Selecting the right external service provider can be a complex decision. Creating a formal decision framework allows an organisation to bring valued rigour and structure to the decision making process.
All organisations, to varying degrees, use external service providers. For some, the partnership with others may be minimal, periodic and a support for core service delivery, such as the use of audit or legal services. For other organisations, the partnership is extensive, ongoing and central to delivering core services to customers. As examples, superannuation funds outsource many aspects of member administration and investment management, and healthcare providers outsource diagnostic services.
In some instances, the appropriate service provider will select themselves, perhaps for reasons of ongoing performance or unique capabilities. Experience suggests this is typically less common, for at least two reasons:
Creating a formal decision framework allows an organisation to bring valued rigour and structure to making a complex decision . It provides clarity on the:
The starting point is clarity on the goal of the decision making process. This could include, for example, ranking the existing performance of service providers to facilitate contract extension. The goal then cascades to broad factors, and for complex decisions, often sub-factors that influence performance. A broad factor could be "Ability to achieve desired consumer outcomes", with sub-factors of "Capability to respond to different customer segments" and "Speed of delivery".
A measure, or perhaps a number of measures, is assigned for each sub-factor (with ideally a mix of quantitative and qualitative measures across all sub-factors), and each measure is weighted to signify relative importance. The diagram below brings this together, showing the inputs, the decision making process and the outputs.
Nous partnered with a large financial services organisation about to embark on a significant change in how it delivers services to customers. The organisation wanted to drive a substantial increase in customer satisfaction and also strengthen its long term sustainability. To help facilitate the change, the organisation wanted to reduce the number of its service providers. Nous was engaged to build a framework to assess the performance of existing service providers to help decide which to partner with in the future.
We worked with key experts across the organisation to develop a robust and evidence-based mechanism to develop the framework. The development of the framework brought a number of benefits. The people we engaged with especially cited the ability to:
develop a comprehensive understanding of the factors which should inform choice of future service provider
Per the diagram above, the framework provided a percentage score for each service provider, allowing the different providers to be easily ranked. It also allowed the organisation to more clearly see the strengths and weaknesses of each potential partner, to help drive ongoing performance improvement.
Nous works with organisations to define their challenges and build comprehensive decision frameworks that address them. Get in touch for more information.
 The approach draws on multi-criteria decision making. For further information, see: Koksalan, M., Wallenius, J,and Zionts, S., Multiple Criteria Decision Making: From Early History to the 21st Century (2011).