TPAs - Midlife Crisis?

Third Party Advisers (TPAs) have surely seen better days. The leader TPI launched TPI Momentum a year ago to also start working for sellers of outsourced service providers breaking their long tradition of advising only buyers of outsourced services. This Irish TPA says outsourcing is the silver bullet you have been waiting for but dont do it without their help. TPAs have also faced some criticism from insiders and outsiders about potential conflicts of interest.


Does the world need TPAs? I would say YES emphatically. Outsourcing advisers often bring a world of order and discipline and process and objectivity to a deal. Without them, some clients would really struggle with their outsourcing initiatives.


Can TPAs do a better job? Absolutely. My guess is that  for every good TPA out there, there are three mediocre ones. Many of them are leading their clients down the garden path to failure.


Can a client rely only on the TPAs to get it right? No. The client needs to hear the vendor views in equal measure. The real interesting practical ideas (which are implemented)  often come from the vendors. While the TPAs have seen many deals and can bring best practices, the vendors have actually executed the post-deal projects and know what happened well after the TPA took their money and kissed goodbye; we all know experience counts more than knowledge.


Are TPAs needed on every deal? Of course not. Use them for complex stuff. Dont use them if you just want their templates. Any good vendor can give you those and you can pick and choose what you like.


Like all management consultants out there, TPAs are feeling the pinch from the struggling world economy. They are often dispensed with, sometimes with disastrous outcomes. Some other clients have smartly saved money that would have gone to TPAs and retained some of their own people instead.


I think TPAs will bounce back since outsourcing is here to stay. However, I think there will likely be a shakeout which will see some average firms disappear. Some of them will transform themselves and create for themselves a more accountable (for outcomes rather than deals) role.

How to Pitch

Brian Sommer has this interesting post on his blog about how to pitch to an analyst or TPA. I believe his advice applies equally to pitching to a customer. 

With a customer, I would probably go further to say, we must speak much less with a customer (even about our great solutions and capabilities) than with an analyst. Let them speak about their problems, let them speak about their needs and only when all the facts are on the table, only when you are sure you have some kind of a solution for their problem, pitch the solution. 

Neutral Navigators

Sharon Drew Morgan has a post in her blog with this fascinating passage:

``...it’s quite possible to have an understanding of the decision making process – the route that buyers must make through their unique decision criteria – and recalibrate our jobs to be not only solution providers, but neutral navigators – Buying Facilitators if you will – much like a buddy to a sight-impaired friend who knows where they want to go but doesn’t know the exact route to get there.``

I have often tried to be this neutral navigator to clients. There was a European client who rightly decided to save a pile of TPA (Third Party Advisors - see here for what a TPA does and one TPA´s recent perspective on their changing role ) consulting money by attempting to do an outsourcing deal with internal staff. They formed a project team and gave them sufficient operational freedom to do what it took to get the project done. The only problem was, the project team did not know how to do it. So, they took their time, met with vendors who gave them bits and pieces of information and over time, put together a solution they could bid out.

As bid manager for one of the vendors in the fray, I recognized a great opportunity to be the ´neutral navigator´ or ´buddy´ to the project team. While I still had to manage my bid and my deliverables, I realized I could play a strategic role for our company by advising the client as a truly neutral party. I would help them with templates and checklists and processes and frank advice (even things which would place our company on a weaker wicket competitively) on a variety of topics without selling them anything, activities which would appear to be strictly not in my role as bid as a bid manager. Over time, the client´s project team began to trust me and would take my opinion seriously before deciding something in the project.

Following that phase, the client bid the solution out to 4 vendors including us. What I noticed, when for example I was defending our proposal, was the amount of credibility I seemed to carry. I could coast through some of the uncomfortable moments (gaps in our ability to deliver, our readiness to deliver and son on) because of the trust the client seemed to place in me. We won almost half of the business eventually bid out.

When I look back, it was not the proposal or the bid documents or the pricing that made the crucial difference in that bid, it was that short period playing neutral advisor to the client...