Bullet proofing Global Sourcing through an effective Governance Model

As globalization  of services  become  the norm of the day, more and more attention is  focused  on effective  governance  of  global sourcing  initiatives.  Simply  put,    IT Governance is the icing on  the Global Delivery Model cake, which helps business leaders to derive maximum business value and allows them to remain in control of globally distributed operations.

A governance model depends  upon  the nature  of the contract,   organizational  structure and     the number of vendors involved.    It defines   organizational   and processes; provides   guiding principals and success measures, policies and standards; and assigns roles and responsibilities required for effective prioritizing, scheduling and managing the outsourcing transactions.

You  can  incorporate  collective  experience  in an  universal governance structure that is flexible enough to adapt  the different   needs within  different geographical  areas, while  applying a  common set of standards and practices for entire programs  of client engagement,  of which the major focus areas are seen in the figure  above and described below - 

Contract Management: The Foundation of Success
The contract document should clearly address potentially contentious issues related to intellectual property, data security, and connectivity, third party liabilities, software licenses and associated charges for software upgrade, and Service Level Agreements (SLAs). A penalty or reward mechanism can also be included to ensure deeper involvement of both the client and vendor.

Financial Management: Cost Control
Fiscal control is vital to the sourcing initiative. Digitization of the Software Development Life Cycle (SDLC) gives CIOs real-time insights into the amount of time, effort and money spent in the various stages to enable improvements in productivity. Executive dashboards and status reports facilitate relationship tracking and control; the dashboards monitor progress and include metrics for productivity / cost per employee and output per employee.

Infrastructure Management: Enabling Delivery

• Effective infrastructure management is a key element in ensuring success of a GDM engagement. It addresses:
• Adequate, reliable and secure connectivity between different sites
• Use of appropriate software tools
• Adequate configuration of computing platforms
• Physical environment that includes office space, telephones and other needs.

Relationship Management: Ongoing Success

The governance structure operates at three distinct levels and ensures strong commitment at each level viz.

• Strategic to address executive leadership activities
• Tactical to address account management
• Operational to address delivery management

Delivery Management: Effective Execution
The success of this approach requires equal participation and responsibility from both client and the supplier at various stages in the software life cycle. This can be achieved by breaking down the development into phases that have deliverables at regular intervals. This ensures that it will avoid surprises late in the development lifecycle. Cultural awareness for the teams involved, as well as clear and frequent communication also helps minimize this impact.

As discussed, good governance definitely helps support a sound IT performance management process.  It plays a critical role on how we should integrate information technology into today's complex IT environment.  The choice is yours, whether you want to develop your own governance model, or adopt frameworks that have been created through the collective experience and expertise of other organizations. The aim is to minimize risks and maximize returns keeping in mind globally distributed nature of the business and IT governance.