On importance and way to institutionalize Service Provider Governance to govern outsourcing as a strategic resource.

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IT Governance
Service Provider Governance

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Objective
“IT governance is about specifying the decision rights and
accountability framework to encourage desirable behavior in
the use of IT. Governance is not about making decisions but
determines who makes and contributes to decisions.”
- Peter Weill and Jeanne W Ross
 Outsourcing is strategic decision and not merely
procurement decision.
 Outsourcing is strategic resource and must be governed
accordingly.
 This article provides perspective on importance and way to
institutionalize service provider governance.

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IT Outsourcing
 Reconfiguring organization’s value chain by identifying
activities core to business, retaining them and making
noncore activities candidates for outsourcing.
 Essential for organization to understand which parts of
business that truly creates competitive advantage – “Core”.
 Efficiency of IT organization is in bringing & utilizing best in
class required capability than building every capability.
 Engage best in class for each job; Engage most capable and
effective at right price.
 No longer an enterprise’s ownership of capabilities that
matters, but its ability to control and make most of critical
capabilities, whether or not they reside on enterprise.

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Why Service Provider Governance?
 The goal of all IT stakeholders, including service providers, is
providing best in-class service to clients – “Business”.
 While service delivery is transferred, accountability remains
firmly with entity – need to ensure risk is managed and
continued delivery of value from service provider.
 If outsourcing desired and not working, mostly it will be an
issue of Governance.
 Governance is about driving desired culture even into
extended service provider teams as well.
 Managing service provider, in itself, is an organization
capability.
 Retention of accumulated outsourcing knowledge in
organization’s process through governance of outsourcing.

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Critical Success Factors
 Outsourcing is not about purchasing but about effective
management and ensuring that both parties benefit.
 Neither possible nor cost-effective to define every detail &
action contractually, governance to balance risk.
 Respect intent of contract clauses, gain share & contractual
viability.
 Senior Management & Business participation at appropriate
level in governance is must
 Drive required conversation through appropriate agenda /
sections in presentation or report to make reviews effective.

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Entity Service Provider
Service Foundation
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
 Main objective of IT service is enabling business to achieve goal; meeting performance metrics is an additional objective
 Retain & create benefit from accumulated business knowledge to maintain competitive advantage
 Nurture customer centric accountable service culture that appreciates business

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Entity Service Provider
Improve Continually
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
Continual Service Improvement
 Institutionalize framework to enable service improvement as business as usual activity
 Service management processes evolve as needs and conditions changes to service business goal
 Improve efficiency and effectiveness of services to business

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Entity Service Provider
Continuous Auditing
Quarterly Process Audit
Closed Loop Control System for Self-heal
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
Continual Service Improvement
 Help improve state of internal controls and to ascertain positive changes are not reverting back
 Monthly self-audit by service delivery team; Yearly or half-yearly audit by internal / external audit team
 IT, Business & Service Provider joint action on non-compliance

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• Individual & Focused review for each
business service
• Operational Performance Review / Risks /
Issues
• SLA Compliance / Exceptions
• Actions / Activities planned near future
• Incident / Dispute Resolution
Review and ResolveWhat is Happening?
Operational Weekly
Service Leads
Service Manager /
Project Manager
Leads / Specialists
For each business
Service /
Capability
Entity Service Provider
Service Monitoring
Quarterly Process Audit
Closed Loop Control System for Self-heal
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
Continual Service Improvement
 Review what is happening service wise and resolve issues & exceptions
 Appropriate sections in weekly report to direct right conversation – Focus on BAU (Business As Usual)
 Contain operational issues, exceptions and performance deviations

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Monthly
• SLA Compliance
• Scope Management
• Forward plan Continuous Improvements
• Level 1 Escalation Handling
Analyze and PreventWhat has Happened?
Operations
Committee
Level 1
IT Managers
Service Leads
Service Delivery
Manager
Service Manager
/ Project
Manager
For each business
Segment or
Portfolio
• Individual & Focused review for each
business service
• Operational Performance Review / Risks /
Issues
• SLA Compliance / Exceptions
• Actions / Activities planned near future
• Incident / Dispute Resolution
Review and ResolveWhat is Happening?
Operational Weekly
Service Lead
Service Manager /
Project Manager
Leads / Specialists
For each business
service /
Capability
Entity Service Provider
Operational Service Review
Quarterly Process Audit
Closed Loop Control System for Self-heal
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
Continual Service Improvement
 Analyze what has happened in past month to identify preventive actions
 Focus on preventive management
 Forum to discuss and agree issues where Entity & Supplier service delivery team needs help from each other

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Quarterly
• Consolidated review of supplier engagements
• Relationship Management
• Define & Monitor performance
• Organization Priority Alignment
• Contracts Issue resolution
• Level 2 Escalation Handling
Define and Monitor
course
Management
Committee
Level 2
IT Leadership of
business
segment(s)
IT Managers
Vendor Manager
Relationship
Manager
Service Delivery
Head
Service Delivery
Manager(s)
What will Happen?
For all
engagements
with one
Service provider
Monthly
• SLA Compliance
• Scope Management
• Forward plan Continuous Improvements
• Level 1 Escalation Handling
Analyze and PreventWhat has Happened?
Operations
Committee
Level 1
IT Managers
Service Leads
Service Delivery
Manager
Service Manager
/ Project
Manager
For each business
Segment or
Portfolio
• Individual & Focused review for each
business service
• Operational Performance Review / Risks /
Issues
• SLA Compliance / Exceptions
• Actions / Activities planned near future
• Incident / Dispute Resolution
Review and ResolveWhat is Happening?
Operational Weekly
Service Lead
Service Manager /
Project Manager
Leads / Specialists
For each business
service /
Capability
Entity Service Provider
Tactical Management Review
Quarterly Process Audit
Closed Loop Control System for Self-heal
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
Continual Service Improvement
 Strategic plan to achieve partnership goal and monitor for course correction
 Focus on “Beyond BAU”
 Strengthen partnership to bring out the best

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AnnuallyExecutive
Committee
Level 3
Executive
Sponsor, CIO
IT Leadership
Executive Sponsor,
Business Unit
Head
Relationship
Manager
Service Delivery
Head
• Strategic Alignment
• Business Continuity
• IT/Business co-innovation
• Level 3 Escalation Handling
Build Future of
Relationship
Where To Go?
For each SupplierQuarterly
• Consolidated review of supplier engagements
• Relationship Management
• Define & Monitor performance
• Organization Priority Alignment
• Contracts Issue resolution
• Level 2 Escalation Handling
Define and Monitor
course
Management
Committee
Level 2
IT Leadership of
business
segment(s)
IT Managers
Vendor Manager
Relationship
Manager
Service Delivery
Head
Service Delivery
Manager(s)
What will Happen?
For all
engagements
with one
Service provider
Monthly
• SLA Compliance
• Scope Management
• Forward plan Continuous Improvements
• Level 1 Escalation Handling
Analyze and PreventWhat has Happened?
Operations
Committee
Level 1
IT Managers
Service Leads
Service Delivery
Manager
Service Manager
/ Project
Manager
For each business
Segment or
Portfolio
• Individual & Focused review for each
business service
• Operational Performance Review / Risks /
Issues
• SLA Compliance / Exceptions
• Actions / Activities planned near future
• Incident / Dispute Resolution
Review and ResolveWhat is Happening?
Operational Weekly
Service Lead
Service Manager /
Project Manager
Leads / Specialists
For each business
service /
Capability
Entity Service Provider
Strategic Executive Review
Quarterly Process Audit
Closed Loop Control System for Self-heal
Risk
Management
Projects
Incident
Management
Knowledge
Management
Problem
Management
Change /
Release
Management
Service
Management
Continual Service Improvement
 Set partnership goal in alignment with organization business goal to improve value out of this partnership
 Provide direction & priority in managing business risk, resource optimization and benefit realization
 Above Level 1 Governance, entity & service provider to show joined up view