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 infrastructure 2.Eval of your CMM cert to close gap between you and supplier 3.Bringing in CMM expert with no domain experience to flush out ambiguities in requirements 4.Negotiation of a flexible CMM 5.Use of an onsite engagement mgr 6.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