Outsourcing deals usually involve very intense and lengthy negotiation between supplier and customer team members. They spend months or year(s) together in planning, drafting and negotiating the agreement before the deal gets implemented or executed. There are at least two review processes that should take place shortly after an outsourcing deal is finalized. The first one is the contract handover process which provides an opportunity for the deal team to pass on the knowledge to the delivery and implementation team so that they can run with the project. The second review is the deal review or lesson learned session to make sure that organization can build on the experience gained from each deal and add it to the institutional knowledge. While many organizations perform contract review or handover process after the deal is finalized, organizations always miss the opportunity to capitalize the knowledge the team gained from each deal.
Invaluable lessons can be gained at each stage of the deal. For example, there may be suggestions on how the internal process could be improved to support future deals and to minimize bottleneck. The review could lead to improvements on internal approval process, resource engagement process, communication strategy, alignment with industry practice on key issues, and better understanding of its own requirements as well as the other side’s requirements. The discussion may also reinforce the importance of conducting proper due diligence which can minimize the need of the parties to engage in a very expensive re-solutioning process post-contract signing.
The review should include not only things that the organization could improve on, but also things that worked well. While most likely the lessons learned by individual team members will be reflected in the way each team member will handle the next outsourcing deal, it is also important for organizations to formalize the lesson learned process so that the knowledge can stay at the institutional level.
It is important to conduct the review shortly after the project is completed when the deal is still fresh in everyone’s mind. After gathering the thoughts from various team members, it will be useful to follow up on those ideas and examine the ones which warrant further review. While many people would agree on the usefulness of conducting lessons learned session, the reality is that as soon as a deal is completed, the deal team members are usually dispersed to pursue other projects. Deal review sessions may not necessarily be conducted as often as we would expect due to limited resources. Where resources permit, organizations could consider expanding the lesson learned process to include regular deal review. It will be beneficial to perform a root cause analysis on deals that have failed to achieve the intended objectives. By performing a root cause analysis, organizations may realize that those deals have a common theme. Identifying those areas can minimize costly repeated mistakes and increase efficiency. For example, the analysis may reveal a poorly performed due diligence or a poorly defined statement of requirement. Organization may proactively minimize similar problem by offering training or by adjusting the composition of the deal team. Conducting deal review can expand cross-team learning and assist organizations to identify areas where it could continuously improve.