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