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GOVERNANCE Concerns both client and vendor “the processes and structures that ensure the alignment of strategies and objectives of the parties involved” Governing structures and processes should facilitate the alignment of client’s objectives and strategies with the vendor’s, intermediaries, and providers Becomes more important as Multiple vendors Sourcing arrangements Geographic locations
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GOVERNANCE OF OUTSOURCING PROJECTS
UNIT 8
GOVERNANCE
• One of the leading causes of outsourcing failure
• In this chapter, we will discuss:• Governing structures for o/s ventures• Roles involved in governing o/s projects• The most effective governance practices for o/s projects
GOVERNANCE
• Concerns both client and vendor• “the processes and structures that ensure the
alignment of strategies and objectives of the parties involved”
• Governing structures and processes should facilitate the alignment of client’s objectives and strategies with the vendor’s, intermediaries, and providers
• Becomes more important as• Multiple vendors• Sourcing arrangements• Geographic locations
ELEMENTS OF A GOVERNANCE STRUCTURE
• Outsourcing organizational structure• Communication channels• Control and monitoring framework• Performance metrics
GOVERNANCE
• Aspects that need special attention• Comm channels should be smooth and effective at all
times• Trust and building rapport is essential for healthy and
effective collaborations• Effective and reliable reporting system should be
maintained
GOVERNANCE
• Can be expensive• Formal structure probably not needed for small
(<$.5 lakh) projects
• Key element of governing is the SLA• Not static• Accommodate business needs for change in the method
and mode of delivery subject to changes in market conditions or clients’ strategic intent
• Monitored on a dashboard• Balanced scorecard
GOVERNANCE ROLES• Often the responsibility of the vendor• Main governing body is the Global Office• Deal with
• Proj mgmt• Quality assurance • Infrastructure office
• Client sets up PMO too, which mirrors vendor’s• Many parallel roles
EFFECTIVE PRACTICES FOR GOVERNING OFFSHORE O/S PROJECTS
1. Development of the infrastructure2. Eval of your CMM cert to close gap between you and
supplier3. Bringing in CMM expert with no domain experience to
flush out ambiguities in requirements4. Negotiation of a flexible CMM5. Use of an onsite engagement mgr6. Giving offshore suppliers domain-specific training to
protect quality and lower development costs 7. Development of governance metrics
PRACTICES TO IMPROVE GOVERNANCE
• Conduct joint improvement activities• Share information intensively but selectively • Develop supplier’s technical capabilities• Supervise your suppliers• Turn supplier rivalry into opportunity• Understand how your suppliers work
