CEOs Who Rely on SLA Lose 40 Percent of Contract Value
CEOs Who Rely on SLA Lose 40 Percent of Contract Value
How much is a "trust dividend" worth in an outsourcing partnership? One Australian study suggests that CEOs who fail to effectively manage their outsourcing relationships will lose out on a "trust dividend" that is worth up to 40 percent of the contract's value. Relying on well-managed arrangements based on trust instead of on punitive SLAs can boost service, quality and other performance indicators, according to the study. This "trust" isn't a blind naivety; instead, it is built on planning with the top people, structures and processes leading the way. The problems with power-based relationships are the high transaction costs of monitoring, the challenges of imposing sanctions, and the restrictions on goals that are outlined from the beginning. In fact, none of the companies interviewed listed a good contract as a key factor in an outsourcing relationship. The focus was on effective relationship management techniques, such as flexible working arrangements, ability to adapt and frequent communication.
http://ct.itbusinessedge.com/t?ctl=DACE92:3C5015E
posted by Victor Lloyd Smith @ 2:47 PM
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