A Strategic Guide with insight from THE CENTER FOR DIGITAL GOVERNMENT
Enabling Knowledge Transfer
The contract, SLAs and SOWs help set project expectations and manage performance; how- ever, a transfer of knowledge between the organization and the vendor is critical for the outsourcing partnership to succeed.
The organization and vendor need to cross train each other; the organization’s employees should learn the outsourcing operations; and the outsourcer’s employees should learn the organization’s business processes. Cross train- ing enables team members to develop ideas for innovation and change, identify risks, dis- cuss issues and help with the overall manage- ment of the outsourcing process. Minneapolis’ CIO believes training is a must for outsourced personnel in order to learn how the city runs its business.
Managing the Vendor Relationship
Active relationship management is critical to ensuring that government objectives are met. According to the CIO of Minneapolis, the working relationship between the government entity and the vendor is like a marriage and management is the key to success. Some orga- nizational leaders state they spend more than 95 percent of their time on relationship building.
Although scope of work, service levels and penalty arrangements are defined in the con- tract, participants in the study indicated that in reality the organization’s managers rarely enforced the penalties. Further, changes in requirements and technology are inevitable. It is common when unexpected developments occur for the vendor to look toward the SOW and the organization will focus on the SLAs. By being flexible on both sides, the organization and the vendor can deal with issues in an open and non-adversarial way. In fact, if the relation-
ship focuses purely on meeting SLAs, there’s a problem in trust. If trust is lacking, the relation- ship will have trouble succeeding.
For the city of Minneapolis, vendor creativity was a plus. For example, the vendor leveraged the contract with the city when additional mainframe capacity was required for new proj- ects. The vendor used the financing provided in the contract for a set number of servers to fund the acquisition of the mainframe. The city believes that the vendor should be able to maximize its profit, as long as it works within the constraints of a price ceiling.
The vendor needs to understand the organiza- tion’s needs as they evolve in order to offer new technology or modifications to existing processes because the organization’s business needs are likely to change throughout the life of the contract. Organizations should be cau-
tious not to unreasonably constrain vendor profits or the relationship will inherently sour.
The vendor and government customer must look at the relationship as a long-term partner- ship where the focus is on the outcome, not the tasks. Building the relationship right from the start involves a process of continual improvement that is bolstered by performance measures and end-user satisfaction metrics.