J. Nicholas Hoover of Techweb.com reported in the October 26, 2009 issue of InformationWeek that the state of Indiana has cancelled a $1.3B, 10 year outsourcing deal with IBM claiming the vendor "failed to deliver the service improvement expected from a welfare modernization project."
Mr. Hoover also reported that the Governor of Indiana, Mr. Mitch Daniels, stated that "The IBM method had the best of intentions, but it was very flawed in concept...it looked good on paper, but did not work in practice."
Oh how many times have we heard that coming from a buyer of training services?
On the surface, it's easy to blame IBM because they are the supplier who failed to deliver. But the real question is, should the State of Indiana shoulder some or any of the responsibility for this debacle?
In an earlier blog, I addressed one of the biggest challenges faced by buyers of any kind of outsourcing engagement, whether it be Training, IT, or HR - how to make sure you select a supplier who is properly aligned to the needs of your business (blog: 8 Best Practices for Maintaining Supplier Alignment ).
The message to buyers is it is absolutely your responsibility to properly define the scope of work you are looking to have done, so you can define the project responsibilities in a way that your supplier cannot fail. This is done in Stage 1 - Organization Assessment - of a training outsourcing engagement. If you do, you should prevent false starts and downstream failures in supplier relationships; thus reducing the risk of failure and wasted money. Sure you can say that no matter how much effort you put into the planning process, there are still companies who will fail to deliver. There are always exceptions to every rule.
But I don't believe it is acceptable that we abdicate responsibility. We must take ownership of the strategic alignment process if we are looking at a project of this magnitude. Quite frankly, successful outsourcing is about risk mitigation. Good deals are done when you manage risk out of the process. It's not about allowing risk to consume you.
It's too easy to take the path that it's always the suppliers fault. As a buyer of services, you must assume the responsibility of being a good steward of your organizations money, especially if your organization is funded by tax payers. And you should make every effort up front to ensure that you are properly scoping the project, select the right partner for that project, and have the proper processes in place to ensure for success.
