I have a manufacturer-provided Satnav in my car. As one might imagine obtaining this feature also required various other bits of kit to be installed at the same time. In total this probably added several hundred pounds to the basic price of the car when it rolled off the forecourt. It is of course rubbish. Ok so it is tidily integrated into the car’s dashboard and control systems, but it can’t accept full postcodes when setting a route, the display is not exactly full HD and at times its knowledge of the UK’s road network seems from the era of Watling Street rather than the A5. Needless to say updating the database would cost something akin to acquiring a 1963 Ferrari GTO in mint condition.
Much better are the standalone devices from the likes of TomTom, Garmin etc. and indeed I acquired one for using in hire cars abroad. They retail for pretty much the price of a single update for my built in device, they are far more portable, user friendly and easier to update with new maps. If only I had the foresight when I bought my car….
…except even these are in real danger of obsolescence through the rise of the smartphone. Why pay TomTom when Google Maps gives you pretty much the same information on a device that I carry around all the time anyway? Putting aside issues around privacy and roaming charges etc. (all of which can be bypassed with the right know-how) then the right app on my phone is probably all I need for most destinations in the world – and to all intents and purposes this part of it is free.
So maybe I shouldn’t have got a satnav in the first place. Or perhaps specified the built in device but then waited for smartphone technology to reach the point it has now and saved some money by missing out the TomToms in the interim. Hindsight is a wonderful thing. At least I have always been fortunate enough to have the opportunity to keep up to date as gadget tech progresses, every time the ‘checkout’ button is clicked representing another informal business case approved by the committee.
Outsourcing relationships between the public and private sectors have a greater challenge than ever in offering an up to date service offer throughout their life. Sticking rigidly to a 2010 model of delivery when everyone else is moving to 2020 expectations of service is a recipe for frustration and dispute, unless there is both the contractual flexibility and economic case to invest in ongoing transformation of services during the full contract term.
Of course the longer the term the greater the likelihood of change in technology, political priorities, financial and other environmental factors – all of which impact upon the ongoing relevance of a delivery model established at the outset. On the other hand trying to retain flexibility at all costs may well lead to a service that isn’t even close to state of the art at the outset. As with consumer technology, whether to buy into a proven but possibly inflexible solution, bet on what appears to be the best current model of delivery or try to retain flexibility to capitalise on opportunities that emerge later – is a genuine challenge for the operational and commercial strands of a procurement to resolve.
In large scale ICT implementations – where the risk of obsolescence is very real – approaches such as Agile have been employed. Although generally not a fan of the jargon that goes with this type of management theory I find it difficult to argue with the principles of the Agile manifesto (which I reproduce here but can also be found at: http://www.agilemanifesto.org/principles.html ). These are:
1. Customer satisfaction by rapid delivery of useful software
2. Welcome changing requirements, even late in development
3. Working software is delivered frequently (weeks rather than months)
4. Close, daily cooperation between business people and developers
5. Projects are built around motivated individuals, who should be trusted
6. Face-to-face conversation is the best form of communication (co-location)
7. Working software is the principal measure of progress
8. Sustainable development, able to maintain a constant pace
9. Continuous attention to technical excellence and good design
10. Simplicity—the art of maximizing the amount of work not done—is essential
11. Self-organizing teams
12. Regular adaptation to changing circumstance
Applying these principles to a satnav purchase would in the last 5 years probably have resulted in the acquisition of a dedicated device with steps put in place to review journey times and incorporate feedback from the times a vehicle was directed to the wrong place. The ergonomics of cradles and suction cup location would be tested to the ultimate satisfaction of the user and simplicity favoured over the superfluous functionality that started to be introduced as devices became more sophisticated. Over time there a compelling argument to ditch this in favour of a smartphone app may be generated through benchmarking and process review. What matters is that these are rational decisions based upon someone keeping abreast of changing customer needs, what is on offer in the wider market, providing an honest comparison with what is being provided currently – and, at the right time, proposing a compelling business case to change.
Substitute “Software” with “Service” and these principles are equally applicable to public sector service outsourcings. So let’s do just that.
How to shoehorn all of this into a contract though? I think it can be done by applying the following instruments in the procurement:
Describe the start point and recognise it for that: Service requirements are generally drawn up with knowledge of what is possible now and how things are done currently. This is unsurprising given that most service specifications are written by service managers within the procuring organisation. It might be argued that such documents should be rewritten until they do capture some expectation of future needs/ standards. In my experience this is difficult and unfair on the authors. After all part of what the organisation is buying is the intellectual property and dedicated research capability of a partner. They will know more about what might be achievable in the future than the buyer. I believe trying to future proof suites of client-prepared specifications beyond a certain point is ultimately not the best use of everyone’s time and procuring clients should accept that this represents a ‘day one’ requirement at best.
Describe the destination: Here’s where we do need to go out on a limb. What are the fundamental themes or areas that you think your organisation should address? These may include for example: better customer interaction, improved staff productivity, resilience, supporting the delivery of the corporate plan, cost reduction…or all of these – as is the case in a procurement we are currently leading. Now describe the outcome measures that will tell you how you are doing against these themes. In satnav terms we are applying a search for the seaside, or a great view, allowing some flexibility around the destination, and recognising that the route may have to be recalculated at various stages. The output can be expressed in an additional specification document which will set out the organisations overarching requirements. These may be expressed as a set of strategic or overarching requirements, additional to the service-level specifications and so scoping out the broad direction in which services should be assessed and then developed over the term of the contract. In a procurement situation this allows potential suppliers to compete with their visions of what this future should look like and how committed they are to the journey.
Develop ‘agile-like’ governance and clienting arrangements. This is where the Agile, or similar desired behaviours will be driven after the initial handover of services. Embracing a set of principles is easy – but both client and supplier must invest appropriate resource and delegated authority to drive continuous improvement in services through the full term of the contract. Success will depend on the capacity and competency of resource provided. I believe there is some way to go yet for public sector clients in guaranteeing the delivery of their side of this relationship.
Enshrine flexibility and transparency in the commercial relationship. This is where I think the supplier market needs to work hardest. To genuinely be seen as a strategic partner, suppliers must embrace their role as the deliverers of transformation, rather than lifters and shifters of people and processes. Even TomTom, Garmin and the like accept that they can’t restrict people to dedicated devices and so deliver their value in new ways through e.g. creating apps for smartphones. Suppliers need to be able to advise their clients when to jump to a new service model and do so in a way that clearly sets out the costs and benefits for all parties. They should be incentivised to prioritise opportunities that drive their clients closer to the overall outcomes they have targeted for the contract.
Measure the effectiveness of the partnership as well as its outcomes. There is a place for subjective measures within contractual relationships. Maybe measuring the effectiveness of co-operation (for example) is not something that is sensibly incorporated in a price performance mechanism, but it can be used as a useful tool for discussion at partnership management tiers of governance. Deterioration in these measures may provide early warning of future problems with ‘harder’ KPIs. Pre-empting such issues will be the mark of an effective client team.
We aim to build these principles into all procurements that we support. Some aspects already have appropriate coverage in the standard contracts (e.g. model services contract) that we use, others will need further development of drafting. But we think truly flexible contracts are now possible and even though the long-term destination is not always clear for our clients when they embark on outsourcings and externalisations, we do believe that we can help build in the navigational tools to help them – and their suppliers – get there.