Tips for small and medium-sized companies to vet service providers – and confirm they are ready for an outsourcing relationship.
Over the last decade, I’ve seen the number of what we used to call “outsourcers” explode. The best of them, who have the most talented, expert staff and the best internal processes, have been snapped up by larger companies. That leaves a large pool of what I consider to be commoditized service providers with only so-so skills and processes.
Larger clients, who have mature procurement, vendor management and governance structures are comparatively well-equipped to separate the wheat from the chaff. They are also big enough to draw the attention of the top-tier global service providers.
But for the CIO of a small to mid-sized company, it’s not so easy. They’re under huge pressure to get results quickly and can easily fall into the trap of “failing fast” with an external service provider in hopes they can learn from their mistakes at not too high a cost. We often see such companies rushing into an engagement with an underqualified provider without the proper internal culture shift and project management skills.
The result is that when something goes wrong – as it always does, even in the best managed project – the client and the service provider descend into finger-pointing and recriminations, rather than learning from the setback and moving forward together.
When we evaluate professional services firms for our clients, we can often tell in the first 10 or 15 minutes whether a provider is worth more of our time.
Here are four questions that help speed up the initial screening – and two more to ask yourself before you start searching for partners.
1. How deep is their bench? Nine out of ten service providers have dynamic, salesy leaders who can wow you in an introductory call. But have they hired enough similarly impressive talent for their technology or businesses practices? It’s harder, and more expensive, to maintain that depth of talent. But that's where the rubber hits the road, at the level of the practice leaders who hire and organize the talent that will work with you.
2. How well do they know the United States? Has their leadership spent significant time living, working or being educated in the US? If the answer is “no” they may not understand your market, your work style, or your expectations. The problems can range from the straightforward (how quickly does the provider respond to calls or emails) to the subtle (how will the provider’s staff respond to criticism or changes in the project.) Another way to assess this is to ask how much of their revenue is generated in the U.S. The higher the percentage, the more likely they know the cultural landscape.
3. How important are you to the provider? Getting the attention, care and feeding you deserve depends in part on your value to the provider. Ask for the profiles of their top 10 clients by revenue in terms of their size, industry, and the technologies involved in their engagements. If you're too far down the "importance list" you'll be treated accordingly. And if you’re too unlike their usual client you could wind up paying them to learn how to work with you. Look for partners with whom you’ll be in their established sweet spot.
4. Will they challenge me? You need a partner who listens to your needs but is also not afraid to push back on your ideas, especially in areas where they know more than you about a new technology or business process. You are paying them not only to deliver results, but to educate, lead and challenge you. You can get a feel for whether they can do this from the very first call, when you learn which providers cut through the sales and marketing fluff to talk about how to solve problems and produce outcomes.
And two questions for you, the potential customer, before you begin vetting partners.
1. Do I understand my objective? Have I clearly identified the business problem I am trying to solve, established success metrics for the provider and a process (including a responsible party) to track those metrics? If not, the provider will likely get caught between the different expectations and needs of various teams within the business. This guarantees delays and added costs and makes it much less likely you’ll achieve the business result you need.
2. Finally, are you ready to work with a provider? Have you established, at the very least, an internal project office to serve as a single point of contact with the provider and to resolve conflicts within your organization about what you expect of the provider? Do you have a plan in place to ensure all stakeholders within your organization understand your goals with the provider and how their work will affect those within the organization? If not, expect internal conflicts, finger pointing and wasted effort, time and money.
The better you know the firms competing to serve you, the better you can make the best fit. The better you know your own capabilities, the more you can make that fit work over time.
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