Outsourcing vendor management is not any easy discipline to learn. In fact, as compared to project management, vendor management is terribly difficult to understand and learn. Immature certifying bodies, generally limited outsourcing experience, dissimilar outsourced operations, internal personalities, and the social politics of outsourcing all create an environment ripe for limited vendor management standardization. What should you expect when you are climbing the steep learning curve?
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Following years of “outsourcing done badly”, transitions of new programs to vendors had come under intensive scrutiny coupled with incredibly detailed requirements gathering processes. While this slowed implementations and limited near term ROI, parties understood that this level of detail was necessary to successfully transition operations to vendors.
Over the last couple of years, we have witnessed a terrible phenomenon. Companies are not taking the time properly define requirements. The consequences are dire - incomplete and/or inaccurate requirements result in a poorly performing program. In response, the client requests changes. Excited to avoid being scapegoated, the vendors make the necessary changes, but then climb learning and productivity curves caused by the changes. In the past two years, we have seen two different programs buckle under clients requesting over 100 changes to each program…in the first three months! The vendors struggled for over 10 months to recover from the changes. Meanwhile, the client couldn’t understand why the vendor was failing to meet quality and turnaround time expectations, so the client changed many of their internal vendor managers and vendor account management key resources. Each new resource requested more changes. New management teams even renegotiated increased penalties for vendor non-performance, further deepening the pain the vendors experienced. Meanwhile, the vendors’ teams numbering over 3000 employees were whipped back and forth with all the changes…they never caught up. The vendors charged over $300k in change control fees.
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