Why large outsourcing deals are like 1980s Rock Albums

Itunes, Youtube, Spotify and the like are great achievements in the democratisation of music consumption but for people of a certain age (i.e. me), there is a regret at the diminishing importance of working one’s way through an album, recognising that, with the exception of the absolute favourites, every long player in the collection would probably have some songs that were not quite as adored as the absolute killer tunes that provided the reason to play it from start to finish.

Aficionados of Prog rock would perhaps argue that the album as a whole is the point – it tells a story or has a musical narrative that builds through the tracklist and as such use of the fast forward or skip buttons were sacrilegious, but whether a double concept album or a series of 2 minute punk classics was being recorded, I would imagine much fretting took place over the running order.

Looking in some of the more murky recesses of my collection I noticed that this thinking around the right structure for an album that would sell to both middle America and trendy kids in Europe seemed to reach a consensus around the time that the music industry decided that there was a cash cow to be made from the big haired, big chorused arena rock outfits of the late seventies and eighties.  Mentioning no names, these bands tended to hit big with a slushy ballad, but from an album and live perspective were better defined by noisier, faster ditties with guitar riffs and the occasional drum solo.

 Looking at almost any of these albums now it is easy to detect a pattern applied to many records, whether the music was hard rock or soul, the artist was British or US in origin.  The pattern looks like this:

 Track 1 – first single – uptempo, cracking tune – this is why you were queuing at midnight outside HMV…

 Track 2 – also uptempo, possibly a third single – yes we have another good one – the band must be confident in this one if they have dared to put two singles right at the beginning

 Track 3 – What’s this – sounds a bit more edgy than normal?

 Track 4 – The power ballad – Maybe the second single and the one that gets the video played on Top of the Pops

 Track 5 – Uptempo again – we’re going to finish this side with a bang.


(Turn the LP over)


Track 6 – Uptempo again – bit of a mixture of the energy of track 1 and the ‘alternative’ slant of track 3

Track 7 – Almost certainly forgettable ‘B’ side to the lead single

Track 8 – Have we got any more fast ones left?

Track 9 – Sentimental rubbish that goes on forever because you are really waiting for…..

Track 10 – …..the future live favourite and a rousing send-off.  Probably has an extended fade out, but still leaves you wanting more.


So, the record leaves a warm glow at the end.  Indeed track 10 may become the defining tune on the album for the fans.  In some way it is made better because the listener has to wait for it and – certainly in the pre-CD period – sit through some rubbish in order to get there. 

These days, of course, we can skip tracks, or not download them in the first place.  Our collections (if this means anything in the age of streaming) are becoming more like a huge ‘Now that’s What I Call Music’ album.  We can skip the rubbish and head straight to the songs we like, but I do wonder whether also removes some of the excitement of listening to a package of newly released songs that mean something more as a whole than their individual parts.

To strategic partnering deals then.  Where does this whimsy fit in with multi-million pound outsourcing arrangements.  Well let’s take a look at what may have happened in (again, no names, no pack drill) some of the early deals in local government.

Year 1 – Transition, maybe a few hiccups, stabilisation, transformation, reduced cost of service

Year 2 – More transformation, investment completed

Year 3 – Phew, let’s just run this as it is for a while

Year 4 – Pretty much the same as last year


3 years from end  How can we make the client extend?

Penultimate Year – Our sole focus is on winning the retender

Final Year – We are [still very interested/completely uninterested]* in the relationship (*delete as applicable)


Maybe this is a little harsh but it is easy to see why some initially good relationships between customer and supplier have soured over time.  Each have a set of stakeholders for which success means different things – on the suppler side the objectives of sales team, operational management, firms risk managers and shareholders may seem aligned but individually they measure success at different points throughout the lifecycle.  On the buyer’s side, the Finance Director may get benefits from the off, through an initial reduction in fees against the previous baseline budgets – but as this rarely matches the supplier’s own cashflows there is an inevitable mismatch later on between the actual operating cost of the services and the price being charged for them.

So it may well be the case that under a traditionally structured strategic partnership model the customer finds itself ambling through the forgettable ‘tracks’ just as the supplier is looking forward to the rousing finale.

As more and more service areas are deemed ripe for externalisation, should more attention be paid to how deals are structured so as to maintain levels of interest and incentivisation throughout the period of a contract?   The answer must be yes.  But not simply by leaving the good tunes to the end.

Irrespective of the service(s) in question we always aim to balance the following:

  • Early impact vs longer term benefits;
  • Operational risk transfer, cost of capital and asset ownership;
  • The efficiency of a new operating model built around assumptions on volumes, unit costs and current priorities. vs flexibility down the line.

We recommend spending some time prior to the issue of OJEU adverts thinking about where this balance lies.  Soft market tests are ver useful for getting the supplier view of where this balance lies and it is as much in their interest to help develop contracts that last the distance.  And advisors will earn their corn by helping different stakeholders on the client side to think beyond the timing of their respective benefits to look at the deal as a whole .  Just as a good album doesn’t depend on the last track, neither should a partnership leave it until the final year to deliver the bulk of the benefit.  But each should be worth the wait.

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