The document discusses best practices for managing outsourced services and partnerships. It provides examples of turning failures in outsourcing relationships into success from the experiences of Westminster City Council and Edinburgh City Council. Key aspects that help partnerships work better include developing trust, clear communication, balanced scorecards, and creating a win-win solution. A new court ruling clarifies partner duties to validate what they can and cannot provide which helps make outsourcing relationships work better.

1. What does it take to
make outsourcing work?
David Wilde – Westminster City Council
Andrew Unsworth – Edinburgh City Council
Alan Watton – Best Practice Group

2. Key points
• Our experience in turning failure into success
• Also, how to avoid failure in the first place
• Sustaining performance over time
• Do’s and don’ts of managing outsourced services
• It’s broken – how to fix it
• Now it’s fixed, how to keep it that way
• Now it’s over, what next?
• How to make sure one doesn’t break in the future

3. Edinburgh experience
Andrew Unsworth

4. I could talk to you today
about…….
• Contracts
• External Advisers
• SLAs
• Benchmarking
• Service Credits
• ……

5. But instead I’ll focus
on….

6. Relationships Have An Impact on
Value….
When asked to compare the +15%
value at stake between a good
and poor outsourcing relationship: Customer satisfaction
Delivery of value-added projects
on time and on budget
Quick response time to requests
Innovation and thought leadership
Over 80% of private sector
Resources freed internally to do
buyers … other work
Over 50% of public sector Intangible Measures of Added Value
buyers …
Annual Contract Value
And over 60% of providers …
Poor Relationships Destroy
Value
Resource waste due to inability to
felt that at least 30% of the trust/delegate
annual contract value was at Greater need to monitor/audit
Frequent conflict escalation
risk
Low internal customer satisfaction
Source: Vantage Partners, “Managing Outsourcing Relationships:
Essential Practices for Buyers and Providers” (2006)
Ineffective execution and follow-through
Lack of clarity around roles and
responsibilities
Decisions made based on limited
information
-15%

7. Keys to Partnership Working
• Develop trust, confidence, respect and understanding of each
other….
– Partnership Charter
– Co-location / Job Share
– Governance
– Communications
– Balanced Scorecard

8. Behaviours
• I will do what is good for the relationship, whether or not you
reciprocate
• Whatever your behaviour, I will accept you as an equal negotiating
partner
• I will try to understand how you see things
• I will be open to persuasion. I will seek to persuade you on the
merits
• I will try to be reliable as possible
• I will consult you before making decisions that significantly affect
you

9. Create A Win-Win Solution

10. A view from the sidelines – your
critical friend:
Alan Watton

11. New Court Ruling: How it helps make outsourcing partnerships work better
New Court Ruling
Stephenson Blake
Now, Johnson and Murphy:
Clarity - Stephenson Blake:
• Duty to warn
• Validate what they
• ValidateWarn they will provide
Duty to what
will provide
• Validate what they Duties what theydoesn’t ask you the right
stay in place
• If service provider won’t
Validate
can’t
• Validate the
consequential effect throughout the entire
• Validate the consequential effect can’t say
questions pre-contractually, they
of what they can’t
once you have contracted with them:
Johnson and Murphy
duration of document that”
• “You didn’t
the agreement
• Above duties stay in
place throughout the
• “You have changed your mind”
life of the contract • “We have misunderstood you”
• “You’ll need to pay more”

12. New Court Ruling: How it helps make outsourcing partnerships work better
Undermining the Contract Through Good Project Management
Project management
Contract terms What this means
methodology
• Prince 2 • Reflect how • Project methodologies
have no effectual
• CMM you are contractual governance
• Agile supposed
• If your own team try to
• Hermes to act align the project you can
• PM2 take responsibility and
• However law remove advisory duty
recognises from your Partner
how you • You become
actually act responsible for costs

13. New Court Ruling: How it helps make outsourcing partnerships work better
How You Can Take Responsibility Away – Without Realising It
• Jumping in
• Directing the project
• Ignoring partner’s
advice Agreeing to
Dealing
Provider’s • Fragmented you
To ‘think’ for
Not
Ignoring
Senior
responsibilities: • Eroded Warn
Duty to
• Not following
the contract Directing
changes
directly
Jumping
management
following
partner’s in • Act with Reasonable
• Agreeing to changes
outside the contract the project
outside of
with sub- Care and Skill
• Dealing directly interference
contract
advice
with subcontractors contract
contractors • Provide ‘best’ advice
• Senior management
interference

14. New Court Ruling: How it helps make outsourcing partnerships work better
If it’s already going wrong…
DO DON’T
Read the contract Continue to pay unless
problems /
Document all problems
misunderstandings are
Create contract your responsibility
management process
Take information at
Set clear milestones / face value. Check why
timelines misunderstandings
for resolution have occurred
Ask yourself: Did the Allow software /
vendor warn me about systems to
this before signing the be overwritten. Keep
contract? evidence

15. Westminster – turning the tide
• Contract 6 years into a 10 year deal
• Customer satisfaction at 22%, cost double what it should be
• Driven by change requests
• Relationship management by conflict
• Part of a bigger deal which was successful elsewhere
Questions:
• Can we fix it?
• What needs to be fixed?
• What if we end it?

16. Westminster – turning the tide
Day -70 towards taking on the job
• Review service
• Review metrics
• Review budget
• Review structure
• Review need
Day 3 in the job
• Critical default notice and 120 days to fix
• Strategic direction
• Internal reorganisation
• Fundamental change in relationship going forward

17. Westminster – turning the tide
Day 90 in the job
• Continuous service improvement plan agreed and signed off
• Customer satisfaction up to 60%
• Lots of people changes had happened
• Co-working under way in anger but NOT conflict
Day 270 in the job
• Critical Default Notice signed off as addressed
• End User Computing project approved
• £913K of first £1million in cost reductions achieved
• Next £1.2million in the pipeline
• Customer satisfaction towards 80%
• New business for the supplier being won