As a consultant, would you recommend your client to outsource their most treasured process, the core of their value chain? If your answer is no- you're not alone. You would probably be thrown out by your client before you could spell KPI. But you also know that for your clients it may be hard to let go of some processes they should be outsourcing. Additionally, in the modern, globalized world, simply outsourcing is not enough. With a tightly knitted bond, the outsourcing relationship can become a real value differentiator. What is the solution? How do you find the right partner that your client is willing to outsource this process to?
The answer is not necessarily who your client could outsource to, but how. IBM, in cooperation with VantagePartners, has developed a method to facilitate the how. With Relationship Alignment, your client won't need to worry that outsourcing an IT process crucial to their business will be a risk to them. Relationship Alignment ensures that both your client and their IT outsourcing partner forge a relationship built on trust.
What is trust, anyway?
Virtually every business relationship is built on a contract. But contracts can span hundreds of pages and a relationship will still fail. In fact, the most common source of failure is not the contract but a lack of trust or other soft factors. Contracts are too rigid to be a north star in everyday transactions between the partners. The truth is that trust is expensive. It takes time to develop trust, and a great part of it is relationship specific. If a relationship is lost, most of the investments made in trust are not salvageable. Deciding to trust a partner on a level that goes beyond risk management is therefore a strategic decision.
Deciding to begin a strategic partnership is not a trivial matter. However, the benefits of a working strategic relationship are reason enough to consider it: Whether your client hopes to achieve synergies in development or wants to outsource to a specialist.
Relationship Alignment makes this manageable. Our approach gets stakeholders on board and analyzes the existing (or launching) relationship quantitatively and qualitatively. Using the analysis, we plan a two-day workshop in which we put expectations on the table and work on aligning the relationship. Parts of the analysis are repeated on a regular basis to monitor the health of the relationship. The goal of the workshop is to develop a relational contract, which supplements the existing legal contract with behavioral norms, thus creating transparency which is an essential prerequisite for trust.
How do you do Relationship Alignment?
Relationship Alignment encompasses five steps. The first step, preparation, gathers the necessary support from stakeholders on both sides of the partnership: the outsourcing provider and the client. This support is crucial because Relationship Alignment requires not only time from both sides, but more importantly the willingness to change something about the relationship. If neither partner feels they need to change something about the relationship, Relationship Alignment cannot work. The goal of Relationship Alignment, instead, is to work out what exactly needs to change to make the relationship work to both partners' advantage. Further, the preparation phase is also used to gather data about the relationship from the executive sponsors in preliminary interviews.
The second step, analysis, involves in-depth interviews and a survey to fully understand the relationship. The interviews typically last between one and one and a half hours. The interviewees are usually key stakeholders in the relationship as well as a selection of different roles across the relationship to enable a thorough analysis. The survey involves every member of the cross-company team, including operative staff. Example items on the survey questionnaire include topics like the perceived effectiveness of the governance and communication, as well as the perceived initiative of the respective partner, and to what extent each team member trusts team members from the partner organization.
The deliverable for the analysis is a documentation of the current relationship health. In a third step, the results from the analysis of the gathered data are used to design a Relationship Alignment concept and presented to the organizations in a workshop.
Following the analysis and design steps, the Relationship Alignment concept is implemented. The core value of the method is delivered in a two-day workshop as it improves the relationship. The workshop is conducted with 15- to 20 key stakeholders from both partners, selected by their respective executive sponsors. This step includes a variety of activities which helps the stakeholders to build trust in each other.
One exercise, for example, is the 'Charta of Collaboration': a list comprising up to ten guidelines for everyday behavior. All stakeholders are involved in brainstorming this set of guidelines. The reason for this exercise is that it is unlikely that team members will find guidelines in the formal contract to govern their everyday interactions. Because the stakeholders developed the Charta on their own, they are more likely to identify with it and thus adhere to its principles. This results in a relational contract.
Relationship Alignment is about empowering the team members to work transparently and collaboratively. Implicit expectations are made transparent and intentions for the relationship are discussed and aligned. Depending on the project scope, Relationship Alignment can also include coaching with key stakeholders in addition to the workshop. Finally, Relationship Alignment also repeats the survey at regular intervals to monitor the health of the relationship as it continues. If interventions become necessary due to shifted markets or deviating behavior, Relationship Alignment can also implement more coaching sessions or workshops to realign the relationship based on the fifth step, continuous support approach.
Does Relationship Alignment really work?
IBM implemented the Relationship Alignment approach in one of its own IT outsourcing projects with a client in Austria. The survey results showed that the client was very unhappy with the way the account team communicated. The client felt their needs were not being met. The account team, in contrast, complained that the client only saw the relationship as a client-vendor relationship and that the contract was too biased in favor of the client. Mutual lack of trust was eroding the relationship.
The results of the analysis also showed, however, that both partners were looking for a strategic partnership. Neither partner was satisfied with the current state of the relationship. To counteract this, the IBM Relationship Alignment consultants, a team independent of the IBM account team, analyzed the relationship in depth using a survey and interviews. Eight key stakeholders from each partner were subsequently invited to a two-day workshop. The workshop clarified the various points of view in the relationship and brought them together. The partners agreed on the perfect way forward and a Charta of Collaboration. The workshop improved everyday interactions and satisfaction on both sides.
Benefits of Relationship Alignment
Strategic outsourcing relationships require trust. Relationship Alignment can help the partners realize that trust is not only a cost factor- when both partners agree in their intent to trust each other the relationship can become a strategic differentiator driving value for both partners. Once there is agreement about the overall direction of the relationship, the partners need to find a way to get there. It's the purpose of Relationship Alignment to manage this journey. Drawing on our experiences in relationship management and the Relationship Alignment method we can help your client to make their relationship a key differentiator.
Markus H. Dahm is Manager in the Digital Change & Transformation Practice at IBM Services, Germany. Dahm manages a pan European outsourcing advisory team that addressed the issues of governance and cooperation in regards to complex outsourcing partnerships. Simon Bergmoser has been with IBM as a working student for three years in various departments, including sales, presales, transformations & operations, and consulting. His bachelor's thesis focused on the Relationship Alignment method in intercultural projects.
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