Australian government outsourcing clients are fed up with lip service and have started flexing their contractual muscle when it comes to making outsourcing vendors perform, according to Meta Group vice president for government strategies John Goggin.
In Australia to coach public sector clients in the subtle art of vendor wrangling, Goggin says that Australian government agencies have survived the price wars of recent years and are learning to leverage realistic levels of service flexibility to their advantage.
“A great deal of outsourcing has been commodity based. It looks like there was some very aggressive pricing by certain vendors, and this is not a [true] partnership. Vendors will have to provide very different contracts [to the previous ones]. Clients need to see that [outsoturcers] can grow with their business. You will see very visible deliverables [in contracts] and not just SLAs,” Goggin said.
One big issue causing government customers pain, Goggin says, is consistent quality of account management, especially after a contract has been inked. Vendors often unconsciously deliver a lesser level of service, because they are forced to focus their resources on winning the next contract, rather than delivering the same levels of service exemplified during the pitching stage.
Goggin said that government IT shops also need to reassess cost models where tender processes require the cheapest bidder to be selected, resulting in artificially low pricepoints that were effectively disadvantageous to both customer and vendor.
"We are seeing the second phase of [outsourcing] contracts here, and a maturity that comes with that. People are starting to recognise that a contract has to be profitable to the vendor in some way [for them to deliver] – otherwise it's not a partnership. You have to paint a vision," Goggin said.
Computerworld understands that Centrelink, the Department of Immigration, Multicultural and Indigenous Affairs and the Department of Defence sought Meta's insights on how to teach outsourcers to think beyond carrot-and-stick methodology to develop a vision of where their customer's organisation is headed.