Changing Governance Models: How to Keep Suppliers on a Leash

• Posted: Monday, June 22, 2009
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• Author: pradhana
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• Filed under: Business Analysis

As 70% of organisations use outsourcing in one form or another, managing it correctly is critical, not just when it is signed, but throughout the lifecycle of the relationship. Why is it, then, that enterprises still apply governance models built-up around industrial-era command and control techniques? The new wave of outsourcing and its continually growing complexity, geographic dispersion and multiple lines of control is begging for fresher and more realistic engagement models, especially given the amount of money being “thrown” at external bodies.

“Frustration at the impotence of key stakeholders to make decisions often occurs in outsourcing relationships, especially if the control mechanisms relate to the bygone world as it was when the deal was signed.” Jens Butler, Ovum. Ovum has found that the context, requirements, resources and capabilities will be very different in the period between signing the deal and considering the renewal.

Outsourcing partners to often “forget” about the governance models, often seen as overhead, and very quickly move into the job of keeping their heads above water associated with the day to day operational challenges. “If you don’t adjust the steering slightly as the journey progresses, expect to have to make a massive U-turn further down the track, which is often dangerous and costly”. /PR-Ovum

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