At the end of an outsourced services contract you have the benefit of hindsight, whether you plan to continue with your current provider or to make a change. How do you ensure that going forward you change the things that dissatisfied you? And are you willing to admit that you might share responsibility for some of the things your provider did that you didn’t like?
Renegotiation is a perfect time to think about governance and your relationship, and how you might revise both your governance exhibit and your operational processes in the next phase. We believe a “back to basics” conversation will provide appropriate thoughtful introspection to help the whole governance team.
In the cut-and-thrust of daily services management, identifying the underlying problems in services relationships can be difficult. Root causes are often related to lack of process, attitudes (on both sides), a need for different measures (service levels don’t really tell the story), and frequently, the need for different kind of executive engagement. The Fourteen Keys of Governance Success survey sets a framework for a discussion on what goes well today, and what might need to be changed in the future.
Take this open-ended test as a discussion with your team, making sure to incorporate members from all levels starting at service delivery and up to executive leadership. Think about what you can do to make your next services contract more satisfying for you, your business stakeholders, and your service provider. Examples of actions coming out of your findings from this exercise might be:
Revamp your internal governance and Balanced Scorecarding approach so you can see how you are improving over time
Re-engage with your executive management team on enhancing their role to ensure that the provider is paying attention appropriately – and stakeholders are managed
Reach out to stakeholders in an updated organizational change management strategy, so they have a better understanding of process and right expectations
Focus on your business processes to update and/or document them, so everyone in your organization knows what to do and how to do it
Of course, we would be happy to help too!
Fourteen Keys to Outsourcing Governance Success – Discussion Guide
1. Read and know the Agreement
Did you place emphasis on your team knowing the contract deeply?
Was your team comfortable when the contract had to come out between to clarify things between you and your provider?
Did you create a Deliverable Tracker to manage deliverables, or something similar?
How well did your team respond when the providers said, “That’s not in the contract”?
Does the contract fit your business needs today?
2. Know the controls for performance
Are you looking at more than service levels?
Do you know how to change the delivery without having to renegotiate the contract?
Do you understand what the provider’s reaction will be if you ask for specific changes?
Are you living with watermelon service levels? (Green on the outside, red on the inside)
3. Plan to change – in every way
Is your service delivery team treating the provider’s people like employees, and giving them detailed directions?
Has your stakeholder community understood that expectations from a service provider’s services have documented parameters?
Do your executives know to ask for a true balanced scorecard with regard to the services, or are they just focused on service levels?
4. Ensure Governance process conformance
How many formal processes did you create in the beginning?
Are they still in place? Do they generate meaningful data that contributes to your Balanced Scorecard?
Can you tell if you are growing in service management and governance capability from your metrics?
5. Forget “How” – focus on “What”
Is your service delivery team still telling the provider exactly what to do?
Do your metrics inform you as to whether the contract is being fulfilled by your provider?
Has your provider given you a Service Operations Manual that tells exactly how they are delivering?
If they have, do they update it annually?
If you had to go to a new provider, do you have the information you need about the services to do that?
6. Measure results: no ‘A’ for effort
Does your relationship with your provider allow for complete objectivity in the evaluation of the services?
Does your team treat the provider as a colleague, and forgive failures as they would an internal service organization?
Is your team fair to the provider when things go wrong?
7. Seek and measure for continuous improvement – in services and Governance
Do you measure for continuous improvement? Does your team know how that might be done?
Do you evaluate your own capability in governance? Do you know what metrics you need to tell you if you are improving over time?
8. Keep work standard – avoid customization
Has your team been able to keep to standard process?
Do you have discussions with your provider on price when you introduce customization?
Have you been able to manage stakeholder demand for customization with price and chargeback discussions?
9. Rationality & repeatability – on both sides
Is the relationship between your team and the provider calm and rational?
Do you interact in the same way with your provider team each time, or do you have various different ways that your team behaves – for example, one time based on process, another time by back door or emotion?
Are your provider’s responses rational?
Are you satisfied that both your leadership team and the provider's have the right mix of skills and personality traits to effectively manage the services and relationship after observing the first contract period?
10. Document and communicate
Do you have a robust governance library?
Would your legal team agree that you have adequate documentation to take legal action if you encounter a difficulty with the provider?
Do you have a means to communicate the state of the services to your internal teams and stakeholders?
Do you have a method to communicate with your service provider’s team (positively) about the relationship and services?
11. Celebrate genuine success
When the joint teams have a success, do you celebrate it in some way?
Party, commendation, reward (non-monetary)
Do you set up projects with the expectation of a celebration of success at the end?
Does your provider management team understand the importance of team building in the relationship?
12. Take responsibility
Do your team members “own” problems they discover and work them through to resolution?
Do your provider’s team members “own” problems they discover and work them through to resolution?
Does each and every person in the engagement understand the critical importance of their role to the success of the overall service delivery and relationship?
13. Ensure business stakeholders are on board
Do your stakeholders routinely:
Talk about “your crappy service provider”?
Talk about the great service they get from the provider?
Don’t talk about the provider at all?
Blame you personally when things go wrong?
Go over your head to higher executives to complain?
Do your stakeholders follow processes you have put in place to work with the provider, or do they disregard them and do what they like?
14. Be a team; manage the relationship
Do you make time to manage the relationship at the various levels?
Governance and Invoicing
Do you ensure that the Service Delivery level knows what is going on at the Executive Level?
Have you created a culture of engagement and good relationship with the provider teams?
Cynthia Batty, Director firstname.lastname@example.org +1 201.978.0542
Cynthia Batty is ISG’s Methodology Architect and a lead in the Transformation and Governance practice. She brings 20 years of practical experience to advise clients on their sourcing governance and service management design, as well as organizational change management and sourcing governance maturity development. She is a recognized expert in sourcing governance, innovation in sourcing, and vendor and contract management.