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OLM50 Governance Dimensions

OLM50 Life Cycle Phases


Performance Management

A successful relationship requires implementation of effective mechanisms to monitor and measure performance of the services, ensuring consistent delivery of agreed service levels, budgets and schedules.

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Management Framework

Managing an outsourced contract and relationship is a significant task that should not be underestimated by the client. It is essential to ensure that accountability, collaboration and teamwork exist at every level between the parties.

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Process Integration

Focusing on process effectiveness, maturity and continuous improvement through outsourcing offers the single biggest opportunity for service delivery savings and improved client satisfaction with services.

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Organization Alignment

A collaboratively developed and aligned organizational framework shows how client and service provider can work together to ensure success and, when necessary, take corrective action on less than desired outcomes.

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Relationship Management

After more than two decades of experience, outsourced clients, service providers and professional advisors agree that the relationship between the parties is the single more valuable asset in the contract. Its ongoing health is critical to success of the outsourcing.

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One of the key advantages of outsourcing is the ability to more readily respond to the client’s evolving and regulatory business changes, both long and short term, while minimizing fixed costs.

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Some time, agreed by the parties, prior to contract expiry the client, in collaboration with the incumbent service provider, must decide if the existing contract can be renegotiated, or if the services should be rebid or if some or all of the services could, and should, be repatriated and delivered by the client’s organization.

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Today’s clients expect service providers to use outsourcing to transform their business in ways that will make them more efficient, more cost effective and more market competitive, delivering improved services to their customers and improving customer satisfaction.

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Governance of the contract and ongoing development and maturing of the relationship between the parties requires a continuous investment of time and effort by both parties, including constant and collaborative vigilance and stewardship by the parties, maintaining joint accountability for success.

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Transition of the agreed services to the successful service provider requires a shift in responsibility whereby the client becomes the facilitator, negotiator and general (oversight) manager of service delivery, while the service provider becomes the process and tools expert delivery agent for the services. Incumbent provider knowledge must be preserved and effectively transitioned with the services.

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Clients may choose to sole-source their service provider, negotiate a comprehensive contract with two (or more) service providers using the negotiation process to drive final selection, or use the selection process described in more detail in OLM50 to choose their successful service provider (each venue can be effective), followed by contract finalization and planning for transition of the services.

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The selection process assesses service provider compliance with the client’s mandatory requirements and service provider responses to the client’s defined requirements of the outsourcing including, but not limited to, the service provider’s proposed service quality, performance, management and governance approaches, pricing of the services and anticipated business value contributions.

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Once a decision has been made to proceed with outsourcing, and the proposed service delivery model has been determined, clients ideally engage in a structured, repeatable and optimized procurement process to select a service provider.

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Designing an effective outsourcing contract means understanding and incorporating those components that will assure success and ensuring they are sufficiently considered in the design of the outsourcing contract.

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A business can’t successfully outsource what it doesn’t understand or cannot define. Using a structured and pragmatic approach, clients must capture and effectively communicate their business requirements, idiosyncrasies and challenges, as well as their business goals and goals for outsourcing.

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