Turn on Lean Governance ..For return on Outsourcing

Turn on Lean Governance ..For return on Outsourcing

This paper focuses on outsourcing IT and Business Processes, with the added dimension of the provider of the service being ‘offshore’ or in a different geography. Highlighting the unique characteristics of the Lean Governance model, the paper stresses the importance of moving outsourcing status from customer-vendor to being partners in attaining enterprise goals. Explaining the concept through case studies, the author demonstrates the importance of structures and processes, as organizations become more mature in the outsourcing process and as business imperatives change. The Lean Governance model encompasses these very elements, and is therefore a force multiplier for achieving the outsourcing objectives of both
business and IT dimensions.

Outsourcing Definition

Outsourcing can be defined in simple terms to describe a situation where one organization gives work to other firms, which can execute this work more efficiently, usually for lower costs, and whose capabilities complement or supplement their own.

Outsourcing enables organizations to focus on their core business, and in addition, it usually reduces costs, provides access to skilled resources, improves process quality and takes advantage of difference in time zones. Organizations jumping on to the outsourcing bandwagon should have a realistic understanding of these factors. They need to objectively assess gains and risks associated with outsourcing decisions. Above all, organizations should be willing to invest in time and talent for creating long-term relationships.

Michael F. Corbett author of “The Outsourcing Revolution” [2004] says: “For success in outsourcing, organizations need to take long-term value of offshore outsourcing, building advantages that go beyond near-term cost-saving. Building long-term relationships and leveraging the same becomes integral part of organizations’ strategic and tactical fabric” .

The benefits can range from being strategic, operational or technological. The risks involved also are varied. At a macro level, risks can be classified as political, legal, regulatory and economic risks. At a micro level the risks can be further classified as risks arising out of decision making flaws and implementation flaws.

Conventional wisdom indicates much of the outsourcing model or outsourcing best practices are centered around cost arbitrage, supplier selection, risk diversification, knowledge dissemination between client and supplier and micromanagement of supplier by the client. But much less is addressed on the governance aspect of client-supplier relationship that not only supports current needs [“to keep the lights on”], but also addresses future business needs. Supplier’s relationship, transformation and delivery capabilities are crucial for building a win-win customer-vendor relationship in outsourcing initiatives.

Download

Download full seminar papers At
http://www.enjineer.com/forum