contractor.
- Procurement hands over contract responsibility to the Business Owner.
- Contractor performs service.
- The Business Owner observes Contractor’s work and keeps them on track.
- Before the contract renewal date, Procurement rebids service contract.
No Oscar threat here. But it points out…
The Dramatic Conflict – An Unclosed Loop
After the contract hand-off, Procurement doesn’t know what the Company got from the contract.
- Did the Company receive less, or more value than dollars spent?
- Did the Business Owner manage the Contractor relationship well?
- Did the Contractor deliver everything proposed in its bid?
The loop is unclosed because Procurement is unaware of the value received from the contracted service. Procurement doesn’t know how the Contractor performed: were they a star, a wall flower, or an embarrassment? How can Procurement find and select the best Contractors if they don’t see how their choices perform?
The Broken Heart – Lost Opportunities
The unclosed loop means the Company lost on the contract. Lost opportunities may include:
- Not receiving full value for spend – not all of the contractor’s proposal promises delivered
- Procurement not learning from poor Contractor selections – repeating them again and again
- Not correcting deficiencies in the contract when identified – waiting & suffering until rebid to update
- Not reducing liability risk from non-contract compliance – diligence varies between Business Owners & Procurement
The Red Herring – Contract Management
The Business Owner works with the Contractor:
- Observing service delivery
- Catching problems
- Holding the Contractor accountable
- Providing guidance
This is contract management. Necessary, but not governance.
Contract management is a process. It’s about activities, and Procurement doesn’t benefit much seeing daily performance. That’s the Business Owner’s job.
But there is a way to connect the loop and avoid the broken heart of lost opportunities. Read on.
The Hero Prevails – Contract Governance
Contract governance is an event. It’s where performance is validated – officially. It’s done by looking at measurable outcomes – cumulative data.
Now here’s a surprise (or not), governance takes place in Contract Performance Reviews. That’s their real purpose. To look at the contracted outcomes.
And almost every outcome can be measured in some form; cost, quality, reliability, responsiveness, etc. These metrics are KPIs (Key Performance Indicators).
Even feelings are measurable, such as:
- Business Owner’s satisfaction working with the Contractor
- End-users’ satisfaction with the delivered service
- Contractor employees’ satisfaction working at that location
Contract governance closes the loop between Procurement, the Business Owner and the Contractor.
As a result:
- Procurement sees value received (or not) from the contracted service
- Procurement sees how their contractor selection played out – did they make the right or wrong choice, or somewhere in between?
- The Business Owner updates Procurement on their Contractor relationship – a great one can improve the Contractor’s standing with Procurement
Into the Sunset – Value Verified
Contract governance verifies that promised value has been received. With Procurement’s involvement the loop is closed. From bid proposal to performance to verification. Going forward Procurement makes better contractor selections, getting more from less spend. Think bonus.
The Business Owner demonstrates the importance of their service’s contribution. It’s done in terms that can send good news upstream in the Company. Think job security.
The Contractor welcomes contract governance. It makes their work visible in a way that counts – with Procurement, who’ll be rebidding their contract in the future. Think account retention.
Hopeful contractors appreciate Procurement’s fairness. They know the winning contractor will be held accountable to delivering on promises made in the bid process. Think justice.
THE END
So why isn’t contract governance done everywhere, with every contract?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: contract governance, procurement, outsourcing, contract services
May 9th, 2008
If you read newspapers, then RSS (Really Simple Syndication) is your new newspaper.
Your paper newspaper is delivered to your doorstep. RSS does the same thing digitally – to your computer’s desktop.
In a newspaper you don’t get to choose which topics to include. The editor does that for you.
With RSS you get to select the topics. You can mix and match topics or zero in on:
- Contract management
- KPIs
- Green cleaning
- Selling & marketing contract services (that’d be Revenue-IQ)
Whatever topics you choose. RSS keeps you on top of the overwhelming and continuous mountain of Internet information. But just the info you want. And you can change those selections on the fly, easily, anytime.
Don’t worry if using something new feels intimidating. It’s roughly estimated that only 5.4% of global internet users use RSS. But that’s about 70+ million users.
It’s easy to start though. To learn how, click here.
And cost? There is no cost. It’s free! Go on, give it a try. You’ll be glad you did.
~~~~~~
Chris Arlen
President, Service Performance
Technorati: RSS, Really Simple Syndication
May 1st, 2008
