Vested Outsourcing Also Can Cut Total Costs

Extracted 17OCT2011 from

Vested Outsourcing is a hybrid model that combines outcome-based thinking with relational economics and shared value principles. It’s about creating business agreements where both the buyer and the service provider collaborate to solve business problems—creating a vested interest in each other’s success. In a Vested Outsourcing partnership, partners focus on transformational initiatives that generate value, rather than what it costs for the service provider to perform an activity.

...if your sole driver is a lower price you can achieve short term cost reduction, but if you’re not collaborating with your service provider, you’re going to miss out on the opportunities for innovation and total cost reduction through process transformation.

...A Vested Outsourcing deal structures the pricing model in such a way that the buyer and the service provider both have financial incentives to innovate.

...From the desired outcomes, you sketch out what needs to happen to achieve those outcomes. We have developed a tool we teach in our classes called the Requirements Roadmap. The Requirements Roadmap is a great way to help companies rise above thinking about activities and service levels.