Outsource Contract Management

IT Outsourcing, or as we prefer to think of it, IT BPO (Business Process Outsourcing) has become an IT management strategy that continues to grow in popularity. This growth will accelerate in the years to come as businesses strive for more predictability and efficiency from their IT spend. In addition the importance of introducing good practice driven by King III will give IT Outsourcing a further boost as management understand and accommodate the costs of uplifting their internal IT organization’s practices to the required standards.

IT Outsourcing promises much to the organization in the way of benefits- including cost reduction, good management practice, access to scarce skills and innovation. But how well you are able to manage the process of selecting and contracting an outsourcing vendor, coupled with the management of the relationship will determine whether the goals of the outsource strategy are met.

 
CXO-Advisor has a well developed and tested IT Outsource process for the procurement and contracting of an outsource vendor as discussed in the section under Advisory Services. This approach assures management that the Company’s business needs and service delivery requirements remain aligned and that the outsource contract and services defined therein will meet the desired outcome. However, this just ensures that the outsource project and foundation for success is in place. The management challenge really starts at that point- how to ensure that over time your outsource vendor continues to deliver on the expectations? The problem is that your business does not remain static.
 
This means that your outsource vendor relationship needs to flexible. This is an important issue at contract time, but an even bigger issue is the management of the relationship and contract on an ongoing basis. You should have the same flexibility with an outsource contract, if not more than an in house contract,
CXO Advisor has therefore designed a set of services to assist both the vendor and the client to keep the delivery of outsource value on track and assure both parties that value is being delivered on an ongoing basis.

Service Description

Our service is designed in a flexible manner to allow us to match your budget and requirements. Our service can be packaged from the following components;
 

Integrated Service Management

TheCXO-Advisor Management Service, manages your outsource vendor(s) service delivery, not only against your SLA requirements but also ensures that the services from multiple vendors are integrated to provide a business service that meet your requirements. Our vendor independent service advisors are trained to manage and integrate both the demand and supply side of the outsource equation to ensure that the goals of your outsource initiative are met. Our experienced advisors will also ensure that you avoid the pitfalls of outsourcing, often experienced by clients in running the operations of an outsource contract.
For example;
  • How do you manage a vendor when they meet the contracted SLA but the experience of the business users is not satisfactory?
  • How do you design and analyze the required operational reports from the vendor?
  • How do you integrate the vendor into your planning process?
  • How should the vendor be measured and aligned with the business strategy and objectives of the IT department on an ongoing basis?
Our service can be delivered on a full time basis with a single resource, via a service team or on a shared basis dependant on the scale of the outsource contract.
 

Benefits

  • The costs associated with the service are not additional costs, but usually replace existing management costs on either side.
  • Our Advisors are independent and are supported by a tried and tested management framework plus best practice research from OVUM. This allows them to play a role in the relationship that ensures that you are getting value on an ongoing basis. Our experience and knowledge of multiple client/vendor contracts puts our managers in a position compare and evaluate.
  • Our managers are able to provide independent advice on, IT architecture, best practice, policy and process as an integral part of the service in addition to day-to-day service managementOur Continuous Improvement (CI) methodology ensures that we are continuously looking for cost savings from the whole IT service environment including from the vendor. Typically, vendors have no incentive to find costs-saving from within their own contracted areas. Our CI program, coupled with our vendor contract approach, ensures that where we find savings, these are realized. In delivering on our CI program our Service Advisors are supported by our consultants, who work together to scan your environment for inefficiencies. The savings derived from this should more than pay for the entire service from CXO-Advisor.
  • Our balanced score card approach to managing vendors ensures that the vendor understands what is expected over-and-above what is usually documented in the contract.

Contract Audit and Assessment

This componentthe of our service offering is aimed at supporting the client management team with an independent audit of their vendor services to assure the client that they are getting the service they are paying for. Modern outsource contracts are complex, especially when the client is paying for best practice services and not merely a functional base service. This is difficult to audit without experience and  insight into the workings of a vendor back-office environment and a thorough understanding of good practice standards such as ITIL and Cobit.
 
This balanced approach is designed to highlight areas of improvement to both sides of the contract. For example, we often find that it is the client’s own behavior that drives costs up! Vendors are often guilty of not maintaining documentation that is needed for good governance and risk management.
The audit and assessment covers all aspects of an outsource relationship with the vendor including;
  • Service design and execution
  • Process design and execution
  • Costing
  • Service definitions
  • Governance structures and alignment with the clients own King III requirements
The output of our report will serve as a roadmap for a joint Continuous Improvement plan.
 

Benefits 

  • CXO-Advisor, really understands dynamics at work in an outsource relationship. This allows us to bring more to the table then a conventional audit. The outcome assists both the vendor and the client and thus the partnership to improve business performance.
  • Improving the client’s management of the vendor will also improve the vendor’s ability to perform and add value.
  • The audits will uncover areas where efficiency and costs savings can be achieved
  • A regular independent audit keeps the vendor competitive and pro-active. Occasionally we will find the vendor’s practices are inadequate.
  • A joint Continuous Improvement plan is not only good practice but helps ensure that the vendor and the clients’ expectations are aligned, resulting in a healthy relationship.

Independent Advisory Service

Managing a healthy outsource relationship is like a marriage where the relationship requires constant attention. At times having an independent, but knowledgeable third party helps to ensure that decision making, controls, and planning are given the right amount of attention under the pressure of day to day delivery.
CXO-Advisor attends all of the key outsource management meetings as an independent advisor to the team. This is an assurance role, which keeps the relationship moving forward and aligned with the changing requirements of your business. This service coupled with the Audit and Assessment serviceprovides the board with independent governance which will align your Outsource to King III requirements. See our IT Alignment to King III.
 

Benefits

  • An independent and experienced advisor provides management assurance and advice.
  • Facilitates solution to disagreements, without long term damage to the relationship.
  • Our understanding of good outsource practice across the market and our access to OVUM research on international outsourcing trends and practices, allows CXO-Advisor to intervene if we feel that either side is taking a direction that may be damaging to the clients business.