The Client-Provider Relationship: A Secret to Innovation and Growth
Cynthia Hollandsworth Batty and Alex Bakker
The value of sourcing hinges on collaboration between the client and the provider. This means measuring and improving engagement from both sides.
Find out how sourcing relationships can contribute to – or hinder – innovation and growth in this fresh-off-the-press report printed exclusively for SourceIT attendees.
Clients want value and innovation from their service provider. But for a contractual relationship to add real value, clients must look at the performance of both parties – how well their own organization understands the nature of the services and how to manage them, as well as how well the provider delivers the contracted services by complying with service levels and project milestones. The failure to evaluate both parties’ understanding of the relationship limits the potential in both traditional sourced services relationships and in more complicated digital ecosystem sourcing. The fact is, most current measurement instruments do not measure both parties holistically.
ISG Research shows that an enterprise’s ability to improve the impact of its own engagement in a sourced services relationship is the only sure way to produce the innovation it needs today.
This ISG paper correlates four pieces of research to reveal a common phenomenon: when clients do not understand how sourcing should work – and the provider fails to perform the needed relationship functions – both parties end up spending more money at the end of the contract term to recompete. It also shows that, when the enterprise client has not solved the internal challenges it faces in managing the provider, it will inevitably repeat the experience. This is an untenable situation for sourcing in the digital ecosystem, where collaboration and communication are essential to getting ahead.
This ISG paper explores the relationship gap between clients and providers and recommends ways to achieve a state of “coactive governance,” in which both parties achieve greater innovation and growth.