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Surviving — and Thriving — in an “Overnight” Outsourcing Transformation

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by Cynthia Batty

Something is changing in the outsourcing universe. We suddenly see companies that have never outsourced before becoming deeply engaged in multiple concurrent outsourcing transactions. It is happening because these companies have an imperative to transform their organizations “overnight.”

So they are undertaking these transformations by outsourcing functions such asinformation systems, transaction processing, Finance & Accounting and Human Resources — all within a very few months of each other.

Rapidly transforming companies have learned from mistakes of the past and want to talk about Governance, but they assume that“Governance“ and the roadmap to success are completely mature. This leads to a phenomenon of “Governance in an Hour“ or its related cousin, “Governance on One Page,“ in which the speed of change overwhelms the ability of the organization to address fundamental decisions, structures and processes that will enable the transformation.

If you recognize your organization in this scenario, consider these TPI Top 5 tips for companies coping with overnight transformation through outsourcing:

1. Make sure you have established clear accountability for the outsourcing relationships at all levels of the enterprise. We see companies trying to matrix responsibilities as they design their Governance of complex transformations. That is understandable, but a matrix reporting structure can obscure accountability. The service provider is responsible to deliver the services; but YOU are accountable for ensuring that you receive the services. Identify a clear line of accountability from a service to an executive who is a genuine stakeholder in the outcome to ensure that the service accountability does not get lost in the transformation.

2. Establish enterprise roles and responsibilities early in your transformation. Corporate functions are significantly affected in outsourcing, particularly Procurement, Risk, Security, Legal, and Audit. Leaving role definition until later in the process can stall important development of the Governance approach and can impede the development of anOutsourcing Center of Excellence.

3. Invest in a Governance data and workflow system. Most companies that are more mature in multisourcing are still using Microsoft Excel and Access to manage their data and workflow at great human cost in both hours and fatigue. Resist this approach. Software to manage these areas is maturing rapidly. A true Governance data and workflow system will pay for itself in a year and free your Governance team to focus on work, not on spreadsheets.

4. Seek out and listen to experienced colleagues in other companies. To paraphrase a well-known quote about childrearing: “Once upon a time I had five theories about outsourcing, but no outsourcing. Now I have five service providers and no theories.“ Outsourcing will change everything about the way your company works, forever. Ask people who have been through it.

5. Follow your instincts to conduct meaningful organizational change management — and have a plan to look back. Companies undergoing rapid transformation have a very high risk of changing too fast for the organization to absorb the changes. Transformational outsourcing is not a popular choice for change; your program must include the vision of what your organization is changing into, the detail for the organization to see and live in the new world, and a program for following up to make sure the transformation stuck.

TPI Governance Advisory Services experts can help you achieve your organizational goals through objective advice, knowledge of your industry and experience with arrangements from simple to complex.

Contact Cynthia Batty, Director, TPI, to learn more. 

About the author

Cynthia brings 25 years of experience helping clients develop their sourcing governance and service management design. Having worked with more than 50 organizations to improve business management and service management processes in both single-provider and multi-provider environments, Cynthia has become a recognized expert in sourcing governance, vendor and contract management. She currently serves as the architect for ISG’s service methodology and global integrator of its products and services. Cynthia works to leverage ISG’s accumulated intellectual property resources to help enterprises create effective transformation and governance capability, and maintains a continuing role in the Strategy and Organizational Change Enablement practice.