Tim Amatt, EquaTerra Project Director

I recently had the opportunity to speak on the subject of governance to a large group of representatives from a number of leading service provider organisations.

This was a great opportunity to discuss a subject which is unfortunately viewed by some as an add-on, or an afterthought, when service providers and client organisations are looking at outsourcing and negotiating the contract. It can be viewed as a distraction from getting the deal done and put to the bottom of the list, or given only minimal consideration: governance equals committee structures and no more.

This is far from the full picture, and governance needs to be a consideration from the earliest stage and throughout the outsourcing life cycle. Governance needs to reflect the intent of the deal and be tailored to the structure of the relationship – are we focused on trying to reduce costs, increase effectiveness, or drive innovation and change? All of these will influence whether we should be developing a relationship for a transactional or collaborative engagement.

Whilst the EquaTerra advisor is going to be helping the client to consider these aspects, it should also sit with the service providers to assist with educating buyers on the level of resources and the overall investment required in governance to ensure success.

At a time when delivering cost savings from outsourcing contracts is such a priority, it can be difficult to ensure that the proper investment is made in governance. However, to fail to prioritise this is a real opportunity missed, especially as organisations increasingly have multi-sourcing arrangements in place, making the governance challenge even greater.

It is essential to keep in mind the potential value leakage from ineffective governance – not just through direct additional costs, but through the opportunity foregone to extract the real value out of the relationship with the Service Provider.

Governance Healthcheck
Governance Healthcheck (GHC) is a service offered by EquaTerra, specifically designed to help outsourcing buyers and service providers to work together to identify, prevent, improve and fix issues associated with existing outsourcing arrangements. It is also a means of supporting the consideration of a sole source engagement when a client is looking at the opportunity to extend the scope of a current relationship with an existing service provider.  It’s a collaborative process which can deliver substantial and sustainable benefits to both parties, with EquaTerra able to offer an independent and informed perspective on how best to reach the desired solution.  Please don’t hesitate to contact me should this service be of interest at tim.amatt@equaterra.com.

Filed under: Contract Review & Negotiation, Governance, Outsourcing by EquaTerra