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ISG White Paper

Enabling Effective Sourcing Governance Through Technology

RoyTina
by Tina Roy
As many organizations face the challenge of harvesting the value from their sourcing arrangements, the approach for comprehensive governance of these relationships is still evolving. First, it generally takes organizations 18 – 24 months to implement and stabilize a proper sourcing governance organization. Second, organizations must recognize that it takes more than looking at service provider performance to be truly effective. By separating decision-making and relationship activities from supporting governance tasks, companies can garner new levels of efficiency. To obtain this higher level of effectiveness, companies not only need to establish the appropriate governance structure and use qualified resources to perform the oversight functions; they also need to understand that technology enablement is a necessity for good outsourcing governance.

The role that sourcing governance tools can play goes beyond the collection of relevant service and cost data or the automation of standardized processes. These tools also help reduce the administrative workload of the governance organization resources while streamlining their work flow. They provide a single point from which to consolidate reporting and data capture in a consistent manner across multiple service providers, and, if used effectively, they tend to reduce the overall costs of governance by reducing the headcount requirements of the service management organization.

There are a number of tools available in the marketplace today that support sourcing governance. Most of them provide the ability to monitor performance of multiple service providers. The offerings vary in sophistication, however, and tend to be fragmented in terms of the areas they support. That is, many of the tools offer support in a specific service management discipline such as contract or financial management without facilitating automated solutions in other key governance disciplines.

When considering the type of tool appropriate for your sourcing environment, this ISG white paper suggests that it is best to look across the spectrum of governance activities the organization is engaged in to ensure that you are securing technology that best matches all those needs.