Structured Approach To Implementing and Operating Outsourcing and Managed Services For Suppliers and Outsourcing Organisations

Structured Approach to
Implementing and Operating

Outsourcing and Managed
Services for Suppliers and
Outsourcing Organisations
Alan McSweeney
Objectives
• Describe at a high-level a structured approach to

implementing outsourcing/managed services from both
service provider and end-user organisation
April 3, 2011 2
Scope
• Provide a high-level view of a common set of processes to

be used by service providers and end-user organisations to
implement and operate an outsourcing/managed services
arrangement
April 3, 2011 3
Topics
• Introduction
− Overview
− Risks and Lessons Learned
− Principles of Outsourcing and Core Competencies
− Phases of Outsourcing Relationship
• Outsourcing for Service Providers
− Phases of Outsourcing Relationship
− Key Issues For Successful Outsourcing
− Key Capabilities and Constituent Practices
• Outsourcing for End-User Organisations
− Outsourcing Challenges
− Key Issues For Successful Outsourcing
− Key Capabilities and Constituent Practices
April 3, 2011 4
What is Outsourcing?
• Outsourcing is delegating the responsibility for performing

an information technology or business function to a third
party
• You outsource because the outsourcing supplier will do:
− What the organisation currently does
− At the same or better level of performance
− For the same or lower price
April 3, 2011 5
Potential Advantages of Managed Services
• Better Use of Staff: allows agencies to focus human

resources on strategic planning and core mission support
• Cost Savings: choose not to build and support IT and
network infrastructure available in the commercial sector;
use limited capital to purchase needed service levels and
reduce total cost of ownership
• Ability to Use Optimal Technologies: adjust types and mix
of hardware, software, skilled labour, capital investment
and technology to support changes in mission needs
• Rapid Response to Organisation and Business Changes:
supplier is measured by ability to produce solutions
April 3, 2011 6
Types of Outsourcing Arrangement
• Efficiency/Utility (Make it Cheaper) arrangement outsourcing

focuses primarily on cost control and, over time, cost reduction, with
the goal of maintaining consistency in the delivery of services
• Business Enhancement (Make it Better) arrangement is about
business productivity. The organisation’s performance, as compared
with their competitors, will improve, resulting in movement toward
defined business goals
• Transformational (Make me Money) arrangement is characterised
by a partnership between the service provider and service recipient
that is focused on innovation and new business, changing the very
basis on which an organisation competes
April 3, 2011 7
Benefits of Managed Services
• Managed Services offers an alternative approach for a client to acquire IT or telecom

support services
− Managed services solutions are designed and delivered by service providers according to a
predefined statement of deliverables and generally includes end-to-end service, service level
agreements, and assets (if desired)
• A managed service typically includes monthly recurring service-based pricing offering a
more predictable cost approach for the client
• Ongoing visibility of operational performance is provided and managed through pre-agreed
performance parameters (known as service-level agreements)
− The client may include their unique performance requirements such as degree of control and
visibility, security, availability, capacity, service continuity and other requirements as it relates to
the specific service
• Because this is a core competency, the service provider is able to optimise the best balance
of facilities, processes, resources, tools, and metrics, resulting in the best overall value for
the client
− Cost effectiveness is typically achieved through instituting process standards and establishing and
supporting a standard operating environment (SOE) consisting of COTS (Commercial Off the Shelf)
services and solutions
• Managed services can be delivered either in a BOCO (Business-owned, contractor-
operated) or COCO (contractor-owned, contractor-operated) model and is largely based on
client preference
April 3, 2011 8
Outsourcing Organisations - Developing a Vision for
IT Services is Required
• What do we do today?
• What do our customers want us to do?
• What changes do we need to make to align with our
customers needs?
• How will they pay for those services?
• How will we deliver those services consistently and
measure their delivery?
• What kind of organisation (Governance/Contract
Management/Structures/Staff/Skills/Service Providers) will
we need to achieve it?
• What service management processes we should use?
April 3, 2011 9
Reasons Organisations Outsource
Reduce And Control Operating
17%
Costs
Improve Company Focus 16%
Gain Access To World-Class

12%
Capabilities
Free Resources For Other

12%
Purposes
Resources Not Available

8%
Internally
Reduce Time To Market 6%
Take Advantage Of
6%
Capabilities
Accelerate Reengineering
4%
Benefits
Share Risks 3%
Function Difficult To Manage

3%
Or Out Of Control
April 3, 2011 10
Outsourcing Experiences
• 13% to 25% of outsourcing contracts are brought in-house

within the first two years
• Buyers replace 80% of their service contractors in the first
three years
• Contractors turn over 40% of their contracts each year, on
average
• Nearly 70% outsourcing organisations feel their service
provider does adequately understand what they are
supposed to do
• Not good
April 3, 2011 11
Key Issues For Successful Outsourcing
• Many outsourcing relationships fail, are terminated early,

are unsatisfactory to either or both of the service provider
and the client
• Outsourcing is a business issues and should be treated as
such
• Many common issues, problems and concerns arise across
outsourcing contracts
• Learn from the issues to avoid them
April 3, 2011 12
Hidden Costs of Outsourcing
• Transfer of knowledge
− Processes and procedures
− Documentation
− Personal knowledge
• Quality issues and their resolution
− Inspection programmes
− Sustaining quality programmes
− Cost of rework
• Communication
− Poor customer service
− Daily operational issues
April 3, 2011 13
Cease's Law on the Nature of the Firm
• A firm will tend to expand until the cost of organizing an extra transaction within the firm
become equal to the costs of carrying out the same transaction on the open market
• This means when it is cheaper to buy the service externally it will generally be bought
externally
• However there is an assumption of perfect knowledge and perfectly rational use of this
knowledge to achieve the most logical solution
• In reality this perfection is rarely if ever achieved
− Other less rational factors affect the decision
• Everybody Else Is Doing It
• I Want To Do It So It Appears On My Resume
• I Like New Technology
• Vendors Keep Talking About It
• I Need One Good Idea To Stamp My Mark On The Organization
• It Will Solve All My Problems
• I Hate Dealing With IT
• I Do Not Want to Setup a Large IT Function
• Cost estimates are rarely accurate
− What we know about most projects is that they either or both overrun on costs and deliver less
than expected
− Cost overruns are generally caused by a mix of errors in the initial cost estimates and deliberate
distortions in order to cause the decision to be made
April 3, 2011 14
Transaction Costs
• Along with production costs, there are costs for preparing, entering into and monitoring the
execution of all kinds of contracts as well as costs for implementing allocation and tracking
measures for the contracted services
• When internal transaction costs become greater than the costs of externally sourcing the
service, the service will be obtained externally
• There are hidden costs associated with sourcing a service externally
− Selecting the wrong supplier
− Costs of writing contract
− Costs of enforcing contract
− Having a poor service contract that results in hidden cost and/or reduced service
− Overlooking personnel issues
− Loosing control over the outsourced activity
− Management, quality assurance and supervision overhead
− Implementation and termination costs
− Loss of flexibility
− Loss of integration between applications and data
− Data extraction costs
− Security framework implementation
• Transition to utility computing model requires full knowledge of costs – current and future
• Note that anything can be outsourced except the management of what is
outsourced
April 3, 2011 15
Outsourcing Planning
• Structured approach can form the basis for an outsourcing

implementation plan for both service providers and for
companies performing outsourcing
April 3, 2011 16
Sample Service Transfer Plan – Outsourcing Service
Provider
• Plan subset
• Based on activities
− 1 Service Transfer
• 1.1 Resources
Transferred In
• 1.2 Personnel
Transferred In
• 1.3 Service Continuity
April 3, 2011 17
Sample Service Transfer Plan – Outsourcing
Organisation
• Plan subset
• Based on activities
− 1 Outsourcing
Opportunity Analysis
• 1.1 Define Current
State
• 1.2 Outsourcing
Criteria
• 1.3 Demand
Identification
• 1.4 Outsourcing
Options
April 3, 2011 18
Where Outsourcing Problems Happen
• Inadequate Preparation = Problems Start Here

• Flawed Service Provider Selection = Project Failure Starts
Here
• Unclear Contract = Conflict Begins Here
• Wrong Performance Measurement = Management Failure
Starts Here
• Ineffective Ongoing Management = Service Delivery
Problems Start Here
April 3, 2011 19
Risks in Outsourcing – Lots of Them
Outsourcing Risks
Strategic Reputation
Compliance Operational
Termination Financial
Country Contract
Access Concentration/Systemic
April 3, 2011 20
Strategic Risks
• Outsourcing provider may conduct activities that are

inconsistent with the overall strategic goals of the
outsourcer
• Outsourcer fails to implement appropriate and effective
oversight of the outsourcing provider
• Outsourcer has inadequate expertise to oversee the
outsourcing provider
April 3, 2011 21
Reputational Risks
• Outsourcing provider delivers a poor service

• Outsourcer’s customer service does not meet expectations
in areas serviced by outsourcing provider
• Outsourcing provider practices do not comply with stated
practices of outsourcer
April 3, 2011 22
Compliance Risks
• Outsourcing provider does not comply with relevant laws

and regulations
• Outsourcing provider does not comply with consumer laws
• Outsourcing provider has inadequate compliance systems
and control
April 3, 2011 23
Operational Risks
• Outsourcing provider experiences technology failures that

impact outsourcer
• Outsourcing provider has inadequate financial capacity to
fulfil obligations and/or provide remedies in the event of
failure or breach
• Outsourcing provider experiences fraud or error
• Outsourcer experiences difficulties or high costs in
undertaking inspections
April 3, 2011 24
Termination Risks
• Outsourcer has no exit strategy are not in place because of

from over-reliance on one provider or the loss of relevant
in-house skills
• Ability to return services from outsourcing provider is
difficult, time-consuming or costly because of a lack of
staff or loss of intellectual capacity
April 3, 2011 25
Financial Risks
• Inadequate cost controls and charging mechanism leads to

unexpectedly higher costs for outsourcer
• Changes to services requested from outsourcing provider
are very expensive
April 3, 2011 26
Country Risks
• Outsourcer cannot enforce contract

• Incorrect selection of applicable legal jurisdiction
April 3, 2011 27
Access Risks
• Outsourcing arrangement negatively impacts ability to

provide accurate and timely information
• There is an additional layer of complexity in understanding
activities of the outsourcing provider
April 3, 2011 28
Concentration/Systemic Risks
• Concentration of services from multiple outsourcers in

small number of outsourcing providers can mean lack of
control by individual outsourcer and overall systemic risk
April 3, 2011 29
Lessons Learned from Outsourcing Problems
• Smoothly Transferring Services And Resources

− Common cause of failure is the ineffective management of the transfer of services and
resources to the service provider, leading to service delivery problems
− Successful service providers rigorously control the transfer of services and resources to
ensure that the new service is able to adequately deliver the service and the service
continuity is maintained.
• Maintaining Stakeholder Expectations
− Common source of failure in outsourcing engagements is a difference in expectations
between the client, the service provider and the suppliers and partners
− Identifying and managing those expectations helps to ensure a common understanding
of what is necessary for success
• Translating Implicit And Explicit Needs Into Defined Requirements With Agreed
Upon Levels Of Quality
− Frequent cause of failure in outsourcing is that the service provider does not fully
understand the needs of the client
− Successful service providers rigorously gather and analyse the stated and unstated
needs, then translate those needs into a set of documented requirements
− Successful service providers also recognise that needs change over time and establish
provisions for gathering and analysing modifications to their services
April 3, 2011 30
• Reviewing Service Design And Deployment To Ensure An Adequate

Coverage Of The Client’s Requirements
− Failure in outsourcing is caused by the service provider not fully addressing the
needs of the client
− To ensure that the service delivery will meet the client’s needs successful
engagements include rigorous reviews of the service design and deployment
activities by the clients and the service provider prior to service delivery
• Managing Client’s Security
− Managing security and controlling critical data and assets are critical to
establishing trust
− Security management includes protection of intellectual property,
confidentiality and privacy concerns
• Monitoring And Controlling Activities To Consistently Meet The
Service Delivery Commitments
− Successful service providers rigorously monitor their service delivery activities
to ensure that the client’s commitments are being met
− Actions are taken to resolve and prevent problems, thereby escalating issues
as appropriate to ensure that they are addressed in a timely basis
April 3, 2011 31
• Monitoring And Managing Client’s And End User’s Satisfaction

− Success is not always defined in terms of meeting the agreed upon commitments,
because clients and end users may be unsatisfied even when commitments are being
met
− Successful outsourcing engagements monitor the satisfaction levels of the stakeholders
to identify problems and take action
• Managing Employee Satisfaction, Motivation, And Retention
− IT-enabled outsourcing often involves challenges during transition, deployment and
service delivery
− High employee turnover jeopardises the service provider’s ability to meet its client’s
requirements and undermines their expected gains and performance levels
− Proactively monitoring and managing employee satisfaction and motivation can
improve personnel retention and effectiveness
• Managing Technological Shifts And Maintaining The Availability, Reliability,
Accessibility, And Security Of Technology
− Technology is a key component of outsourcing
− Major challenges for the service provider include keeping pace with rapid changes in
technology and effectively managing the technology infrastructure while changes are
incorporated
April 3, 2011 32
Principles of Outsourcing
• Need a comprehensive policy to guide the assessment of whether and how activities can be
appropriately outsourced
• Senior management needs to be responsible for outsourcing policy and related overall
responsibility for activities undertaken under the policy
• Need to establish a comprehensive outsourcing risk management programme to address
the outsourced activities and the relationship with the service provider
• Need to ensure that outsourcing arrangements does diminish its ability to fulfil obligations
to customers and stakeholders
• Need to conduct appropriate due diligence in selecting outsourcing service providers
• Outsourcing relationship needs to be governed by contract that clearly describes all
material aspects of the outsourcing arrangement, including the rights, responsibilities and
expectations of all parties
• Need to establish and maintain contingency plans, including a plan for availability and
disaster recovery and regular testing of backup arrangements
• Need to take appropriate steps to ensure that outsourcing providers protect confidential
information from intentional or inadvertent disclosure
• Need to be aware of the potential risks posed where the activities of multiple outsourcers
entities are concentrated within a small number of outsourcing providers
April 3, 2011 33
Core Competencies for Exploiting Outsourcing and
Managed Services for Organisations Selecting
Outsourcing
• Sourcing – having an effective approach to outsourcing
− Concerned with managing the IT function like a business
• Supplier Management – plan, analyse and manage the
ongoing relationships with suppliers
− Concerned with managing the IT function
April 3, 2011 34
Sourcing and Supplier Management
• Supplier Management competence and associated

processes operationalises the strategic decisions taken
within the Sourcing competence
Supplier
Sourcing Management
April 3, 2011 35
Sourcing and Supplier Management
Procurement of IT Services and IT Hardware/Software
Sourcing Competence Supplier Management Competence Sourcing
Competence
Order
Contract
Strategic Management
Supplier Management
Sourcing (Ordering/
Selection (Payment,
Decision Delivery/
Penalties)
Distribution)
Performance
Supplier Supplier
Contracting Measurement Evaluation
Engagement Communications
And Monitoring
Governance and
Supplier Risk Supplier
Partner Transition
Monitoring Development
Integration
April 3, 2011 36
Sourcing Competence
Planning Cycle
Strategy Objectives Sourcing Business Case Organisational

Alignment and Scoping Model Calculation Readiness
Partner
Partner integration
Contracting Transition Reevaluation
Selection and
Governance
Sourcing Cycle
April 3, 2011 37
Sourcing Competence
• Define sourcing strategy and sourcing model

• Evaluate outsourcing potential of IT processes
• Select optimal partner(s)
• Manage the transition to selected partner(s)
• Setting the basis for a successful relationship with selected
partner(s) to maximise business value contribution
April 3, 2011 38
Sourcing Competence Scope
• Strategic sourcing decisions on what processes are in- or outsourced

to what extent
• The decision on what sourcing model is applied
− Internal/external
− Onshore/nearshore/offshore
− Single vs. multiple vendor relationship
• Calculation of business cases for outsourcing projects
• The process of selecting the optimal partner(s)
• Preparation, negotiation, closing and re-evaluation of contracts with
selected partner(s)
• Managing the transition process and setting up requirements for an
enduring and successful relationship with partner(s)
April 3, 2011 39
Dimensions of Sourcing Competence Measurement
Framework
Sourcing
Strategy
• Measure state of
Sourcing competence
along three dimensions
− Sourcing Strategy
− Contracting
− Sourcing Execution
• Define facets of each Contracting
dimension
• Measure each facet in
terms of:
− Associated processes and
their state of development
− Scope or extent within the Sourcing
organisation Execution
April 3, 2011 40
Supplier Management Competence
• Supplier management is concerned with the execution of

the IT supplier strategy and manages the suppliers on an
operational basis
• Supplier management operationalises the strategic
decisions of IT suppliers and contracts agreed in the
Sourcing competence
• Effective supplier management provides opportunities for
cost reduction from better control of assets and people, as
well as value-creation opportunities by supporting IT
supplier collaboration and innovation
April 3, 2011 41
Supplier Management Competence Scope
• All activities related to managing ongoing (operational) relationship

with suppliers and associated systems/ tools
• Analysis of existing suppliers to identify suitable ongoing
engagement strategies at an individual and portfolio level
• Manage supplier relationship in line with evolving IT strategy
• Measure and monitor supplier performance from both the
organisation’s own perspective and the supplier’s perspective
• Manage the ongoing external risks (e.g. supplier insolvency) and
ongoing internal risks (e.g. unchecked SLAs) derived from the
organisation’s relationships with its suppliers
• Long-term development of suppliers, their products and services to
help them improve internally to achieve improved levels of
innovation, quality and performance, and to be aligned optimally
with the enterprise
April 3, 2011 42
Dimensions of Supplier Management Competence
Measurement Framework
Supplier
Alignment
• Measure state of Supplier
Management
competence along three
dimensions
− Supplier Alignment
− Relationship Management
− Performance And Risk
Management
Relationship
• Define facets of each Management
dimension
• Measure each facet in
terms of:
− Associated processes and
their state of development
− Scope or extent within the Performance
And Risk
organisation Management
April 3, 2011 43
Phases of Outsourcing Relationship
Ongoing
Analysis Initiation Delivery Completion
For outsourcing organisation
For both outsourcing organisation and service provider
April 3, 2011 44
Phase Outsourcing Organisation Service Provider
Analysis Analyse operations and functions to

identify those services, processes or
functions that could potentially be
outsourced and develops the approach
to be taken to source the identified
opportunities
Initiation Prepare for and transition to provision Prepare for and transition to provision of
of service service
Delivery Provide service and manage and Provide service and manage and measure its
measure its provision provision
Completion Close-out the service after the contract Close-out the service after the contract ends
ends or the service has been terminated or the service has been terminated
Ongoing Management of outsourcing lifecycle Management of outsourcing lifecycle
April 3, 2011 45
Roles of Service Provider and Outsourcing Organisation
During Phases of Outsourcing Relationship
Service Provider Outsourcing Organisation
Determine if outsourcing represents a business

Analysis opportunity
Plan for outsourcing of selected services, evaluate and

Prepare for service transition, transfer resources and
select a service provider, create an outsourcing
Initiation personnel from outsourcing organisation and ensure
agreement and transfer resources and personnel to
service continuity
service provider
Implement the capability to manage the service

Define and agree requirements, negotiate contract, provider, administer the agreement and the issues,
Delivery plan, design and deploy service, implement service challenges and changes that arise after the agreement
delivery has been reached, reviewing the service provider’s
performance
Implement knowledge management processes, Develop outsourcing strategy management, manage

perform people management, implement relationship with service provider, ensure value,
Ongoing performance management, manage relationship, implement knowledge management processes,
manage technology and manage risks and threats manage technology and manage risks and threats
Prepare for service transition, transfer resources and Plan for completion, ensure service continuity,
Completion personnel from outsourcing organisation and ensure transfer resources and personnel from outsourcing
service continuity organisation and transfer knowledge
April 3, 2011 46
Roles of Service Provider and Outsourcing Organisation
During Phases of Outsourcing Relationship
Common
Language
Service Provider
and
Expectations
Analysis Initiation Delivery Ongoing Completion
Agreed Roles
and Outsourcing Organisation
Responsibilities
April 3, 2011 47
Key Capabilities and Constituent Practices
• Idealised set of steps for a service provider and end-user

organisations and outsourcing organisation to perform
when taking on a new outsourcing service
• Provides a detailed checklist of work to be done
• Each practices contains a set of activities and tasks
• Can be modified to suit the circumstances: scope of
outsourcing, size of service, duration of contract
• Can forms the basis of a project plan for elements of
outsourcing work such as initiation
• Reduces risk of failure
April 3, 2011 48
Key Capabilities Within Outsourcing Lifecycle for
Service Providers
People Performance Relationship Technology
Management Management Management Management
Knowledge Threat
Management Ongoing Management
Initiation Delivery Completion
Service Design
Service Service Service
Contracting and
Transfer Delivery Transfer
Deployment
April 3, 2011 49
End-User Organisations
Outsourcing Organisational
Governance Relationship Value
Strategy Change
Management Management Management
Management Management
Technology People
Ongoing
Threat Knowledge

Outsourcing
Opportunity
Analysis
Outsourcing Outsourcing Outsourcing
Planning Agreements Completion
Outsourcing
Approach Service Sourced
Service
Provider Services
Transfer
Evaluation Management
April 3, 2011 50
Service Providers and End-User Organisations
Outsourcing
Capabilities
and Skills
Analysis Initiation Delivery Ongoing Completion
Outsourcing Outsourcing Service Outsourcing Service Outsourcing Service Outsourcing Service

Organisation Organisation Provider Organisation Provider Organisation Provider Organisation Provider
Outsourcing Sourced Outsourcing

Outsourcing Service Knowledge Outsourcing Service
Opportunity Services Contracting Strategy
Planning Transfer Management Completion Transfer
Analysis Management Management
Service Service Design
Outsourcing Governance People
Provider and
Approach Management Management
Evaluation Deployment
Outsourcing Service Relationship Performance

Agreements Delivery Management Management
Service Value Relationship

Transfer Management Management
Organisational
Technology
Change
Management
Management
People Threat
Knowledge
Management
Technology
Management
Threat
Management
April 3, 2011 51
Key Capabilities and Constituent Practices for
Outsourcing
Service Providers Capabilities

and Skills
Initiation/
Delivery Ongoing
Completion
3 Service
1 Service 4 Service 5 Knowledge 6 People 7 Performance 8 Relationship 9 Technology 10 Threat
2 Contracting Design and
Transfer Delivery Management Management Management Management Management Management
Deployment
3.1 4.1 Plan 7.1

1.1 Resources 2.1 5.1 Share 6.1 Encourage 8.1 Client 9.1 Acquire 10.1 Risk
Communicate Service Engagement
Transferred In Negotiations Knowledge Innovation Interactions Technology Management
Requirements Delivery Objectives
5.2 Provide 6.2 8.2 Select 10.2

1.2 Personnel 3.2 Design and 4.2 Train 7.2 Verify 9.2 Technology
2.2 Pricing Required Participation Suppliers and Engagement
Transferred In Deploy Service Clients Processes Licenses
Information# in Decisions Partners Risk
2.3 Confirm 3.3 Plan Design 8.3 Manage 10.3 Risk

1.3 Service 4.3 Deliver 5.3 Knowledge 6.3 Work 7.3 Adequate 9.3 Control
Existing and Suppliers and Across
Continuity Service System Environment Resources Technology
Conditions Deployment Partners Engagements
1.4 Resources 4.4 Verify 6.4 Assign 7.4

2.4 Market 3.4 Service 5.4 Process 9.4 Technology
Transferred Service Responsibilitie Organisational 8.4 Cultural Fit 10.4 Security
Information Specification Assets Integration
Out Commitments s Objectives
1.5 Personnel 5.5 7.5 Review 8.5 10.5

2.5 Plan 3.5 Service 4.5 Correct 6.5 Define 9.5 Optimise
Transferred Engagement Organisational Stakeholder Intellectual
Negotiations Design Problems Roles Technology
Out Knowledge Performance Information Property
1.6 Knowledge 4.6 Prevent 9.6 Proactively 10.6 Statutory

2.6 Gather 3.6 Design 6.6 Workforce 7.6 Make 8.6 Client
Transferred Known 5.6 Reuse Introduce and Regulatory
Requirements Feedback Competencies Improvements Relationships
Out Problems Technology Compliance
5.7 Version 6.7 Plan and 7.7 Achieve 8.7 Supplier

2.7 Review 3.7 Verify 4.7 Service 10.7 Disaster
and Change Deliver Organisational and Partner
Requirements Design Modifications Recovery
Control Training Objectives Relationships
6.8 Plan and

2.8 Respond to 3.8 Deploy 4.8 Financial 5.8 Resource 7.8 Capability 8.8 Value
Deliver
Requirements Service Management Consumption Baselines Creation
Training
6.9
2.9 Contract
Performance 7.9 Benchmark
Roles
Feedback
6.10 7.10 Prevent

2.10 Create
Performance Potential
Contracts
Feedback Problems
2.11 Amend 7.11 Deploy

6.11 Rewards
Contracts Innovations
April 3, 2011 52
Key Capabilities and Constituent Practices for End-
User Organisations - 1 Outsourcing
Capabilities and
Skills
Analysis Phase Initiation Phase Delivery Phase Completion Phase
1 Outsourcing
2 Outsourcing 3 Outsourcing 4 Service Provider 5 Outsourcing 7 Sourced Services 8 Outsourcing
Opportunity 6 Service Transfer
Approach Planning Evaluation Agreements Management Completion
Analysis
3.1 Establish 7.1 Perform
1.1 Define Current 2.1 Outsourcing 4.1 Communicate 5.1 Negotiations 6.1 Service 8.1 Completion
Outsourcing Outsourcing
State Approach Requirements Guidelines Transition Planning
Project Management
4.2 Evaluate
1.2 Outsourcing 3.2 Service 5.2 Confirm 7.2 Performance 8.2 Service
2.2 Business Case Potential Service 6.2 Verify Design
Criteria Definition Existing Conditions Monitoring Continuity
Providers
3.3 Service 4.3 Select 8.3 Resources
1.3 Demand 2.3 Governance 6.3 Resources 7.3 Financial
Provider Selection Candidate Service 5.3 Negotiations Transfer from
Identification Model Transferred Out Management
Procedures Providers Service Provider
8.4 Personnel
1.4 Outsourcing 2.4 Impact and 3.4 Evaluation 5.4 Agreement 6.4 Personnel 7.4 Agreement
Transfer from
Options Risk Analysis Criteria Roles Transferred Out Management
Service Provider
3.5 Prepare 7.5 Problem and 8.5 Knowledge
2.5 Outsourcing 5.5 Define SLAs 6.5 Knowledge
Service Incident Transfer from
Initiation Decision and Measures Transferred Out
Requirements Monitoring Service Provider
7.6 Service
5.6 Create
Delivery Change
Agreements
Management
5.7 Amend 7.7 Service Change

Agreements Management
7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 53
Key Capabilities and Constituent Practices for End-
User Organisations - 2 Outsourcing
Capabilities and
Skills
Ongoing Phase
Competency
Governance Environment
and Change
Focused Focused
Focused
13
9 Outsourcing
10 Governance 11 Relationship 12 Value Organisational 14 People 15 Knowledge 16 Technology 17 Threat
Strategy
Management Management Management Change Management Management Management Management
Management
Management
12.1 17.1
10.1 11.1 Service 13.1 Prepare for 14.1 Assign 15.1 Provide
9.1 Outsourcing Organisational 16.1 Asset Outsourcing
Outsourcing Provider Organisational Outsourcing Required
Sponsorship Outsourcing Management Risk
Policy Interactions Change Responsibilities Information
Performance Management
17.2
10.2 Service 11.2 Service 13.2
9.2 Outsourcing 12.2 Capability 14.2 Personnel 15.2 Knowledge 16.2 License Organisational
Provider Provider Stakeholder
Constraints Baselines Competencies System Management Risk
Management Relationships Involvement
Management
14.3
9.3 Potential 10.3 Internal 12.3 Benchmark
11.3 Internal 13.3 Define Organisational 15.3 Market 16.3 Technology 17.3 Intellectual
Outsourcing Stakeholder Outsourcing
Relationships Future State Outsourcing Information Integration Property
Areas Management Processes
Competency
10.4 Defined 12.4 Improve 13.4 Human

9.4 Outsourcing 11.4 Issue 14.4 Define 15.4 Lessons 17.4 Security
Outsourcing Outsourcing Resource
Objectives Management Roles Learned and Privacy
Processes Processes Changes
9.5 13.5
10.5 Align
Organisational Communicate 15.5 Share
Strategy and 11.5 Cultural Fit 12.5 Innovation 17.5 Compliance
Outsourcing Organisational Knowledge
Architectures
Strategy Changes
10.6 Business 11.6 12.6 Business 13.6

17.6 Business
Process Collaborative Value and Organisational
Continuity
Integration Relationships Impact Change
12.7
10.7 Adapt to 11.7 Innovative
Outsourcing
Business Change Relationships
Alignment
April 3, 2011 54
Analysis Phase
• End-User Organisation
• Concerned with analysing operations and
functions to identify those services,
processes, or functions that could
potentially be outsourced
− Understanding the current, or as-is, state of
the client organisation’s structure and
processes
− Identifying the relevant criteria for selecting
outsourcing opportunities
− Identifying outsourcing opportunities to
meet outsourcing objectives and criteria
− Organising options for outsourcing
− Developing and validating the Business Case
for each outsourcing option
− Identifying the outsourcing approach and
governance model for the proposed
outsourcing action
− Performing impact and risk analyses of the
proposed outsourcing action
− Making the decision whether or not to
source the proposed outsourcing action
April 3, 2011 55
Initiation Phase
• Service Provider • End-User Organisation

• Concerned with preparation for and initiation of • Concerned with preparation for and initiation of
service delivery managing outsourced services
− Gather requirements − Preparing for service selection by developing the
− Perform due diligence to validate customer solicitation and criteria for selection
information − Soliciting and evaluating potential service
− Assess if and how the requirements can be met providers
− Prepare for negotiation − Preparing for negotiation by having an
− Negotiate and sign contract organisational position on cost, quality and other
topics that need to be negotiated
− Confirm assumptions − Defining the formal service level agreements and
− Confirm responsibilities and commitments service provider performance measures
− Design the service − Understanding service provider’s capabilities by
− Review the service design gathering information about the service provider
− Create service specification and confirming the assumptions that impact
commitments
− Deploy the service
− Establishing a formal agreement with service
− Transfer resources - personnel, technology, providers that clearly articulates the clients’ and
infrastructure, applications service provider’s responsibilities and
− Transition of service commitments
− Providing feedback on the service design in order
to ensure that the services are meeting the
client’s requirements and the agreed-upon
commitments
− Managing the effective transfer of resources
needed for service delivery, including personnel,
technology infrastructure and work environment
April 3, 2011 56
Delivery Phase

• Concerned with service delivery including • Concerned with monitoring the service
management of service delivery, verification provider’s service delivery capabilities, including
that commitments are being met and the ongoing monitoring of service provider
management of costs associated with the performance to verify that commitments are
service provision being met, monitoring changes, management of
− Planning and tracking the service delivery the finances and agreements associated with
activities the service provision, fostering realistic
− Delivering services according to the agreed expectations and performing value analysis
commitments − Planning and tracking the outsourcing
− Managing the finances associated with the service management activities
delivery − Ensuring that services are delivered according to
− Identifying and controlling modifications to the the agreed-upon commitments
services being provided − Managing the finances associated with the service
− Identifying and controlling modifications to delivery
associated service commitments − Identifying and controlling modifications to the
− Identifying problems that impact the service services being provided or to the associated
delivery and taking both preventive and service commitments
corrective actions − Facilitating problem resolution for problems that
impact the service delivery
− Reconciling performance against expectations and
ensuring that the service provision returns value
to the client organisation
April 3, 2011 57
Ongoing Phase

• Management functions that need to • Management functions that need to
be performed during the entire be performed during the entire
outsourcing lifecycle outsourcing lifecycle
− Manage and motivate personnel to − Manage and motivate personnel to
effectively deliver services effectively deliver services
− Manage relationships with clients, − Manage relationships with clients,
suppliers and business partners suppliers and business partners
− Measure and review the organisation’s − Measure and review the organisation’s
performance and taking action to performance and taking action to
improve it improve it
− Manage information and knowledge − Manage information and knowledge
systems so that personnel have access systems so that personnel have access
to the knowledge needed to to the knowledge needed to
effectively perform their work effectively perform their work
− Identify and control threats to the − Identify and control threats to the
organisation’s ability to meet its organisation’s ability to meet its
objectives and client requirements objectives and client requirements
− Manage the technology, systems and − Manage the technology, systems and
applications infrastructure used to applications infrastructure used to
support delivery of service support delivery of service
April 3, 2011 58
Completion Phase

• Concerned with closing down the • Concerned with closing down the
engagement at the end of the outsourcing engagement at the end of the outsourcing
lifecycle lifecycle
− Manage the transfer of resources to the − Planning for closing down a outsourced
new service provider, whether it is to the service and managing the agreement during
client or to another service provider the close-down period including managing
− Ensure service continuity during transfer the agreement during termination
− Identify and transferring the knowledge proceedings, during renewal, or during
critical for the delivery of service normal completion
− Managing the transfer of resources to the
new service provider, whether it is to back
to the organisation or to another service
provider including the potential transfer of
people, technology infrastructure and
intellectual property
− Ensuring service continuity during the
transfer of responsibilities for service
provision
− Identifying and transferring the knowledge
capital critical for the delivery of service
April 3, 2011 59
Benefits of Structured Approach
• Minimises problems • Provides structured approach to

• Provides common language evaluating and adopting outsourcing
• Provides common understanding of • Demonstrates due diligence in

roles and responsibilities selecting outsourcing partner
• Provides mechanism for resolving • Provides common understanding of

issues roles and responsibilities
• Know what is expected and what • Provides mechanism for resolving

should be done issues
• Knows service to be provided and
measures delivery
April 3, 2011 60
Outsourcing for Service Providers
April 3, 2011 61
Ongoing
April 3, 2011 62
• Every outsourcing relationship has four phases

− Initiation – prepare for and transition to provision of service
− Delivery – provide service and manage and measure its provision
− Completion – close-out the service after the contract ends or the
service has been terminated
− Ongoing – management of outsourcing lifecycle
April 3, 2011 63
Initiation Phase
• Concerned with preparation for and initiation of service delivery

− Gather requirements
− Perform due diligence to validate customer information
− Assess if and how the requirements can be met
− Prepare for negotiation
− Negotiate and sign contract
− Confirm assumptions
− Confirm responsibilities and commitments
− Design the service
− Review the service design
− Create service specification
− Deploy the service
− Transfer resources - personnel, technology, infrastructure, applications
− Transition of service
April 3, 2011 64
Delivery Phase
• Concerned with service delivery including management of

service delivery, verification that commitments are being
met and management of costs associated with the service
provision
− Planning and tracking the service delivery activities
− Delivering services according to the agreed commitments
− Managing the finances associated with the service delivery
− Identifying and controlling modifications to the services being
provided
− Identifying and controlling modifications to associated service
commitments
− Identifying problems that impact the service delivery and taking
both preventive and corrective actions
April 3, 2011 65
Completion Phase
• Concerned with closing down the engagement at the end

of the outsourcing lifecycle
− Manage the transfer of resources to the new service provider,
whether it is to the client or to another service provider
− Ensure service continuity during transfer
− Identify and transferring the knowledge critical for the delivery of
service
April 3, 2011 66
Ongoing Phase
• Management functions that need to be performed during

the entire outsourcing lifecycle
− Manage and motivate personnel to effectively deliver services
− Manage relationships with clients, suppliers and business partners
− Measure and review the organisation’s performance and taking
action to improve it
− Manage information and knowledge systems so that personnel
have access to the knowledge needed to effectively perform their
work
− Identify and control threats to the organisation’s ability to meet
its objectives and client requirements
− Manage the technology, systems and applications infrastructure
used to support delivery of service
April 3, 2011 67
Key Capabilities Within Outsourcing Lifecycle
People Performance Relationship Technology
Management Management Management Management
Knowledge Threat
Management Ongoing Management
Service Design
Service Service Service
Contracting and
Transfer Delivery Transfer
Deployment
April 3, 2011 68
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
1 Service 3 Service Design 4 Service 5 Knowledge 6 People 7 Performance 8 Relationship 9 Technology 10 Threat
2 Contracting
Transfer and Deployment Delivery Management Management Management Management Management Management
3.1
1.1 Resources 4.1 Plan Service 5.1 Share 6.1 Encourage 7.1 Engagement 8.1 Client 9.1 Acquire 10.1 Risk
2.1 Negotiations Communicate
Transferred In Delivery Knowledge Innovation Objectives Interactions Technology Management
Requirements
5.2 Provide 8.2 Select

1.2 Personnel 3.2 Design and 6.2 Participation 7.2 Verify 9.2 Technology 10.2 Engagement
2.2 Pricing 4.2 Train Clients Required Suppliers and
Transferred In Deploy Service in Decisions Processes Licenses Risk
Information# Partners
2.3 Confirm 8.3 Manage

1.3 Service 3.3 Plan Design 4.3 Deliver 5.3 Knowledge 6.3 Work 7.3 Adequate 9.3 Control 10.3 Risk Across
Existing Suppliers and
Continuity and Deployment Service System Environment Resources Technology Engagements
Conditions Partners
7.4
1.4 Resources 2.4 Market 3.4 Service 4.4 Verify Service 5.4 Process 6.4 Assign 9.4 Technology
Organisational 8.4 Cultural Fit 10.4 Security
Transferred Out Information Specification Commitments Assets Responsibilities Integration
Objectives
7.5 Review
1.5 Personnel 2.5 Plan 3.5 Service 4.5 Correct 5.5 Engagement 8.5 Stakeholder 9.5 Optimise 10.5 Intellectual
6.5 Define Roles Organisational
Transferred Out Negotiations Design Problems Knowledge Information Technology Property
Performance
9.6 Proactively 10.6 Statutory

1.6 Knowledge 2.6 Gather 3.6 Design 4.6 Prevent 6.6 Workforce 7.6 Make 8.6 Client
5.6 Reuse Introduce and Regulatory
Transferred Out Requirements Feedback Known Problems Competencies Improvements Relationships
Technology Compliance
7.7 Achieve 8.7 Supplier and

2.7 Review 4.7 Service 5.7 Version and 6.7 Plan and 10.7 Disaster
3.7 Verify Design Organisational Partner
Requirements Modifications Change Control Deliver Training Recovery
Objectives Relationships
2.8 Respond to 3.8 Deploy 4.8 Financial 5.8 Resource 6.8 Plan and 7.8 Capability 8.8 Value
Requirements Service Management Consumption Deliver Training Baselines Creation
2.9 Contract 6.9 Performance

7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 69
• Idealised set of steps for a service provider to perform

when taking on a new outsourcing client
• Each practice contains a set of activities and tasks
• Can be modified to suit the circumstances: scope of
outsourcing, size of client, duration of contract
• Can forms the basis of a project plan for elements of
outsourcing work such as initiation
• Demonstrates professionalism to potential clients
April 3, 2011 70
• Many outsourcing relationships fail, are terminated early,

are unsatisfactory to either or both of the service provider
and the client
• Outsourcing is a business issues and should be treated as
such
• Many common issues, problems and concerns arise across
outsourcing contracts
• Learn from the issues to avoid them
April 3, 2011 71
1. Establishing and maintaining trust with stakeholders

2. Managing stakeholder expectations
3. Translating implicit and explicit needs into defined requirements with agreed-
upon levels of quality
4. Establishing well-defined contracts with stakeholders, including clients, suppliers
and partners
5. Reviewing service design and deployment to ensure adequate coverage of the
requirements
6. Ensuring the effectiveness of interactions with stakeholders
7. Managing supplier and partner relationships to ensure that commitments are
met
8. Ensuring compliance with statutory and regulatory requirements
9. Managing clients’ security
10. Managing cultural differences between stakeholders
11. Monitoring and controlling activities to consistently meet the service delivery
commitments
April 3, 2011 72
12. Monitoring and managing clients’ and end-users’ satisfaction

13. Building and maintaining the competencies that enable personnel to effectively
perform their roles and responsibilities
14. Managing employee satisfaction, motivation and retention
15. Establishing and maintaining an effective work environment
16. Maintaining a competitive advantage
17. Innovating, building flexibility and increasing responsiveness to meet unique
and evolving client requirements
18. Managing rapid technological shifts and maintaining the availability, reliability,
accessibility and security of technology
19. Capturing and using knowledge
20. Smoothly transferring services and resources
21. Maintaining continuity of the service delivery
22. Capturing and transferring knowledge gained to the client during contract
completion
23. Measuring and analysing the reasons for termination, to prevent reoccurrence
April 3, 2011 73
Issue 1 - Establishing And Maintaining Trust With
Stakeholders
• Building a trusting relationship with stakeholders is critical
to success
• Important for all suppliers and partners involved in the
outsourcing relationship – hardware, software,
communications, services
• By effectively managing expectations and responding to
personnel, clients and end-users, service provider
establishes trust with its stakeholders to help establish
long-term relationships
April 3, 2011 74
Issue 2 - Managing Stakeholder Expectations
• Differences in expectations between the client, the service

provider and the suppliers and partners is a common
source of failure
• Identifying and managing those expectations helps to
ensure a common understanding of what is necessary for
success
April 3, 2011 75
Issue 3 - Translating Implicit And Explicit Needs Into Defined
Requirements With Agreed-Upon Levels Of Quality
• Frequent cause of failure in outsourcing is that the service

provider does not fully understand the needs of the client
− Inability of clients to adequately express their needs
− Lack of rigor by the service provider in gathering and analysing
those needs
• Successful service providers rigorously gather and analyse
the stated and unstated needs
− Translate those needs into a set of documented requirements
• Successful providers also recognise that needs change over
time and establish provisions for gathering and analysing
modifications to their services
April 3, 2011 76
Issue 4 - Establishing Well-Defined Contracts With
Stakeholders, Including Clients, Suppliers And Partners
• Poorly written contracts are a common cause of failure

and result in a large number of contracts being
renegotiated
• Outsourcing arrangements are typically long-term in
nature and require contracts that are clear and detailed as
well as being flexible enough to account for business
changes
• Formal mechanisms are required in order for the provider
to identify changing needs, modify services based on those
changes and amend contracts to reflect the current
requirements and commitments
April 3, 2011 77
Issue 5 - Reviewing Service Design And Deployment
To Ensure Adequate Coverage Of The Requirements
• Failure in outsourcing can be caused by the service
provider not fully addressing the needs of the client
• To ensure that the service delivery will meet the client’s
needs, successful engagements include rigorous reviews of
the service design and deployment activities by the clients
and the service provider prior to service delivery
April 3, 2011 78
Issue 6 - Ensuring The Effectiveness Of Interactions
With Stakeholders
• Large-scale outsourcing often involves a combination of
face-to-face and remote interactions
• Interactions with clients need to be managed in order to
effectively understand their needs
• Clear communications with all stakeholders can have a
strong positive impact on the ability to effectively perform
work
April 3, 2011 79
Issue 7 - Managing Supplier And Partner
Relationships To Ensure That Commitments Are Met
• Outsourcing engagements can include multiple service
providers working together to meet the client’s needs
• Regardless of the type of relationship suppliers and
partners can have a significant impact on the effectiveness
of the service delivery and they must be actively managed
April 3, 2011 80
Issue 8 - Ensuring Compliance With Statutory And
Regulatory Requirements
• Service providers are often faced with the need to comply
with a large variety of laws and regulations
• Effectively operating in this environment requires rigorous
analysis and management of all applicable legal
requirements to protect themselves and their clients
April 3, 2011 81
Issue 9 - Managing Clients’ Security
• Managing security and controlling critical data and assets

are critical to establishing trust
• Security management includes protection of intellectual
property, confidentiality and privacy concerns
• Breakdowns, such as security breaches, can impact the
service provider’s ability to provide adequate service and
can irreparably damage the relationship with the client
April 3, 2011 82
Issue 10 - Managing Cultural Differences Between
Stakeholders
• In large-scale outsourcing there are many potential
cultural differences between service providers, clients,
end-users, suppliers and partners
• These include differences between country, region and
organisational culture
• These differences need to be identified and addressed in
order to guard against breakdowns in communication
April 3, 2011 83
Issue 11 - Monitoring And Controlling Activities To
Consistently Meet The Service Delivery Commitments
• Successful service providers monitor their service delivery

activities to ensure that the client’s commitments are
being met
• Actions are taken to resolve and prevent problems,
thereby escalating issues as appropriate to ensure that
they are addressed in a timely basis
April 3, 2011 84
Issue 12 - Monitoring And Managing Clients’ And
End-Users’ Satisfaction
• Success is not always defined in terms of meeting the
agreed-upon commitments because clients and end-users
may be unsatisfied even when commitments are being
met
• Successful outsourcing engagements monitor the
satisfaction levels of the stakeholders to identify problems
and take action
April 3, 2011 85
Issue 13 - Building And Maintaining The Competencies That
Enable Personnel To Effectively Perform Their Roles And
Responsibilities
• Outsourcing is often highly dependant on specialised
competencies without which personnel cannot effectively
perform the work assigned to them
• Service providers need to manage the competencies of
individuals as well as the workforce as a whole in order to
ensure that work is effectively performed and that the
client’s requirements are met.
April 3, 2011 86
Issue 14 - Managing Employee Satisfaction,
Motivation And Retention
• IT-enabled outsourcing often involves challenges during
transition and deployment and service delivery
• High employee turnover jeopardises the service provider’s
ability to meet its clients’ requirements and undermines
their expected gains and performance levels
• Proactively monitoring and managing employee
satisfaction and motivation can improve personnel
retention and effectiveness
April 3, 2011 87
Issue 15 - Establishing And Maintaining An Effective
Work Environment
• A work environment that is well suited to the service being
delivered enables personnel to effectively perform their
work
• Also contributes to employee satisfaction and retention
April 3, 2011 88
Issue 16 - Maintaining A Competitive Advantage
• Service providers need to effectively demonstrate their

capabilities relative to competitors
• Initially done to differentiate the service provider from the
competition in such a way that they will be chosen over
other providers
• Done to continually improve the organisation’s capabilities
and demonstrate to clients that the current service
provider is the organisation best equipped to meet clients’
changing needs
• Important aspect of being competitive is demonstrating
financial stability and longevity
April 3, 2011 89
Issue 17 - Innovating, Building Flexibility and Increasing
Responsiveness To Meet Unique And Evolving Client
Requirements
• Successful outsourcing engagements are those where the
service provider is able to be flexible and responsive to
clients’ changing needs
• Adopting innovations is one way to add value and meet
new needs
• Actively manage the performance of the organisation and
continuously improve its capabilities
April 3, 2011 90
Issue 18 - Managing Rapid Technological Shifts And
Maintaining The Availability, Reliability, Accessibility And
Security Of Technology
• Technology is a key component of IT outsourcing such as
public cloud
• Challenges for the service provider include keeping pace
with rapid changes in technology and effectively managing
the technology infrastructure while changes are
incorporated
April 3, 2011 91
Issue 19 - Capturing And Using Knowledge
• Managing knowledge is critical to a service provider’s

ability to avoid rework and improve the consistency and
quality of work performed by personnel
• includes the effective storage, retrieval and use of
knowledge gained on engagements
April 3, 2011 92
Issue 20 - Smoothly Transferring Services And
Resources
• A common cause of failure in outsourcing is the ineffective
management of the transfer of services and resources to
and from the service provider leading to service delivery
problems
• Successful service providers rigorously control the transfer
of services and resources to ensure that the new service
provider is able to adequately deliver the service and that
service continuity is maintained
April 3, 2011 93
Issue 21 - Maintaining Continuity Of The Service
Delivery
• Effectiveness of outsourcing is related to the service
provider’s ability to maintain service continuity despite any
problems that arise
• Successful providers manage service continuity by
effectively controlling and preventing problems during
service delivery, preparing and responding to threats and
coordinating the transfer of service during periods of
transition
April 3, 2011 94
Issue 22 - Capturing And Transferring Knowledge
Gained To The Client During Contract Completion
• Frequent concern of clients who consider outsourcing is
that in-house knowledge will be eroded, making it
impossible to bring outsourced services back in-house
• Successful service providers address this concern by
making provisions for capturing and transferring
knowledge back to the client during contract completion
April 3, 2011 95
Issue 23 - Measuring And Analysing The Reasons for
Termination to prevent Reoccurrence
• Termination may happen for a number of reasons,
including an inability of the service provider to meet
changing client needs, resolve problems, meet
commitments, or match the capabilities of competitors
• Analysing the reasons for termination and taking action
based on the findings helps to prevent issues from
recurring with other clients and ensure the long-term
success of the service provider
April 3, 2011 96
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 97
1 Service Transfer - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 98
1 Service Transfer - 1.1 Resources Transferred In
• Scope
− Establish and implement procedures to verify and account for
resources transferred to the organisation
• Track and manage resource transfers in order to facilitate a smooth transfer
of responsibilities prior to service delivery
• Activities
− Provide support for creating and maintaining the procedures for
verifying and accounting for resources transferred to the
organisation
− Document and implement the procedures for verifying and
accounting for resources transferred to the organisation
− Support the implementation of the procedures for verifying and
accounting for resources transferred to the organisation
April 3, 2011 99
1 Service Transfer - 1.2 Personnel Transferred In
• Scope
− Establish and implement procedures to manage the transfer of
personnel to the organisation
• Transfer the necessary personnel and ensure that the necessary personnel
competencies are in place in order to enable the organisation to effectively
deliver service
• Activities
managing the transfer of personnel to the organisation
− Document and implement the procedures for managing the
transfer of personnel to the organisation
− Support the implementation of the procedures for managing the
transfer of personnel to the organisation
April 3, 2011 100
1 Service Transfer - 1.3 Service Continuity
• Scope
− Establish and implement procedures to ensure the continuity of
service
• Maintain service continuity as service is transferred to the client, or to
another service provide, in order to improve client satisfaction
• Activities
ensuring continuity of service across the organisation
− Document and implement the procedures for ensuring continuity
of service
− Support the implementation of the procedures for ensuring
continuity of service across the organisation
April 3, 2011 101

1 Service Transfer - 1.4 Resources Transferred Out
• Scope
− Establish and implement procedures to transfer resources from
the organisation
• Manage the transfer of resources in order to help ensure a smooth hand-
over and improve the client’s satisfaction, thereby establishing a basis for
future relationships with the client
• Activities
transferring resources from the organisation
− Document and implement the procedures for transferring
resources from the organisation
− Support the implementation of the procedures for transferring
resources from the organisation
April 3, 2011 102
1 Service Transfer - 1.5 Personnel Transferred Out
• Scope
personnel from the organisation
• Activities
managing the transfer of personnel from the organisation
− Document and implement the procedures for managing the
transfer of personnel from the organisation
− Support the implementation of the procedures for managing the
transfer of personnel from the organisation
April 3, 2011 103

1 Service Transfer - 1.6 Knowledge Transferred Out
• Scope
− Establish and implement procedures to transfer to the client the
knowledge gained from the specific client engagement
• Activities
transferring knowledge to the client
− Document and implement the procedures for transferring
knowledge to the client
− Support the implementation of the procedures for transferring
knowledge to the client
April 3, 2011 104

2 Contracting - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 105
2 Contracting - 2.1 Negotiations
• Scope
− Establish and implement guidelines for negotiations with current
or prospective clients
• Activities
− Provide support for creating and maintaining the guidelines for
negotiations with current or prospective clients across the
organisation
− Document and implement the guidelines for negotiations with
current or prospective clients
− Support the implementation of guidelines for negotiations with
current or prospective clients across the organisation
April 3, 2011 106

2 Contracting - 2.2 Pricing
• Scope
− Establish and implement guidelines for pricing services
• Activities
pricing services
− Document and implement the guidelines for pricing services
− Support the implementation of guidelines for pricing services
April 3, 2011 107

2 Contracting - 2.3 Confirm Existing Conditions
• Scope
− Establish and implement guidelines for confirming existing
conditions about potential engagements
• Activities
confirming existing conditions
− Document and implement the guidelines for confirming existing
conditions
− Support the implementation of guidelines for confirming existing
conditions
April 3, 2011 108

2 Contracting - 2.4 Market Information
• Scope
− Analyse and use market information about prospective clients
• Activities
− Provide support for creating and maintaining the work products
and tasks for analysing and using market information about
prospective clients
− Document and implement the work products and tasks required
for analysing and using market information about prospective
clients
− Support the implementation of analysing and using market
information about prospective clients
April 3, 2011 109

2 Contracting - 2.5 Plan Negotiations
• Scope
− Plan and track negotiations with current or prospective clients
• Activities
and tasks for planning and tracking client negotiations
for planning and tracking client negotiations
− Support the implementation of planning and tracking client
negotiations
April 3, 2011 110

2 Contracting - 2.6 Gather Requirements
• Scope
− Establish and implement procedures to gather a client’s
requirements
• Activities
gathering requirements
− Document and implement the procedures for gathering
requirements
− Support the implementation of the procedures for gathering
requirements
April 3, 2011 111

2 Contracting - 2.7 Review Requirements
• Scope
− Prior to committing to the prospective client, review
requirements and verify that the organisation can meet them
• Activities
and tasks for reviewing requirements and verifying that the
organisation can meet them
for reviewing requirements and verifying that the organisation
can meet them
− Support the implementation of reviewing requirements and
verifying that the organisation can meet them
April 3, 2011 112

2 Contracting - 2.8 Respond to Requirements
• Scope
− Establish and implement procedures to respond to the
requirements of a prospective client
• Activities
responding to requirements
− Document and implement the procedures for responding to
requirements
− Support the implementation of the procedures for responding to
requirements
April 3, 2011 113

2 Contracting - 2.9 Contract Roles
• Scope
− Establish and implement procedures to respond to the
requirements of a prospective client
• Activities
responding to requirements
− Document and implement the procedures for responding to
requirements
− Support the implementation of the procedures for responding to
requirements
April 3, 2011 114

2 Contracting - 2.10 Create Contracts
• Scope
− Define the roles and responsibilities of the organisation and the client with
respect to the proposed contract
• Consistent and effective legal agreements in order to enable all the parties to have a
clear understanding of what services will be delivered and at what level of quality
• Given the long-term nature of most outsourcing engagements, implementing
procedures for contracts and flexibility in the relationship between the client and
the organisation are critical to success
• Activities
− Provide support for creating and maintaining the work products and tasks for
defining the roles and responsibilities of the organisation and client
− Document and implement the work products and tasks required for defining
the roles and responsibilities of the organisation and client
− Support the implementation of defining the roles and responsibilities of the
organisation and client
April 3, 2011 115

2 Contracting - 2.11 Amend Contracts
• Scope
− Establish and implement procedures to amend contracts
• Activities
amending contracts
− Document and implement the procedures for amending contracts
− Support the implementation of the procedures for amending
contracts
April 3, 2011 116

3 Service Design and Deployment - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 117
3 Service Design and Deployment - 3.1
Communicate Requirements
• Scope
− Establish and implement procedures to communicate the client’s
requirements to the service design and deployment team
• Activities
communicating requirements
− Document and implement the procedures for communicating
requirements
− Support the implementation of the procedures for
communicating requirements
April 3, 2011 118

3 Service Design and Deployment - 3.2 Design and
Deploy Service
• Scope
− Establish and implement procedures to design and deploy the
service to meet client requirements
• Activities
designing and deploying the service across the organisation
− Document and implement the procedures for designing and
deploying the service
− Support the implementation of the procedures for designing and
deploying the service across the organisation
April 3, 2011 119

3 Service Design and Deployment - 3.3 Plan Design
and Deployment
• Scope
− Plan and track the design and deployment of the service
• Activities
and tasks for planning and tracking the design and deployment of
the service
for planning and tracking design and deployment
− Support the implementation of planning and tracking the design
and deployment of the service
April 3, 2011 120

3 Service Design and Deployment - 3.4 Service
Specification
• Scope
− Create the service specification
• Create a service specification that clearly, accurately and comprehensively describes
the services to be provided in order to effectively meet the client’s requirements
• Service specification is the basis for designing, deploying and delivering service. It is
a comprehensive document that describes the services that the organisation
provides to the client and describes how end-users request services
• Describes the available services, the agreed-upon service levels, if any and the
interfaces between the organisation, the clients and the end-users
• As the service evolves over time, the service specification is modified to document
the changing expectations of the client and the organisation
• Activities
creating the service specification
− Document and implement the work products and tasks required for creating
the service specification
− Support the implementation of creating the service specification
April 3, 2011 121

3 Service Design and Deployment - 3.5 Service
Design
• Scope
− Create the service design based on the service specification
• Ensure that the service design is based on the client’s requirements and the
set of services specified in the agreed-upon service specification in order to
effectively meet the client’s requirements
• Activities
and tasks for creating the service design
for creating the service design
− Support the implementation of creating the service design
April 3, 2011 122

3 Service Design and Deployment - 3.6 Design
Feedback
• Scope
− Establish and implement procedures to obtain feedback from the
client on the designed service and to incorporate necessary
changes
• Activities
obtaining service design feedback
− Document and implement the procedures for obtaining service
design feedback
− Support the implementation of the procedures for obtaining
service design feedback
April 3, 2011 123

3 Service Design and Deployment - 3.7 Verify Design
• Scope
− Establish and implement procedures to review and verify the
service design
• Activities
service design review and verification across the organisation
− Document and implement the procedures for service design
review and verification
− Support the implementation of the procedures for service design
review and verification
April 3, 2011 124

3 Service Design and Deployment - 3.8 Deploy
Service
• Scope
− Deploy the service based on the service design
• Activities
and tasks for deploying the service
for deploying the service
− Support the implementation of deploying the service
April 3, 2011 125

4 Service Delivery - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 126
4 Service Delivery - 4.1 Plan Service Delivery
• Scope
− Plan and track the service delivery according to the service design
• Activities
and tasks for planning and tracking the service delivery
for planning and tracking service delivery
− Support the implementation of planning and tracking the service
delivery
April 3, 2011 127

4 Service Delivery - 4.2 Train Clients
• Scope
− Establish and implement procedures to train clients and end-users
• Activities
training clients and end-users
− Document and implement the procedures for training clients and
end-users
− Support the implementation of the procedures for training clients
and end-users
April 3, 2011 128

4 Service Delivery - 4.3 Deliver Service
• Scope
− Deliver service according to the service delivery plans
• Activities
and tasks for delivering service
for delivering service
− Support the implementation of delivering service
April 3, 2011 129

4 Service Delivery - 4.4 Verify Service Commitments
• Scope
− Establish and implement procedures to measure and verify that
service commitments are being met
• Activities
verifying service commitments
− Document and implement the procedures for verifying service
commitments
− Support the implementation of the procedures for verifying
service commitments
April 3, 2011 130

4 Service Delivery - 4.5 Correct Problems
• Scope
− Establish and implement procedures to correct problems
• Activities
correcting problems
− Document and implement the procedures for correcting problems
− Support the implementation of the procedures for correcting
problems
April 3, 2011 131

4 Service Delivery - 4.6 Prevent Known Problems
• Scope
− Establish and implement procedures to take preventive action for
known problems
• Activities
taking preventive actions for known problems across the
organisation
− Document and implement the procedures for taking preventive
actions for known problems
− Support the implementation of the procedures for taking
preventive actions for known problems across the organisation
April 3, 2011 132

4 Service Delivery - 4.7 Service Modifications
• Scope
− Establish and implement procedures to make modifications to
services
• Activities
modifying services
− Document and implement the procedures for modifying services
− Support the implementation of the procedures for modifying
services
April 3, 2011 133

4 Service Delivery - 4.8 Financial Management
• Scope
− Establish and implement procedures for financial management of
the engagement
• Activities
financial management of the engagement
− Document and implement the procedures for the financial
management of the engagement
− Support the implementation of the procedures for financial
management of the engagement
April 3, 2011 134

5 Knowledge Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 135
5 Knowledge Management - 5.1 Share Knowledge
• Scope
− Establish and implement a policy to share knowledge among
stakeholders
• Activities
− Provide support for creating and maintaining a policy for sharing
knowledge among stakeholders across the organisation
− Document and implement a policy for sharing knowledge among
stakeholders
− Support the implementation of a policy for sharing knowledge
among stakeholders across the organisation
April 3, 2011 136

5 Knowledge Management - 5.2 Provide Required
Information
• Scope
− Identify, control and provide the information that personnel need
to perform their work
• Activities
and tasks for identifying, controlling and providing the
information personnel need to perform their work
− Document and implement work products and tasks required for
identifying, controlling and providing the information personnel
need to perform their work
− Support the implementation of identifying, controlling and
making available the information personnel need to perform their
work
April 3, 2011 137
5 Knowledge Management - 5.3 Knowledge System
• Scope
− Establish and maintain a knowledge system to identify, control
and provide information
• Activities
and tasks for establishing and maintaining a knowledge system
for use across the organisation
establishing and maintaining a knowledge system
− Support the implementation of establishing and maintaining a
knowledge system for use across the organisation
April 3, 2011 138

5 Knowledge Management - 5.4 Process Assets
• Scope
− Establish and maintain a set of process assets for use across the
organisation
• Activities
and tasks for establishing and maintaining a set of process assets
for use across the organisation
establishing and maintaining a set of process assets
− Support the implementation of establishing and maintaining a set
of process assets for use across the organisation
April 3, 2011 139

5 Knowledge Management - 5.5 Engagement
Knowledge
• Scope
− Analyse and use knowledge gained from client engagements
• Activities
and tasks for analysing and using knowledge gained from client
engagements across the organisation
analysing knowledge gained from client engagements
− Support the implementation of analysing and using knowledge
gained from client engagements across the organisation
April 3, 2011 140

5 Knowledge Management - 5.6 Reuse
• Scope
− Identify and reuse work products
• Activities
and tasks for identifying and reusing work products across the
organisation
identifying and reusing work products
− Support the implementation of identifying and reusing work
products across the organisation
April 3, 2011 141

5 Knowledge Management - 5.7 Version and Change
Control
• Scope
− Establish and implement procedures to apply version control and
change control to work products
• Activities
version control and change control
− Document and implement the procedures for version control and
change control
− Support the implementation of the procedures for version control
and change control
April 3, 2011 142

5 Knowledge Management - 5.8 Resource
Consumption
• Scope
− Establish and implement procedures to analyse and use
information on resources consumed
• Activities
analysing and using information on resource consumption
− Document and implement the procedures for analysing and using
information on resource consumption
− Support the implementation of the procedures for analysing and
using information on resource consumption
April 3, 2011 143

6 People Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 144
6 People Management - 6.1 Encourage Innovation
• Scope
− Establish and implement a policy to encourage and support
innovation across the organisation
• Activities
− Provide support for creating and maintaining a policy for
encouraging and supporting innovation across the organisation
− Document and implement a policy for encouraging and
supporting innovation across the organisation
− Support the implementation of a policy for encouraging and
supporting innovation across the organisation
April 3, 2011 145

6 People Management - 6.2 Participation in
Decisions
• Scope
− Establish and implement a policy on the participation of
personnel in decisions that affect their work commitments
• Activities
− Provide support for creating and maintaining a policy on the
participation of personnel in decisions that affect their work
commitments across the organisation
− Document and implement a policy on the participation of
personnel in decisions that affect their work commitments
− Support the implementation of a policy on the participation of
personnel in decisions that affect their work commitments across
the organisation
April 3, 2011 146

6 People Management - 6.3 Work Environment
• Scope
− Establish and maintain a work environment that enables
personnel to work effectively
• Activities
and tasks for establishing and maintaining a work environment
that enables personnel to work effectively
for establishing and maintaining an effective work environment
− Support the implementation of establishing and maintaining a
work environment that enables personnel to work effectively
April 3, 2011 147

6 People Management - 6.4 Assign Responsibilities
• Scope
− Assign roles and responsibilities to personnel based on
appropriate personnel competencies
• Activities
and tasks for assigning roles and responsibilities to personnel
for assigning roles and responsibilities to personnel
− Support the implementation of assigning roles and responsibilities
to personnel
April 3, 2011 148

6 People Management - 6.5 Define Roles
• Scope
− Define and communicate the roles, responsibilities and authority
of personnel in the organisation
• Activities
and tasks for defining and communicating the roles,
responsibilities and authority of personnel in the organisation
for defining and communicating the roles, responsibilities and
authority of personnel in the organisation
− Support the implementation of defining and communicating the
roles, responsibilities and authority of personnel in the
organisation
April 3, 2011 149
6 People Management - 6.6 Workforce
Competencies
• Scope
− Develop the workforce competencies needed to achieve
organisational objectives
• Activities
and tasks for developing workforce competencies
for developing workforce competencies
− Support the implementation of developing workforce
competencies
April 3, 2011 150

6 People Management - 6.7 Plan and Deliver
Training
• Scope
− Establish and implement procedures to plan and deliver training
• Activities
planning and delivering training across the organisation
− Document and implement the procedures for planning and
delivering training
− Support the implementation of the procedures for planning and
delivering training across the organisation
April 3, 2011 151

6 People Management - 6.8 Plan and Deliver
Training
• Scope
− Meet identified personnel competency needs by providing
training
• Activities
and tasks for meeting identified personnel competency needs
for meeting personnel competency needs
− Support the implementation of meeting identified personnel
competency needs
April 3, 2011 152

6 People Management - 6.9 Performance Feedback
• Scope
− Establish and implement procedures to provide feedback on
performance to personnel
• Activities
providing performance feedback to personnel across the
organisation
− Document and implement the procedures for providing
performance feedback to personnel
− Support the implementation of the procedures for providing
performance feedback to personnel across the organisation
April 3, 2011 153

6 People Management - 6.10 Performance Feedback
• Scope
− Establish and implement procedures to provide personnel with
opportunities for career development
• Activities
career development across the organisation
− Document and implement the procedures for career
development
− Support the implementation of the procedures for career
development across the organisation
April 3, 2011 154

6 People Management - 6.11 Rewards
• Scope
− Provide rewards and recognition that encourage the achievement
of organisational objectives
• Activities
and tasks for providing rewards and recognition that encourage
the achievement of organisational objectives
for establishing rewards and recognition to encourage the
achievement of organisational objectives
− Support the implementation of providing rewards and recognition
that encourage the achievement of organisational objectives
April 3, 2011 155

7 Performance Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 156
7 Performance Management - 7.1 Engagement
Objectives
• Scope
− Define, communicate and track engagement objectives
• Activities
and tasks for defining, communicating and tracking engagement
objectives
for defining, communicating and tracking engagement objectives
− Support the implementation of defining, communicating and
tracking engagement objectives
April 3, 2011 157

7 Performance Management - 7.2 Verify Processes
• Scope
− Establish and implement procedures to verify that processes are
consistently performed as defined
• Activities
verifying that processes are consistently performed as defined
− Document and implement the procedures for verifying that
processes are consistently performed as defined
− Support the implementation of the procedures for verifying that
processes are consistently performed as defined
April 3, 2011 158

7 Performance Management - 7.3 Adequate
Resources
• Scope
− Identify and provide adequate resources that personnel need to
perform their work
• Activities
and tasks for identifying and providing adequate resources to
personnel
for identifying and providing adequate resources to personnel
− Support the implementation of identifying and providing
adequate resources to personnel
April 3, 2011 159

7 Performance Management - 7.4 Organisational
Objectives
• Scope
− Define, communicate and track organisational objectives
• Activities
and tasks for defining, communicating and tracking organisational
objectives
for defining, communicating and tracking organisational
objectives
− Support the implementation of defining, communicating and
tracking organisational objectives
April 3, 2011 160

7 Performance Management - 7.5 Review
Organisational Performance
• Scope
− Establish and implement procedures to review organisational
performance
• Activities
reviewing organisational performance
− Document and implement the procedures for reviewing
organisational performance
− Support the implementation of the procedures for reviewing
organisational performance
April 3, 2011 161

7 Performance Management - 7.6 Make
Improvements
• Scope
− Make improvements based on reviews of organisational
performance
• Activities
and tasks for making improvements across the organisation
− Document and implement the work products and activities
required to make improvements
− Support the implementation of making improvements across the
organisation
April 3, 2011 162

7 Performance Management - 7.7 Achieve
Organisational Objectives
• Scope
− Establish and implement programs to achieve organisational
objectives
• Activities
and tasks for establishing and implementing programs to achieve
for establishing programs to achieve organisational objectives
− Support the implementation of programs to achieve
April 3, 2011 163

7 Performance Management - 7.8 Capability
Baselines
• Scope
− Define capability baselines for the organisation by analysing
performance data
• Activities
and tasks for defining capability baselines
for defining capability baselines
− Support the implementation of defining capability baselines
April 3, 2011 164

7 Performance Management - 7.9 Benchmark
• Scope
− Benchmark organisational performance to identify opportunities
for improvement
• Activities
and tasks for benchmarking organisational performance
for benchmarking organisational performance
− Support the implementation of benchmarking organisational
performance
April 3, 2011 165

7 Performance Management - 7.10 Prevent
Potential Problems
• Scope
− Establish and implement programs to take preventive action on
potential problems
• Activities
and tasks for establishing and implementing programs to take
preventive action on potential problems
for establishing programs to take preventive action on potential
problems
− Support the implementation of programs to take preventive
action on potential problems
April 3, 2011 166

7 Performance Management - 7.11 Deploy
Innovations
• Scope
− Establish and implement programs to deploy innovations across
the organisation
• Activities
and tasks for establishing and implementing programs to deploy
innovations across the organisation
for establishing programs to deploy innovations
− Support the implementation of programs to deploy innovations
across the organisation
April 3, 2011 167

8 Relationship Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 168
8 Relationship Management - 8.1 Client Interactions
• Scope
− Establish and implement procedures to manage interactions with
clients
• Activities
managing client interactions
− Document and implement the procedures for managing client
interactions
− Support the implementation of the procedures for managing
client interactions
April 3, 2011 169

8 Relationship Management - 8.2 Select Suppliers
and Partners
• Scope
− Establish and implement procedures to select suppliers and
partners based on their ability to meet identified requirements
• Activities
selecting suppliers and partners
− Document and implement the procedures for selecting suppliers
and partners
− Support the implementation of the procedures for selecting
suppliers and partners
April 3, 2011 170

8 Relationship Management - 8.3 Manage Suppliers
and Partners
• Scope
− Manage the performance of suppliers and partners against their
commitments
• Activities
and tasks for managing the performance of suppliers and partners
for managing the performance of suppliers and partners
− Support the implementation of managing the performance of
April 3, 2011 171

8 Relationship Management - 8.4 Cultural Fit
• Scope
− Identify cultural attributes that impact the service and implement
actions to achieve a cultural fit
• Activities
and tasks for achieving a cultural fit across the organisation
for achieving a cultural fit
− Support the implementation of achieving a cultural fit across the
organisation
April 3, 2011 172

8 Relationship Management - 8.5 Stakeholder
Information
• Scope
− Analyse and use client and other stakeholder information
• Activities
and tasks for analysing and using client and other stakeholder
information
for analysing client and other stakeholder information
− Support the implementation of analysing and using client and
other stakeholder information
April 3, 2011 173

8 Relationship Management - 8.6 Client
Relationships
• Scope
− Establish and implement procedures to manage client
relationships
• Activities
managing client relationships across the organisation
− Document and implement the procedures for managing client
relationships
client relationships across the organisation
April 3, 2011 174

8 Relationship Management - 8.7 Supplier and
Partner Relationships
• Scope
− Establish and implement procedures to manage relationships with
• Activities
managing relationships with suppliers and partners across the
organisation
− Document and implement the procedures for managing
relationships with suppliers and partners
relationships with suppliers and partners across the organisation
April 3, 2011 175

8 Relationship Management - 8.8 Value Creation
• Scope
− Proactively identify value creation opportunities and
communicate them to the client
• Activities
and tasks for proactively identifying and communicating value
creation opportunities across the organisation
− Document and implement the work products and tasks
proactively required for identifying and communicating value
creation opportunities
− Support the implementation of proactively identifying and
communicating value creation opportunities across the
organisation
April 3, 2011 176
9 Technology Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 177
9 Technology Management - 9.1 Acquire Technology
• Scope
− Establish and implement procedures to acquire and deploy
technology
• Activities
acquiring and deploying technology
− Document and implement the procedures for acquiring and
deploying technology
− Support the implementation of the procedures for acquiring and
deploying technology
April 3, 2011 178

9 Technology Management - 9.2 Technology
Licenses
• Scope
− Establish and implement procedures to manage technology
licenses
• Activities
managing technology licenses
technology licenses
technology licenses
April 3, 2011 179

9 Technology Management - 9.3 Control Technology
• Scope
− Establish and implement procedures to track and control changes
to the technology infrastructure
• Activities
tracking and controlling changes to the technology infrastructure
− Document and implement the procedures for tracking and
controlling changes to the technology infrastructure
− Support the implementation of the procedures for tracking and
controlling changes to the technology infrastructure
April 3, 2011 180

Integration
• Scope
− Establish and implement procedures to manage integration of the
organisation’s technology infrastructure
• Activities
managing integration of the technology infrastructure
integration of the technology infrastructure
integration of the technology infrastructure
April 3, 2011 181

9 Technology Management - 9.5 Optimise
Technology
• Scope
− Optimise the overall performance of the technology
infrastructure needed to deliver all services
• Activities
and tasks for optimising the technology infrastructure across the
organisation
for optimising the technology infrastructure
− Support the implementation of optimising the technology
infrastructure across the organisation
April 3, 2011 182

9 Technology Management - 9.6 Proactively
Introduce Technology
• Scope
− Establish and implement procedures to proactively identify and
introduce appropriate technology
• Activities
proactively identifying and introducing technology across the
organisation
− Document and implement the procedures for proactively
identifying and introducing technology
− Support the implementation of the procedures for proactively
identifying and introducing technology across the organisation
April 3, 2011 183

10 Threat Management - Activities
Outsourcing
Capabilities and
Skills
Initiation/
Delivery Ongoing
Completion
2 Contracting
3.1
Requirements


Conditions Partners
7.4
Objectives
7.5 Review
Performance



7.9 Benchmark
Roles Feedback
6.10 7.10 Prevent

2.10 Create
Contracts
Feedback Problems

6.11 Rewards
April 3, 2011 184
10 Threat Management - 10.1 Risk Management
• Scope
− Establish and implement a policy on risk management
• Activities
− Provide support for creating and maintaining a policy for
managing risk
− Document and implement a policy for managing risk
− Support the implementation of a policy for managing risk
April 3, 2011 185

10 Threat Management - 10.2 Engagement Risk
• Scope
− Identify, assess and manage risks specific to the client
engagement
• Activities
and tasks for identifying, assessing and managing engagement-
specific risks
− Document and implement the work products and activities
required to identify, assess and manage engagement-specific risks
− Support the implementation of identifying, assessing and
managing engagement-specific risks
April 3, 2011 186

10 Threat Management - 10.3 Risk Across
Engagements
• Scope
− Establish and implement procedures to manage risks across client
engagements
• Activities
managing risks across client engagements
− Document and implement the procedures for managing risks
across client engagements
− Support the implementation of the procedures for managing risks
across client engagements
April 3, 2011 187

10 Threat Management - 10.4 Security
• Scope
− Establish and implement procedures to meet security
requirements
• Activities
meeting security requirements
− Document and implement the procedures for meeting security
requirements
− Support the implementation of the procedures for meeting
security requirements
April 3, 2011 188

10 Threat Management - 10.5 Intellectual Property
• Scope
− Establish and implement procedures to protect the intellectual
property of stakeholders
• Activities
protecting the intellectual property of stakeholders
− Document and implement the procedures for protecting the
intellectual property of stakeholders
− Support the implementation of the procedures for protecting the
April 3, 2011 189

10 Threat Management - 10.6 Statutory and
Regulatory Compliance
• Scope
− Establish and implement procedures to comply with statutory and
regulatory requirements
• Activities
statutory and regulatory compliance
− Document and implement the procedures for statutory and
regulatory compliance
− Support the implementation of the procedures for statutory and
regulatory compliance
April 3, 2011 190

10 Threat Management - 10.7 Disaster Recovery
• Scope
− Establish and implement disaster recovery procedures
• Activities
disaster recovery
− Document and implement the procedures for disaster recovery
− Support the implementation of the procedures for disaster
recovery
April 3, 2011 191

Outsourcing for End-User Organisations
April 3, 2011 192

Outsourcing Challenges
• Establishing an appropriate outsourcing strategy

• Identifying capabilities that could be outsourced
• Developing appropriate approaches for outsourcing
activities
• Managing risks throughout their outsourcing activities
• Identifying, selecting and negotiating with service
providers
• Conducting service provider governance and performance
management
• Managing relationships with their service providers
April 3, 2011 193
Reasons for Adopting a Structured Approach to
Outsourcing
• Provides a focus on outsourcing management for IT-enabled services
• Builds confidence and trust with all stakeholders
• Enables effective communication with all stakeholders
• Provides increased agility through improved capability to effectively manage
change
• Enables risks to be managed effectively
• Provides effective business controls
• Enables continual improvement of process and performance
• Allows the organisation to focus on core competencies and strategic operations
• Builds and sustains the competence to effectively manage the outsourcing
strategy and outsourcing engagements
• Improves outsourcing governance
• Allows enhanced supplier/partner relationship management capabilities
• Provides for service measurement that supports action
April 3, 2011 194

• Same issues arise for outsourcing organisations as for

service providers
• Additional issues that arise for outsourcing organisations
− Establishing a strategy for the organisation’s outsourcing activities
− Being an informed buyer of outsourcing services
− Actively managing outsourcing risks
April 3, 2011 195

Outsourcing Organisation Issue 1 - Establishing a
Strategy For the Organisation’s Outsourcing
Activities
• May not have sufficient focus on analysis, initiation and completion
activities
• May not have a strategy for outsourcing or may have a strategy that
is not synchronised or aligned with the IT or corporate strategies
• Outsourcing strategy should
− Clearly describe outsourcing objectives
− Be aligned with with the organisation’s business, growth and continuity
strategies
− Be defined, documented and followed
− Be regularly updated as conditions change.
− Guide analysis activities to prepare for and overcome difficulties in the initial
decision making
− Ensure that the organisation understands which capabilities or processes
(strategic/non-strategic, core/non-core, or key/non-key) should be retained in
the organisation
− Consider if non-core activities are being outsourced too automatically
− Ensure that the organisation gives adequate consideration to the full economic
impact of its outsourcing activities
April 3, 2011 196
Outsourcing Organisation Issue 2 - Being an
Informed Buyer of Outsourcing Services
• Be an informed customer of outsourcing services
• Decisions often made to outsource without considering the fit with broader or
long-term business strategies, the impact on short-term organisational
performance, whether outsourcing is appropriate or if they are joining a fad, or
the risks of losing internal expertise
• Be actively involved in managing the activities in the analysis and initiation phases
• Outsourcing should be a part of the organisation’s process management approach
• Develop a competency in outsourcing and managing outsourcing relationships
• Many view their outsourcing activities as separate isolated projects
• Avoid “distress outsourcing” - outsourcing a problem area as a way to solve that
problem - often leads to more distress
− Passing a problem to a service provider does not eliminate the problem - it increases
the number of parties involved in or trying to solve it
April 3, 2011 197

Outsourcing Organisation Issue 3 - Actively
Managing Outsourcing Risks
• Outsourcing is not the transfer the governance, accountability or
risks associated with the outsourced activity
• Client organisations should actively identify, manage and mitigate all
relevant risks
− Poor strategic planning with respect to outsourcing
− Inadequate alignment of the outsourcing strategy, corporate strategy and IT
strategies
− Potential changes in client’s business practices and processes
− In-house resistance and poor communication
− Change management efforts are often neglected or ignored
− Lack of clear division of responsibilities between client organisations and their
service providers
− Communications difficulties with the service providers due to cultural
differences or poorly-defined service provider interactions
− Potential dependency on service providers
− Reputation risks, where a highly visible problem at the service provider is a
potential problem for the client due to adverse publicity
April 3, 2011 198

Phases of Outsourcing Relationship for End-User
Organisations
Ongoing
April 3, 2011 199

• Every outsourcing relationship has five phases

− Analysis – analyse operations and functions to identify those
services, processes or functions that could potentially be
outsourced and develops the approach to be taken to source the
identified opportunities
− Initiation – prepare for and transition to provision of service
− Delivery – provide service and manage and measure its provision
− Completion – close-out the service after the contract ends or the
service has been terminated
− Ongoing – management of outsourcing lifecycle
April 3, 2011 200

Analysis Phase
• Concerned with analysing operations and functions to identify those

services, processes, or functions that could potentially be
outsourced
− Understanding the current, or as-is, state of the client organisation’s structure
and processes
− Identifying the relevant criteria for selecting outsourcing opportunities
− Identifying outsourcing opportunities to meet outsourcing objectives and
criteria
− Organising options for outsourcing
− Developing and validating the Business Case for each outsourcing option
− Identifying the outsourcing approach and governance model for the proposed
outsourcing action
− Performing impact and risk analyses of the proposed outsourcing action
− Making the decision whether or not to source the proposed outsourcing action
April 3, 2011 201

Initiation Phase
• Concerned with preparation for and initiation of managing

outsourced services
− Preparing for service selection by developing the solicitation and criteria for
selection
− Soliciting and evaluating potential service providers
− Preparing for negotiation by having an organisational position on cost, quality
and other topics that need to be negotiated
− Defining the formal service level agreements and service provider performance
measures
− Understanding service provider’s capabilities by gathering information about
the service provider and confirming the assumptions that impact commitments
− Establishing a formal agreement with service providers that clearly articulates
the clients’ and service provider’s responsibilities and commitments
− Providing feedback on the service design in order to ensure that the services
are meeting the client’s requirements and the agreed-upon commitments
− Managing the effective transfer of resources needed for service delivery,
including personnel, technology infrastructure and work environment
April 3, 2011 202

Delivery Phase
• Concerned with monitoring the service provider’s service delivery

capabilities, including the ongoing monitoring of service provider
performance to verify that commitments are being met, monitoring
changes, management of the finances and agreements associated
with the service provision, fostering realistic expectations and
performing value analysis
− Planning and tracking the outsourcing management activities
− Ensuring that services are delivered according to the agreed-upon
commitments
− Managing the finances associated with the service delivery
− Identifying and controlling modifications to the services being provided or to
the associated service commitments
− Facilitating problem resolution for problems that impact the service delivery
− Reconciling performance against expectations and ensuring that the service
provision returns value to the client organisation
April 3, 2011 203

Completion Phase
• Concerned with closing down the engagement at the end

− Planning for closing down a outsourced service and managing the
agreement during the close-down period including managing the
agreement during termination proceedings, during renewal, or
during normal completion
− Managing the transfer of resources to the new service provider,
whether it is to back to the organisation or to another service
provider including the potential transfer of people, technology
infrastructure and intellectual property
− Ensuring service continuity during the transfer of responsibilities
for service provision
− Identifying and transferring the knowledge capital critical for the
delivery of service
April 3, 2011 204

Ongoing Phase
• Management functions that need to be performed during

the entire outsourcing lifecycle
− Manage and motivate personnel to effectively deliver services
− Manage relationships with clients, suppliers and business partners
− Measure and review the organisation’s performance and taking
action to improve it
− Manage information and knowledge systems so that personnel
have access to the knowledge needed to effectively perform their
work
− Identify and control threats to the organisation’s ability to meet
its objectives and client requirements
− Manage the technology, systems and applications infrastructure
used to support delivery of service
April 3, 2011 205
End-User Organisations
Outsourcing Organisational
Governance Relationship Value
Strategy Change
Management Management Management
Technology People
Ongoing
Threat Knowledge

Outsourcing
Opportunity
Analysis
Outsourcing Outsourcing Outsourcing
Planning Agreements Completion
Outsourcing
Approach Service Sourced
Service
Provider Services
Transfer
Evaluation Management
April 3, 2011 206
Key Capabilities and Constituent Practices of
Outsourcing Process - 1 Outsourcing
Capabilities and Skills
1 Outsourcing 2 Outsourcing 3 Outsourcing 4 Service Provider 5 Outsourcing 7 Sourced Services 8 Outsourcing

6 Service Transfer
Opportunity Analysis Approach Planning Evaluation Agreements Management Completion
7.1 Perform
1.1 Define Current 2.1 Outsourcing 3.1 Establish 4.1 Communicate 5.1 Negotiations 8.1 Completion
6.1 Service Transition Outsourcing
State Approach Outsourcing Project Requirements Guidelines Planning
Management
4.2 Evaluate
1.2 Outsourcing 5.2 Confirm Existing 7.2 Performance
2.2 Business Case 3.2 Service Definition Potential Service 6.2 Verify Design 8.2 Service Continuity
Criteria Conditions Monitoring
Providers
8.3 Resources
1.3 Demand 2.3 Governance 3.3 Service Provider 4.3 Select Candidate 6.3 Resources 7.3 Financial
5.3 Negotiations Transfer from Service
Identification Model Selection Procedures Service Providers Transferred Out Management
Provider
8.4 Personnel
1.4 Outsourcing 2.4 Impact and Risk 3.4 Evaluation 6.4 Personnel 7.4 Agreement
5.4 Agreement Roles Transfer from Service
Options Analysis Criteria Transferred Out Management
Provider
8.5 Knowledge
2.5 Outsourcing 3.5 Prepare Service 5.5 Define SLAs and 6.5 Knowledge 7.5 Problem and
Transfer from Service
Initiation Decision Requirements Measures Transferred Out Incident Monitoring
Provider
5.6 Create 7.6 Service Delivery

Agreements Change Management

7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 207

Key Capabilities and Constituent Practices of
Outsourcing Process - 2 Outsourcing
Capabilities and
Skills
Ongoing Phase
Governance Competency and Environment

Focused Change Focused Focused
9 Outsourcing 13 Organisational
10 Governance 11 Relationship 12 Value 14 People 15 Knowledge 16 Technology 17 Threat
Strategy Change
Management Management Management Management Management Management Management
12.1
11.1 Service 13.1 Prepare for 14.1 Assign 15.1 Provide
9.1 Outsourcing 10.1 Outsourcing Organisational 16.1 Asset 17.1 Outsourcing
Provider Organisational Outsourcing Required
Sponsorship Policy Outsourcing Management Risk Management
Interactions Change Responsibilities Information
Performance

9.2 Outsourcing 12.2 Capability 13.2 Stakeholder 14.2 Personnel 15.2 Knowledge 16.2 License
Provider Provider Organisational
Constraints Baselines Involvement Competencies System Management
Management Relationships Risk Management
14.3
10.3 Internal 12.3 Benchmark
9.3 Potential 11.3 Internal 13.3 Define Future Organisational 15.3 Market 16.3 Technology 17.3 Intellectual
Stakeholder Outsourcing
Outsourcing Areas Relationships State Outsourcing Information Integration Property
Management Processes
Competency
10.4 Defined 12.4 Improve

9.4 Outsourcing 11.4 Issue 13.4 Human 15.4 Lessons 17.4 Security and
Outsourcing Outsourcing 14.4 Define Roles
Objectives Management Resource Changes Learned Privacy
Processes Processes
9.5 Organisational 13.5 Communicate

10.5 Align Strategy 15.5 Share
Outsourcing 11.5 Cultural Fit 12.5 Innovation Organisational 17.5 Compliance
and Architectures Knowledge
Strategy Changes
10.6 Business 13.6

11.6 Collaborative 12.6 Business 17.6 Business
Process Organisational
Relationships Value and Impact Continuity
Integration Change
10.7 Adapt to 11.7 Innovative 12.7 Outsourcing

Business Change Relationships Alignment
April 3, 2011 208

• Idealised set of steps for an organisation looking to outsource to

perform when initiating the project
• Each practices contains a set of activities and tasks
• Can be modified to suit the circumstances: scope of outsourcing, size
of system/application being outsourced, duration of contract
• Can forms the basis of a project plan for elements of outsourcing
work such as initiation
• Assists with the selection of the most suitable outsourcing partner
April 3, 2011 209

Analysis Phase - Outsourcing Opportunity Analysis
• Functional analysis of the current operations of the

organisation and identification of potential functions,
processes or services that could be outsourced
• Addresses the critical issues of being an informed buyer of
outsourcing services and translating implicit and explicit
needs into defined requirements with agreed-upon levels
of quality
• Document the current state and understand the current
business processes of the organisation
• Determine the criteria for selecting outsourcing
opportunities
• Organise outsourcing opportunities
April 3, 2011 210

Analysis Phase - Outsourcing Approach
• Deciding on the type of outsourcing for a specific outsourcing

opportunity
• Determining the proposed outsourcing approach
• Deciding on the type of outsourcing arrangements desired, including
the outsourcing approach and the operational governance model of
the proposed outsourcing action
• Preparing a business case for outsourcing which includes carrying
out a cost-benefit analysis and determining stakeholder buy-in
• Organising the impact and risks of the proposed outsourcing action
• Making the decision whether or not to source the proposed
outsourcing action
April 3, 2011 211

Initiation Phase - Outsourcing Planning
• Planning for implementation of the outsourcing approach for a

planned outsourcing initiative
• Establishing a capability to plan and manage the outsourced service.
Getting all the resources, including manpower, ready to execute the
outsourcing agreement
• Developing a outsourcing plan for a planned outsourcing activity
• Developing the Service(s) Requirements Document or Service(s)
Definitions Document and having the basic structure of the
agreement in place
• Developing any documentation needed to communicate the client’s
inquiries, requests and requirements to prospective service
providers
April 3, 2011 212

Initiation Phase - Service Provider Evaluation
• Soliciting potential service providers, screening the set of

potential service providers and selecting the preferred
service providers
• Comparing and assessing alternative solutions and service
providers in their ability to create business value, benefits
and cost savings, delivery service quality and flexibility to
accommodate business changes throughout the planned
duration of the agreement
April 3, 2011 213

Initiation Phase - Outsourcing Agreements
• Carrying out service confirmation, negotiating terms and conditions

of the agreements and entering into an agreement with the selected
service providers
• Dealing with renegotiation and making changes to agreements
• Preparing for negotiation by having an organisational position on
cost and other topics that need to be negotiated
• Defining formal service level agreements and service provider
performance measures
• Understanding service provider’s capabilities by gathering
information about the service provider
• Working with service providers to confirm the assumptions that
impact commitments.
• Establishing a formal agreement with service providers that clearly
articulates the clients’ and service provider’s responsibilities and
commitments
April 3, 2011 214

Initiation Phase - Service Transfer
• Successfully transferring resources between the client organisation

and its service providers by creating and implementing a transfer
plan; creating client/service provider teams; identifying key skill
sets/personnel to retain in-house or transfer to the service
providers; ensuring service design meets the client’s needs; and
transferring resources, personnel and knowledge to service provider
• Planning and managing the service transfer
• Reviewing the service provider’s service design information
• Transferring knowledge and personnel to the service provider
• Transferring resources, including technology infrastructure and work
environment to the service provider
April 3, 2011 215

Delivery Phase - Sourced Services Management
• Having the capability to manage service providers and the issues and challenges
that arise after the agreement has been reached
• Focus on operational issues like measuring performance against the SLAs,
monitoring SLAs, managing performance and taking corrective action, if required.
• Responsibility for managing and monitoring the financial control for the
agreement
• Responsibility for the administration of the agreement and ensuring that the
service provider is executing according to the terms and conditions of the
agreement
• Focus on managing relations with the service providers of a outsourced service,
addressing fostering realistic expectations of the service provider performance
(expectation management) and managing problems
• Managing changes
• Reviewing the service provider’s performance against the agreed-upon
deliverables required business benefits, soliciting and evaluating feedback from
stakeholders and reviewing performance against the agreed upon service
commitments and deliverables
April 3, 2011 216
Completion Phase - Outsourcing Completion
• Planning and making provisions for the closure of the

relationship/project and ensuring that the hand off is smooth
• Assessing the outcome of the outsourced service as well as the
performance of the service provider and in-house teams
• Ensure continuity of service during completion
• Ensuring that the project effectiveness, lessons learned, best
practices and key project metrics are documented
• Enable evaluation of performance measures across other
outsourcing projects to serve as guides for undertaking future
outsourcing initiatives
• Following a formal process for concluding the outsourced service,
ensuring all deliverables are consolidated (code, system
documentation, etc) and are handed back to the client, along with
required knowledge transfer, as directed by the client organisation
April 3, 2011 217
Ongoing Phase - Outsourcing Strategy Management
• Determining the outsourcing strategy and setting

organisational objectives or goals for outsourcing
• Address issues such as will the organisation be
outsourcing; how to structure the outsourcing; and what
kind of outsourcing strategy to follow in terms of single
source, best source, alliance, or other forms of outsourcing
agreements
April 3, 2011 218

Ongoing Phase - Governance Management
• Establishing organisational structure for outsourcing and

organisational process management for outsourcing processes and
procedures
• Ensuring the effectiveness of interactions with stakeholders;
managing relationships between clients and service providers, as
well as supplier and partner relationships, to ensure that
commitments are met; innovating, building flexibility and increasing
responsiveness to meet
• Ensuring alignment of outsourced services with the client
organisation’s strategy and architecture
• Addressing issues related to aligning outsourcing with the
technology strategy, control of technology architecture and design
and future technology direction for the client organisation
April 3, 2011 219

Ongoing Phase - Relationship Management
• Establishing and managing long-term relations with the

service providers and developing relationships with service
providers
• Managing long term relations with the service providers
• Managing agreements, managing expectations and
managing issues and managing operations
April 3, 2011 220

Ongoing Phase - Value Management
• Fostering and managing the culture of continuous improvement so

that the client derives value from the outsourcing engagement and
ensuring ongoing alignment of the outsourcing strategy and the
organisation’s outsourcing performance with the organisation’s
objectives
• Reviewing the business requirements against market benchmarks by
benchmarking the performance of the organisation, competitive
analysis of its outsourcing performance as compared to that of other
client organisations and organizing performance of internal
outsourcing processes
• Reviewing the outsourcing strategy for business alignment and
• Institutionalising the culture of innovation, ensuring that continuous
improvement enables relationships where the client organisation
and the service provider can effectively meet or exceed stakeholder
value drivers
April 3, 2011 221
Ongoing Phase - Organisational Change
Management
• Change management process to guide the client’s adoption of new systems
(organisational and technological) and new ways of achieving business objectives
through outsourcing
• Ensuring readiness for change and involving relevant sponsors and stakeholders
• Preparing for the change management process to guide the client organisation’s
adoption of the new systems (the organisational and technological changes),
defining the proper strategy for managing change, developing a team of change
management leaders, identifying and employing long term change management
practices and engaging employees and service providers
• Re-engineering the organisation and business processes and workflows to fit the
new structure
• Developing and executing the communication strategies and plans, both internal
and external, is very critical for the entire organisational change process
• Managing the human aspects of change
• Managing ongoing change and overcoming resistance to change and
implementing methodologies to ensure effective and successful overall
management of the organisational change
April 3, 2011 222
Ongoing Phase - People Management
• Providing and managing skilled resources and the

necessary environment for the organisation’s outsourcing
activities
• Clearly defining and communicating outsourcing roles and
responsibilities to personnel
• Identifying workforce and personnel competency needs
and developing (i.e., training) or acquiring personnel with
the necessary competencies to perform the organisation’s
outsourcing activities
April 3, 2011 223

Ongoing Phase - Knowledge Management
• Managing information and knowledge systems so that

personnel have easy access to the knowledge needed to
effectively perform their work
• Ensuring that outsourcing information is appropriately
made available and providing the information needed by
personnel in a knowledge system that allows controlled,
but efficient, access
• Maintaining information and lessons learned to improve
current and future outsourcing performance
• Understanding the market and screening the potential set
of service providers and assisting them in understanding
the organisation’s needs
April 3, 2011 224

Ongoing Phase - Technology Management
• Monitoring and managing the technology infrastructure

• Managing the change of the technology base and ensuring
that technology strategy and architecture are managed
consistent with business needs.
• Managing technology assets and the licensing of
technology
April 3, 2011 225

Ongoing Phase - Threat Management
• Identifying and actively managing threats to the client

organisation’s ability to meet its business and outsourcing
objectives and requirements
• Managing outsourcing risks, consistent with the
organisation’s existing risk management policies, by
identifying, assessing and controlling risks
• Managing security, privacy, confidentiality and intellectual
property threats
• Ensuring business continuity, including concerns regarding
recovery from disasters
• Monitoring statutes and regulations to ensure compliance
April 3, 2011 226

1 Outsourcing Opportunity Analysis - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 227

1 Outsourcing Opportunity Analysis - 1.1 Define
Current State
• Scope
− Document the current organisational structure and process model
− A solid understanding of the current state of the organisation can serve as a
basis for defining the services, their performance and service levels,
requirements and business case for potential outsourcing actions
− Not establishing a baseline understanding of current processes can lead to ill-
informed outsourcing decisions and greater risk in achieving the planned
objectives for outsourcing actions
• Activities
documenting the current organisational structure and process model
− Document and implement the work products and tasks required for
documenting the current organisational structure and process model
− Support the implementation of documenting the current organisational
structure and process model
April 3, 2011 228

1 Outsourcing Opportunity Analysis - 1.2
Outsourcing Criteria
• Scope
− Define the relevant criteria for identifying outsourcing opportunities
− Criteria should align with the organisational outsourcing strategy and
objectives so that the client’s resources are focused on the opportunities most
likely to meet the organisation’s outsourcing objectives, such as to source
functions that produce the highest cost savings return at the lowest cost and
risk
• Activities
defining the relevant criteria for identifying outsourcing opportunities
the relevant criteria for identifying outsourcing opportunities
− Support the implementation of defining the relevant criteria for identifying
April 3, 2011 229

1 Outsourcing Opportunity Analysis - 1.3 Demand
Identification
• Scope
− Identify potential outsourcing opportunities
− Focus on those opportunities most likely to meet the organisation’s
outsourcing objectives, while also meeting the defined criteria, which will lead
to further analysis of whether these potential opportunities should be pursued
− Without taking a disciplined approach to this decision-making, the organisation
risks selecting less than optimum outsourcing opportunities, or more risky
• Activities
identifying potential outsourcing opportunities
− Document and implement the work products and tasks required for identifying
potential outsourcing opportunities
− Support the implementation of identifying potential outsourcing opportunities
April 3, 2011 230

1 Outsourcing Opportunity Analysis - 1.4
Outsourcing Options
• Scope
− Organise the options that the organisation has to source the services, like
assessment of the criticality of the business activity, assessment of the external
supply market (identification of potential service providers), deciding on the
relevant types of outsourcing relationship and aligning outsourcing decisions
with performance and business needs
− Necessary in order to have a firm basis for developing the business case for any
outsourcing activity
• Activities
organizing outsourcing options for potential outsourcing opportunities
− Document and implement the work products and tasks required for organizing
outsourcing options for potential outsourcing opportunities
− Support the implementation of organizing outsourcing options for potential
April 3, 2011 231

2 Outsourcing Approach - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 232

2 Outsourcing Approach - 2.1 Outsourcing Approach
• Scope
− Identify and document the outsourcing approach for the proposed outsourcing
action
− Examine possible alternatives and determine the preferable approach
− Establishing the outsourcing approach includes defining the specific objectives
and outsourcing approach (or procurement strategy) to be used in selecting
service providers
• Activities
identifying and documenting the outsourcing approach for the proposed
outsourcing action
and documenting the outsourcing approach for the proposed outsourcing
action
− Support the implementation of identifying and documenting the outsourcing
approach for the proposed outsourcing action
April 3, 2011 233

2 Outsourcing Approach - 2.2 Business Case
• Scope
− Establish and implement procedures to develop and validate the business case
for outsourcing
− Quantitative and qualitative measures help determine the full effect of the
− Business case should be based on accurate data
− Preliminary estimate of potential costs should not overlook the “extra” costs,
such as potential knowledge transfer and governance and coordination costs
for managing the service providers and their relationships
− Business case enables decision makers to assess the full costs, benefits and
risks of the potential outsourcing opportunity
• Activities
− Provide support for creating and maintaining the procedures for developing
and validating the business case for outsourcing
− Document and implement the procedures required for developing and
validating the business case for outsourcing
− Support the implementation of developing and validating the business case for
outsourcing
April 3, 2011 234

2 Outsourcing Approach - 2.3 Governance Model
• Scope
− Identify and document the governance model for the proposed outsourcing action
− Governance model helps clarify how the client will manage the proposed outsourcing
action
− Used to describe how the processes and authority for service delivery, risk, conflict
resolution and responsibility for the proposed outsourcing action will be executed
among the client’s stakeholders, outsourcing organisation and service providers
− Governance model will help ensure that
• The service provider delivers services as promises and meets service commitments smoothly
and effectively
• The client can make the right decisions at the right time
• The client can effectively manage key stakeholders’ expectations for service delivery
• Activities
identifying and documenting the governance model for the proposed outsourcing
action
− Document and implement the work products and tasks required for identifying and
documenting the governance model for the proposed outsourcing action
− Support the implementation of identifying and documenting the governance model for
the proposed outsourcing action
April 3, 2011 235

2 Outsourcing Approach - 2.4 Impact and Risk
Analysis
• Scope
− Perform impact and risk analyses of the proposed outsourcing action
− Identify, organise and prioritise risks of the proposed outsourcing action
− Provides the foundation for proactive risk management throughout the life of
the outsourcing initiative
− Risk analysis increases confidence in ability to manage risk and ability to ensure
an appropriate level of service delivery despite the occurrence of problems
• Activities
performing impact and risk analyses of the proposed outsourcing action
performing impact and risk analyses of the proposed outsourcing action
− Support the implementation of performing impact and risk analyses of the
April 3, 2011 236

2 Outsourcing Approach - 2.5 Outsourcing Initiation
Decision
• Scope
− Decide to initiate the proposed outsourcing action
− Makes a outsourcing initiation decision whether or not to source the proposed
outsourcing action, consistent with the outsourcing objectives for the client
organisation, impact/risk analyses and business case analyses
− Outsourcing decision sets the groundwork for future governance and
outsourcing management activities
− Crucial that the decision be well-informed and supported by relevant data
− Need to avoid a decision being made in the blind without adequate
consideration of its implications for the organisation as it moves forward
• Activities
deciding to initiate the proposed outsourcing action
− Document and implement the work products and tasks required for deciding to
initiate the proposed outsourcing action
− Support the implementation of deciding to initiate the proposed outsourcing
action
April 3, 2011 237
3 Outsourcing Planning - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 238

3 Outsourcing Planning - 3.1 Establish Outsourcing
Project
• Scope
− Establish and implement plans for managing the outsourcing project for each
outsourcing action
− Failure to provide appropriate and sufficient, governance of outsourcing
activities can cause innumerable difficulties by not having sufficient resources
to perform the necessary outsourcing management activities
• Activities
establishing and implementing the plans for managing outsourcing project for
each outsourcing action
establishing and implementing the plans for managing the outsourcing project
for each outsourcing action
− Support the implementation of establishing and implementing the plan for
managing the outsourcing project for each outsourcing action
April 3, 2011 239

3 Outsourcing Planning - 3.2 Service Definition
• Scope
− Define and document the services and service conditions
− Important that the client organisation set out in specific and measurable terms the
services required, how they are to be delivered and the duration that they are required
for, as well as the performance standards (service levels) that relate to each of the
services to be provided
− Clearly document the scope of the service to be performed in service specifications or
service catalogs, clearly specifying the desired results and defining the industry
standards to be followed
− Defining detailed performance measures allow the client organisation to document the
business requirements and rules, service levels and metrics to clarify customer
expectations regarding the nature of the relationship, the levels of service to be
delivered, the price and how performance will be measured, monitored and reported
• Activities
− Provide support for creating and maintaining the work products and tasks for defining
and documenting the services and service conditions
− Document and implement the work products and tasks required for defining and
documenting the services and service conditions
− Support the implementation of defining and documenting the services and service
conditions
April 3, 2011 240
3 Outsourcing Planning - 3.3 Service Provider
Selection Procedures
• Scope
− Establish and implement procedures to select service providers
− Establish detailed procedures that require service providers to answer specific
requests in a way that allows the client to compare responses and correlate
data
− The greater the importance of the potential outsourcing activity, the more
attention should be given to the service provider selection procedures
• Activities
− Provide support for creating and maintaining the procedures for selecting
potential service providers
− Document and implement the procedures required for selecting potential
service providers
− Support the implementation of selecting potential service providers
April 3, 2011 241

3 Outsourcing Planning - 3.4 Evaluation Criteria
• Scope
− Define the evaluation criteria to be used in selecting service providers
according to documented procedures
− Main principles for rating should be incorporated in the solicitation
− Evaluation criteria should provide the basis for evaluating between potential
service providers
− Documenting the evaluation criteria can minimise the possibility that decisions
will be second-guessed, or that the reason for making the outsourcing decision
will be forgotten
• Activities
defining the evaluation criteria to be used in selecting service providers
the evaluation criteria to be used in selecting service providers according to
documented procedures
− Support the implementation of defining the evaluation criteria to be used in
selecting service providers
April 3, 2011 242

3 Outsourcing Planning - 3.5 Prepare Service
Requirements
• Scope
− Prepare requirements to communicate to prospective service providers
− Requirements outline the potential agreement with the service provider
− Objective should be to attract the most responses from the most qualified
providers
− Provide as much information as possible to give service providers a good
understanding of what is expected of them
• Activities
preparing requirements to communicate to prospective service providers
− Document and implement the work products and tasks required for preparing
requirements to communicate to prospective service providers according to
− Support the implementation of preparing requirements to communicate to
prospective service providers
April 3, 2011 243
4 Service Provider Evaluation - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 244

4 Service Provider Evaluation - 4.1 Communicate
Requirements
• Scope
− Communicate requirements to prospective service providers according to
documented selection procedures
− Engaging potential service providers is critical to having a qualified pool of
service providers to select from
− Failure to follow standard procedures in soliciting prospective service providers
can lead to inconsistencies in responses and serve as a potential source of risks
or failures in future activities
− Consistency in actions with prospective service providers may also be required
for compliance with ethical and legal requirements on the selection process
• Activities
communicating requirements to prospective service providers according to the
communicating requirements to prospective service providers according to the
− Support the implementation of communicating requirements to prospective
service providers
April 3, 2011 245

4 Service Provider Evaluation - 4.2 Evaluate Potential
Service Providers
• Scope
− Evaluate potential service providers using documented criteria and selection
procedures
− Many aspects, including the strategic alignment, reputation, references,
experience, financial goals, risk, resource capabilities and information security
should be considered while choosing the service provider
• Activities
evaluating potential service providers according to the documented selection
procedures
− Document and implement the work products and tasks required for evaluating
potential service providers according to the documented selection procedures
− Support the implementation of evaluating potential service providers
April 3, 2011 246

4 Service Provider Evaluation - 4.3 Select Candidate
Service Providers
• Scope
− Select candidate service providers according to the documented selection
procedures
− By following the documented selection procedures, the client should be able to
use the appropriate evaluation criteria, gather the necessary objective data
and guarantee that its overall selection process proceeds in a structured
format
− Creates a paper trail that can be useful if there is a need to explain how they
arrived at a specific selection
• Activities
selecting candidate service providers according to the documented selection
procedures
− Document and implement the work products and tasks required for selecting
candidate service providers according to the documented selection procedures
− Support the implementation of selecting candidate service providers
April 3, 2011 247

5 Outsourcing Agreements - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 248

5 Outsourcing Agreements - 5.1 Negotiations
Guidelines
• Scope
− Establish and implement guidelines for negotiations with service providers
− Having these guidelines provides a structured approach to negotiation and can
improve the internal stakeholder’s confidence in the outsourcing organisation
− Guidelines also help protect the client organisation from legal or performance
issues by verifying that the necessary aspects of negotiations are covered
• Activities
− Provide support for creating and maintaining the guidelines for negotiations
with service providers
− Document and implement the guidelines required for negotiations with service
providers
− Support the implementation of negotiations with service providers
April 3, 2011 249

5 Outsourcing Agreements - 5.2 Confirm Existing
Conditions
• Scope
− Establish and implement guidelines to confirm existing conditions
− Helps mitigate risk by verifying that the service provider is making
its commitments based on a clear understanding of the client
organisation’s current service delivery environment
• Activities
confirming existing conditions
− Document and implement the guidelines for confirming existing
conditions
− Support the implementation of confirming existing conditions
April 3, 2011 250

5 Outsourcing Agreements - 5.3 Negotiations
• Scope
− Plan and track negotiations with service providers
− Identify and monitor the key topics that require consensus and capture in the
formal agreement between the parties
− Planning for the negotiation and clearly identifying the key topics reflects a
degree of preparation that enhances internal client trust in the capabilities of
the organisation, which aids in establishing positive relationships
− Outsourcing organisations should be particularly wary of security and
intellectual property concerns during negotiations
• Activities
planning and tracking negotiations
− Document and implement the work products and tasks required for planning
and tracking negotiations
− Support the implementation of planning and tracking negotiations
April 3, 2011 251

5 Outsourcing Agreements - 5.4 Agreement Roles
• Scope
− Define the roles and responsibilities of the client organisation and the service
provider under the proposed agreement
− Having clearly defined and understood roles and responsibilities helps to guard
against mismatched expectations that may result in service delivery issues
• Activities
defining the roles and responsibilities of the client organisation and the service
provider under the proposed agreement
the roles and responsibilities of the client organisation and the service provider
under the proposed agreement
− Support the implementation of defining the roles and responsibilities of the
client organisation and the service provider under the proposed agreement
April 3, 2011 252

5 Outsourcing Agreements - 5.5 Define SLAs and
Measures
• Scope
− Define the formal service level agreements and performance measures for the
services and service conditions
− Performance measures need to be established for each important component
of the outsourced activity
− Defining the performance measures allows the service provider to rationalise
resources to best meet the client needs and allows the client to ensure that
business requirements are being met
− Greatest cause of disputes is the gap in understanding between the results
expected by the client and the level of service the service provider intends to
provide
• Activities
defining the formal service level agreements and performance measures for
the services and service conditions
the formal service level agreements and performance measures for the
services and service conditions
− Support the implementation of defining the formal service level agreements
and performance measures for the services and service conditions
April 3, 2011 253
5 Outsourcing Agreements - 5.6 Create Agreements
• Scope
− Establish and implement procedures to create agreements
− Legal agreements enable all the parties to have a clear understanding of what
services will be delivered and at what level of quality
− Given the long-term nature of most outsourcing engagements, implementing
procedures for creating well-formed agreements and flexibility in the
relationship between the client organisation and the service provider are
critical to success
• Activities
− Provide support for creating and maintaining the procedures for creating
agreements
− Document and implement the procedures required for creating agreements
− Support the implementation of creating agreements
April 3, 2011 254

5 Outsourcing Agreements - 5.7 Amend Agreements
• Scope
− Establish and implement procedures to amend agreements
− Given the long-term nature of most outsourcing engagements,
implementing procedures for amending agreements and
flexibility in the relationship between the client and the service
provider are critical to success
• Activities
amending agreements
− Document and implement the procedures required for amending
agreements
− Support the implementation of amending agreements
April 3, 2011 255

6 Service Transfer - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 256

6 Service Transfer - 6.1 Service Transition
• Scope
− Plan and track the transition of the outsourced service
− Planning is critical for establishing expectations for both the client
and service provider
− Forms the basis for tracking transition and deployment tasks and
for reviewing and verifying the service design
• Activities
and tasks for planning and tracking the transition of the
outsourced service
for planning and tracking the transition of the outsourced service
− Support the implementation of planning and tracking the
transition of the outsourced service
April 3, 2011 257
6 Service Transfer - 6.2 Verify Design
• Scope
− Establish and implement procedures to review and verify the
outsourced service design
− Removing defects early prevents problems during service
deployment and enables the service provider to satisfy the
client’s requirements and meet the service level commitments
− Establish an in-depth and rigorous review of the service design
• Activities
reviewing and verifying the outsourced service design
− Document and implement the procedures required for reviewing
and verifying the outsourced service design
− Support the implementation of reviewing and verifying the
outsourced service design
April 3, 2011 258
6 Service Transfer - 6.3 Resources Transferred Out
• Scope
− Establish and implement procedures to verify and account for resources
transferred to service providers
− Track and manage resource transfers in order to facilitate a smooth transfer of
responsibilities prior to service delivery
− Enables the client organisation to verify the transfer of the required resources
and to facilitate handling any disputes regarding disposition of resources that
might arise at completion
• Activities
− Provide support for creating and maintaining the procedures for verifying and
accounting for resources transferred to service providers
− Document and implement the procedures required for verifying and
accounting for resources transferred to service providers
− Support the implementation of verifying and accounting for resources
transferred to service providers
April 3, 2011 259

6 Service Transfer - 6.4 Personnel Transferred Out
• Scope
personnel to service providers
• Activities
managing the transfer of personnel to service providers
− Document and implement the procedures required for managing
the transfer of personnel to service providers
− Support the implementation of managing the transfer of
personnel to service providers
April 3, 2011 260

6 Service Transfer - 6.5 Knowledge Transferred Out
• Scope
− Ensure that transfer of knowledge to service providers is planned, supported
and verified
− Verification that knowledge transfer has successfully occurred can eliminate
sources of doubt or confusion as the service moves into delivery
− Comprehensive and detailed documentation of transferred knowledge also
makes it easier for a client to bring the service delivery back in-house or
transition to another service provider
• Activities
ensuring that transfer of knowledge to service providers is planned, supported
and verified
− Document and implement the work products and tasks required for ensuring
that transfer of knowledge to service providers is planned, supported and
verified
− Support the implementation of ensuring that transfer of knowledge to service
providers is planned, supported and verified
April 3, 2011 261

7 Sourced Services Management - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 262

7 Sourced Services Management - 7.1 Perform
Outsourcing Management
• Scope
− Plan and track outsourcing management for the outsourced services
− Well-defined plan for governance and service management is necessary to
ensure the client organisation’s success in managing and monitoring service
providers
− Planning and tracking are key aspects of service management for the
outsourced services that occur throughout delivery
• Activities
planning and tracking outsourcing management for the outsourced services
and tracking outsourcing management for the outsourced services
− Support the implementation of planning and tracking outsourcing
management plans for the outsourced services
April 3, 2011 263

7 Sourced Services Management - 7.2 Performance
Monitoring
• Scope
− Establish and implement procedures to monitor and verify that service
commitments are being met
− Verify that the agreed upon service commitments are being met and take
appropriate action which may include exercising remedies in the agreement
when commitments are not met or are in jeopardy of being missed
− Goal of the procedures is to optimise the cost of monitoring and conformance
by generating maximum compliance with minimum cost
• Activities
− Provide support for creating and maintaining the procedures for monitoring
and verifying service commitments
− Document and implement the procedures required for monitoring and
verifying service commitments
− Support the implementation of monitoring and verification of service
commitments
April 3, 2011 264

7 Sourced Services Management - 7.3 Financial
Management
• Scope
− Establish and implement procedures for financial management of the
outsourced services
− Procedures allow the client organisation to develop and maintain cost controls,
manage the costs of performing outsourcing management, evaluate financial
impact of changes to agreements, clearly understand costs, develop and
distribute financial reports and resolve financial issues
• Activities
− Provide support for creating and maintaining the procedures for financial
management of the outsourced services
− Document and implement the procedures required for the financial
management of the outsourced services
− Support the implementation of financial management of the outsourced
service
April 3, 2011 265

7 Sourced Services Management - 7.4 Agreement
Management
• Scope
− Establish and implement procedures for management of
agreements governing the outsourced services
− Manage organisational understanding of key elements of
agreements, as appropriate, such as definitions, service activity
and task descriptions, service performance levels, problem
escalation definitions and service conditions
• Activities
management of agreements governing the outsourced services
− Document and implement the procedures required for
management of agreements governing the outsourced services
− Support the implementation of management of agreements
governing the outsourced services
April 3, 2011 266

7 Sourced Services Management - 7.5 Problem and
Incident Monitoring
• Scope
− Participate in problem and incident monitoring and resolution
− Monitor the service provider’s adherence to problem severity management as
well as participating with the service provider in understanding and resolving
problems
− Establish the need for and implement a reporting process for issues raised by
internal stakeholders, such as end users
• Activities
participating in problem and incident monitoring and resolution
participating in problem and incident monitoring and resolution
− Support the implementation of participation in problem and incident
monitoring and resolution
April 3, 2011 267

7 Sourced Services Management - 7.6 Service
Delivery Change Management
• Scope
− Participate in change management activities
− Manage modifications of the services in a controlled manner in order to
minimise the impact on their delivery, including ensuring that retained services
remain synchronised with outsourced services as service changes are
implemented
− Change management is focused on ensuring that all changes are assessed,
approved, implemented and reviewed in a controlled manner
• Activities
participating in change management activities
participating in change management activities
− Support the implementation of participation in change management activities
April 3, 2011 268

7 Sourced Services Management - 7.7 Service
Change Management
• Scope
− Establish and implement procedures to manage modifications to services
− Major business changes, due to growth, business mergers, acquisitions and
reorganisations and changing customer requirements, can require service
levels to be adjusted, redefined, or even temporarily suspended
− Effective service management disciplines help ensure that the effect of
changes to one area of the infrastructure or business process are identified
prior to the change, that changes are planned and that back out plans are in
place
• Activities
− Provide support for creating and maintaining the procedures for managing
modifications to services
− Document and implement the procedures required for managing modifications
to services
− Support the implementation of managing modifications to services
April 3, 2011 269

7 Sourced Services Management - 7.8 Review
Service Performance
• Scope
− Establish and implement procedures for reconciling service performance
against expectations
− Manage the performance of service providers in order to help ensure that the
client organisation receives the agreed-to service
− Effective management includes identifying deviations in the performance of
service providers and taking the appropriate corrective action to assure
expected service delivery
• Activities
− Provide support for creating and maintaining the procedures for reconciling
service performance against expectations
− Document and implement the procedures required for reconciling service
performance against expectations
− Support the implementation of reconciling service performance against
expectations
April 3, 2011 270

7 Sourced Services Management - 7.9 Stakeholder
Feedback
• Scope
− Establish and implement guidelines to collect and organise
stakeholder inputs and feedback
− Collect, organise and use stakeholder information in order to
improve service delivery, outsourcing management and
relationships with stakeholders
• Activities
collecting and organizing stakeholder inputs and feedback
− Document and implement the guidelines required for collecting
and organizing stakeholder inputs and feedback
− Support the implementation of collecting and organizing
stakeholder inputs and feedback
April 3, 2011 271
7 Sourced Services Management - 7.10 Service Value
Analysis
• Scope
− Establish and implement procedures for performing value analysis
of the outsourced service
− Expected value propositions for the outsourcing action and their
expected outcomes must be well defined and documented
− State value propositions as outcomes or goals that are
quantifiable and measurable
• Activities
performing value analysis of the outsourced service
− Document and implement the procedures required for
performing value analysis of the outsourced service
− Support the implementation of performing value analysis of the
outsourced service
April 3, 2011 272
7 Sourced Services Management - 7.11 Continuation
Decision
• Scope
− Establish and implement procedures for making decisions about continuing the
outsourced service
− A procedure to reconcile provider performance against expectations as a trend
over time will lead to fact-based decisions for fine tuning the services delivered
and eventually for future outsourcing decisions between outsourcing options
− Outsourcing decision may include continued delivery of the outsourced service
with no changes, identifying necessary amendments to agreements, renewing
agreements for an extended duration, or terminating the agreements that are
currently in place
• Activities
− Provide support for creating and maintaining the procedures for making
decisions about continuing the outsourced service
− Document and implement the procedures required for making decisions about
continuing the outsourced service
− Support the implementation of making decisions about continuing the
outsourced service
April 3, 2011 273

8 Outsourcing Completion - Activities Outsourcing

6 Service Transfer
7.1 Perform
Management
4.2 Evaluate
Providers
8.3 Resources
Provider
8.4 Personnel
Provider
8.5 Knowledge
Provider


7.8 Review Service

Performance
7.9 Stakeholder
Feedback
7.10 Service Value

Analysis
7.11 Continuation
Decision
April 3, 2011 274

8 Outsourcing Completion - 8.1 Completion Planning
• Scope
− Plan and track completion of the outsourced service
− In addition to making sure that financial and other substantive commitments
are identified and met, client organisations should pay attention to the health
of the relationship so as to make it possible for both parties to separate
amicably
− For services transitioning to another service provider, the completion plans
may need to be closely aligned with the transition plans developed by the
client and the incumbent service provider
• Activities
planning and tracking completion of the outsourced service
and tracking completion of the outsourced service
− Support the implementation of planning and tracking the completion of the
outsourced service
April 3, 2011 275

8 Outsourcing Completion - 8.2 Service Continuity
• Scope
− Establish and implement procedures to ensure the continuity of
service during completion
− Facilitating and monitoring the transfer of service helps ensure
that the client’s business is not disrupted
• Activities
ensuring the continuity of service during completion
− Document and implement the procedures required for ensuring
the continuity of service during completion
− Support the implementation of ensuring the continuity of service
during completion
April 3, 2011 276

8 Outsourcing Completion - 8.3 Resources Transfer
from Service Provider
• Scope
− Ensure that resource transfer during completion is managed according to
− Resources to be transferred can include service-related documents, software,
hardware, licenses, facilities, personnel and other assets
• Activities
ensuring that resource transfer during completion is managed according to
that resource transfer during completion is managed according to documented
procedures
− Support the implementation of resource transfer during completion
April 3, 2011 277

8 Outsourcing Completion - 8.4 Personnel Transfer
• Scope
− Ensure that the transfer of personnel during completion is
managed according to documented procedures
• Activities
and tasks ensuring that the transfer of personnel during
completion is managed according to documented procedures
for ensuring that the transfer of personnel during completion is
− Support the implementation of transfer of personnel during
completion
April 3, 2011 278

8 Outsourcing Completion - 8.5 Knowledge Transfer
• Scope
− Ensure that knowledge transfer during completion is managed
− Knowledge the service provider gained during the engagement
may represent the client organisation’s intellectual property
• Activities
and tasks for ensuring that knowledge transfer during completion
is managed according to documented procedures
for ensuring that knowledge transfer during completion is
− Support the implementation of knowledge transfer during
completion
April 3, 2011 279
9 Outsourcing Strategy Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 280

9 Outsourcing Strategy Management - 9.1
Outsourcing Sponsorship
• Scope
− Establish management sponsorship for outsourcing
− Ensuring that the correct level of senior management supports and is
committed to the outsourcing initiatives is critical for client organisations, as
outsourcing is often en a strategic initiative that crosses functional groups
within the client organisation
− Sponsorship should be established at the appropriate level to have the
necessary scope and strategic perspective for the outsourcing activities
• Activities
establishing management sponsorship for outsourcing
establishing management sponsorship for outsourcing
− Support the implementation of establishing management sponsorship for
outsourcing
April 3, 2011 281

Outsourcing Constraints
• Scope
− Identify the constraints that impact the client organisation’s
potential uses of outsourcing
− Understand the strategic, political and managerial implications of
outsourcing
• Activities
and tasks for determining the constraints that impact the client
organisation’s potential uses of outsourcing
for determining the constraints that impact the client
organisation’s potential uses of outsourcing
− Support the implementation of determining the constraints that
impact the client organisation’s potential uses of outsourcing
April 3, 2011 282

9 Outsourcing Strategy Management - 9.3 Potential
Outsourcing Areas
• Scope
− Decide to what extent outsourcing may be relevant to the client organisation
− Examine the organisation’s business strategies and plans and determine which
business processes, skills or competencies are better handled by others,
leaving the client to concentrate on its own core competencies
• Activities
determining to what extent outsourcing may be relevant to the client
organisation
determining to what extent outsourcing may be relevant to the client
organisation
− Support the implementation of determining to what extent outsourcing may
be relevant to the client organisation
April 3, 2011 283

Outsourcing Objectives
• Scope
− Define, align and document outsourcing objectives
− Outsourcing objectives set will reflect the underlying motives for the
organisation considering outsourcing as an appropriate business strategy
− Clearly defined and measurable outsourcing objectives establish the
outsourcing principles and enable management to set and attain performance
expectations
− Outsourcing objectives should be clearly established and supported, aligned
with IT and business objectives and support achieving these business
objectives
• Activities
developing, aligning and documenting outsourcing objectives
developing, aligning and documenting outsourcing objectives
− Support the implementation of developing, aligning and documenting
outsourcing objectives
April 3, 2011 284
Organisational Outsourcing Strategy
• Scope
− Define, communicate and maintain the outsourcing strategy of the client
organisation
− Outsourcing strategy should clearly address the client organisation’s
outsourcing objectives and be in alignment with the organisation’s business,
growth and continuity strategies
− Outsourcing objectives set will reflect the underlying motives for the
organisation considering outsourcing as an appropriate business strategy
• Activities
− provide support for creating and maintaining the work products and tasks for
developing and managing the outsourcing strategy of the client organisation
− Document and implement the work products and tasks required for developing
and managing the outsourcing strategy of the client organisation
− Support the implementation of developing and managing the outsourcing
strategy of the client organisation
April 3, 2011 285

10 Governance Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 286

10 Governance Management - 10.1 Outsourcing
Policy
• Scope
− Establish and implement the organisational outsourcing policy
− Provides the organisational structures, processes and mechanisms needed to
manage, assess and improve the client organisation’s outsourcing initiatives
and support the outsourcing strategy
− Governance policy should enable effective execution of the key client
− Demonstrates leadership and organisational commitment and is a key factor
for outsourcing success
• Activities
− Provide support for creating and maintaining the organisational outsourcing
policy
− Document and implement the organisational outsourcing policy
− Support the implementation of the organisation’s outsourcing policy
April 3, 2011 287

10 Governance Management - 10.2 Service Provider
Management
• Scope
− Establish and implement procedures to manage service providers
− Having effective relationships with service providers helps the
outsourcing organisation expand its capabilities and respond to
internal clients’ changing requirements and demands
− Includes tracking the performance of service provider
− Should be proactive and collaborative, with customers and their
service providers working together to resolve issues
• Activities
managing service providers
service providers
− Support the implementation of managing service providers
April 3, 2011 288
10 Governance Management - 10.3 Internal
Stakeholder Management
• Scope
− Establish and implement procedures to manage internal
stakeholders
− Having procedures to manage the relationships with internal
stakeholders helps the outsourcing organisation ensure that
outsourced services meet internal needs and respond to internal
clients’ changing demands
• Activities
managing internal stakeholders
internal stakeholders
− Support the implementation of managing internal stakeholders
April 3, 2011 289
10 Governance Management - 10.4 Defined
Outsourcing Processes
• Scope
− Establish and maintain documented outsourcing processes for use across the
organisation
− Processes help to ensure mechanisms are in place to manage relationships with service
providers while meeting the client’s organisational outsourcing objectives
− Without appropriate outsourcing processes in place, the problems may fail to be
identified or managed adequately
− Well-developed and implemented outsourcing processes enables the client
organisation to integrate and institutionalise best practices of planning, organizing,
acquiring, implementing, delivering, supporting and monitoring outsourcing
performance, to ensure that the client’s outsourcing activities support its business
objectives
• Activities
establishing and maintaining documented outsourcing processes for use across the
organisation
− Document and implement the work products and tasks required for establishing and
maintaining documented outsourcing processes for use across the organisation
− Support the implementation of establishing and maintaining documented outsourcing
processes for use across the organisation
April 3, 2011 290
10 Governance Management - 10.5 Align Strategy
and Architectures
• Scope
− Align strategies and architectures to support outsourcing across the
organisation
− Engaging in outsourcing activities without ensuring that they are consistent
with the client organisation’s strategy and architectures can lead to significant
risk, potential impacts on service delivery and performance and introduce
unnecessary issues in service transfer
− Continual monitoring of technological advances and regulatory trends will
ensure that the organisation’s technology architecture remains capable of
supporting business process and outsourcing needs
• Activities
aligning strategies and architectures to support outsourcing across the
organisation
− Document and implement the work products and tasks required for aligning
strategies and architectures to support outsourcing across the organisation
− Support the implementation of aligning strategies and architectures to support
outsourcing across the organisation
April 3, 2011 291

10 Governance Management - 10.6 Business Process
Integration
• Scope
− Establish and implement procedures to manage the integration of business
processes with those performed by service providers
− IT-enabled outsourcing requires that the client organisation’s business
processes be integrated with those of the service provider
− Processes must be coordinated between all the involved parties to achieve the
agreed-to performance and service levels
• Activities
− Provide support for creating and maintaining the procedures for managing the
integration of business processes with those performed by service providers
− Document and implement the procedures required for managing the
integration of business processes with those performed by service providers
− Support the implementation of managing the integration of business processes
with those performed by service providers
April 3, 2011 292

10 Governance Management - 10.7 Adapt to
Business Change
• Scope
− Establish and implement guidelines for reviewing and adapting to changes
− Processes should be constantly reviewed and refined to ensure that all
activities add value appropriately
− In order to achieve the maximum benefits of outsourcing, organisations should
review their agreements and rectify any issues that have emerged due to
change in business needs or constraints
• Activities
− Provide support for creating and maintaining the guidelines for reviewing and
adapting to changes
− Document and implement the guidelines required for reviewing and adapting
to changes
− Support the implementation of reviewing and adapting to changes
April 3, 2011 293

11 Relationship Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 294

11 Relationship Management - 11.1 Service Provider
Interactions
• Scope
− Establish and implement procedures to manage interactions with
service providers
− Providing a common point of contact such as a service provider
relationship team helps ensure the continuity of communication
− Team should be maintained throughout the outsourcing life-cycle
• Activities
managing interactions with service providers
interactions with service providers
− Support the implementation of managing interactions with
service providers
April 3, 2011 295

11 Relationship Management - 11.2 Service Provider
Relationships
• Scope
− Establish and implement procedures to manage service provider relationships
− Having effective procedures to manage service provider relationships with
existing service providers helps the client organisation to communicate their
changing needs and to proactively determine how to address them while also
addressing the organisation’s objectives
− Interface between the client organisation and its service providers is crucial to
successful outcomes
• Activities
service provider relationships
− Document and implement the procedures required for managing service
provider relationships
− Support the implementation of managing service provider relationships
April 3, 2011 296

11 Relationship Management - 11.3 Internal
Relationships
• Scope
− Establish and implement procedures to manage internal client relationships
− Effective collection, analysis and tracking of internal client interactions enables
the creation of an extensive record that can provide insight into internal client
requirements and needs
− Having effective relationships with internal clients helps the outsourcing
organisation to understand the internal clients’ changing needs
• Activities
internal client relationships
− Document and implement the procedures required for managing internal
client relationships
− Support the implementation of managing internal client relationships
April 3, 2011 297

11 Relationship Management - 11.4 Issue
Management
• Scope
− Establish and implement procedures to manage issues and their resolution
− Issue management covers identification, documentation, escalation,
negotiation and dispute and conflict resolution of issues amongst the client
organisation, internal stakeholders and the service provider
− Effective issue management requires that negotiation and resolution
techniques between the client and service provider organisations be
standardised as a common repeatable issue management process
• Activities
issues and their resolution
− Document and implement the procedures required for managing issues and
their resolution
− Support the implementation of managing issues and their resolution
April 3, 2011 298

11 Relationship Management - 11.5 Cultural Fit
• Scope
− Identify cultural attributes that impact the outsourcing relationship and the
outsourced services and implement actions to achieve cultural fit
− Addressing cultural differences also improves stakeholder satisfaction and
enables all involved personnel to work together effectively
• Activities
identifying cultural attributes that impact the outsourcing relationship and the
outsourced services and implementing actions to achieve cultural fit
cultural attributes that impact the outsourcing relationship and the outsourced
services and implementing actions to achieve cultural fit
− Support the implementation of identifying cultural attributes that impact the
outsourcing relationship and the outsourced services and implementing
actions to achieve cultural fit
April 3, 2011 299

11 Relationship Management - 11.6 Collaborative
Relationships
• Scope
− Establish and implement guidelines for developing collaborative
relationships with service providers
− A key to successfully managing outsourcing during long-term
relationships is building trust and collaboration, which goes
beyond an agreement’s legal requirements to explore new ways
that clients and service providers can engage in win-win activities
• Activities
developing collaborative relationships with service providers
− Document and implement the guidelines required for developing
collaborative relationships with service providers
− Support the implementation of developing collaborative
relationships with service providers
April 3, 2011 300

11 Relationship Management - 11.7 Innovative
Relationships
• Scope
− Develop relationships that focus on value creation through innovation
− Value creation includes identifying opportunities of greater business value for
the client, including innovations such as new business arrangements or
enhanced technologies and other opportunities for creating value or making
improvements
• Activities
developing relationships that focus on value creation through innovation
relationships that focus on value creation through innovation
− Support the implementation of developing relationships that focus on value
creation through innovation
April 3, 2011 301

12 Value Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 302

12 Value Management - 12.1 Organisational
Outsourcing Performance
• Scope
− Establish and implement procedures to review organisational outsourcing
performance
− Organise key performance measurements across the client organisation in
order to manage and improve organisational outsourcing performance
− Client organisations need to manage their outsourcing activities by identifying
and utilising measures or indicators that best represent the factors that lead to
improved customer, operational and financial performance
• Activities
− Provide support for creating and maintaining the procedures for reviewing
organisational outsourcing performance across the organisation
− Document and implement the procedures required for reviewing
organisational outsourcing performance across the organisation
− Support the implementation of reviewing organisational outsourcing
performance across the organisation
April 3, 2011 303

12 Value Management - 12.2 Capability Baselines
• Scope
− Define capability baselines for the client organisation by organizing outsourcing
performance data
− Provides a basis for the outsourcing organisation to organise whether
performance deviations are within expected ranges or if they represent
exceptions that need to be investigated and addressed
• Activities
defining capability baselines for the client organisation
capability baselines for the client organisation
− Support the implementation of defining capability baselines for the client
organisation
April 3, 2011 304

12 Value Management - 12.3 Benchmark
Outsourcing Processes
• Scope
− Benchmark the client organisation’s outsourcing-related processes by
comparing performance with other client organisations involved in similar
relationships
− Benchmarking allows the client organisation to objectively organise its
outsourcing processes
− Measure the performance of the organisation’s processes and compares them
to the measured performance of industry best practices
− Compare the organisation’s processes to industry best practices in order to
identify the practices that lead to superior performance
− Compare the organisation’s processes against standards or models
• Activities
benchmarking the client organisation’s outsourcing-related processes
benchmarking the client organisation’s outsourcing-related processes
− Support the implementation of benchmarking the client organisation’s
outsourcing-related processes
April 3, 2011 305

12 Value Management - 12.4 Improve Outsourcing
Processes
• Scope
− Improve outsourcing-related processes based on reviews of organisational
outsourcing performance
− Use the knowledge gained from performance reviews in order to improve the
organisation’s outsourcing performance and increase the stakeholders’ value
• Activities
making improvements based on reviews of organisational outsourcing
performance
− Document and implement the work products and tasks required for making
improvements based on reviews of organisational outsourcing performance
− Support the implementation of making improvements based on reviews of
organisational outsourcing performance
April 3, 2011 306

12 Value Management - 12.5 Innovation
• Scope
− Establish and implement programs to encourage and deploy innovations
through outsourcing relationships and outsourced services across the
organisation
− Innovations may spring from many sources: people, markets and service
providers, as well as reviews of ongoing outsourcing performance
− Major changes that affect the organisation need to be actively managed
because of the learning curve and potential impacts associated with the
change
• Activities
establishing and implementing programs to encourage and deploy innovations
through outsourcing relationships and outsourced services across the
organisation
establishing programs to encourage and deploy innovations through
outsourcing relationships and outsourced services across the organisation
April 3, 2011 307

12 Value Management - 12.6 Business Value and
Impact
• Scope
− Organise the business value and impact of organisational
− Evaluate the client organisation’s outsourcing capability and its
contribution to business value and impacts
• Activities
and tasks for organizing the business value and impact of
organisational outsourcing performance
for organizing the business value and impact of organisational
− Support the implementation of organizing the business value and
impact of organisational outsourcing performance
April 3, 2011 308

12 Value Management - 12.7 Outsourcing Alignment
• Scope
− Align the client organisation’s outsourcing activities and results with its
business objectives and strategy
− Enhance the alignment of outsourcing results across the organisation and with
organisational performance and business objectives
− Analyses allow management to align outsourcing performance across the
entire organisation and to use their outsourcing activities strategically to
achieve organisational business objectives
• Activities
ensuring alignment of outsourcing activities and results with business
objectives and strategy
alignment of outsourcing activities and results with business objectives and
strategy
− Support the implementation of ensuring alignment of outsourcing activities
and results with business objectives and strategy
April 3, 2011 309

13 Organisational Change Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 310

13 Organisational Change Management - 13.1
Prepare for Organisational Change
• Scope
− Prepare for changes across the organisation needed to support the client
organisation’s outsourcing actions
− Assess the client organisation’s readiness for change and determine the gaps
that need to be closed to ensure a successful transition to a new service
delivery model
− Outsourcing can have significant change implications for an organisation
• Activities
preparing for organisational change needed to support the client
organisation’s outsourcing actions
− Document and implement the work products and tasks required for preparing
for organisational change needed to support the client organisation’s
outsourcing actions
− Support the implementation of preparing for organisational change needed to
support the client organisation’s outsourcing activities
April 3, 2011 311

Stakeholder Involvement
• Scope
− Identify and involve relevant stakeholders in outsourcing activities
• Activities
and tasks for identifying and involving relevant stakeholders in
for identifying and involving relevant stakeholders in outsourcing
activities
April 3, 2011 312

Define Future State
• Scope
− Define the future organisational structure and process model
− Organisational structure and its process architecture must be
defined in order to establish the business model that will be
implemented
• Activities
and tasks for defining the future organisational structure and
process model
for defining the future organisational structure and process model
− Support the implementation of defining the future organisational
structure and process model
April 3, 2011 313
Human Resource Changes
• Scope
− Establish and implement human resource strategies and plans to support the
client organisation’s outsourcing actions
− Address the workforce transformations that may occur as a result of
− Management should develop effective action plans to deal with personnel
issues during its outsourcing activities
• Activities
establishing and implementing human resource strategies and plans to support
the client organisation’s outsourcing actions
establishing and implementing human resource strategies and plans to support
the client organisation’s outsourcing actions
− Support the implementation of establishing and implementing human resource
strategies and plans to support the client organisation’s outsourcing actions
April 3, 2011 314

Communicate Organisational Changes
• Scope
− Establish and implement communications strategies and plans to support the
client organisation’s outsourcing actions
− Define and explain the compelling need for a potential outsourcing action
− Business justification of a potential outsourcing action should be
communicated clearly and early in the effort
• Activities
establishing and implementing communications strategies and plans to
support the client organisation’s outsourcing actions
establishing and implementing communications strategies and plans to
support the client organisation’s outsourcing actions
− Support the implementation of establishing and implementing
communications strategies and plans to support the client organisation’s
outsourcing actions
April 3, 2011 315

Organisational Change
• Scope
− Manage organisational change to support outsourcing actions
− New service delivery model that outsourcing brings to an organisation impacts
all stakeholders - employees, users and support groups
− Change management captures the impact of outsourcing on various human or
“soft” dimensions of the organisation throughout a outsourcing engagement
and then enables addressing these issues
• Activities
managing organisational change to support outsourcing actions
− Document and implement the work products and tasks required for managing
organisational change to support outsourcing actions
− Support the implementation of managing organisational change to support
outsourcing actions
April 3, 2011 316

14 People Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 317

14 People Management - 14.1 Assign Outsourcing
Responsibilities
• Scope
− Assign roles and responsibilities to outsourcing personnel based on
− Having qualified personnel helps to ensure that work can be performed
− Personnel competency is the combination of knowledge, skills and process
abilities that specific personnel in the client organisation possess
• Activities
assigning roles and responsibilities to outsourcing personnel based on
− Document and implement the work products and tasks required for assigning
roles and responsibilities to outsourcing personnel based on appropriate
personnel competencies
− Support the implementation of assigning roles and responsibilities to
outsourcing personnel based on appropriate personnel competencies
April 3, 2011 318

14 People Management - 14.2 Personnel
Competencies
• Scope
− Develop personnel competencies needed by individuals with outsourcing
responsibilities to perform their assignments
− Address personnel competency gaps in order to enable personnel to effectively
perform their roles and responsibilities
− Effective training helps to ensure that personnel can perform their assigned
roles and responsibilities
− Training requirements must be identified to satisfy the needs of both the
outsourcing engagement and the client’s outsourcing objectives
• Activities
developing personnel competencies needed by individuals with outsourcing
personnel competencies needed by individuals with outsourcing
− Support the implementation of developing personnel competencies needed by
individuals with outsourcing responsibilities to perform their assignments
April 3, 2011 319

14 People Management - 14.3 Organisational
Outsourcing Competency
• Scope
− Define and manage a workforce competency focused on outsourcing across
the organisation
− Organization must develop a workforce competency in organizing, planning,
managing and evaluating outsourcing activities
− Failure to address the knowledge, skill and competency needs of those
involved in outsourcing and governance activities exposes the organisation to
risks that could be prevented by having a knowledgeable and competent
outsourcing workforce
• Activities
defining and managing a workforce competency focused on outsourcing across
the organisation
and managing a workforce competency focused on outsourcing across the
organisation
− Support the implementation of defining and managing a workforce
competency focused on outsourcing across the organisation
April 3, 2011 320

14 People Management - 14.4 Define Roles
• Scope
− Define and communicate the roles and responsibilities of outsourcing
personnel across the organisation
− Clearly define the roles, responsibilities and authority of outsourcing
personnel, as part of the overall outsourcing process, in order to enable them
to effectively perform their assigned work
− Aligning outsourcing personnel’s roles, responsibilities and authority with
client organisational objectives should result in improved performance
• Activities
defining and communicating the roles and responsibilities of outsourcing
personnel across the organisation
and communicating the roles and responsibilities of outsourcing personnel
across the organisation
− Support the implementation of defining and communicating the roles and
responsibilities of outsourcing personnel across the organisation
April 3, 2011 321

15 Knowledge Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 322

15 Knowledge Management - 15.1 Provide Required
Information
• Scope
− Identify, control and provide the information that personnel need to perform
their outsourcing responsibilities
− Provide access to the information that is essential for personnel to do their
work in order to enable personnel to work efficiently
− Easy access to required information enables personnel to be more efficient and
effective in the performance of their work
• Activities
identifying, controlling and providing the information that personnel need to
perform their outsourcing responsibilities
identifying, controlling and providing the information that personnel need to
perform their outsourcing responsibilities
− Support the implementation of identifying, controlling and providing the
information that personnel need to perform their outsourcing responsibilities
April 3, 2011 323

15 Knowledge Management - 15.2 Knowledge
System
• Scope
− Utilise a knowledge system to identify, control and disseminate outsourcing
information
− A knowledge system is not necessarily a central electronic repository of
information, but is rather a coordinated method for managing and
communicating needed information
• Activities
utilising a knowledge system to identify, control and disseminate outsourcing
information
− Document and implement the work products and tasks required for utilising a
knowledge system to identify, control and disseminate outsourcing
information
− Support the implementation of utilising a knowledge system to identify,
control and disseminate outsourcing information
April 3, 2011 324

15 Knowledge Management - 15.3 Market
Information
• Scope
− Organise and use information about the service provider market
− Information includes the service provider’s industry market share,
external delivery partners and their existing clients
• Activities
and tasks for organizing and using information about the service
provider market
for organizing and using information about the service provider
market
− Support the implementation of organizing and using information
about the service provider market
April 3, 2011 325
15 Knowledge Management - 15.4 Lessons Learned
• Scope
− Organise and use knowledge gained from outsourcing activities
− Effectively organizing and using the knowledge gained from prior and current
initiatives enables clients to reuse its best practices, to address problems that
have occurred and to improve overall value obtained through current and
future initiatives
• Activities
organizing and using knowledge gained from outsourcing activities
− Document and implement the work products and tasks required for organizing
and using knowledge gained from outsourcing activities
− Support the implementation of organizing and using knowledge gained from
April 3, 2011 326

15 Knowledge Management - 15.5 Share Knowledge
• Scope
− Establish and implement procedures to share knowledge among
stakeholders
− Knowledge sharing procedures also clarify the rules by which
knowledge can be shared between internal stakeholders, client
outsourcing personnel, service providers and their suppliers and
partners
• Activities
sharing knowledge among stakeholders
− Document and implement the procedures required for sharing
knowledge among stakeholders
− Support the implementation of sharing knowledge among
stakeholders
April 3, 2011 327

16 Technology Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 328

16 Technology Management - 16.1 Asset
Management
• Scope
− Ensure that technology assets are managed according to
• Activities
and tasks for ensuring that technology assets are managed
for ensuring that technology assets are managed according to
− Support the implementation of ensuring that technology assets
are managed according to documented procedures
April 3, 2011 329

16 Technology Management - 16.2 License
Management
• Scope
− Ensure that technology licenses are managed according to
• Activities
and tasks for ensuring that technology licenses are managed
for ensuring that technology licenses are managed according to
− Support the implementation of ensuring that technology licenses
are managed according to documented procedures
April 3, 2011 330

Integration
• Scope
− Establish and implement procedures to manage the client organisation’s
integration of its technology infrastructure with service providers
− Integration can range in scope from integrating with a single outsourcing
initiative and one service provider to more complex cases of integrating with
several initiatives and multiple service providers and their appropriate partners
− For the integration of technology infrastructure may be identified during the
process of gathering requirements of a outsourcing opportunity
• Activities
− Provide support for creating and maintaining the procedures for managing the
client organisation’s integration of its technology infrastructure with the
service providers
− Document and implement the procedures required for managing the client
organisation’s integration of its technology infrastructure with the service
providers
− Support the implementation of managing the client organisation’s integration
of its technology infrastructure with the service providers
April 3, 2011 331

17 Threat Management - Activities
Outsourcing
Capabilities and
Skills
Ongoing Phase

Strategy Change
12.1
Performance

14.3
Competency

Processes Processes

Strategy Changes
10.6 Business 13.6

Integration Change

April 3, 2011 332

17 Threat Management - 17.1 Outsourcing Risk
Management
• Scope
− Establish and implement procedures to identify, assess and manage
outsourcing risks
− Effective risk management is particularly critical in the early stages of a
outsourcing initiative, where requirements are being organised and service is
being designed to meet those requirements
− Problems encountered here can impact the success of service delivery and
associated business benefits throughout the life of the initiative.
• Activities
− Provide support for creating and maintaining the procedures for identifying,
assessing and managing outsourcing risks
− Document and implement the procedures required for identifying, assessing
and managing outsourcing risks
− Support the implementation of identifying, assessing and managing
outsourcing risks
April 3, 2011 333

17 Threat Management - 17.2 Organisational Risk
Management
• Scope
− Establish and implement procedures to manage risks across multiple
outsourced services and service providers
− Effective identification and assessment of risks enables the client organisation
to take mitigating actions to lower the impact should a risk event occur
− Effective risk management improves the stakeholders’ confidence in the client
organisation’s ability to maintain needed services and service levels
• Activities
risks across multiple outsourced services and service providers
− Document and implement the procedures required for managing risks across
multiple outsourced services and service providers
− Support the implementation of managing risks across multiple outsourced
services and service providers
April 3, 2011 334

17 Threat Management - 17.3 Intellectual Property
• Scope
− Establish and implement procedures to protect the intellectual property of
stakeholders
− Inappropriate use or disclosure of intellectual property can damage the
relationship with stakeholders, may cause financial loss and make the client
organisation vulnerable to disputes or legal action
− Organization should have a formalised policy on the protection of intellectual
property that is used to provide direction for creating the procedures on
protection of intellectual property
• Activities
− Provide support for creating and maintaining the procedures for protecting the
− Document and implement the procedures required for protecting the
− Support the implementation of protecting the intellectual property of
stakeholders
April 3, 2011 335

17 Threat Management - 17.4 Security and Privacy
• Scope
− Establish and implement procedures to meet security and privacy
requirements
− Breakdowns, such as security breaches, can impact the client organisation’s
ability to provide business continuity, thereby damaging the relationship and
making the involved parties vulnerable to legal action
− Effective security is essential for meeting privacy requirements and protecting
intellectual property
− Security requirements may come from the client organisation or statutes and
regulations governing the service being delivered
• Activities
− Provide support for creating and maintaining the procedures for meeting
security and privacy requirements
− Document and implement the procedures required for meeting security and
privacy requirements
− Support the implementation of meeting security and privacy requirements
April 3, 2011 336

17 Threat Management - 17.5 Compliance
• Scope
− Establish and implement procedures to comply with applicable standards and
statutory and regulatory requirements
− Client organisation must implement procedures to address governance, risk
and compliance
− Procedures ensure that they comply with standards, statutes and regulations
that impact their outsourcing capability and their outsourced services in order
to meet statutory, regulatory and stakeholder requirements and to avoid
stakeholder dissatisfaction and legal or audit issues
• Activities
− Provide support for creating and maintaining the procedures for complying
with applicable standards and statutory and regulatory requirements
− Document and implement the procedures required for complying with
applicable standards and statutory and regulatory requirements
− Support the implementation of complying with applicable standards and
statutory and regulatory requirements
April 3, 2011 337

17 Threat Management - 17.6 Business Continuity
• Scope
− Establish and implement procedures to ensure business continuity of
outsourced services
− Prepare for possible disasters in order to minimise their impact on the client
organisation’s ability to continue business activities
− Preparation covers service delivery, security, the protection of intellectual
property, crisis management and the safety of personnel and promotes
confidence in the client organisation’s and service providers’ ability to react
effectively to adverse situations
• Activities
− Provide support for creating and maintaining the procedures for ensuring
business continuity of outsourced services
− Document and implement the procedures required for ensuring business
continuity of outsourced services
− Support the implementation of ensuring business continuity of outsourced
services
April 3, 2011 338

Summary
• Outsourcing experiences and implementations has been

poor
• A structured approach to implementing outsourcing
arrangements by both providers and end-users can enable
effective outsourcing
• A common language and a common understanding of roles
and responsibilities will reduce problems and assist in
issue resolution
April 3, 2011 339

More Information
Alan McSweeney
alan@alanmcsweeney.com
April 3, 2011 340

Structured Approach To Implementing and Operating Outsourcing and Managed Services For Suppliers and Outsourcing Organisations

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Structured Approach to

Implementing and Operating

• Describe at a high-level a structured approach to

• Provide a high-level view of a common set of processes to

• Outsourcing is delegating the responsibility for performing

• Better Use of Staff: allows agencies to focus human

• Efficiency/Utility (Make it Cheaper) arrangement outsourcing

• Managed Services offers an alternative approach for a client to acquire IT or telecom

Improve Company Focus 16%

Gain Access To World-Class

Free Resources For Other

Resources Not Available

Reduce Time To Market 6%

Function Difficult To Manage

• 13% to 25% of outsourcing contracts are brought in-house

• Many outsourcing relationships fail, are terminated early,

• Structured approach can form the basis for an outsourcing

• Inadequate Preparation = Problems Start Here

• Outsourcing provider may conduct activities that are

• Outsourcing provider delivers a poor service

• Outsourcing provider does not comply with relevant laws

• Outsourcing provider experiences technology failures that

• Outsourcer has no exit strategy are not in place because of

• Inadequate cost controls and charging mechanism leads to

• Outsourcer cannot enforce contract

• Outsourcing arrangement negatively impacts ability to

• Concentration of services from multiple outsourcers in

• Smoothly Transferring Services And Resources

• Reviewing Service Design And Deployment To Ensure An Adequate

• Monitoring And Managing Client’s And End User’s Satisfaction

• Supplier Management competence and associated

Strategy Objectives Sourcing Business Case Organisational

• Define sourcing strategy and sourcing model

• Strategic sourcing decisions on what processes are in- or outsourced

• Supplier management is concerned with the execution of

• All activities related to managing ongoing (operational) relationship

Analysis Initiation Delivery Completion

For outsourcing organisation

For both outsourcing organisation and service provider

Phase Outsourcing Organisation Service Provider

Analysis Analyse operations and functions to

Ongoing Management of outsourcing lifecycle Management of outsourcing lifecycle

Determine if outsourcing represents a business

Plan for outsourcing of selected services, evaluate and

Implement the capability to manage the service

Implement knowledge management processes, Develop outsourcing strategy management, manage

Analysis Initiation Delivery Ongoing Completion

• Idealised set of steps for a service provider and end-user

Initiation Delivery Completion

Analysis Initiation Delivery Completion

Analysis Initiation Delivery Ongoing Completion

Outsourcing Outsourcing Service Outsourcing Service Outsourcing Service Outsourcing Service

Outsourcing Sourced Outsourcing

Outsourcing Service Relationship Performance

Service Value Relationship

Service Providers Capabilities

3.1 4.1 Plan 7.1

5.2 Provide 6.2 8.2 Select 10.2

2.3 Confirm 3.3 Plan Design 8.3 Manage 10.3 Risk

1.4 Resources 4.4 Verify 6.4 Assign 7.4

1.5 Personnel 5.5 7.5 Review 8.5 10.5

1.6 Knowledge 4.6 Prevent 9.6 Proactively 10.6 Statutory

5.7 Version 6.7 Plan and 7.7 Achieve 8.7 Supplier