Organizational Structure Running A Successful Business
Outsourcing Contingency Planning
1. Risk Management and Outsourcing Contingency Planning
Financial Services Back and Middle Office Operations
Robert Childs, Program Director Crescendo Consulting Solutions
As the outsourcing model evolves into an embedded business practice within Sharing information – however painful – will quickly establish mutual trust.
Financial Services, client buyers are becoming increasingly sensitive to the This will benefit the longer-term relationship and help build capability and
capability, viability and stability of service providers. Vendor solvency, performance.
conversion delays, scope creep, hidden fees, lack of service level agreements
and key performance metrics, and misaligned client-supplier governance are • Establish a cross-company Steering Committee. Engage
examples of the challenges facing these relationships today. Whether executive sponsorship and key stakeholders in defining and
considering outsourcing for the first time or renewing an existing relationship, executing the program. Enable them to measure performance.
it is clear that contingency planning and strong risk management are essential Select a program manager. These roles are critical for building and
to any future transactions. Both client buyers and suppliers can take steps to maintaining a successful relationship. Develop strong accountability
avoid the potential pitfalls of outsourcing. for those who hold these roles. Incent performance and make it part
of the employee’s performance plan.
Scope
• Set clear expectations; document the business case. Develop a Resources
detailed document that includes vision, in-scope functions, service • Define skills and resources necessary to initiate, execute and
expectations, key stakeholders, implementation requirements, measure the relationship. Engage the appropriate resources to
anticipated governance, and high level process and technology help scope, price and plan implementation and provide quality
requirements. Define a high level financial model including ongoing service delivery. Remember, the relationship will never
anticipated return on investment (ROI). This is a required step for recover if the work is incorrectly scoped and the deal mispriced. At
new deals but is strongly encouraged for renewals. Synthesizing times, having an agnostic third party to help facilitate and negotiate
lessons learned, existing relationship issues and anticipated future terms and conditions helps fast-track execution.
requirements into a refreshed business case will help clarify buyer- • Create a robust Service Level Agreement with corresponding
supplier expectations and will lead to a stronger, more productive Key Performance Indicators that will govern the relationship. Tie
relationship. incentives and corrective actions to explicit data and performance
Relationship Management / Governance measures. Ensure escalation procedures are defined and incident
• Establish a trusted, transparent relationship. Suppliers need to lessons learned are shared. Utilize the Steering Committee to review
share current capability as well as future growth plans avoiding the performance and manage services and issue mitigation.
strong sell. Suppliers “can’t do it all.” Be specific about your • Create an oversight / audit committee that avoids duplicating
capability and transparent about evolving functionality. Buyers supplier work yet effectively controls the process.
appreciate the candor and may be willing to grow with you. Buyers
need to be open with the issues that led them to consider outsourcing
in the first place.