Why Outsourcing Governance Matters
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If only Dr. Phil would take on outsourcing governance relationships. If your company has outsourced significant business processes, you know it s very hard to manage the relationship with your outsourcers. But why? The process is not new, you probably went through a complete review and selection process to ensure that your partner has the resources and expertise needed. How could there be any problems now, when you got along so well while you were dating?
Well, like any new relationship, this partnership with your service provider requires some adjustments, a commitment to communication and some new skills. After the outsourcing contract is signed, the hard work in making things go smoothly begins.
It s not that companies can t handle these outsourcing governance relationships. Companies today manage many important relationships with employees, contractors, suppliers and customers. A successful firm has dedicated significant energy to managing these relationships. Each of these relationships is supported by an organizational structure, management methodologies, established processes and a supporting information infrastructure. Employees have the HR department, contractors have dedicated managers, suppliers have procurement, and customers have marketing and sales.
If there was a rash of staff resignations in your east coast office, there would be no question as to who in the organization must be involved. The local human resources (HR) manager would be the first to know and would likely escalate the issue to the VP of HR. There are policies and systems in place to manage this issue. If the situation were customer defections instead of employee resignations, the people, processes and systems involved would be just as well defined.
Now, think about your outsourcing providers. If something goes wrong with your outsourcing relationship, what happens? Is the escalation path clear? Is there one senior executive who is responsible for the health of the relationship? What are your outsourcing governance rules? Do you have any? If not, can you simply substitute your HR policy or your customer retention strategy? Of course not, the relationship you have with your outsourcing provider is very different.
Fortunately, your existing relationships provide the framework for the adjustments required for outsourcing governance. Just like employees, contractors, suppliers and customers, your outsourcing providers need a supporting organizational structure, management methodologies and information infrastructure.
Outsourcing providers are unique. They aren t employees, although in many cases, they do the work that employees used to do. They aren t just suppliers; they are involved in day-to-day operations. They are not contractors; you do not get to dictate how they are doing the work. They re new and different, and you must change your ways if this new relationship is going to work.
Rules for successfully managing your outsourcing governance: - Make outsourcing governance a distinct responsibility; - Clearly define your outsourcing governance and relationship management methodology; - Utilize effective tools to manage the relationship with your outsourcing providers.
Chief Sourcing Officer (CSO) The organizational chart of companies that make significant use of outsourcing should identify the most senior executive responsible for outsourcing governance. This executive should have a dedicated team that knows the new disciplines of outsourcing governance and relationship management.
Management Approach An outsourcing governance methodology is no different than any other methodology, policy or strategy. There is no right answer. Do you manage to service level agreements (SLA) or performance metrics? Do you make providers compete with each other or trust that a single provider is doing the best job possible? How much do you need to know about the details of your providers operations? Do you deal with the top managers or interact directly with the outsourced employees that are doing your work? The key is that your outsourcing governance methodology is clearly defined and diligently implemented.
Tools The moment you outsourced, you destroyed your information infrastructure. No existing ERP, CRM or SCM system exists that can bridge the divide between you and your providers. You now have new people, new locations and new needs. Unfortunately, the systems needed to manage the outsourcing governance are rarely addressed in the initial strategy. Just like your customer relationship management system manages your customer relationships, you need an appropriate set of tools to manage the unique needs of your outsourcing relationships.
Making it All Come Together Now that you ve made the investment in outsourcing, you need to invest the time and energy in outsourcing governance to keep your relationship with our providers successful. Don t allow it to get so bad that you need Dr. Phil or, worse, head for divorce. The keys to a healthy relationship are to make outsourcing governance part of your core competency, clearly define your outsourcing relationship management methodology and utilize new tools to manage your global network of outsourcing service providers.
More information on outsourcing governance is available.
Bookmark it:
If only Dr. Phil would take on outsourcing governance relationships. If your company has outsourced significant business processes, you know it s very hard to manage the relationship with your outsourcers. But why? The process is not new, you probably went through a complete review and selection process to ensure that your partner has the resources and expertise needed. How could there be any problems now, when you got along so well while you were dating?
Well, like any new relationship, this partnership with your service provider requires some adjustments, a commitment to communication and some new skills. After the outsourcing contract is signed, the hard work in making things go smoothly begins.
It s not that companies can t handle these outsourcing governance relationships. Companies today manage many important relationships with employees, contractors, suppliers and customers. A successful firm has dedicated significant energy to managing these relationships. Each of these relationships is supported by an organizational structure, management methodologies, established processes and a supporting information infrastructure. Employees have the HR department, contractors have dedicated managers, suppliers have procurement, and customers have marketing and sales.
If there was a rash of staff resignations in your east coast office, there would be no question as to who in the organization must be involved. The local human resources (HR) manager would be the first to know and would likely escalate the issue to the VP of HR. There are policies and systems in place to manage this issue. If the situation were customer defections instead of employee resignations, the people, processes and systems involved would be just as well defined.
Now, think about your outsourcing providers. If something goes wrong with your outsourcing relationship, what happens? Is the escalation path clear? Is there one senior executive who is responsible for the health of the relationship? What are your outsourcing governance rules? Do you have any? If not, can you simply substitute your HR policy or your customer retention strategy? Of course not, the relationship you have with your outsourcing provider is very different.
Fortunately, your existing relationships provide the framework for the adjustments required for outsourcing governance. Just like employees, contractors, suppliers and customers, your outsourcing providers need a supporting organizational structure, management methodologies and information infrastructure.
Outsourcing providers are unique. They aren t employees, although in many cases, they do the work that employees used to do. They aren t just suppliers; they are involved in day-to-day operations. They are not contractors; you do not get to dictate how they are doing the work. They re new and different, and you must change your ways if this new relationship is going to work.
Rules for successfully managing your outsourcing governance: - Make outsourcing governance a distinct responsibility; - Clearly define your outsourcing governance and relationship management methodology; - Utilize effective tools to manage the relationship with your outsourcing providers.
Chief Sourcing Officer (CSO) The organizational chart of companies that make significant use of outsourcing should identify the most senior executive responsible for outsourcing governance. This executive should have a dedicated team that knows the new disciplines of outsourcing governance and relationship management.
Management Approach An outsourcing governance methodology is no different than any other methodology, policy or strategy. There is no right answer. Do you manage to service level agreements (SLA) or performance metrics? Do you make providers compete with each other or trust that a single provider is doing the best job possible? How much do you need to know about the details of your providers operations? Do you deal with the top managers or interact directly with the outsourced employees that are doing your work? The key is that your outsourcing governance methodology is clearly defined and diligently implemented.
Tools The moment you outsourced, you destroyed your information infrastructure. No existing ERP, CRM or SCM system exists that can bridge the divide between you and your providers. You now have new people, new locations and new needs. Unfortunately, the systems needed to manage the outsourcing governance are rarely addressed in the initial strategy. Just like your customer relationship management system manages your customer relationships, you need an appropriate set of tools to manage the unique needs of your outsourcing relationships.
Making it All Come Together Now that you ve made the investment in outsourcing, you need to invest the time and energy in outsourcing governance to keep your relationship with our providers successful. Don t allow it to get so bad that you need Dr. Phil or, worse, head for divorce. The keys to a healthy relationship are to make outsourcing governance part of your core competency, clearly define your outsourcing relationship management methodology and utilize new tools to manage your global network of outsourcing service providers.
More information on outsourcing governance is available.
Bookmark it:
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