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Establish an Effective Sourcing Governance Process Early

There are many reasons for value leakage in a sourcing agreement such as excessive capital spend, budget expansion, scope creep on projects, delivery misunderstandings, etc..., that are mistakenly identified as the root cause of a failed outsourcing relationship but, they are all symptoms of the lack of an effective outsourcing governance process.

Alsbridge research shows, when outsourcing fails to achieve expected results as initially intended, the most prevalent root cause is often the governance process and structure.

Many companies have governance organizations in place prior to outsourcing but, all too often they set up to operate efficiently or effectively. Without an effective governance organization in place, the likelihood is that the same results will be achieved post services transition and sourcing with a new provider as were experienced prior to the relationship.

There are at least three options on timing the development of an effective governance organization:

1. Prior to the sourcing process to effectively monitor the current environment
2. During the sourcing process designed to accommodate both the retained and outsourced domains
3. Post sourcing process after challenges are discovered and value leakage has taken hold

There are typically two different measurements for a successful outsourcing relationship. The provider identifies success through cost savings and renewal probability. The client identifies success as achieving their desired financial results and operational efficiency which is usually the result of having a strong governance organization in place earlier rather than later.

Timing the development of a successful governance organization has an important direct impact on the success of a sourcing arrangement, though businesses will benefit from the right governance organization in place, even without an outsourcing arrangement.

The A to Z of Outsourcing

Outsourcing has attracted a lot of attention over the past few years. At times, the logistics of outsourcing can seem complex but, the basic idea of outsourcing is of course very simple – reap the benefits of having a specialist do a specific job for less money than it would cost for you to do it yourself. However, when it comes time to setting up the right outsourcing agreement, you may be overwhelmed with the complex and bewildering array of outsourcing terms and jargon.

As a result, we at Alsbridge wrote this outsourcing guide to help anyone involved in outsourcing understand the main terminology. The "A to Z of Outsourcing" isn't intended to be an exhaustive manual, but rather it is a guide to help you understand common outsourcing terms and concepts. If you don't know your ARC's from your Earnback, this outsourcing overview is definitely for you.

We've tried to make this outsourcing guide comprehensive without creating an encyclopedia. However if there's anything you would like to know which isn't included, or which isn't clear, feel free to contact ALsbridge, we'd be delighted to hear from you. Our goal is to make understanding outsourcing as easy and simple as possible so you can gain the most benefit from your deals.

The Role of Benchmarking in Outsourcing

With increasing economic uncertainty comes increasing pressure to evaluate and make the most of your outsourcing options, both from a business and an information technology perspective.

More and more benchmarking is becoming recognized as a management discipline for driving external cost-efficiency and ensuring benefits from sourcing operational activities are delivered to efficient, or specialized providers.

This white paper discusses how benchmarking can be an effective tool in an environment where requirements are constantly changing, returns are required sooner rather than later and there are ever more options for selective sourcing.

Contract Renegotiation: Timing is Everything

The consequences to a buyer company that fails to renegotiate certain provisions of its outsourcing contract at the right time can be devastating. Right now is the right time for many organizations.

As the outsourcing services market continues to undergo significant changes in service provider mix, technological advances, and price drops, more and more outsourcing buyers are entering into the contract renegotiation process wholly unprepared. As a result, many leave significant financial savings on the table and/or structure sub-optimal deals that don’t adequately serve their needs or deliver real value.

Contract renegotiation is not a cure-all for all outsourcing ills and is not a replacement for maintaining a healthy relationship with your service provider. At the end of the day, both sides of the table are looking for a positive outcome and a relationship that delivers value. However, understanding how and when to renegotiate your outsourcing agreement and then taking the time to prepare for your renegotiation is fundamental to success. Start early to make time your asset, not your enemy.