Selecting a third party service provider

Julie Sullivan, Director, KPMG's Toronto Advisory Practice
Monday, September 30, 2013

What do buyer organizations need to consider when shopping for a service provider?

Survey after survey cites the top reason buyer organizations purchase outsourcing services is the desire to reduce operational costs. Yet, one of the top challenges cited by buyer organizations is the lack of quality and fit with their service provider.

What does this mean?

Buyer organizations need to review weighting on pricing relative to other key evaluation factors.

There is no doubt that price is important but it must be delivered to meet a buyer organization’s need, with people who can work together at a quality that meets or exceeds expectations.

Here are some questions to ask when selecting a service provider:

  • Does the provider understand the buyer organization’s current situation and what it’s trying to achieve?
  • Does the service provider’s recommended solution make sense?
  • Is the solution implementable, based on knowledge of the buyer organization?
  • Can the buyer organization live up to what it must do internally to make the solution successful?
  • Has the buyer organization talked to the service provider’s clients and asked the right questions?
  • Does the service provider have the right people to complete this work and has the buyer organization met the people it will be working with?
  • How strong is the service provider’s governance structure and does it align to what the buyer organization expects?
  • When a problem occurs, can the buyer organization’s people work with the service provider and its team to find a solution?

Many buyer organizations now use a collaborative approach to service provider selection. Working closely with potential service providers to develop a solution for a buyer organization has merit. It will shed light on the service provider’s capabilities, people, collaboration and problem-solving skills – and ultimately “fit.”

Julie Sullivan is a director in KPMG’s advisory practice in Toronto.

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