Govern Outsourcing for Measurable, Repeatable and Predictable Results

Test 1

Govern Outsourcing for Measurable, Repeatable and Predictable Results

The decision to outsource your entire IT process, or portions of your software development, is not an end to itself.

Driving real cost savings and better business results requires a fundamentally different mindset. However, like anything, change is difficult and expensive. Not surprisingly, most executives worry about managing the vast complexities of such a change. But when you stop and look at the competitive landscape, the question becomes not whether or not you should take on the challenge, but how will you outsource for optimum results? To succeed, develop a comprehensive strategy and define rigorous and well-supported steps designed to achieve your most critical business requirements, goals and objectives.

Assess and manage your outsourcing strategy.

Let’s begin. Assess and manage your outsourcing strategy on three distinct levels: Initiation, Governance and Operational. Adopting such a multi-dimensional approach, one that includes a well defined vision, strong governance, effective leadership, baseline measurements and cultural change, allows you to create the clear line of sight needed to increase business performance, profitability and competitiveness.

Initiation

  • Define intent and expectations specific to business goals
  • Establish relevant performance benchmarks
  • Identify linkage and integration of governance and operations
  • Develop service agreements
  • Responsible for corporate/BOD approvals, IT, corporate and Centralized corporate policies
  • Adhere to partners, metrics, regulatory and quality controls
  • Support budget, strategy and management reporting

Governance

  • Oversee outsourcing implementation
  • Develop budgets, schedules and portfolio of work
  • Create definitions, templates, content, requirements for frameworks, programs and processes
  • Responsible for IT policy, controls, assist OM groups
  • Review performance and operational metrics, trends and exception processing
  • Support communication, new and existing governance

Operations

  • Manage day-to-day execution of contract
  • Analyze metrics and recommend improvements
  • Train and communicate performance reviews
  • Ensure proper representation on governance board
  • Responsible for gathering critical data and reviewing metrics
  • Adhere to established operational controls
  • Support initial and ongoing training and communication

Start off on the right foot.

Outsourcing is more than a contract arrangement. To achieve measurable results and real cost savings, consider the outsource provider more of a business partner with whom you can collaborate in order to achieve, and exceed, anticipated outcomes. Be sure to:

  • Articulate goals and expectations upfront
  • Establish a baseline to quantify efficiencies and cost savings
  • Create a plan for change management and clearly define new processes.

Protect your initial investment.

Most importantly, define success well in advance of establishing service-level agreements (SLAs). Answer the question, “What does success look like?” Start with a business case for outsourcing that clearly articulates the intentions and expectations. If you don’t use specific quantitative data when defining short- and long-term implementation success factors and results, you will find there is a disconnect. Even worse, no matter how subtle, such a disconnect often leads to a breakdown in accountability, schedules and cost over-runs. Don’t let your outsourcing partner off the hook or fall victim to their “been-there-done-that” contractual approach. Clearly outline the governance and operational aspects of the outsourcing relationship to all parties involved, and put it in writing! SLA’s are often too generic and boiler plate. Establish and negotiate performance standards and mandate governance and operations management language that you can use to communicate successful delivery.

Strict governance and careful management.

Remember, you are outsourcing the work, not the responsibility of achieving a real business result. Managing your outsourcing partner requires a balance of strategy, governance, standards, measurement systems and monitoring activities. Here are a few practical approaches to consider when building that partnership:

  • Develop a governance model to drive desired behaviors from all parties involved. The model should enable decision-making, oversight and even simple visibility into the outsourced function(s).
  • Create or expand a Program Management Office (PMO) chartered with the responsibility for the portfolio of work and projects that are targeted for outsourcing.
  • Empower the PMO to monitor outsourcing activities that will drive the update and oversight of standards, processes and controls.
  • Develop an issue-resolution process, backed by executive leadership, as well as a regular (even daily) communication structure.
  • Allocate enough time, money and other resources to manage the relationship.
  • Establish measurement best practices and/or utilize a third-party objective entity.

Dedicating energy into all of these areas will help make the most of your outsourcing partnerships. By establishing benchmarks and applying the proper rigor of oversight when the decision to outsource is reached, you can achieve measurable, repeatable and predictable results. However, it takes planning, monitoring and upgrading activities to not only achieve consistent results, but also clear and measurable business gains.

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