Outsourcing service providers is not a one-off task. Continuous guidance is required to ensure candidates deliver on targets, and client businesses select the best fit for their needs. Standardized selection processes throughout the solution lifecycle are imperative to define an optimal solution and leverage provider strengths effectively.
Businesses can deploy multiple levels of evaluation to set and maintain rigorous quality control and operational standards. Such levels help clarify business needs, identify potential constraints ahead of time, and streamline both solutions development and provider selection.
We recommend 3 levels of evaluation to ensure a clear and comprehensive service provider evaluation and selection process.
Evaluate supplier capabilities
Start with the basics. Provider ability to accomplish the intended task is the top-line evaluation component. This includes defining the needed service functions and comparing candidate provider capabilities across 5 dimensions:
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Supplier competencies measure the provider’s general capabilities to deliver desired business outcomes. They include functional expertise, technical process knowledge, and familiarity with needed tools and applications.
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Business case variables focus on quantifiable benefits. Operating cost reduction, speed to realize savings, NPV and IRR estimates, and rate card efficiency for further strategic work are major business case variables.
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Solutions design and delivery model. Features of effective models include:
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Adaptability to changing client needs and outcomes
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Designs that drive standardization, simplification, and integration
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Tools and technologies that cohere with client competencies
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Modularity for future optimizations and long-term effectiveness
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Appropriate delivery centers and locations for client services
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Accommodation for the development of future projects
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Effective DR and BCP processes
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Transition capabilities evaluate the proposed transition plan in relation to business outcomes. Providers should also demonstrate the ability to predict and mitigate emergent risks.
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The strategic and cultural fit measures how well the provider aligns with client strategy and account teams. Other qualitative elements such as governance approaches, commitment to innovation, and supplier culture are also considered.
Supplier evaluation results affect not just supplier selection but also the concurrent evaluation of target solutions.
Evaluate solution effectiveness
Solution effectiveness can be evaluated with the following 6 principles:
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Reduce operating costs. Enterprise OPEX can be minimized by leveraging service provider economies of scale.
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Maintain critical expertise. Solutions should be designed with client competencies in mind. Engineer input mechanisms for client development of operational, technical, and intellectual properties driving differentiation.
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Create scalability. Solutions should possess both expansion and evolve-down capabilities that adapt to demand volume, service portfolios, geographic coverage, and multiple technology systems.
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Preserve flexibility. Once core standardization and drive efficiencies have been established, designate operational and technical “layers” to facilitate flexibility in value-driving areas.
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Ensure operational fidelity. Provide strong solutions performance management to support the delivery of services around the clock. Deploy a comprehensive performance management framework to secure diagnostic data and audit key processes with SLAs and metrics.
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Maintain accountability. Designed solutions should facilitate transparency with the client enterprise, regulatory compliance, continuous feedback, and efficient adjustment where required.
Pressure test solutions with joint design workshops
Provider and solution evaluations are not executed in isolation. Joint design workshops serve as a staging ground to clarify requirements and test solutions in real time. Cross-organizational stakeholder representation from both client and provider is critical, with the following roles frequently present:
CLIENT |
PROVIDER |
Operations |
Operations |
Process owners |
Solution architects |
End-user stakeholders |
Account executives |
Departmental heads |
Functional SMEs |
Finance and HR |
Leveraged Services |
Legal |
Finance and HR |
Each round of workshops enhances the client’s understanding of provider capabilities, potential risks, and the client’s role within the emergent operating model. Exploratory sessions dedicated to functional, technical, financial, and legal aspects constantly refine solutions and give all parties a clear view of developmental and selection processes.
Workshop workflows are divided into 3 sequential phases, each with distinct objectives:
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Phase 1: Confirm client needs
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Communicate collaboratively to deepen understanding of environment, objectives, and requirements
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Preview candidate provider capabilities and answer questions from suppliers
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Identify and discuss key issues, potential solution options, and projected impacts
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Initiate down-select process
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Phase 2: Develop and test solutions
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Review candidate providers’ proposed solutions
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Identify and discuss emergent issues, operational level details, and potential solution options
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Proceed with down-select process
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Phase 3: Review proposed solutions
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Receive presentation of written candidate proposals
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Clarify understanding of candidate proposals
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Provide real-time client feedback on proposals
Harness phased workshops to evaluate solutions efficiently and continuously throughout the developmental process. The extrapolated insights will clarify the candidate supplier and solution best suited to meet your business needs.
Executing synchronized and simultaneous evaluations requires intimate knowledge of specific business needs and candidate solutions in play. Consult expert advisory for guidance on tailoring your provider evaluation process to suit your needs.
Wavestone has guided hundreds of supplier reviews and helped organizations choose the supplier best able to deliver on expectations. Tap into our experience and expertise!
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