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Tuesday, June 19, 2012

Enabling good governance in a Managed Services contract

Managed Services 2.0 demands good governance to be successful. More than half of all outsourcing engagements fail: 20% in the first 2 years and a further 30%+ are not renewed (Gartner Group Survey Nov 2011).

Good governance is about control over processes and control over information. When done well it enables the customer to communicate and then measure its service provider’s performance against its expectations. It clearly establishes the framework within which an operator expects its managed services providers to innovate, and it demonstrates the alignment (or otherwise) between both businesses.

It has the additional advantage of building evidence-based cases for targeted investment in the network by service providers; and it clearly illustrates the impact of poor network performance on meeting business objectives.

Good governance ensures that attention is being paid all day every day to the details that matter:

o Measuring things
o Understanding what important
o Identifying issues
o Spotting potential problems and assigning actions
o Ensuring accountability is set and responsibility taken
o Change is planned for (and recognized when it happens)
o The correlation, or more simply, the connection between things is thought about and acted on.

An enterprise with strong governance will be able to look at its most important processes such as project delivery or customer service and understand clearly the risk of the process failing.

In Managed Services contracts the risk of a process failing can lead to penalties, clients not renewing eight-figure contracts, and even legal liabilities due to not hitting certain KPIs or SLAs.

But in those contracts it is not just the risk of process failure that can result in contracts not being renewed – poor control of information can lead to the same result.

Handling governance consistently well is hard, painstaking, essential work, and technology is the only answer.

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