By Steven Forsyth, Investment Management Consulting
I’ve been working in the Investment Management outsourcing space for a number of years and often face questions about what is new. There seems to be a high degree of cynicism, with many people suggesting that all they see is a merry-go-round of service providers jostling for migration business.
If that were the case, wouldn’t the clients have reacted in uproar by now? From what I have seen, the reality is that a growing trend is emerging where ‘partnership’ is the key word. Clients first thoughts are not about how they can rip up a contract when things don’t go according to plan at the first attempt. Service providers are not waiting in the wings to point out their competitors ‘obvious’ failings. Of course, competition is rife – it should be in any industry, but the competition is healthy. The majority of service providers recognise this – and accept that point scoring does no one any favours.
Yet, what I have witnessed is a growing appetite for collaborative review. Reinvigorating service delivery and tackling pain points can put a relationship back on track and clients and their providers, alike, have come to recognise this. It’s optimisation over migration, or rather marriage guidance before any divorce papers are served.
So are you getting value from your relationship and anyway, what is value?
Perhaps you’ve undertaken a benchmarking exercise or a review of key performance indicators. While this can show you that the services represent good value for money and/or targets are being met, the reality is that there can often be significant room for improvement.
There is also evidence to suggest that some service providers are failing to actively identify opportunities for innovation. In some cases a reluctance to shoulder some of the commercial risk is also a major concern for clients. You should consider these two factors as part of any benchmarking exercise or review because how your provider reacts can be an indication of their long-term commitment, forward-thinking and value-adding capability.
The point is that considering the true value of a relationship could offer far more than benchmarking does. But how do parties go about assessing this? Going far beyond the letter of the contractual obligations can be taxing as the softer aspects of potential and perception need to play alongside well trodden review areas such as performance. Getting the balance right can make for an interesting analysis and further towards an assessment as to whether the true spirit of the deal is being delivered.
I think the real beauty of such an assessment is that it can be beneficial regardless of whether you are at the beginning, middle or nearing the end of a contract. Ultimately you want sustainable service optimisation rather than a series of short term fixes.