Fast, competitive, structured

In my job, I get to spend a lot of time with both clients and service providers, and often find myself discussing the topics of "fast", "competitive" and "structured". Generally, there is a lot of confusion over how these terms relate to each other and some strong misconceptions that they are either interchangeable or conflicting.

Competitive is perhaps the easiest concept to understand in that it clearly involves multiple parties competing for something. In the sourcing industry, this is typically at the RFP (request for proposal) stage but can also be seen in the ongoing delivery stage where clients have multiple service providers working in the same domain (for example, application development and maintenance).

Competition is not always appropriate--and while that may sound like heresy coming from a sourcing advisor, it is in fact a crucial point. Consider a situation where a client has a long term relationship with a particular service provider, a relationship that is so strong that the possibility of any other service provider displacing the incumbent is essentially zero. In such a situation, appropriate competition is extremely difficult.

What I mean by "appropriate" is perhaps easier explained by reference to things that are not appropriate. For example, using a service provider as a 'stalking horse' without their knowledge (i.e. they are not aware that they cannot win, and the client hopes their presence will result in more concessions from the pre-determined winner) is not appropriate.

A good sourcing advisor will guide a client through appropriate thought and execution processes to ensure the client achieves their objectives, without damaging their own reputation or wasting time and money on the part of service providers.

Likewise, mature service providers understand that where clients do not have competition they still have to address the obvious questions around value for money, market-competitiveness of terms and so on, and will work with both clients and sourcing advisors to ensure these questions get addressed in a sufficiently robust manner.

This demand for robustness is often the cause of confusion between competitive and structured. One can have a sole-source situation that is still structured. In fact, as just described, the need for robustness in sole-source situations is just as strong as it is in competitive situations. Unfortunately, this need for robustness and the difference between robust and competitive has not always been understood by service providers. And in the past, some tended to push for a less-than-robust process when in fact, they really wanted to avoid a competitive situation.

As that confusion disappears, the next confusion point is starting to emerge--namely, that competition and structure are incompatible with speed. Historically, there has been no evidence that competitive transactions are materially any longer, or any shorter, than sole-source transactions. There are, however, lots of evidence that lack of structure leads to a slower process with more loop-backs and twists and turns than a structured one.

Having said that, the interesting question is how speed is measured. Many clients, and sourcing advisors, push for speed to get a contract signed--a flawed concept. A sourcing transaction is simply one step on the journey of service delivery transformation and contract signing is, but one, part of that step. What is far more important is the time it takes to establish a sound working relationship.

When viewed in this light, the question of speed to achieve the organization's objectives becomes clearer and it is easy to recognize that the timing between signing a contract and establishing a sound relationship is something that can be manipulated to create false impressions of speed--impressions that are dangerous as people assume the work is done.

So, next time you hear someone talk about speed, robustness and competition, remember to make sure you're clear what they're really talking about.