This brings up two closely related questions, both critical to successful deployment of outsourced services:

1. Did eHealth follow and or use the advise of a qualified 3rd Party advisor to design the outsources contract – I don’t mean the RFP which is a standard procurement process usually more suited to purchasing commodities such as Supplies and equipment?
2. If the above is true what is the current gap analysis between the Service Level Agreements (SLA’s) and reality?

There are many good suppliers of outsourcing services and the focus is mainly Information Technology (IT), Human Resources (HR), Finance and Accounting (F&A) and Customer Service (Call Centers).

Our experience in outsourcing has been as a “third party advisor”. Companies hire third party advisors in outsourcing for two reasons:

1.) To identify the field of suppliers that are considered the best fit for the opportunity and take the client (the buyer of outsourcing services) through a very detailed selection process. This process leads to a final bid or RFP element which is most concerned about pricing.
2.) To mitigate deals that in some stage of failure.

In scenario #1 above the client incurs the third party advisor fees and in scenario #2 sometimes the fee is split between the buyer and supplier.

Deals fail for all kinds of reasons but a three really standout:

1.) The process that was being outsourced was not clearly identified. In IT outsourcing deals for example often time work is being done by people in shadow organizations (meaning they are doing IT type work but are not actually in It’s budget) If you pull out only IT and don’t identify the shadow organizations the outsourcer cannot fully service the organization because they were not made aware of this work and did not account for it in their pricing model. And the pissing contest begins.
2.) Poorly defined service levels are another reason deals fail. Every deal must have solid, achievable service levels. This is how you hold the supplier accountable. There are very often financial penalties for not achieving these (SLA’s) Service Level Agreements.
3.) Poor Governance models are put in place after the deal is signed. The Governance model is the organizational structure in both the supplier and buyer that must put into place to manage the deal into the future. Many buyer’s have a “fire and forget” mentally. That thinking will really get organizations in deep trouble.

To propose an answer my own questions, I am guessing that most of the above apply. Perhaps the next step should be an analysis and the retention of “yet another” 3rd party advisor to get eHealth properly on track.