Trust the Brits to tone-down the hype of the outsourcing sales pitch, with BSkyB broadcasting organization being awarded $313m in damages for a $75m EDS (now part of HP) CRM implementation with didn't quite pass muster. So is this a major warning shot for vendors over-hyping their capabilities to win deals, or is EDS simply falling foul of failing to satisfy Rupert Murdoch?
While several people are calling this verdict a one-off, I take the view that this sets a dangerous precedent for the outsourcing business, when you consider the sheer volume of complex outsourcing deals that are currently (and soon to be) in play.
Another one of these verdicts (especially if it's State-side) and we really could see a damaging domino-effect of lawsuits that could change the whole way deals are priced, negotiated and delivered. I even met with a consulting firm the other day, which is making a killing "rescuing" contracts, but in reality is mediating between vendor and customer to annul the broken marriage.
My fear is that the outsourcing industry is currently operating in a pressure-cooker situation for the following reasons:
1) Outsourcing vendor sales executives are under enormous pressure to hit sales targets this year;
2) Vendors are finding it harder and harder to differentiate themselves and are promising ambitious business benefits based on business outcomes, process transformation and innovation to get their noses in front during sales pursuits;
3) Some vendors are drinking too much of their own Kool-aid right now to realize they may be over-promising;
4) Customers too often fail to realize how challenging their outsourcing experience is going to be for them, and vendure headlong into engagements that are geared for failure.
My mantra is very much centered on the fact that we need to steer the vendor/customer relationship away from punitive contractual clauses, away from the letter of the contract, and focused on collaborative working partnerships. Customers are ultimately hiring vendors to work with them, and both parties need to find behavioural ways to make their outcome successful. Responsibility for the business outcomes of outsourcing engagements rests with both parties and the industry cannot afford to have more of these fractured relationships aired in the courtroom.