Managing Risk In The Changing World Of Outsourcing

Managing Risk In The Changing World Of Outsourcing

Outsourcing is experiencing a sea change, with the huge single supplier model giving way to the more fragmented Service Integration and Management (SIAM) model. This allows clients to choose a variety of suppliers who specialise in different areas – from applications management to accounts and payroll – bringing flexibility and efficiency to the client.

But it also creates challenges; with more outsourcers providing services the risk of things being missed as the ‘white space’ between contractors increases. And with more ‘moving parts’ in the operation someone needs to take responsibility for overseeing the entire contract, they become the ‘integrator’ in SIAM.

This contract management can be done in-house, or it can itself be outsourced, either to one of the current suppliers or to another outsourcing supplier altogether. It is then up to this one supplier to be able to report back to the client so that they know the status of all the different contracts.

Not only is management important when using a SIAM model, but also while moving from a single supplier to the SIAM model. To minimise risk processes must be tracked and monitored as they are transitioned to different suppliers.

Access to dynamic and up to the minute information across the full range of business functions is critical in managing these complex contracts and limiting risk. The benefit of having oversight over all areas being outsourced is that innovation and savings can be maximised for the client, but this will only happen if the correct information is identified at the correct time and acted on.

Business units do not operate in isolation but are affected both by other parts of the business, as well as external factors. So there is no point looking at one unit separately from the whole, they are interdependent; IT naturally affects other areas. And when increasing the business scale to a global company, complexity increases exponentially.

A marketing campaign in North America can impact on a call centre taking orders in Bangladesh. Senior executives need the ability to look at the business-wide impact of different scenarios in order to concentrate on activities that will have the best impact for the business.

By linking business processes to the key data of an organisation, the outcomes and effect of any changes can be managed. This offers suppliers the opportunity to show they are at the sharp end of delivery and give clients confidence that they can manage risk when moving their business from a single big supplier to multiple specialist providers.

Crucially, by linking their work with business outcomes and impacts, outsourcers are able to articulate the bearing they are having on the business. Rather than talking in terms of service level agreements (SLAs) – which are meaningless outside of the team working with the outsourcer – they are able to talk in terms of business benefits, which is what senior management is really interested in. By being able to ‘talk the talk’, outsourcers can clearly demonstrate the value they are bringing to the business and why they are an important partner.

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George Davies

George Davies is CEO of MooD International. The company has won the Queen’s Awards for Enterprise in Innovation twice (2004 and 2010) and most recently were commended in the UK Council for Electronic Business Excellence Awards for their work with the Ministry of Defence.