Back to Basics: The Importance of an Outsourcing Governance Team

By Allan Watton on July 24, 2012

The Importance of an Outsourcing Governance TeamAccording to a Gartner survey, 53% of organisations that have outsourced reported challenges relating to a lack of project/programme management skills. Or to put it another way, they had no experienced outsourcing governance.

When considering outsourcing, the creation of a Governance Team is not an option – it is a must. The team must have full responsibility for ensuring that decisions on outsourcing align with your organisation’s strategic goals. Furthermore, they must administrate an effective process for informed decision-making on the “whether, what and how” questions relating to outsourcing.

But that in itself does not explain the importance of a Governance Team. If you are in any doubt as to why such a team should form the backbone of your outsourcing process, read on.

Difficult Questions

For many organisations, making the decision to outsource seems a simple one. It is sometimes a case of, “We have a problem – let’s outsource it” (bad idea), or “We need to cut costs – let’s outsource”.

If a decision to outsource is based solely upon one such simple question, the process is likely to fail. In order for a successful outsourcing partnership to be established, your Governance Team will be tasked with asking difficult (but vital) questions.

There are questions that must be asked before you engage in outsourcing (which we covered here), along with questions relating to the ongoing management of the partnership, such as:

  • Who will manage the service?
  • How will the service be monitored?
  • How regularly will “health checks” be carried out to ensure that our outcomes are being met?

Your Governance Team will be made up of people who have the expertise and authority with which to answer such questions.

Effective Transition

The process by which an outsourced service is transferred from your organisation to your new partner is extremely important.

Transitioning from an in-house function to an outsourced process will require an ongoing commitment from senior management within your organisation. Consequently, the Governance Team will be charged with assembling a delivery team to ensure that your partner is fully focused on service implementation.

Your Governance Team will take a hands-on approach to managing expectations – both those of your partner, and internally. It will take the lead in guiding the outsourcing project teams to deliver the expected business objectives and benefits. It will act as both a facilitator and catalyst for ensuring the effective implementation of the outsourced service.

Quick Wins

Nothing acts as a better galvanising force in an outsourcing partnership than quick wins. Everyone involved in the process will love seeing immediate results flowing from a newly formed partnership.

Your Governance Team will be charged with identifying all areas that can be transformed into quick wins once the outsourcing agreement commences. Ultimately, it is responsible for getting the agreement off on the right foot.

Communication of Expectations

Arguably the most important factor in the successful implementation of an outsourced service is the clear communication of expectations. If you leave your partner to guess what it is that you are trying to achieve, or the quantifiable goals by which you will measure their success, you are likely to end up with less than stellar results.

This is important both at the inception of the partnership, and on an ongoing basis. As priorities and legislation change, the clear communication of revised expectations and objectives to your partner are vital. This highlights the importance of your Governance Team in the long run.

The Linchpin

Your Governance Team must have the authority to make or break the outsourcing agreement. It must have the power to insist that certain objectives are delivered from your partner, or the power to insist that they are no longer necessary. Likewise, it must have the authority to change the agreement in any (legally permissible) way that it sees fit, to ensure that your organisation’s objectives and outcomes are met.

The alternative is management by committee – a slow and cumbersome process. Although the idea of handing over control to your Governance Team may seem a frightening one, the benefits far outweigh any perceived risk.

The Facilitator

Ultimately, your Governance Team has a huge role to play in defining the success of your outsourcing project. It facilitates expectations and effective communication. But perhaps most importantly, it seeks to align desired benefits across both parties, in order to foster a mutually beneficial partnership.

Any successful outsourcing partnership is underpinned by a highly competent Governance Team, so never underplay their importance when establishing your own future partnerships.

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