The Importance of Governance
Suggestions of profit reduction in private companies in industries such as healthcare and education are well known in the Nordic countries. Such suggestions are a result of a continuous lack of quality and businesses operating with inappropriate terms and conditions. In our opinion this is much due to poor governance, including both the ability to contract and manage the right things and to contract and manage them in the right way. To increase quality and efficiency we need to focus much more on governance.
More effective ecosystem – short term and long term
In general, we see a significant potential for many organizations making their ecosystems with suppliers, clients and users more effective. The supplier can be part of the same organization but it can also be anything from a private school to an Indian IT service provider or a public transport service provider. It is not only about short term effectiveness but also about development, innovation and digitizing in the long term. From the society´s point of view it is how both businesses and people can benefit. There is a huge potential both in the public and private sector.
The procurement is the starting point but the quality of the relationship makes the difference
In order to reach the required quality, you have to start with the procurement process. Then you have to ensure that you actually get the quality that you procured. This depends on how you follow up things and that you have the ability, possibility, courage and power to take the required actions.
You have to start by building a trustful relationship. You need clear, stable, long-term rules and guidelines and to fully understand how this can also benefit the supplier. According to international research, the single most important component to get the deliverables you require is to build good and well-balanced relationships. So how can this be achieved? On the one hand, a clear follow-up, including opportunities for effective sanctions is needed. On the other hand, it is a win-win situation for all if suppliers are truly committed and enjoy stable and stimulating days at work. Anything that will encourage the people in the service provider organization to try harder for its client.
The right governance model and an active well-balanced governance organization
The IT business has in some aspects been in the forefront. There are models and frameworks on how to build a really good governance organization. The basics of these models can easily be applied to all other industries.
Many organizations perceive their governance organization as an organization participating in procuring, following up on a couple of KPIs, and imposing penalties if the supplier doesn’t perform. However, the parameters that are being followed up aren’t often the relevant ones and an overall focus on penalties is seldom beneficial in the long run.
When your governance roles aren’t managed professionally, you loose bigger (hidden) values than you may realize, regardless whether you work in the public or the private sector.
Governance, in the sense we refer to here, is about being able to understand and convert the needs of the users, or the citizens, to a delivery according to a contracted quality and cost. A good delivery requires an active buyer who follows up on quality etc and who can encourage a supplier to perform the best they can. You should express relevant requirements, you should follow up, you should take measures quickly and efficiently. But most of all you should make sure that your organization has a climate where suppliers are stimulated to deliver in a satisfactory manner. Also, you would naturally prefer the suppliers to contribute to a continuous development of the services you buy.
SPN methodologies and frameworks
The SPN advisors have years of experience from working for both private and public organizations and getting their ecosystems with external and internal parties work well. We offer well-proven methodologies and frameworks. Based on these, we contribute with advice on organizational issues, processes and collaboration forms.