Outsourcing Program Governance Project

Global Bank Governance Project

The client was a major global bank that had outsourced various IT services (including desktop support, LAN/WAN management, and telecommunications) to different vendors in separate outsourcing actions. Some outsourcing contracts were regional, some by business unit, and the newest ones were global in scope. A total staff of eight personnel in the bank’s Vendor Management office was currently responsible for contract management for outsourced services as well as the management of related hardware and software product contracts.

Problem Summary

Management had identified problems with the existing Vendor Management function, noting that the organization was burdened by the need to administer contracts that no longer reflect the bank’s realities or requirements—this “legacy mode” was making it difficult to do proactive planning and to be responsive to business needs. Further, management believed that staffing the contract management function with people who had different skill sets—people with more business savvy, financial sense, and “enough technical knowledge not to be bamboozled by vendors” – was needed in order to improve program management effectiveness.

In order to add real value to the bank’s business operations, management also believed that the Vendor Management functions’ effectiveness in contract and vendor management tracking & reporting, end-user communications and coordination with the bank’s global technology office needed to be improved. The bank desired to evolve the Vendor Management function to a model where multiple outsourcing agreements could be managed in a more standardized manner. The ultimate goal of using common process in the contract management and outsourced service delivery management was the evolution of the existing office into a Program Management Office (PMO) with improved focus on understanding business needs and alignment of vendor contracts and processes to meet these needs.

TBI was engaged to develop a PMO model for this client because of its depth of experience in outsourcing and expertise in outsourcing program governance.

TBI’s Approach

The scope of the work included review of current contractual agreements and processes, a comparison between current processes and the development of:

  • A Program Management Office (PMO) model to address gaps in processes, organizational structure and tools.
  • An action plan and timetable for implementation – i.e., a roadmap to establish the PMO.

The TBI consultants, drawing on knowledge of best practices in outsourcing life cycle management, organizational design, contracting and process analysis, developed a composite perspective of the current Vendor Management environment and recommendations for actions.

A “best practices” review was conducted to identify contract components that would lend themselves to standardization to streamline the development and management of contracts. It also identified subjects that were not typically covered in the client’s outsourcing contracts that were recommended for future inclusion in order to standardize process and improve governance.

TBI also reviewed staff job descriptions and interviewed each of the current Vendor Management employees and managers, in order to gain an understanding of current job functions, staffing and organizational structure adequacy, and operational challenges in the employees’ viewpoints.

Successful Business Solutions

The client received:

  • A gap analysis showing strengths and weaknesses of the current Vendor Management processes in terms of industry best practices for outsourcing program management.
  • Recommendations for standardizing outsourcing contract terms and conditions.
  • A mission statement for a new Program Management Office.
  • A PMO organizational model, showing the policy level, management level and functional level of activities, with key roles and responsibilities and competencies defined for each position.
  • An outsourcing process life cycle model, showing the linkage and coordination needed among the PMO and other internal bank functions and their roles and responsibilities at different points in the life cycle.
  • Recommendations for steps needed to successfully transition to the proposed PMO organization were also provided, including:
  • Clarification of roles.
  • Conducting a detailed skills assessment of current employee competencies for those new roles.
  • Assignment of responsibilities in a manner that would encourage cross-contract analyses.
  • Development of service level metrics that was more meaningful to the business and end users.
  • Providing forums to improve communications, including the establishment of a cross-functional Outsourcing Governance Committee.
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