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"To ensure outsourcing arrangements work, building a relationship and collaborating with the provider is critical."

SIMON FOGDEN, PA FINANCE SOURCING EXPERT

Focus on your objectives with outsourcing providers

 

According to Gartner, clients are looking for more focus on business outcomes from their providers. Their research showed that, while worldwide spending on IT services declined 5.3% to $763 billion in 2009, those organisations that drafted outsourcing agreements with a defined business objective as the end goal performed far better than their competition in the last year.

Simon Fogden, PA Consulting Group finance sourcing expert, says: "This is undoubtedly and encouragingly the case within the Financial and Accounting (F&A) outsourcing arena, but there are other, arguably more striking, trends being seen too.

"Client organisations have become wiser in their ability to measure performance and have increased their expectations of providers. Traditionally, F&A outsourcing performance measurement focused on turnaround and volume-based targets, such as a percentage of supplier invoices being processed on time. This led to providers becoming task-orientated, with no thought to the impact of missed targets on the client’s business or their reputation.

"To combat this, the way performance targets are being set is transforming within F&A outsourcing contracts. Measurements are becoming more aligned to support business strategies and bring value to the client organisation.

"Organisations are also beginning to recognise that building a good relationship and collaborating with the provider is critical: the service should not be held at arm’s length, but should be viewed as an extension of the client organisation. In turn, the service provider needs to willingly tune in with the client’s overall business goals and support their transformation agendas.

"Outsourcing arrangements constructed in this way assure clients that in the future they will not have to revisit the negotiation table or potentially even change provider. In return for the greater demands being placed upon them, providers are rewarded with a longer term contract. This approach therefore represents a win-win situation for both clients and providers.

"Defining the right business objectives is critical in an outsourcing arrangement, but for these to deliver results, both sides of the contract must invest in the relationship."

To find out how PA can help you get the most out of your outsourcing arrangement, contact us now.