Contracting > Provider Engagement
Getting the most from the Provider Market
This page covers interacting with Service providers to understand their capability, testing that requirements can be met, and selecting a preferred supplier for contract negotiations.
The objectives of provider engagement are to:
- Get to a manageable number of providers
- Get providers to understand your business and requirements
- Use providers to refine your delivery model, ensuring it aligns with capabilities of multiple providers.
- Have providers put forward the best possible proposals to your requirements.
- Achieve clarity on commitments and issues that can be taken into negotiations
- Identify the best provider to join the contracting and negotiation process
Considerations for provider engagement
These are some considerations for planning your engagement:
- How many providers do you have at what stage? There is a temptation to review a long list of providers to avoid missing a good one. In practice, it takes too much time and resource to engage with providers to do a good job with more than a handful. A short list of three good potential providers is ideal.
- How attractive is your business to the market? Service providers will pay more attention to potential clients with clear intent to contract for a large service and where they have a good chance of being selected. To get the best responses, be clear about your own process and decision making and talk to providers aligned with the scale and nature of your requirement.
- What sort of provider are you looking for? Is it to execute your transactions efficiently, working with you to raise performance, or bringing in leading edge expertise? A misalignment of provider with your expectations will either give you a poor service or one that is over-priced.
There are many alternative ways of undertaking the engagement process. I have given below one sequence of activities as a start point for your planning:
- Reviewing the market to identify suitable providers: You may use your company procurement department ensure compliance with procurement policy and to help identify appropriate providers, but it is very beneficial to consult people who have a deep knowledge of the outsourcing market. The right providers will obviously have appropriate capability and capacity. They will also align in terms of deal size, geographic coverage and culture. You shouldn't need to engage with more than 3 or 4 maximum.
- Contact: Of course, most providers will be very pleased to compete for your business, but they also have finite resources for sales. It is well worthwhile in the initial contact to test interest in the sort of services you are looking for, explain your engagement approach and advise of your timing.
- Briefing for the Exploration Workshop: Develop an information pack with the scope and outline your service delivery model. Brief the providers on your requirements and explain your objectives for the workshops.
- Exploration workshops: If you know exactly how you want your services to be, then you will not need this activity. The objective is to have the provider understand your context and requirements and have them explain how you could make most use of their capabilities. Of course the provider will be in sales mode and tend to grow the scope of services, but they will also explain how they see their services being used well and how they see clients getting the most value. The exploration workshops will give insight into providers' capability for creativity and help refine your service delivery model.
- Develop/update goals and positions for down select process: In order to ensure your RFP requests all the information required, it helps to finalise the criteria for down-selection. This may have been influenced by the Exploration workshops.
- Develop and distribute RFP: The RFP sets out the requirements that you wish the providers to respond to and how you wish them to respond. The more specific and well defined your requirements are, the easier it will be during selection, contract development and negotiations. Your will find a description of typical RFP contents on the page "Contracting > Key Documents". Having distributed the RFP to the providers, do make sure that your information and intentions were understood by having clarification sessions with providers.
- Review of supplier proposal documents: Providers will need about 3 weeks to develop their proposals. It is good practice to sperate the commercial responses from the solution. Once the solutions are evaluated, differences in value can be estimated and provided to those responsible for evaluating the commercials. Since full evaluation will take into account each contact and submission from the providers, collate evaluation points and scores in evaluation workbooks.
- Supplier presentations: However good the provider RFP response, having it presented gives additional clarity and understanding. Use this opportunity to resolve any uncertainties about a proposal.
- Visits and References: Visiting provider service centres provides huge insight into the capability and culture of the provider's operational organisation. And it is that capability, rather than a slick sales force, that you are looking for. Compare how much depth individuals have in the processes they are executing. How well are provider staff looked after, motivated, developed? Sometimes provider visits take place early in the process in order to help convince detractors, but at this later stage more specific points can be tested. Talking and meeting with the provider's current customers can also be valuable. Remember to weight the value by how much choice you had of which customers to talk to.
- Final competitive positions: Prior to final selection, you may find that one or other provider is leading but the proposal has an issue. It is perfectly legitimate to ask the provider to fix that issue in order to make their selection easier. It is not a good tactic to squeeze the overall commercials excessively, because this can lead to the provider fighting to regain value during negotiations or, even worse, having to cut corners with the service.
- Provider Selection: should be made across the full range of selection criteria and using all the information you have about the providers. You will want to select one provider with whom to hold final negotiations and a second provider as fall back in case negotiations with the first are not successfully concluded. Do give the providers that are not selected feedback on why that was the case and, if possible, how they could improve.
Fairly typical selection criteria would be as below, with modification and weighting to fit the requirements:
- Programme Management: The demonstrable level of previous experience that the provider has in managing this kind of arrangement
- Transformation: The level of confidence in the provider's ability to manage the design, build and deployment in a way that meets Client requirements resulting in valuable assets and an operational solution:
- Design: Skills and methodology to work with Client to develop a quality, robust design as foundation for remaining programme.
- Build & Test: Capability to develop [appropriate] systems
- Roll-out: Capability to put HR processes and technology into operation
- Delivery Model: The quality of overall services solution
- HR Services Solution: Quality of operate solution from HR process perspective
- Application Management Solution: Quality of solution for supporting [system]
- Application Hosting Solution: Quality of solution for supporting the [system] development environment
Both for effectiveness of the process, but also to retain a good audit trail, it is a very good idea to use workbooks for the evaluation. These can be formatted spreadsheets which prompt evaluation for:
- All providers
- at stages - exploration workshop, RFP evaluation, presentations, visits
- for each criterion
There can be detailed questions to prompt the evaluator and areas for rationale.
Process and roles
The numbers of people involved in evaluation can range from 3 to over 20 depending on the approach taken to involvement of stakeholders. With higher numbers, it is essential to have a formal process for collating views and bringing discussions to a conclusion.