We are often asked by enterprises how they can maximize the value received from their service provider. Traditional methods to ensure value include building in benchmarking and gain sharing clauses into contracts. While providing reassurance to clients, these mechanisms are quite reactionary, focused solely on the cost of services or transactions, and lack the ability to bring true innovation to the relationship.
The market has, and continues to, evolve quickly. Enabling technology such as cloud computing or robotic process automation (RPA) alter delivery models and the business case, service providers acquire new capabilities, and the clients competitive environment, outlooks and targeted outcomes change to adapt to the market.
Strategic Engagement Reviews (SER) can be a powerful, proactive tool to help service providers maximize their value to clients, address the changing market, and build on their client relationships.
A broad-based SER will comprise three key areas of focus:
- Review the overall relationship and current state of the delivery model. This review will focus on how well the service provider is delivering to the clients targeted outcomes and to the contract. The objective of this area is to not only review current status and understand improvement opportunities, but also begin to understand how a client’s targeted outcomes are evolving and how to make the delivery model more efficient and effective. Specific areas of focus include:
- Solution review – a review of the breadth and depth of the services delivered, leverage of technology and offshore resources, and review of governance performance
- Contract assessment – a review of the pricing models, performance metrics, incentive sharing, and general terms and conditions to ensure they continue to meet the needs of the client
- Delivery metrics – a review of areas such as productivity, attrition rates, and performance against the defined SLAs
- Contract pricing – a review of current pricing, volumes, and development and understanding of how pricing compares to market norms
- Explore improvements to existing delivery models. The SER provides the service provider and client the opportunity to discuss how delivery models are changing to improve. As regulatory compliance and technology evolves, so do delivery processes and models to accommodate those changes. An example of recent changes that have altered delivery capabilities is the incorporation of RPA. These tools continue to impact the cost and quality of transaction-based work activities that would benefit many delivery models. As service providers adopt these improvements, the SER creates an opportunity to discuss the business case for these tools and how to incorporate them into the client’s environment.
- Uncover new opportunities. During this process, service providers have an opportunity to gain a greater understanding of the client’s current environment and business needs, which opens discussions to address those needs. Additionally, service providers’ capabilities change over time, and the SER provides an opportunity to showcase those capabilities and radiate from the existing delivery contract into new services areas.
Recently, we at Everest Group performed an SER for a large enterprise in the retail industry. In accordance with the three key areas of focus above, we were able to help them:
- Understand technology and solution expectation gaps that were leading to poor SLA performance
- Define solution enhancements driven by new technologies that the service provider is using in other areas of their business to improve service accuracy
- Fine tune the geographic reach of the solution to better focus on key markets and service provider capabilities
At the end of the SER process, the enterprise and service provider were equipped with a prioritized listing of gaps and relationship improvement opportunity and were able to engage in a meaningful way to improve the solution and ultimately the relationship. The scope of services is being redefined to better meet the strengths of the service provider and the client, while new technologies are being implemented to provide improved transparency into the service delivery transactions.
When proactively performing SERs, it is important for both the service providers and the clients to remain as fact-based as possible, trust those close to the process being delivered, keep an open mind, and acknowledge there is always room for improvement. While dashboards may be green, remember they were created with a set of assumptions over a year ago, and desired outcomes, technology, and capabilities change. The solution that was aligned at contract signing may need to be adjusted and improved for today’s reality – there is always room for improvement.
When executed correctly, the SER will provide the service provider with an avenue to openly dialog with clients, more thoroughly understand business needs, and uncover improvement and new opportunities, while strengthening a business advisor relationship. Learn more about Everest Group’s Strategic Engagement Review expertise.