While most organizations remain laser focused on achieving the expected benefits and executing a fool-proof contract as they evaluate and select a provider, they either lose sight of putting in the critical government mechanisms (apart from the usual contractual governance related clauses) or start thinking of robust governance as expectations begin to be missed. One of the leading reasons of dissatisfaction with outsourced service delivery can be traced to the absence or lack of required governance after the contract is executed.
Though the organizations recognize that management and governance of outsourced service delivery and the relationship with the service providers is a complex set of activities involving various people, processes and technologies; many of them rely on providers to take the lead in managing the delivery and the relationship. While such an arrangement may work for a small and simple outsourcing relationship, it becomes woefully inadequate as the scope of services provided, scale, and geographical distribution of services as well as service delivery locations, and complexity increases. Warning signals of inadequate governance may include less than expected savings or benefits, missed SLAs/ KPIs, increased risk, reduced customer satisfaction, increased friction in the relationship with more bandwidth required for reconciling or managing issues and disputes, etc.
The following are the key focus areas for any Outsourcing management and governance:
- Service quality and performance management – SLAs and KPIs achievement, performance credits/ earn-backs, operational and executive reporting, dashboards
- Financial management – Billing and invoice reconciliation, budget variance, payments
- Contract and Compliance management – Contract change, contract repository, contract compliance
- Relationship management – Issues and disputes, escalations, communication, stakeholder management, customer satisfaction
- Resource management – Demand forecasting and demand fulfilment, resource consumption management
- Risk management – Alerts and notifications, escalations and communication, risk mitigation
Complex and continually evolving outsourcing relationships have necessitated a deeper look at outsourcing management/ governance tools. The tools too have evolved from being in-house tools or service provider tools or add-on module(s) of an enterprise software focused largely on operational or specific aspects of outsourcing governance providing point solutions, to specialized third party tools focused on all aspects of outsourcing management mentioned above, plus additional functionalities such as workflow management, reporting and analytics, executive dashboards, data search and sort, document repository, etc.
As organizations look to optimize value from their outsourced operations, they are giving a serious thought to institutionalizing robust governance framework supported by an outsourcing governance tool that enables them to make informed decisions faster by providing on-demand actionable data or insights.
The outsourcing governance tools landscape is evolving, and some of the leading tools that organizations are currently considering for their global service delivery governance include:
- Ariba (SAP)
- Contract Insight (CobbleStone Systems)
- Emptoris (IBM)
- Sirion Labs
- Smart by GEP
Apart from evaluating the available tools and their providers based on the specific needs of the organization in terms of the outsourcing governance focus areas mentioned above, other key aspects to consider include (a) scalability, (b) breadth of capabilities – services, operating model, pricing models, (c) time to implement, (d) efforts or time required from client organization, (e) technology/ platform for the tool, (f) customization capabilities, and (g) total cost of ownership.
He has significant expertise and well rounded experience in transformation initiatives related to large, complex, multi-location ITO/ BPO, as well as business/ process transformation; with deep experiential insights into all aspects of ITO and BPO, business strategy and planning, cost and performance optimization, BPR, and associated organizational change management.
Shalabh's experience spans multiple industry verticals and stints in multiple geographies – North America, Western Europe, Middle East, Asia Pacific and India.
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- Outsourcing Governance Tools: Leverage for Value Realization and Decision Making - November 14, 2016