Thursday, March 13, 2014

The Lost Art of Economic Game Planning

As I speak with outsourcing service providers and their Clients, I tend to look for points of similarity and difference.  That’s one way that I try to deduce the trends and find the nuances worthy of greater inspection.  I am finding that there are more points of similarity than uniqueness across the ITO and BPO provider community.
One particular characteristic that I’ve found to be prevalent is the lack of “economic game plans” for existing outsourcing arrangements.

It wasn’t too long ago that this art was central to the Account Planning techniques of most of the major service providers.  In the best of situations, the Economic Game Plan was a document that was openly shared with the Client.
The elements of the EGP aren’t especially complicated or obscure.  They include:

Ø  Volume forecasts for contracted services
Ø  Cost transformation projections to yield efficiencies
Ø  New service projections – timing, pricing, and volumes
By reviewing these metrics between and among the provider and Client, both parties were able to minimize surprises and align expectations.  It was also the forum for candidly discussing changes to volumes for future periods – enabling better cost and revenue forecasting by both parties.

Lacking these open conversations, a Client might be left wondering why the service provider is taking certain actions … whether those action are to reduce costs or promote new sources of revenue.

Conversely, if the service provider is planning and acting without the benefit of alignment with the Client, the guesswork may yield disappointing results.
I’m not quite sure why this technique has faded from the management toolkit.  There once was a day when Clients insisted on the transparency and, quite frankly, the providers rejoiced in the opportunity to receive feedback on their plans.

Without bilateral EGPs, each party is left to surmise what the other is intending.  That’s not a healthy situation, and rarely does it come to pass that both are correct.
To be fair, a few service providers tell me that this discipline is central to their management models.  But, I’m not convinced that their Clients see the situation in the same light.


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