Have you seen the movie Rashomon? It's the story of a crime, and how each witness remembers the incident differently. One of its key themes is the nature of truth, an idea that many other movies, like Memento, and guys like Aristotle have played with, but Rashomon (1950) did it best. The timeless notion that people can look at the same thing and yet see something different comes to mind whenever I hear a discussion about outsourcing outcomes.
This came to mind the other day while doing some research into vested outsourcing (a topic we'll be digging into in the near future). One of the key precepts of vested outsourcing, as put forth by leading proponent Kate Vitasek, at the University of Tennessee, is: Focus on outcomes, not transactions. Or, put another way, focus on the what, not the how.
"In the most effective Vested Outsourcing partnerships, very little discussion takes place about the processes the service providers will follow to meet the requirements; participants focus instead on system-wide performance expectations. Why dictate procedures in an area where you have decided you are deficient? It is up to the service providers to understand how to put the supporting processes together to achieve the desired outcomes."
Vitasek cites the example of an IT outsourcing relationship and says it would be wrong for the client to specify the types of hardware, for example, that their provider should use. "Unless the company that is outsourcing has the skills and the resources to keep up with the latest innovations in the service it is outsourcing, it should leave the details to the experts."
Makes sense, right?
But there's another, and no doubt another, way of looking at it. My colleague Bob Scheier wrapped up several of these ways of looking at it in his excellent post at Global Delivery Report, "Outcome-Based Outsourcing — Just Say No?"
Scheier writes: "Measuring outsourcing deals on their business outcomes (such as profits or customer satisfaction) sounds much cooler than measuring it on gritty details like server uptime. But is this highfalutin’ business alignment more trouble than it’s worth?"
One of the big questions revolves around outcome-based pricing. Says Everest Group Research Director Chirajeet Sengupta: "There’s a price for that alignment [between an outsourcer’s effort and your bottom line] and in reality you might not be willing to pay that price.”
And another key part of the conversation is the debate about SLAs. In this discussion at LinkedIn,
participant Kenny Markford says: "SLAs are ... one piece of the Supplier Performance Management puzzle.... To make a difference the SLAs must be relevant for your business. If they are, they can help ensure a quality service is delivered."
I encourage you to check out the discussion. The debate over outcome-based outsourcing reminds me of Rashomon because there are lots of layers and angles, and ultimately, the truth, or at least the best way to approach a sourcing relationship, is seldom black or white.
What has been your experience? What have you seen? I'd love to hear your perspective.
Meanwhile, on that note... it's Friday, so let's close with a relevant bit from a classic episode of "The Simpsons." Lobbying for a trip to Japan, Marge Simpson says to an unconvinced Homer:
Marge: C'mon, Homer, Japan will be fun. You liked "Rashomon."
Homer: That's not how I remember it.