FAQ’s and Fast Facts

1. Focus on outcomes, not transactions.
2. Focus on the WHAT, not the HOW.
3. Agree on clearly defined and measurable outcomes.
4. Optimize pricing model incentives for cost/service trade-offs.
5. Governance structure provides insight, not merely oversight.

The Supply Chain Council named the University of Tennessee Center for Executive Education as the recipient of the 2011 North American Supply Chain Excellence Academic Advancement Award for its work on performance-based approaches and the World Trade Magazine included Vested Outsourcing and lead researcher Kate Vitasek in its list of Top 50+1 Most Influential 2011 Trends.

But for those still on the fence about adopting Vested Outsourcing, consider the success Microsoft has had with their Vested Outsourcing relationship with Accenture for back-office procure-to-pay operations . The joint Microsoft/Accenture team has taken the triple crown in the world of outsourcing, winning the industry’s top awards from the Outsourcing Center, the Shared Services Outsourcing Network, and the International Association of Outsourcing Professionals.

Tim McBride, Microsoft Chief Procurement Officer provides the following advice.  “Most procurement professionals are hard-wired to ‘win,’ which means if Microsoft wins the supplier looses. We have learned that applying a Vested Outsourcing philosophy requires a cultural change in how we will need to work with our suppliers. For Microsoft, this means exploring Vested Outsourcing one program and one supplier at a time—working to build trust with our supply base and business units that outsource to understand there really is a better way.”

“Vested Outsourcing truly flips conventional outsourcing on its head.  A must read for any company outsourcing that is trying to achieve fast, good AND cheap.”
-Peter Sheahan, author of the best selling book Flip

“ In the outsourcing world, a genuinely new concept comes along only once every 10 years or so. I believe Vested Outsourcing is one of them.”
-Cliff Lynch –author of Logistics Outsourcing: A Management Guide

“Vested Outsourcing is a game-changing approach that will quickly become the new gold standard for advanced outsourcing relationships. It is a critical enabler for Outsourcing 2.0.”
-Frank Casale – CEO, Outsourcing Institute

Outsourcing has become so commonplace that more than three out of five companies (63 percent) participating in a recent study by the research and consulting firm PricewaterhouseCoopers have outsourced a business process to a third party. Of the 304 top decision-makers involved in the study, 46 percent said that outsourcing’s importance has increased during the past three years. In addition, 42 percent indicated their company’s use of outsourcing has increased. Almost one-quarter (23 percent) have outsourcing programs in their current business plans.

• Based on award-winning research and field work from the University of Tennessee (number two in the world in supply chain research).
• Funded by the U.S. Air Force to find “a better way to outsource.”
• Applied field research to study some of the most successful outsourcing relationships and contracts.
• Revealed that most outsourcing agreements have inherent flaws.
• Purpose was to codify the “rules” of outsourcing. Vested Outsourcing:
  -Is centered on buying results instead of tasks and/or activities (payments are based on achieving results).
• Leverages “win-win” thinking associated with behavioral economics.
• Win-win” is also known as “solutions concept” and is based on what is often referred to as “game theory” The most famous of the behavioral economists  is John Nash.
• The Nash equilibrium states that no player can benefit by changing strategy while the other players keep their strategies unchanged. That set of strategies and the corresponding payouts constitute the “Nash equilibrium.”
• Nash shared the 1994 Nobel Memorial Prize in Economic Sciences with game theorists Reinhard Selten and John Harsanyi; the movie A Beautiful Mind portrays his story.
• Eight Nobel prizes have been awarded to behavioral economists. Behavioral economics is at the heart of Vested Outsourcing.
• Creates a Vested Agreement built on a flexible framework that follows five rules.
• Uses incentives to encourage transformational results.
• Follows a structured implementation model to improve implementation.
• Is transformational when applied.