How Alignment With Organizational Strategy Ensures Successful Outsourcing
Last month I wrote about 13 game changers for successful outsourcing relationships. Today I want to highlight the importance for game changer # 1 – alignment with organizational strategy.
Although well thought out from the start, aligning an organization’s strategy with its decision to outsource tends to focus on achieving the short-term goals of profitability and cost reduction of the organization.
However, there are seven steps an organization may wish to take to ensure that alignment with its strategy materializes once the organization decides to outsource:
Step 1 – strategy is more than brainstorming: a recent article published on the Harvard Business Review by Ken Favaro of the consulting firm Strategy & (formerly Booz & Company) clearly defines three types of strategies for an organization:
- Business strategy – related to the capabilities, competitive advantages and activities of the organization.
- Business unit strategy – linked to target markets, products and services provided to its customers.
- Implementation strategy – consists of all the decisions and activities that an organization needs to perform in order to achieve the organization’s corporate and business unit strategies.
When an organization is able to align all of the above, outsourcing makes more sense. For reference, there are great books like the famous and well-known Good to Great by Jim Collins, which provide real examples of organizations capable of turning dreams into reality.
2nd step – are quick wins achievable? Having quick wins mapped and well executed will certainly boost the organization’s confidence in all of its strategic decisions and steps. As with any change, having the confidence that the organization’s strategic decisions translate into results will help generate the momentum and endurance needed to promote a complex change like outsourcing. Therefore, quick wins should be a top priority in the first 90 days.
Step 3 – are the lessons learned being used? Throughout a complex change like outsourcing, an organization can make mistakes along the way. Instead of focusing on what went wrong, one suggestion is to learn effective lessons for the organization team, as you want to continue to build momentum and demonstrate your support throughout the cycle. life of the supply. Another advantage is the “link” it generates within the team of the organization involved. If an organization is able to quickly address / resolve issues, the benefits of outsourcing tend to be visible despite the challenges.
Step 4 – Are you tracking progress and encouraging timely adjustments? Changes to an original plan may be necessary in order to achieve the desired results. Organizations may be faced with the challenge of knowing what their real progress in their strategy – and if their original schedule still holds. Otherwise, a potential reassessment of the timing adjustments against the benefits and risks could be useful in determining the net impact of any required changes. More importantly, an organization must have a clear guideline for risk management. For example, if an organization’s business unit strategy is poorly managed and somewhat contrary to outsourcing, it will be very difficult to manage / achieve success.
Step 5 – are you achieving the desired results for the organization? Another consideration is to be clear about the results managed to date and to determine if they are representative of the organization’s strategy. While this takes time, care needs to be taken to ensure that things like the organization’s vision / values as well as costs are factored in. Additionally, organizations shouldn’t underestimate what it takes to make outsourcing a successful value proposition, and manage expectations within and across their teams.
Step 6 – Are you monitoring the external factors related to your decision? In today’s global economy, organizations need to watch out for potential external factors that can impact their decision to outsource. For example, currency risks and inflation levels in developing countries where service providers have delivery centers. Although indirectly related, external factors can lead to reputational risks, which can impact the organization’s brand and strategy. Once the outsourcing arrangement is in place, ongoing monitoring of these external factors should continue.
Step 7 – are you ready to run? The right balance between the vision and the reality of a business must be achieved in order to be successful. Organizations that do not have the right approach to managing such a complex change tend to suffer the consequences of a poorly managed implementation strategy. Also, it will lead to a misconception that outsourcing is not suitable for the corporate and business strategies of the organization. While it is difficult to be in this position, a turnaround is possible as long as the above steps are considered to move forward.
Ultimately, you are not alone if you thought outsourcing was harder than it looks. The above steps are outsourcing tools, as these can help you assess the alignment of outsourcing with the organization’s strategy.
Finally, for those who want to know more about the latest market trends, The Outsourcing Institute is organizing its famous Wall St Technology Conference in New York on June 2, 2015. Here are some of the reasons you might want to consider attending this year’s conference:
- The event is free for outsourcing buyers
- The conference agenda covers all hot topics in today’s market
- The conference is only a one-day commitment – the value you will get for a single day is well worth the time
- The incredible opportunity to network with colleagues in the industry
More details can be found at The site of the Subcontracting Institute. As I am personally involved with the Outsourcing Institute and serve on the advisory board for this year’s conference, I look forward to meeting some of you there.
Copyright © 2015 IDG Communications, Inc.