Building the Extended Enterprise

Many outsourcing deals fail and the client is often the cause of the failure.  The inability to manage the outsourcer effectively while integrating the outsourced and retained governance models is at the heart of the problem.

At Nathanson and Company, we combine our transformational services and outsourcing services to help you build one model that will integrate and optimize your outsourced and retained operations and allow you to manage a multiple supplier operation seamlessly.

We call this model the “Extended Enterprise”.

Key aspects of this service include:

• Designing and implementing a common operational model that works within the constraints of your organization

• Identify which work needs to be done in house and which is the right candidate for outsourcing

• Designing a vendor marketplace to maximize competition and supplier responsiveness even in single sourced contracts

• Designing and implementing comprehensive portfolio management processes

• Designing and implementing a comprehensive vendor management and governance model

• Designing and negotiating each contract to work within the Extended Enterprise enabling you have a single method of managing demand, managing the provision of services, tracking performance across internal and external suppliers and running multivendor projects

When Renegotiation is the answer

Nathanson will provide a rapid assessment of your existing outsourcing relationship, defining the improvement opportunities and the savings opportunity and providing a roadmap to achieve them.  We have an excellent track record supporting clients in a variety of renegotiation scenarios, consistently delivering service improvements and costs savings to our customers.

Our customers have realized a mean of 36.61 % savings with customers’ investment returned in an average of 17 days operating under the renegotiated agreement.

The following describes a few scenarios where our customers have found our services invaluable:

Poor Performance.    In many cases, a Supplier’s failure to perform cannot be attributed to its lack of experience or expertise performing the services.  It is often driven by a combination of financial, political and marketplace factors that are not readily apparent.  If your Supplier has consistently failed to deliver the contracted services, we will identify the root causes for your supplier’s performance issues and establish a corrective action plan to restore service to the contractual levels.   If recovery is not the answer, we will provide you with a roadmap to replace your Supplier and minimize the operational and financial risks to your business.

Lack of Innovation.    Suppliers sometimes stop innovating after the initial service transition and stabilization period.  We evaluate the supplier’s delivery model, identify improvement opportunities and find ways to better leverage the Supplier’s own organizational capabilities.  If your Supplier has become complacent, satisfied with status-quo and lacks the motivation to drive continuous improvement and optimization, we will structure an improvement plan that will drive cost savings and provide the appropriate incentives for ensuring supplier performance.  We are experts at identifying concrete, indisputable and measurable improvements that drive efficiency and cost savings for you and your Supplier.

Business Change.  Your success lies in your ability to align your business needs with your Suppliers’ strategic capabilities.  If you have encountered a significant change in your business that is driving radical changes in the way that you support your business, your agreements may need an overhaul.    We evaluate your business strategy and assess how that strategy aligns with your portfolio of supplier agreements.   We then restructure your agreements in a manner that aligns with your evolving business strategy and meets your operational and financial needs.

End of Term.  If your outsourcing agreement is approaching the end of its term, we can help you identify your options to renew, restructure, renegotiate or terminate.    Even if you are reasonably satisfied with your supplier’s performance, there is always room for improvement.  We can help you take your outsourcing relationship to the next level of cost savings and service improvement.     If continuation is not the answer, we can show you how to replace your existing supplier while minimizing disruption and expense and maximizing the investments that you have already made.

Our Approach to Renegotiation

We start by performing a rapid assessment of your outsourcing relationship and underpinning agreements.    Our assessment, which is typically completed in 1 to 4 weeks, provides an in-depth evaluation of your contract and the supplier’s operating performance to determine if your supplier is performing the required services in the most efficient and cost effective manner.

The following list describes key activities included in our assessment:

• Solution.  We evaluate the supplier’s delivery solution and underlying support processes to determine if they are the most effective.    We look at core service processes, productivity, IT enablement, labor rates and geographic distribution of work.

• Supplier Management.  We will look at your current organizational structure and capabilities for systematically managing and monitoring your supplier’s performance as well as governing the supplier relationship.

• Contract.   We determine if the Supplier is performing the services required under the agreement and according to the specifications.    We evaluate key business terms to understand your rights and obligation under the agreement.

• Price.    We provide a holistic comparison of your contract cost to the market for agreements of similar size and scope.   We look at your total costs (not just unit prices) and assess how those costs have changed over time due to change orders, ARCs and RRCs, COLA, foreign exchange provisions and productivity.

• Service Levels.    We compare your contract service levels with industry peers.   We will look at the contract, the needs of the business and commercially reasonable terms to ensure alignment.

• Demand.   We investigate how your business accesses the services to determine if there are potential savings through more effective management of the intake process, ensuring that your Supplier is focused on the activities that deliver the highest value to your business for a reasonable price.

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