Towards metric-based gain sharing
Whatever the objectives, it is crucial that the measures to be used and pursued are understood right from day one. They will drive the selection of the supplier, since potential providers that have demonstrably performed well against similar metrics elsewhere, and which can bring this experience to bear, will offer a greater likelihood of achieving the client’s goals. This is especially the case where the output measure can be pursued via some form of risk-sharing partnership.
An example of a successful measure of this kind was the outsourcing deal some years ago between EDS and the UK-based aero-engine maker Rolls-Royce. The client, engaged in a dynamic and fiercely competitive market, wanted to lift its position ...
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