Secret No. 6: Implement a strong governance model that serves on many levels. Remember to continually monitor progress in the outsourcing program.
When I make presentations at client conferences, I often ask this question: What is the single largest factor contributing to the failure of services globalization initiatives? The answers I receive range from supplier incompetence to miscommunication to internal resistance. But in my experience, a great percentage of failures occur because of the client organization’s inadequate attention to governance.
Governance usually gets a lot of attention during the rollout period, but often it’s forgotten once a steady state has been reached, and executives move on to new initiatives. The most common problems I’ve seen are:
- Lack of executive focus after signing the contract;
- Insufficient performance and deliverables monitoring;
- Contract amnesia; and
- A loss of original objectives.
A strong governance model solves those common problems by operating at three levels.
The top tier in the pyramid reflects organizational governance. Here, governance activities are primarily strategic and engaged by senior leaders. The big picture is reconciled here, where the firm’s business case for globalization is aligned with the initiative itself. This level of governance focuses on achievement of strategic objectives through services globalization and monitors that progress.
At the functional level, governance activities are more hands-on than at the organizational level, but less than at the operational level. Here, the role of the governance group is to enable coordination, communication, and control among key stakeholders. The focus is on functional synergies and coordination.
The operational level is the front line, where individual contracts and relationships are managed. The operational governance team is responsible for monitoring the day-to-day activities within the initiative as well as for reporting from-the-ground information to the functional and organizational teams. Because the team is directly responsible for managing day-to-day activities, large organizations may have several groups in place.
Ultimately, the program management office (PMO) is accountable for ongoing success. The PMO is where the proverbial buck stops; it bears the ultimate responsibility for ensuring that good governance is being practiced within all three layers.
Surrounding the three layers of governance and the PMO are key components—areas that are managed within a successful governance model. Table 1 highlights the necessary activities within each management area.