Tracking Vital Sourcing Signs to Keep the Enterprise Compliant and Healthy

Just as outsourcing buyers have become increasingly confident in their ability to manage the complex interconnections between service providers in today’s multi-sourcing environments, along comes a fresh set of challenges. The emergence of new technologies, new as-a-service platforms and shifting operating models threaten once again to turn “business as usual” on its ear.

Against this complicated backdrop, many enterprises find themselves without appropriate ways of tracking even the most critical contract deliverables. It’s like a watermelon. From the outside, service levels look entirely green (thumbs-up, all systems go). Dig deeper, and they’re red on the inside (with plenty of warning signs that anticipated value is in danger of being compromised). Many enterprises are unsure if they are applying the right governance policies across their sourcing relationships, if they are applying them consistently across geographies, if they are using the right tools or even if they are measuring the right things.

This is much like with our own physical wellbeing. We don’t always have a true sense of the inner workings of our own health, and when we need an outside, expert opinion, we go for an annual checkup.

For large, complex enterprises, a Governance Capability Review is that annual checkup. It applies an independent and expert perspective to measure how well an enterprise is managing risk and how actual value is stacking up to anticipated value.

An enterprise that builds a Governance Capability Review into its shared services or outsourced delivery model benefits from a full picture of the maturity of governance processes, tools and people skills throughout its various sourced services. By comparing an organization’s current practices to the ever-evolving best-in-class capabilities of the market, an organization can fully understand its governance capability and what it needs to do to improve its service-delivery health.

Here’s what such an assessment can do:

  • Determine corporate-level consistency: Measuring the consistency of the policies, processes, tools and organizational roles employed in each business sector within the group helps determine how governance is applied across the enterprise. This kind of review works to establish immediate and short-term actions needed to mitigate risk.
  • Assure value: Service provider relationships and shared services models are based on a business case presented to senior leadership, but very few organizations formally track the realization of such business cases and/or the value leakage of the implementation. A Governance Capability Review shines light on the exact ways an enterprise can assure value in their service provider relationships.
  • Ensure contract compliance: Negotiating contractual arrangements with service providers requires significant effort, cost and time, but very few enterprises implement the necessary mechanisms to ensure the fruits of such well-negotiated contracts are actually delivered by both parties. Formal processes and tools must be accompanied by adequate training so those involved can track, monitor and report contract compliance to senior leadership on an ongoing basis.
  • Comply with regulations: Regulatory issues—especially in highly regulated sectors such as banking, insurance, capital markets and healthcare—arise far too frequently these days. A regular, independent review aligned to the applicable regulatory requirements can help minimize the consequences of non-compliance.

As the business world becomes increasingly fraught with uncertainty, complex organizations have much to gain from the rigor and regularity of Governance Capability Reviews. Contact medirectly to discuss how ISG can help.

About the author

Dinesh is a highly experienced and well-respected advisor in the outsourcing industry with more than 23 years of experience in management consulting and outsourcing. He works with enterprises to craft sourcing strategies, structure and negotiate complex sourcing transactions and design and implement sourcing governance organizations. Prior to joining ISG, Dinesh worked with Infosys and Accenture, where he led large transition programs and consulted on IT strategy and implementations, business process-reengineering and operational improvement programs. He is a published thought leader and a regular speaker at industry conferences. Dinesh manages the ISG India Business.