Outsourcing Governance Framework

How Methodology, Models and Frameworks can enhance IT Governance

Effective governance is critical to achieving corporate goals and increasing the company’s worth. Defining the corporate governance’s practice and its philosophy will help you facilitate real value to the organization.

Outsourcing Governance Challenges

Gaining agreement on priorities for expenditure and appropriate allocation of resources across enterprise will require:

  • On-going program evaluation (i.e., effectiveness and cost efficiency)
  • Managing customer relationships to assure business needs are understood
  • Managing vendor relationships to assure coordinated activity and compliance with policy and contracts
  • On-going service delivery process review, maintenance and continuous improvement
  • Establishing clear roles and responsibilities
  • Communication and coordination across enterprise and service delivery partners

Governance Tools – Best Practices

Visible executive sponsorship and outsourcing oversight need clear communication of outsourcing objectives and strategies and on-going program assessment.

Proposal review and prioritization bodies (e.g., steering committees) to determine how corporate money is best invested

  • Business driven analysis
  • Involvement of end users is critical to success

Roles and responsibilities

  • Clear delineation of service delivery and service level management roles
  • Both sides held accountable for results
  • Customer has to exercise balanced control over the vendor
  • Manage the What, not the How
  • Resist urge to micro manage
  • Maximize synergy opportunities

Service Level Agreements

Focus on service levels required to meet business requirements; it’s very important to clearly communicate performance expectations.

  • Provide forums for discussion of performance
  • Establish consequences for failure to provide acceptable service levels
  • Support continuous improvement

Performance objectives

  • Clear business objectives
  • Empower, do not constrain, the vendor
  • Clear allocation of risks
  • Joint incentives for improvement

Problem escalation mechanisms

Quick response for both business and relationship

Force resolution at lowest level possible

Dispute resolution processes

  • Look for win-win opportunities whenever possible
  • Timeliness

Change management processes

Change should be seamless, anticipate change; build flexibility into the contract operating level agreements. Recognize interfacing services and performance constraints.

  • Establish clear and measurable performance commitments
  • Match real business requirements not just function availability

Performance measurement and exception reports to allow monitoring of performance and evaluation of service delivery options

  • Valid and reliable performance metrics
  • Mutual understanding of meaning and impact of results
  • Timely reporting

Program Management Office

  • Balance of tactical and strategic focus over time
  • Proactive thinking
  • Knowing what is important to control and how tightly to control
  • Vendor and customer relationship management


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