Carnegie Mellon University’s IT Services Qualification Center today released its first public draft of the eSourcing Capability Model for Client Organizations (eSCM-CL). These are the same folks who brought us the Capability Maturity Model and CMMi (the "i" is for "integration").
This document, 112 pages long, lays out 95 best practices for client companies doing sourcing — outsourcing, insourcing, multisourcing, offshoring, whatever form your sourcing takes — particularly for functions that are IT-related or IT-enabled (such as most business process outsourcing).
Why is this important? As the paper spells out, so many organizations fail in their sourcing efforts because they’re not doing their side of the work well. What? You didn’t know you had to do anything once that contract was signed? (If you think that, then you’re definitely at Level 1 of the eSourcing Capability Model as a client company.)
Outsourcing isn’t easy. Among the challenges companies face, they have to establish the appropriate sourcing strategy; they have to identify the particular functions that could be sourced; they need to develop the appropriate approach for each sourcing activity; they have to manage the sourcing activities; they have to identify, select and negotiate with potential service providers; they have to conduct service provider governance and performance management; and they need to manage those relationships they have with their service providers. That’s a long list of requirements.
By working on your sourcing model, the presumption is that your organization will continuously improve its practices, develop more trusting relationships with vendors and be able to meet the changing demands of your business with greater ability. You can even go after certification of your practices, to prove what a great client you would be. (OK, so maybe this last one is a stretch, but that is part of the goals for the whole eSCM-CL movement.)
The draft spells out 23 issues that are critical for successful "eSourcing." These range from "translating…needs into defined requirements" ("…the service provider does not fully understand the needs of the client. This may be due to the inability of clients to adequately express their needs, ambiguity in scope or the definition of services, difficulties in defining service levels, as well as by a lack of rigor by the service provider in gathering and analyzing those needs…") to "managing clients’ security" ("Security management includes protection of intellectual property, confidentiality, and privacy concerns…")
Once you work your way through those critical issues, you’ll learn the 12 guiding principles for the eSCM-CL model, such as "building confidence and trust with all stakeholders" and "managing risks effectively."
Each of the 95 best practices falls along the three dimensions of the capability model: sourcing lifecycle, capability areas and capability levels.
The lifecycle dimension encompasses analysis, initiation, delivery and completion — in other words activities that happen while the sourcing is taking place as well as those that happen before and afterwards.
Capability areas provide a topical or logical grouping of practices (17 in total) to help users remember and "intellectually manage" the contents of the model. These areas include sourcing strategy management, governance management, relationship management, people management and so on. Each topical area is laid out and explained in detail.
Capability levels are the five that you’d expect from knowing anything about CMM. It’s just that the definitions in each level are different. Level one organizations tend to do sourcing in an ad hoc manner — with little regard for any aspects of sourcing beyond immediate business needs. At Level two, a client is expected to understand its business objectives, define measurable sourcing objectives and define the measures needed to track progress. At Level three, a company does measurement across multiple sourced services and directly addresses sourcing issues. Level four focuses on overall sourcing performance with respect to its impact on the business. At Level five, organizations have demonstrated "measurable, sustained and consistent performance excellence throughout the organization over time" (two years, to be exact).
Once you’ve worked your way through all of the preceding build-up, by the you actually get to the 95 best practices, it’s anti-climactic. They take up precisely four pages in Appendix C. Here’s an example of one of the best practices:
Practice ID: Stri01
Life-cycle phase: Ongoing
Short description: Executive leadership
Practice Statement: Establish executive leadership for the client organization’s sourcing activities.
What? That’s it?! Actually, no, it’s not. The details for each best practice are expected during 2Q06.
My suggestion is that you download a copy of the overview for yourself and spend three or four hours working through it. Even if you’re an experienced hand at outsourcing matters, there’s much here you probably have glossed over in your career. It’s time to knuckle under and show true expertise. Someday you may be tested on it.
Besides, ITSqc wants feedback from members of the public about its first efforts.
