In managing your outsourcing efforts, make sure you pay especially close attention to these six activities. Also, this list of DOs and DON’Ts will help management take the appropriate actions.
How does one measure success for globalization initiatives? Too many firms and consultants measure this through the eyes of contract negotiations. Then, senior-level involvement in and commitment to a globalization initiative often fade over time, typically when the initiative progresses into its steady state.
To prevent this slide into complacency (which eventually leads to the failure of the globalization initiative), management—the last phase of the globalization lifecycle—should be as important as the knowledge, plan, and source phases. The goals of the management phase include providing ongoing contract governance and program management, ensuring that the provider performs in line with expectations, and realizing the client organization’s projected benefits. To accomplish those goals, the management phase must build a strong governance model. But the management phase must also do more. Here are six key activities:
• Secure Internal Buy-in. Globalization initiatives often face internal resistance because of employees’ fear for their jobs or cultural insensitivities about the new provider’s location. But for the globalization initiative to succeed, those points of internal resistance must be addressed, and internal buy-in must be secured.
• Streamline Governance Layers. Thick layers of bureaucracy will prevent timely decision-making and coordination among teams, yet a lack of organization will lead to a loss of accountability. So client firms must carefully craft their management structures to reach a middle ground, allowing for timely decision-making and coordination.
• Define Roles and Responsibilities. Each team member involved in the globalization initiative should have a defined role and a clearly outlined set of responsibilities. Not only will effective role definition improve existing employees’ contributions, but it will also make it easier for the organization to successfully fill open positions.
• Leverage the Role of Influencers. Influential individuals can become vocal champions and ambassadors for the globalization initiative, resulting in more internal buy-in at all levels and more consistent attention from management throughout the project’s duration.
• Invest Time and Effort. Generally, operating staff and managers should plan to dedicate 15 to 28 percent of their time to the globalization initiative. Those at the C-level should plan to contribute 5 percent of their time.
• Budget Appropriately. Organizations should budget approximately 5 to 8 percent of their overall initiative expenditure for governance.
Management activities should continue as long as the globalization initiative is active, though the management phase begins with the transition from in-house to globalized services. Transition management involves six steps, including:
• Transition planning and key resource retention;
• Change and cultural management;
• Risk assessment, impact analysis, asset protection, and mitigation planning;
• Knowledge transfer;
• Reengineering of workflow; and
• Reaching steady state.
Long before the client organization even signs its sourcing contract, it should work with the service provider (and, preferably, a third-party advisor) to detail the transition plan. This is not only about setting dates and goals, but also about how to get to the end goal.
Some DOs and DON’Ts to consider:
• Design a detailed transition map that includes several transition waves;
• Ensure time for sufficient process documentation;
• Ensure proper training—it’s the key to successful knowledge transfer; and
• Schedule shadowing, reverse shadowing, and readiness tests into the training program.
• Don’t assume the supplier is the expert on transition management;
• Don’t hand over full responsibility too early; and
• Don’t be afraid to make adjustments to the transition schedule if the provider is not ready for customers.
While inadequate attention of management to good governance is one of the leading causes of initiative failure, strong transition management and engaging in the six key activities will go far in leading the client organization to realize all of its projected benefits.