Structuring enduring strategic alliances: the case of Shell Australia and Transfield Services

Purpose – This paper provides insights into the evolution of the strategic alliance between Shell and Transfield Services in Sydney, Australia in the area of engineering and facilities management. Design/methodology/approach – To gain an in‐depth understanding of the distinct developmental phases in the alliance relationship, we conducted 12 interviews and a survey yielding 39 responses from the management and operations staff of both these organizations. Findings – Initially the alliance between Shell and Transfield Services was established with fundamental building blocks of trust and flexibility. However, as the relationship progressed with subsequent contract renewals, complex value adding demands were placed on the alliance. This paper provides insights into understanding three generations of evolution in the relationship‐starting from the building of a successful relationship based on labor savings and then on to one which seeks incremental innovations to become one of the most efficient maintenance operators in the world and finally seeking additional capabilities to continue improving alliance outcomes. Originality/value – The paper is aimed at managers who are involved in structuring and managing outsourcing arrangements. Referring to outsourcing as an alliance arrangement, the paper points out that as alliance relationships mature, managers need to progress from a fee‐for‐service model to trusted collaboration, and finally to an alliance with joint strategic objectives. Drawing from the case of Shell and Transfield, we present the best practices managers may adopt when progressing to a joint strategic engagement.