The challenge, as always, is to wade through the business-speak to get at the essence of what they’re trying to communicate. In this case, I think their message is this: Executives get bored in the long-term in managing the people and processes around the outsourcing initiatives being done by their companies, especially in year two. In the case of offshored work, this lack of attention can result in some form of failure. And worse, if you don’t show good governance skills from the start, you can’t simply expect to introduce new policies and procedures midstream and expect them to work. The respect is gone.
So what do you need to do to implement “successful governance” from the git-go? NeoIT identifies seven vital factors:
1. Getting internal buy-in.That doesn’t mean just from the executive level; it means throughout the organization, where people and processes will be affected. That requires a level of cultural awareness and sensitivity and good communication mechanisms. The lowliest person can derail the best efforts in truly mean ways.
2. Committing to the duration of the offshoring initiative.Here’s where boredom sets in. The grand declarations have been spoken, the contracts signed, the PR generated, and then executives sent off on their next missions. Suddenly, monitoring isn’t taking place and the details of the contract are forgotten.
3. Setting up a hierarchy.This is actually the opposite of setting up a bureaucracy. There needs to be a structure whereby timely decision-making happens and people understand who’s in charge of what.
4. Defining roles and staffing.Everybody on the team needs to know what roles he or she plays.
5. Designating champions.Without the consistent influence of champions, attention can wane.
6. Investing time.NeoIT says that managers and operating staff should budget between 15% and 28% of their time and effort in governing the offshoring initiative. CxO-level people need to budget about 5% of their time.
7. Investing money.Expect to spend between 5% and 8% of the overall offshoring budget on governance matters.
I recommend this 10-page Adobe Acrobat paper to understand more about each factor and to get the NeoIT take on the management issues you’ll face in achieving good governance of your projects.