Outsourcing Partnerships Focus On The Results
Scope Management Assistance Makes for Smart Sourcing TransitionsThe Scope Manager provides knowledgeable and independent support to the consumer of IT services. The specialist know-how of the experienced Scope Manager affords the strategic CIO vital insight into effective IT-business alignment. While such insight is valuable for better management of in-house IT services, it is a key catalyst for brokering effective, results-focused outsourcing partnerships. The smart business strategist will consult a knowledgeable Scope Manager as early as possible in decisions affecting IT sourcing. The lack of this input to key sourcing decisions can be shown to be at the root of many of the outsourcing issues apparent in business today. Smart Risk ManagementWhen you outsource ICT you are handing over stewardship of a key support service. With it goes a lot of knowledge of your business domain and your customers. The biggest risk is that these assets will be lost to your organisation and you may be locked into a supplier regardless of the performance levels the supplier delivers. Of course, a good supplier will be seeking to provide a good quality service, but by engaging an Independent Scope Manager the customer retains informed management control of the partnership at all times, radically reducing The Scope Manager works with the executive team to identify the best sourcing strategy to achieve the organisation’s desired business outcomes. They will bring to the decision-making process significant experience of software-intensive systems which will enable a non-technical executive team to evaluate the options from an informed standpoint. Because the independent third party Scope Manager has no vested interest in your sourcing decision, he/she can help your business understand and manage the risks associated with outsourcing IT services – and take an informed view on whether outsourcing is the right option at all. A successful outcome for your business is the only successful outcome for the Scope Manager. DCG-SMS IS AN EXPERIENCED PROVIDER OF INDEPENDENT SCOPE MANAGEMENT – contact info@dcg-sms.com Smart ProcurementBefore engaging with potential suppliers, the smart customer will spend some time understanding what they really want from the partnership. This should then inform the contract terms and procurement approach to be used. The Scope Manager will facilitate the management team’s understanding of the role of the outsourced function in the business value stream. This is necessary to ensure an intelligent procurement process which delivers the partnership the buyer wants. |
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Measuring Value: The Scope Manager will assist the management team in quantifying the strategic objectives of the business. By defining quantified objectives, the benefit and value delivered by outsourced services can be accurately measured in terms meaningful to the management team. This in turn enables activities to be aligned to the delivery of the desired outcome. Procurement Readiness: The Scope Manager will facilitate the necessary studies, data collection and analysis to ensure the buyer has clearly defined and understood the scope of the service to be outsourced. The Scope Manager will work with the management team to ensure they are satisfied that they understand the role of the outsourced service in delivering value to their own customers and have confidence in their governance process. Competitive tenders can then be sought.
Smart Supplier Selection. The Scope Manager will facilitate baselines of current productivity, quality and effectiveness against which to measure benefits delivered by outsourced suppliers. Independent capability assessments of preferred suppliers can also be conducted, providing the buyer with sufficient insight to make an informed choice of supplier. |
Smart Contract TermsTraditional IT contracts attempt to specify requirements in detail and monitor progress against prescriptive service level agreements. There is general agreement that this approach has not been particularly successful in delivering the desired business outcomes. This is hardly surprising, as the pace of technological change increases and the life of a software requirements specification gets ever shorter – without any commensurate reduction in the size or schedule of software projects. Back in 1982, Daniel McCracken and Michael Jackson observed: “Requirements cannot ever be fully stated in advance, not even in principle, because the user doesn’t know them in advance, even in principle. The development process itself changes the user’s perceptions of what is possible.” If the buyer wishes to contract a specified service for a specified price, to deliver to an essentially stable set of requirements, a more traditional-looking service level agreement can suffice. The buyer should be aware that any changes to the specified set of requirements are likely to be costly. If however the need is for a flexible and innovative supplier (or portfolio of suppliers) who will work with their client to identify benefits and deliver desired outcomes to the client’s business, a different contract approach is needed. OUTPUT-BASED CONTRACTS define the commodity to be produced in terms of the output of the software development process. They provide an objective performance baseline which enables a joint management team to focus on aligning IT activities with the business requirements. The Scope Manager bring to this process the necessary expertise and measurement know-how to identify meaningful measures of output which will facilitate outcome-focused outsourcing partnerships. Smart Performance ManagementIn a perfect process alignment, work flows continuously, piece-by-piece. Value is always delivered “just-in-time” without excessive stock-piling. Perfecting process performance in an outsourced context requires collaboration between customer and supplier. A Scope Manager will work with retained IT and outsourced supplier teams to identify and prioritise improvements in the end-to-end development process. He/she will facilitate a constructive collaborative dialogue which works to discover and address the root cause of problems rather than resorting to an adversarial, blame-seeking approach. Process management can incorporate compliance with established models and standards (CMMI, ITIL/ISO, etc.) if required. The Scope Manager may also audit output measures and measurement practice to provide an objective overview of contract performance, thus pre-empting potential disputes. |
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FOR MANAGING AGILE PERFORMANCE AND PROCESS IMPROVEMENT CONTACT DCG-SMS info@dcg-sms.com
Terms of engagementLike any other professional service, Scope Management advice is there for the business to call on at need in accordance with agreed pricing schedules. The Scope Manager will not be a full time employee of your organisation. If you would like to engage a DCG-SMS Scope Manager for your business, please call us to discuss further how our expertise can support your strategic business goals. contact info@dcg-sms.com tel. +44(0) 843 289 5174
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Working in Partnership: The Trusted Supplier and the Intelligent Customer |
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| It is the customer’s responsibility to clearly define and communicate the business goals of software projects for new development and enhancements. It is the suppliers responsibility to use their professional knowledge and expertise to deliver the desired outcome as effectively and efficiently as possible. To achieve this, the supplier needs the client’s engagement in understanding and managing the end-to-end process of delivering value. Traditional outsourcing contracts encourage an adversarial stance which detracts from the delivery of business value. Creating a collective focus on delivering the results the business needs requires a business transformation that focuses all the activities in the supply chain on delivering value to the customer. | |
| PARTNERS IN DELIVERING CUSTOMER VALUE CONTACT DCG-SMS info@dcg-sms.com | EXPERT “CUSTOMER FRIEND” CONTACT DCG-SMS info@dcg-sms.com |
The Trusted Supplier Organisation: Understanding Customer Value |
The Intelligent Customer Organisation: Managing the extended value stream |
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It is the supplier’s responsibility to provide the client with assurance that their delivery process provides value for money. Such assurance requires open and honest accounting of performance, typically including:
Delivering Value: ProductivityCollaborative partnership requires a good degree of trust between customer and supplier. While it is incumbent on both parties to agree contract terms which incentivise the supplier to maximise efficiency, the customer needs to have objective assurance from the start of the relationship that the supplier is committed to delivering value for money and eliminating wasteful practices. Data from the International Software Benchmarking Standards Group and other industry surveys show generally poor levels of software performance. The perception of many working in the industry is that attempts to improve the development and delivery process are frequently frustrated by the structure and management of the organisation. Either way, all the Rightshifting data suggests that improving the effectiveness of software-intensive systems will also significantly improve the efficiency. Measurement-driven process improvementIt is DCG-SMS’ observation that one of the key reasons for the failure to grasp the nettle of software productivity and performance is a lack of reliable and objective data. Many studies have shown that few organizations effectively embed a measurement-based approach to improving performance and predictability. Despite the proven benefits of such an evidence-based approach, the metrics that are gathered tend to be those that are easiest to collect, not those which are needed to support improved performance. Measure twice – cut once. |
The customer should always be in control of the outsourcing relationship. Suppliers frequently have stewardship of knowledge that is vital to the customer’s business, making an “absentee landlord” approach to vendor management a very high-risk strategy. DCG-SMS know-how supports informed management which demands and achieves high performance levels from suppliers.
Understanding ValueUnderstanding value from the customer’s, user’s and stakeholders perspectives is a key principle of Lean systems thinking. Delivering value from an outsourced supply chain requires customer and vendor to work in partnership on understanding and delivering value to the end customer of the extended supply chain. A supplier cannot deliver good value without the engagement of an informed and committed client management team. The more layers of management that exist between the business user and the development team, the greater the threat to the integrity of the value stream. Shared Values, Shared SuccessOutsourcing partnerships have two sets of business stakeholders to be managed: the stakeholders in the customer’s business and the stakeholders in the supplier’s business. To foster the stable, long-term relationship that the knowledge-rich nature of much softsystems outsourcing demands, the needs of ALL stakeholders must be met. Outsourcing partnerships work when client and supplier are a good cultural fit. Shared business values and shared strategic positioning are crucial. Procurement processes must support informed consideration of value over transactional cost. Too narrow a focus on transaction costs increases whole-life costs, decreases effectiveness, and significantly ratchets up the risk. The customer organisation should make an informed assessment of the nature of the work to be outsourced – is it a commodity service which should be procured at the most competitive rate? Or is the client seeking an innovative and collaborative supplier prepared to share risk and reward?
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