Last month a report from Whitehall thinktank the Institute for Government criticised the government for its setting up and management of outsourcers in areas such as schools and employment services. It observed that cost-effective services for users with multiple needs were often overlooked by commissioners focused just on their department’s narrow objectives. It also recommended that policymakers focus on developing a competitive market of service provision. While the government announced in 2010 that it would be looking to get more SMEs involved in supplying goods and services, this is proving to be challenging for a number of different reasons, from tender processes to delivery penalty payments, which could be disastrous for small businesses.

But the challenges the government faces in outsourcing these complex services are not unique to the public sector; private organisations also have a huge number of moving parts to monitor to ensure that they are achieving their objectives in outsourcing a contract. With the move to using multiple niche suppliers to get the best in breed service, it brings the challenge of managing the ‘white space’ in between the different suppliers and ensuring consistent oversight of the whole project. However, implemented correctly this model will create greater flexibility - one of the keys to this will be the ability to control and optimise all the moving elements in unison.

To help manage these multiple partners outsourcers are adding a layer of management. Called Service Integration and Management (SIAM) this layer brings together all the different suppliers to give an overarching view of how the contracts are operating. This layer can either also be managed by an outsourcer, or the client can manage it in-house if they have the necessary skills. However it’s managed, the key for it to work effectively is for the reporting to be relevant and linked to business objectives. Too many contracts rely on SLAs which do not give an accurate indication of how the business will be impacted by different actions. It’s not enough to look at the work contract by contract, a holistic view needs to be taken to get the most benefit.

Tying into this overarching view is the requirement for the relationship between client and outsourcers to be transparent. Transparency will mean that work can be performance managed to ensure that supply chain assets are managed and maintained at optimal cost, that evidence of the delivery of business value is accessible and that risk can be better managed across service delivery and commercial boundaries.

While this new way of working brings with it challenges, there are also huge opportunities for outsourcers to become true partners with their clients and effect real business transformation and innovation.

Major public sector procurement framework projects dropped