Speak to most outsourcing customers at the beginning of their contracts and innovation is always on their wish list. Talk to them couple of years later, and the one thing they wish they had gotten is innovation. The lack of innovation in outsourcing seems to be one the few things they are dejected about.
Innovation in outsourcing comes in many forms:
Absolutely new, disruptive business idea
A never-seen-before, high-impact business outcome that may generate a new income stream
A remarkable idea that changes the way the client connects with its end customer
Outsourcing customers serious about innovating should do the following:
Get everyone on board. The biggest obstructions to innovate are getting buy in to the idea and dealing with the inaction to change. It is often easier to deal with both issues if the new idea has a quantifiable business impact, either income upstream or margin improvement or both. You have to begin a change management initiative early in the game.
Clients frequently ask their team to innovate a particular segment of an IT process. Clients have to gaze at the entire process and be willing to work on all the pieces if they want to solve the problem.
Some insightful questions need to be asked like:
Set the expectations right. This is vital, What gets sold and delivered as transformation makes customers think the providers didn’t get it. While both agree to the broad innovation structure, translating it into visible benefits has been a challenge.
Understand the client’s expectations. is the best way to plot a course for innovation success and avoid “the blame game.”
Provide benchmarks, measuring impact is “the most difficult part of innovation”, measure productivity or outcomes or gain-share. You have to remove the ambiguity.
Have deep domain knowledge too. Implementing technology is not enough to innovate. Instead, it’s a mixture of technology and deep domain knowledge. You have to understand your client’s industry.
Assemble the proper team. The right team can make all the difference in making innovation happen. Cultural fit is important. So is the right mix of business and technology skills.
Have courage! Sometimes the service provider’s innovation team has to move beyond their functional sponsor and talk to executives at a higher level if there is deep resistance to change. You have to have courage to go to the CIO or the head of sales to break down the barriers. This, of course, is a delicate dance and can easily backfire.
Why is innovation so difficult in outsourcing relationships?
Different perceptions are major part of the problem, while outsourcers provide ROI and can exhibit tangible savings, customers are interested in its impact. That is a matter of perception, making innovation difficult to prove. Another problem may be the definition itself. It varies from person to person.How do you define innovation?
It does not move if you keep looking at it. It’s only after a point in time that you see it has moved .The concept of innovation changes from business to business, even from process to process. If there is a concept that is used in different contexts by different stakeholders with different meanings at different times, it probably is innovation.Innovation in outsourcing comes in many forms:
Absolutely new, disruptive business idea
A never-seen-before, high-impact business outcome that may generate a new income stream
A remarkable idea that changes the way the client connects with its end customer
How clients can support innovation
The professionals say both parties are equally liable for not producing the desired innovative result.Outsourcing customers serious about innovating should do the following:
Get everyone on board. The biggest obstructions to innovate are getting buy in to the idea and dealing with the inaction to change. It is often easier to deal with both issues if the new idea has a quantifiable business impact, either income upstream or margin improvement or both. You have to begin a change management initiative early in the game.
Clients frequently ask their team to innovate a particular segment of an IT process. Clients have to gaze at the entire process and be willing to work on all the pieces if they want to solve the problem.
Some insightful questions need to be asked like:
- What more can I coerce into my processes to make the outcome more dramatic?
- What sort of analytics can change the way I work?
- How can I generate a new income stream with my existing sales and marketing workforce?
What the vendors can do
Service providers (Vendors) have their own to-do list:Set the expectations right. This is vital, What gets sold and delivered as transformation makes customers think the providers didn’t get it. While both agree to the broad innovation structure, translating it into visible benefits has been a challenge.
Understand the client’s expectations. is the best way to plot a course for innovation success and avoid “the blame game.”
Provide benchmarks, measuring impact is “the most difficult part of innovation”, measure productivity or outcomes or gain-share. You have to remove the ambiguity.
Have deep domain knowledge too. Implementing technology is not enough to innovate. Instead, it’s a mixture of technology and deep domain knowledge. You have to understand your client’s industry.
Assemble the proper team. The right team can make all the difference in making innovation happen. Cultural fit is important. So is the right mix of business and technology skills.
Have courage! Sometimes the service provider’s innovation team has to move beyond their functional sponsor and talk to executives at a higher level if there is deep resistance to change. You have to have courage to go to the CIO or the head of sales to break down the barriers. This, of course, is a delicate dance and can easily backfire.
About Author:
Tushar Kulkarni is consultant and part of Systems Plus Pvt. Ltd. He is a part of consulting team that delivers Sourcing and Vendor Management Office projects. He can be contacted at: tushar.k@spluspl.com
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