The Source of the Problem

  Governance   ProjectsAtWork  

A formal governance process is key to reaping outsourcing benefits.

Organizations are increasingly outsourcing business practices and technology programs in search of savings and efficiency. But half of all outsourcing efforts are deemed failures for not delivering anticipated value, according to research group Gartner in Stamford, Conn. And the problems inevitably can be traced to the lack of a formal process for managing the outsourcing engagement. Gartner estimates that less than 30 percent of outsourcing clients have formal plans for managing long-term relationships with their service vendors.

"Understanding and choosing what type of relationship best fits an enterprise's business strategy, and the value it wants from the deal, lays the groundwork for all subsequent decisions on how the deal is managed," says Linda Cohen, managing vice president for Gartner and chairperson of the Gartner Outsourcing Summit 2003 in June. "Outsourcing has become the next new business-critical process, requiring that everyone who buys, sells or manages IT be re-skilled in the new competency."

A recent report by Meta Group in Stamford, Conn., says, "Vendor governance is becoming a critical success factor, and must include global relationships and business-process outsourcing with formal methodologies followed to refine quality and improve consistency."

Many organizations are not …

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