Organizations looking to create business value by establishing strategic relationships with BPO and ITO service providers always face the challenge of choosing the right partner for these initiatives. Often, however, the process of selecting the provider dominates the team’s focus and takes away from fully vetting proposals and exploring viable options to get to the best deal possible.
Particularly in cases where there is a desire to tap into differentiating capabilities available in the marketplace, a significant amount of due diligence is needed to ensure that the provider understands the problems they must solve so they can put their best foot forward. To be effective, clients need to offer full transparency into the challenges and barriers that exist within their current operating environment to ensure that targets are clear and achievable. This dictates an RFS (“Request for Solution”) process (rather than the more traditional and prescriptive RFP), so that alternatives can be explored and both parties can limit the assumptions upon which the proposed solution is dependent. Although some circumstances may allow for a rigorous and competitive RFS that allows each of the candidates on the “short list” to present a tailored solution, this can consume an extensive amount of client time and resources.
If a “preferred” provider can be identified early on, the client may be best served by exclusively engaging this provider to work collaboratively to create an optimized solution while mitigating risk and ensuring they can come to an agreement about competitive commercial terms—i.e., a “winning deal.”
The Advisor Imperative
When structuring a sole source deal, Wavestone recommends that clients engage a third-party advisor to be their advocate. This strategy is essential in a sole source deal, so that competitive pressure can be replaced with market knowledge and benchmarks and client stakeholders can rest assured that the deal struck is suitable and acceptable. The advisor will leverage their experience and industry data to help drive price, value, and terms. Furthermore, the advisor will establish and maintain a credible position during sole source contract negotiations, from which the client could walk away or go competitive if the right deal can’t be reached with the provider.
Advisor-Led Sole-Source Approach
Wavestone’s sole source methodology provides an accelerated approach to delivering a sourcing deal that is 1) good, 2) fair, 3) safe, and 4) sustainable. Throughout this process, our advisors bring industry data and insights from similar transactions to compare the solution against industry best practices and relevant benchmarks, develop competitive terms and conditions, and set engagement criteria to ensure that desired outcomes can be achieved. A summary of the phased activities is shown below:
Phase 1 – Solution Finalization
- Solution review
- Financial analysis
- Contractual analysis
- Governance model
Phase 2 – Equitable Contracting
- Develop contract schedule documents
- Advocate for client during negotiation
- Fortify client objectives and mitigate risk
- Support legal review and contract finalization
Phase 3 — Transition
- Develop client service transition plan
- Provide transition program management
- Establish a contract management office
- Implement new governance model
Key elements and the typical timeline of the approach are depicted here:
Key artifact examples that are leveraged during the engagement include:
Even when an organization conducts a thorough and competitive provider selection process, many benefits—efficiencies, innovation, service commitments, add-ins, and savings—are often left on the table. Expending the necessary time and effort to normalize and optimize proposals for multiple providers does not always close the value gap.
Adopting Wavestone’s sole source approach for executing a sole source transaction can significantly reduce the time required to get to a winning deal and accelerate delivering value to the organization.
Simply stated, Wavestone engages seasoned practitioners who bring relevant data, analytics, and insights, and use a proven methodology to ensure clients achieve the outcomes they need.
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