Putting it all in context

In the past few years there's been a great deal written about Governance; yet, it's still a misunderstood subject. In most cases, it's an afterthought only considered once the "transaction" is complete and the Provider is selected. Unfortunately, this practice relegates Governance to no more than a box to be checked off on the path to program implementation. In order for Governance to have a chance to realize the business case for which it was created, it must be more than this.

Considering the Governance structures of Providers, as well as most Advisors, one sees that there is a blending together as though all are dancing to the same "sheet of music". Each has their organizational alignment charts, communication plans and list tasks that need to be accomplished. But, if this is the silver bullet to program success, then why is there such a high failure rate and common dissatisfaction among most buyers? Has the reliance on the "same sheet of music" turned everyone into following the Pied Piper? Or, perhaps it has led to the kind of pack mentality that caused the Lemmings to run off of the proverbial cliff.

As the wise proverb states, "there is nothing new under the sun", so we focus on the recent past to see similarities and lessons learned that we should apply to Governance. Of course, the lessons are many and recent, but we'll avoid the dot.com parallels because the pain may be still too fresh for some. Let's look back to the late 90's when many organizations were jumping on the ERP bandwagon that was driven in part by preparation for the looming Y2K debacle, (oh, the money spent on that.ouch!!).

Many of these systems were pushed through by zealous consultants who were given a virtual open checkbook for execution. Quick plans were made to justify the expense; methodologies were developed to implement those plans; and change agents were empowered to execute. Damn the torpedoes, full speed ahead! It was going to fundamentally change the way organizations were run and drive substantial efficiencies. Did it?

The immediate answer is no, but the long term answer is yes. Short-term costs went up as implementations followed the path of fitting the software to the existing processes not effectively aligning with a new way to operate. Long-term, it did change the way data was handled and set the stage for successive waves to leverage this data and alter the business processes. Only later was true business process engineering achieved through proper change management. Admittedly, this is a simplistic view; but maybe if the right change controls and alignment were considered up front, then companies jumping on the ERP bandwagon would have realized the benefits more quickly.

BPO Governance

This is much like the state of Business Process Outsourcing (BPO) today. There's a lot of excitement about the potential, and companies are eager to explore ways to remain cost competitive. However, BPO remains a relatively new and immature field. Many Providers are spinning the tail of their delivery capabilities and all the good they can help you achieve (sound familiar?). The fact is, the savings are there, but labor arbitrage alone does not make a successful venture.

The importance of having a good Governance structure should never be underestimated and planning for it should begin the first day, i.e. the day you begin the feasibility study and not the day you sign the contract! As Stephen Covey noted, you must "begin with the end in mind". Don't just look at the numbers, but at the organization itself and ask:

• Can the organization make the transition?
• Is there sufficient process documentation and metrics?
• Are the right people in the organization to make it happen?
• Is there adequate executive commitment and oversight?

If the answer to any of these questions is 'no', then fix it immediately!

Planning for the retained organization and Program Management must be holistic in nature and take into account the larger imperative for change. Understand the key drivers: People, Process and Performance. Each driver must be coordinated by the PMO to work together. The retained organization and the Provider's staff (People) must understand the Process and the KPI's (Performance) by which they will be measured. The metrics must be realistic, measurable and repeatable. From this basis, continuous improvement can be imbedded throughout the delivery model.

Outsourcing is a long, multi-year journey and you must realize that you are picking a Strategic Partner and not a Vendor. Yes, you want a fair price, but in the end you'll get what you pay for. Driving for rock bottom prices will deliver you a Provider that looks for every excuse not to improve the process, thereby giving you sub-standard results. This too must be planned for up front; you have to define the financial targets that must be achieved to meet the business plan. Then, when reached, back off and focus on the relationship.

In Conclusion

What is the lesson here? Ask yourself the following:

• Is my company just following the Outsourcing mantra to reduce cost without an overarching plan or strategic alignment?
• Is there a central PMO set up to coordinate and standardize outsourcing efforts?
• Are there effective change controls in place?
• Does my company know how to measure performance and program success?
• Is my program floundering and about to derail?"

If you don't have warm fuzzies after reviewing these questions, then you have a Governance issue. And just like in the ERP days, it fundamentally comes down to effective Program Management, Change Management and Performance Measurement - all of which adds up to Governance.

For more information contact Ben Trowbridge at 1 214 696 6410.