CBDI Journal September 2010

Editorial - Ten Tips for Outsourcing/Offshoring Success

Outsourcing in some form is clearly the de facto delivery approach in larger enterprises. I observe many enthusiastically embracing the approach hoping to reduce costs. Yet mature outsourcers tell me – cost is generally not their primary objective these days. It’s more about scalability, skills, virtualization and understanding what the core business really is.

In my research earlier this year on eSCM[1]  I noted the comment from ITSQC[2]  that “organizations using outsourcing as a tactical exercise, rather than a strategic part of their overall management capabilities . . . are likely to be a high risk for sourcing failure because they may not have a readiness for managing change or the sourcing activities”.

I agree. Outsourcing is not a solution to the current chaotic situation many are experiencing. In fact outsourcing requires considerable structure and management – with a strong reference model, framework and process in conjunction with a sourcing maturity model.

I was recently asked to advise on outsourcing, and I drew up something close to the following list which may be of interest.

  1. Define sourcing policy. Define domains, layers, service types that are appropriate for outsourcing/offshoring (and those which are not).
  2. Define capability maturity required from supplier. Capability maturity from a supplier needs to be matched with the nature of the outsourced responsibility. Recommend certification of supplier by independent subject matter experts, as the maturity level required may considerably exceed the enterprise’s own maturity level achievement.
  3. Define baseline reference model and policies that supplier will be required to comply with.  Whilst it is normal that the supplier will deliver services based on their own reference model, the enterprise must exert appropriate influence over key issues including enterprise architecture compliance, portfolio integration, technology/bus integration, security policy, standards compliance, process integration, deliverables and governance criteria.
  4. Select supplier on basis of 1, 2 and 3. Procurement people need to be brought up to speed with a richer set of selection criteria and give considerable weighting to these. Supplier selection based on lowest cost may be appropriate for commodity procurement, not outsourcing!
  5. Create integrated capability roadmap and plan. In all probability the relationship will require the enterprise to develop its own capability maturity in key areas.
  6. Enforce key operating policies. Including architecture, portfolio planning, modernization patterns, separation of specification from implementation, contract first.
  7. Define the life cycle delivery process. Think contract! In addition to the regular “procurement” contracts there needs to be a contract based delivery process in which contracts are used to manage architecture, service, SLA and implementation delivery. Regular CBDI members will (hopefully) forgive me for banging on about these critical components. You may be surprised how many organizations don’t use comprehensive contracts.
  8. Allocate roles and responsibilities. Formalize the RAEW (Responsibility, Authority, Expertise and Work) or RACI (Responsibility, Accountability, Consulted, Informed) or whatever system you use.
  9. Formalize governance criteria. Forget formal governance boards. Waste of time for governance of detail. Make sure there’s strong policy and governance criteria in place for each phase end linked to specific deliverables. Use self governance and peer review with alerts required where waivers are requested. Distributed responsibility leads to effective governance. Include the supplier in the distributed, self governance system and require compliance as part of the procurement contract.
  10. Coordinate capability development and delegation. Manage capability development. Ensure that the combined organizations do not undertake activities for which capabilities (on either side) are inadequate for purpose.

David Sprott, Everware-CBDI, September 2010

[1]  Using the eSCM Framework for Sourcing Capability Management in Conjunction with SAE and ITIL. CBDI Journal, June 2010

[2] ITSqc, LLC, the spin-off from Carnegie Mellon University created to promote best practice models for the global IT-enabled services industry, was founded to extend the impact of the eSourcing Capability Models.  http://itsqc.org

Document Download: CBDI Journal September 2010

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PDF version of CBDI Journal September 2010 Editorial: Ten Tips for Outsourcing/Offshoring Success Practice Guide: The CBDI-SAE Reference Framework in 2010 A description of the CBDI Service Architecture & Engineering framework in terms of its origins, objectives, principles, rationale, process and components and a discussion around how a reference framework needs to evolve to support user requirements today and in the future. This article will be of interest to anyone that is struggling to bring order to chaos in architecture and delivery projects. Includes self-assessment questionnaire. By David Sprott Practice Guide: BPMN and its Role in Application Modernization Projects Across the industry Application Modernization is a synonym for legacy renewal and transformation. It's widely viewed as a technology based process. In contrast we recommend that modernization must be business driven. It's a major opportunity to create a modern architecture which reflects the current and future business needs. Getting concrete understanding of the future business needs is of course not a trivial task and in this article we provide guidance on using the increasingly popular BPMN notation in a systematic and efficient approach to business driven modernization. By Tony Bidgood What's New: Knowledgebase Update What's new in the CBDI-SAE Knowledgebase plus hints and tips for new users.

Type: pdf

File Size: 1MB

Published: 16 Sep 2010 00:00

List of Content

The CBDI-SAE Reference Framework in 2010 (pdf)

A description of the CBDI Service Architecture & Engineering framework in terms of its origins, objectives, principles, rationale, process and components and a discussion around how a reference framework needs to evolve to support user requirements today and in the future. This article will be of interest to anyone that is struggling to bring order to chaos in architecture and delivery projects.

Includes self-assessment questionnaire.

BPMN and its role in Application Modernization Projects (pdf)

Across the industry Application Modernization is a synonym for legacy renewal and transformation. It's widely viewed as a technology based process. In contrast we recommend that modernization must be business driven. It's a major opportunity to create a modern architecture which reflects the current and future business needs. Getting concrete understanding of the future business needs is of course not a trivial task and in this article we provide guidance on using the increasingly popular BPMN notation in a systematic and efficient approach to business driven modernization.

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