Orchestrating Outsourcing Success - Page 4

Oct 18, 2004

Binod Taterway

Mixin' & Matchin'

Multi-sourced environments (MSE) will benefit from applying the "mix-and-match" paradigm to outsourcing.

Large providers' skills lie in their scale, repeatability and functional competency, which when combined with small providers' agility and innovation can give an organization the needed balance in terms of scale, rigidity, innovation, and flexibility in outsourcing.

This mix-and-match, best-of-breed approach focuses not only on the structure of the outsourcing contracts, but also on how to best manage them on an on-going basis.

Business and IT architectures are usually defined by their respective leaders, but to leverage each other (one in support of the other) organizations need to invest in relationship and service management architectures as well.

By not defining this architectural framework, organizations tend to bridge gaps between business and IT utilizing ad-hoc, one-off ways to manage relationships and services that rely more on individual skills and situational advantages than a well defined approach.

The results fall into a number of categories:

  • Over-reliance on a third-party service provider;
  • relationship and service management skills remaining tied to critical resources and managers; and
  • rotation of resources in long-term contracts creating hiccups in service performance.
  • Investing in a common infrastructure for relationship and service management would accomplish better alignment between business and IT. This is because the standardized approach to manage all elements of IT services would allow for multiple service providers to coexist through operating level agreements, glass pipeline visibility, operational metrics, and an integrated process network.

    On the relationship scale, developing organizational trust and co-management processes in an integrated SMO will allow organizations to better work with their providers.

    Empirical results suggest that organizations can optimize 25% by establishing a common service management architecture and an additional 20% by adopting a relationship architecture that fosters organizational trust in support of the business.


    Business agility is the reason why outsourcing contracts need to be flexible. Buildng a flexible and sustained relationship with your providers can help you deliver on your service promises to the business.

    The traditional approach to managing service providers needs to be replaced by a well defined architectural framework that includes business, relationship, service management, and IT.

    Organizations also need to move away from SLA management which tends to be rear-view, after-the-fact, learning to a more of OLA management focus, which tends to be forward-looking and predictive in managing incidents, problems, and issues that arise in managing a multi-sourced environment.

    By implementing glass pipeline visibility and operating metrics, organizations can improve service performance in cooperation and collaboration with their service providers.

    Binod Taterway is CEO of Blue Canopy Group, a business and IT consultancy located outside of Washington, DC in Herndon, Virginia. Prior to founding Blue Canopy, he was vice president, Automotive and Manufacturing at Sapient Corp. and managing director, Automotive and Manufacturing Practice at Proxicom.

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