Hitting the Target -The Sweet Spot of Achieving Value & Transformation
Latest research from Quantum Plus shows clients are unanimous in their disappointment with the value brought to them by their supplier’s mid-term. Once the deal is done the technology transformation (and therefore value) seems to fizzle out rapidly.
In our recent client-side event; The Future of Technology Sourcing, 100% of clients said they saw no innovation and transformation from their incumbent suppliers, what a disappointment!
Meanwhile, suppliers are naturally looking to grow revenue with existing clients – inevitably transformation means cannibalising current revenue, unlocking the power of growth through transformation seems to be a target clients and suppliers are missing. This underlines one of the QP Hidden Factors of Sourcing;
Hidden Factors in Sourcing Relationships
Missing the Target
We speak to clients and suppliers, both are frustrated in not achieving transformation in the life of the contract, however we can see that in fact you don’t both want the same thing…
The net effect is that during the life of a contract which might be three to five years, both client and supplier become disappointed with the results as the gap between planned and actual ROI grows. This is because we live in a world of fast-paced technology change, only set to speed up what was once value for money quickly becomes outdated.
The reality is the client procurement and contracting does not support a dynamic and flexible arrangement, supplier processes and governance demand TCV commitments that drive behaviour. Net result, we all quickly get fed up with the status quo but we’re way too entrenched to do anything about it…
Transformation not Innovation
‘Innovation’ is the perhaps one of the least useful words in our contracts. We need to change this to ‘Transformation’ and underpin it with a framework of delivery from the get go. There’s no way of knowing of course, what transformation might be required over the life of the contract – that’s the beauty of it.
Talking transformation from the beginning of our sourcing relationships requires us to establish over the life of the contract, what we want the end state to achieve – not exactly what it should look like but WHAT WE WANT TO ACHIEVE.
At Quantum Plus we use our Desired Outcomes methodology to create this future vision, it becomes a shared outcome target around which the sourcing and the contract is designed, it helps us to understand the gap between today and the future state, and to always have a guiding north star for transformation.
Clients are under pressure to cut costs and drive up technology value, it might be difficult to fund the project to procure, transition and do the initial transformation of legacy in the first year of contract. This often leads to cost cutting, scope minimisation and choosing the cheapest solution. This need not be the case.
We use Financial Engineering methodologies to help clients and suppliers design the right transformation to achieve the desired outcome;
The savings profile is understood over the life of the contract (at least as far as can be projected at the start), the supplier brings forward some of those savings to flatline the cost profile for the client over the life of the contract.
Using financial engineering not only helps the client consume the technology transformation and transition to the new supplier, it ensures a level of commitment and understanding to the transformation journey from the outset.
The Sweet Spot of Achieving Value & Transformation
Let’s start talking transformation not innovation
Use Desired Outcomes methodology to set out the future outcomes
Let financial engineering take the strain on budgets
For more information, please contact us by phone on 01789 201630 or by email at firstname.lastname@example.org.