By Shawn McCray, Partner TPI

The Top 10 Problems With Outsourcing Implementations (And How to Overcome Them)

Using Industry-Leading Change Management and Governance Practices to Achieve Outsourcing Success

April 2008

CONTENTS

2. Introduction

3. Top10ProblemswithOutsourcingImplementations

7. BusinessImpactfromtheTop10Problems

8. OvercomingProblemsandDrivingSuccess:AFramework

forAction

10. SpecificActionstoMitigatetheTop10Problemsand

FacilitateChange

12. Conclusion

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INTrOdUCTION

You can choose blue-chip service providers and sign innovative, iron-clad, risk-sharing contracts — but stillnotachieve successful results if youunderestimate the importanceofChangeManagementandgovernanceinoutsourcing.

Inmultiple interviewswithoutsourcingprovidersandbuyersofoutsourcedservices (clients),we learnedthatpoorChangeManagementandgovernancearethemostsystemic—andfarreaching—ofallthemyriadmis-takesthatcanoccur.Experiencetellsusthatsomemanagersandprojectleaderstendtoexcelatdomainknowl-edge,vendorandportfoliomanagement,ratherthanChangeManagementitself.

Why are ChangeManagement and governance critical business issues? Outsourcing agreements can fail toachieveintendedbenefits,notbecausethegoalswereill-conceivedbutbecauseofpoorplanningandexecu-tion, even cultural intransigence. The benefits of outsourcing come through the successful introduction andsustainmentofchange—acontinuouscommitmentratherthanaone-timeevent.

However,makingchangehappensuccessfully isoneofthemoredifficultaspectsoforganizational leadershipand corporatemanagement. For this reason,we are highlighting the commonly encounteredproblems thatimpede successful outsourcing implementations and, in particular, undermine changes required to achieveexpectedresults.

Business Results

Performance

Growth

Financials

Sustainability

Focused on creating the new delivery

model

OUTSOUrCING IMPLEMENTATION

CHANGE MANAGEMENT

Focused on maximizing

performance under the new delivery

model

SErvICE MANAGEMENT &

GOvErNANCE

+

3© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

TOP 10 PrOBLEMS WITH OUTSOUrCING IMPLEMENTATIONS

Aspartofourcommitmenttoimprovetheoutsourc-ing industry throughour InnovationAgenda, TPI setouttoidentifycommonclientproblemsinoutsourc-ing implementations.Ourgoalwasto identifytheseproblems and then “work backward” to identify ac-tionsthatcouldpreventormitigatetheseproblems.

TPI conducted multiple interviews with outsourc-ingclientsandserviceproviderstoidentifykeyprob-lem areas, and also utilized the knowledge baseof our 350+ advisors who have extensive outsourc-ing experience— either as clients, service providersand/oradvisors.

Wedefined“outsourcingimplementation”tobethefirst 6-18 months that a change occurs in an out-sourcing relationship. This change could be an ini-tial outsourcing contract, a significant changewith-in an existing outsourcing relationship (involvingscope, technologyand/orbusinessprocesschange),oraswitchfromoneserviceprovidertoanother(orpotentiallymultipleserviceproviders).

Theoutsourcingimplementationiswhen“therubbermeetstheroad.”Itisthecriticaljunctureintheout-sourcingrelationshipwhere:

Required planning should already be•defined in order to initiate the change(including all contract negotiations andimplementationpreparationsbytheclientandserviceprovider[s]).

The future groundwork is laid for the en-•terprise-wide relationship between the cli-ent and service provider (i.e, work movesout of the planning stage and begins toimpactmultipleclientleaders,usersandotherstakeholders).

The final result of our efforts is a “Top 10” list ofclient problems with outsourcing implementations.Therewaswideagreementamongclientsandserviceprovidersalikeregardingkeyissues—werankedtheproblemsbasedon theprevalenceof responseswereceived and the impact/downstream implicationsoftheproblem.

Problem #1: Post-Contract Processes and decision rights Not Understood

BasedonTPI’s interviewsandanalysis, the#1prob-lem in outsourcing implementations is a lack ofunderstanding of post-contract processes and deci-sion rights. Simplyput, clients and serviceprovidersarenotoperationallypreparedtoworktogetheraftercontractsigning.

Theresultsarethatservicessimplyaren’tperformed,implementationactivitiesgetstalled,clientstakehol-ders and service provider staff are both frustrated,andtheentirescheduleforachievingexpectedbusi-nessbenefitsisdelayed.

Havingprocessesanddecisionrightsratedasthebig-gest problemmay seem surprising given the possi-bility for high emotion and behavioral change thatcomes with outsourcing. However, in TPI’s view itis this lack of definition andunderstanding that is asignificantrootcauseofmanyotherissues.

The problem occurs if new processes and decisionrightshavenotbeenwell-designedorsocialized.Forinstance,withthenewoutsourcingmodel,whointheclient’sorganizationcanrequestservices?Doesitgodirectlytotheprovider,andifso,how?Arenewsoft-ware tools/systems required? What documentationorjustificationisrequiredfortheservicerequest?Areanynewapprovals required (eitherwithin the clientorganizationorbytheserviceprovider)?Doesapproval

4© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

dependonthenatureoftheunderlyingrequestand/orfinancial cost?Whodecides?Whatabout “emer-gency”changerequests—aretheseactedonimme-diately,andwhatconstitutesan“emergency”?

Theseandahostofotherquestionsaboutfinancial,contractual, and service delivery processes anddecisionrightsmustbeansweredandcommunicatedtoappropriatestakeholders intheclientandserviceprovider organizations. The outsourcing contract isnot intended tobe (nor should itbe)anoperationsmanual; therefore additional work is required todesignandcommunicatechanges.

Problem #2: Little or No Support From Client Leaders receiving Services

Another significant problem that exists in manyoutsourcing implementations is the lack of buy-infrom senior client leaders who will be recipients oftheoutsourcingservices.Thiscan result inactiveorpassive resistance to the entire outsourcingmodel;create the desire for “special treatment” or opt-outfromtheoutsourcingservices,andresultsinbusinesscasedeterioration.

Manytimesleaderswhowillreceivefutureservicesdonotactivelyparticipateintheoutsourcingevaluationor receive proactive communications regarding itsstatus.This lackofparticipationhastwodetrimentalimpacts:1) the leader receivingservices isgenerallyunpreparedforthechangestocome;and2)theeval-uationandnegotiationteammaynotfullyrepresentorunderstanduniqueservicesforaparticularunitintheorganization.

Problem #3: Poor Mutual Understanding of the Contract

Aftersigningtheinitialcontract,boththeclientandservice provider havemultiple teammembers whoaretryingtomanagetheinitialimplementationactiv-itiesandongoingoperations.Theclienthasstaffwhoarejustlearningthedetailsoftheagreement,maybeemotionally charged regarding the decision to out-sourceandalsohaveapersonalviewofwhattheser-viceprovidershould(andshouldnot)perform.

Theserviceproviderhasteammemberswhoarealsonewtothetransaction,andsometimesbringaviewof“this iswhatwedid inmy lastdeal”without fullyunderstanding nuances of the specific agreementthathasbeennegotiated.

Thesignificantnumberofnewpeoplecombinedwitha high speed of implementation impairs a requisiteabsorption period, leading to uninformed views onbothsidesof“what’sinthecontract.”

Problem #4: Client retained Team Not in Place or Too Small

Withmanyoutsourcingimplementations,thereisanoutrightlackofadefinedretained/governanceteamoronethat is toosmall.Thiscauses issues in imple-mentationbecausethereisnoone“directingtraffic”or theteam is toosmall tohandleboththevolumeandcomplexity.

Clients tend to put offmaking decisions about theretained/governance team for multiple reasons,including:

5© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

Allenergiesandeffortsare focusedon“the•deal” intermsofcontractterms,conditions,andpricing,withnotime/resourcesdevotedtopost-contractissues.

Clientsmay postponemaking staffing deci-•sionsandcommunicatingchangesuntiltheyaresureaboutthefinaloutcomeoftheout-sourcingagreement.

Clientsexpectthatsincetheyareoutsourcing•thework,theserviceproviderwilltakecareofeverythingandtheclientcan“washitshands”of ongoing management responsibilities,resultinginalackofgovernancestaff.

Problem #5: Client retained Team Lacks required Skills

Evenifaclientputsaretainedteaminplacetoman-age the outsourcing implementation and ongoingoperations, the team may not have the right skillsrequiredfortheirnewroles.

According to data gathered by TPI’s GovernanceBenchmark database, client-retained organizationsoftenlooklikethis:

60 percent of staff assigned to the gover-•nanceorganizationhavenoprioroutsourcingexperience.

40 percent of clients in the benchmark•did not provide any initial training for thegovernance team assigned to manage theagreement.

Only 20 percent of clients feel like they•provide enough ongoing training for theirgovernanceteam.

Also, in TPI’s experience, most clients only considerexisting staff within their organization and usuallywant to keep people with the best technical and/

or business process experience. However, thesepeoplesometimeshaveahardtimemakingtheswitchbetween performing or managing the day-to-dayworkandholdingtheserviceprovideraccountable.

Problem #6: Loss of Key Talent and/or Poor Knowledge Transfer

Outsourcing creates uncertainty for existing em-ployeesandcontractorswhoprovideservicestotheclientorganization.Theuncertaintycancausethisstaffto look elsewhere for employment and leave eitherbefore or during the outsourcing implementation,causinganeedtoeitherbackfilltheresourceorreducetheamountofworkperformedbytheorganization.

In addition, some of the client staff is temporarilyengaged for knowledge transfer to the serviceproviderduringtheimplementation.Ifthestaffisnotproperlymotivatedoriftheserviceproviderdoesnotdoagoodjobwithknowledgetransfer,thiscancausedecreasedefficiency in servicedelivery andpossiblyintroduceoperationalrisk.

Thesetwoissuescanbesignificantproblemsifnotad-dressed.However, it is inthemiddleofourrankingsbecauseclientsandserviceprovidersbothrecognizetheimportanceoftheseissuesandgenerallymakeareasonableattemptatmitigation.

Problem #7: Inability to Meet Pent-Up demand for Services

Prior to an outsourcing implementation, the clientorganizationmaycurtailbigprojectsandnon-essentialspending. This is for two reasons: 1) the clientmaywait for theexpertiseof theserviceproviderbeforeinitiating activities; and 2) the client may limit itsinvestmentsintheareadesignatedforoutsourcing.

6© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

If the client has limited these activities, there istypically a substantial amount of pent-up demandand/orrequirementsthatneedtobemetshortlyaftertheimplementationperiodbegins.However,thewaysinwhichthenewinitiativesareprioritized,estimated,evaluated,approved,scheduledandperformedmayallbeinthemidstofchangeduringtransitiontothenewoutsourcingmodel.Thisresultsin“apigtryingtofitthroughagardenhose”;onlyatrickleofdemandisfulfilleduntilthenewmodelisinplace.

Problem #8: End-User resistance to Adopting New Methods

Oftentimes,athird-partyserviceprovider isbroughtin to be a “change agent.” The outsourcing spon-sorwantstoachievebusinessbenefitsquicklywhichrequirechangesinprocess,technology,behaviorand(potentially)staffing.

However,formanyoutsourcingservices,theprovideris not in complete control of the end-to-end result.Theusersonthereceivingendofnewmethodscaninhibittheachievementofbusinessobjectivesthroughlackofcompliance,strategydisagreementsordelaysinexecutingtheirrequiredresponsibilities.

Problem #9: Culture Clash Between the Client and Service Provider

TPI sees culture clashes between a client and ser-viceprovideroccurringontwolevels:corporatecul-ture and (increasingly in today’s global economy)national/regionalculture.

In termsofcorporateculture, theclientand serviceprovidermayhavedifferentnormsintermsofspeed,style,decisionmakingandorganizationalstructure.

Anotheraspectofpotentialcorporatecultureclashisthefactthatoutsourcingrepresentsacommercialre-lationshipbetweentwoseparateentities.Sometimesbothorganizationscantakeextreme, inflexibleposi-tionsthatservetocreatetensionordistrust(e.g,theclienttakingapositionthat“Idon’tcarewhatthecon-tractsays,I’mthecustomer”andtheserviceproviderequallydigginginitsheelsandtakingaviewthat“wearedeliveringtocontractspecifications”).

Intermsofnational/regionalinhibitors,languageandtheunderstandingofsubtleties inverbal,non-verbalandwrittencommunicationscanbeproblematic(es-peciallywhenwork isperformedoffshorewith littlecontactotherthanbyphoneore-mail).Also,expec-tationsregardingthelevelofopendebate,acknowl-edgement of potential problems, andwillingness toveer fromthedefinedprocess inorder tocompleteworkmayvarybetweenregionsandnationalities.

Problem #10: Changes don’t Last

Old habits die hard. Even for organizations that ini-tially change behaviors and processes to achievesuccesswithoutsourcing, there canbe a significanttendency to revert to oldways of doing things. TPIseesclients start tocutbackondialoguewith theirbusiness stakeholders and service providers, reducegovernancestaffandreduceprocessrigorovertime.

This retrenchmentusuallyoccursbecause the clientbelieves benefits will continue to occur automati-cally, and therefore “we can eliminate unnecessarycost.”The ironyof thesedecisions is thatclientsarecuttingbackontheverythingsthathavemadeout-sourcing successful in the past and are needed tomakeitsuccessfulinthefuture.

7© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

BUSINESS IMPACT FrOM THE TOP 10 PrOBLEMS

Ourfindingsindicatethatunmanagedchangesarethebiggestproblemsclientsfaceinoutsourcingimplemen-tations—notissuesrelatedtospecificcontractterms,pricingortechnology.Thesumtotaloftheseproblemscausessignificantdegradationintheexpectedbusinesscaseduringimplementationandbeyond.Thegraphicbelowillustratestheimpactofunmanagedchangesinoutsourcingimplementations.

IMPACT OF UNMANAGEd CHANGEUnmanaged change causes a severe performance gap during the outsourcing implementation and results in expected performance not being reached

Current Performance

Intended Performance with Change

Change Implementation

Complete

TIME

PErF

OrM

AN

CE

Typical Performance

with Unmanaged Change

Performance Gap Created

by Unmanaged Change

rate and Speed of Adoption

resistance and Opts-Outs

Lack of Proficiency

Ineffective Governance

8© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

OvErCOMING PrOBLEMS ANd drIvING SUCCESS: A FrAMEWOrK FOr ACTION

While the problems listed above may seem signifi-cantatfirstglance,theycanbereadilyovercomewithawareness,attentionandfocus. Infact,byrecogniz-ingtheseissuesinadvance,clientsandserviceprovid-ersareaheadofthegameandcandriveearly—andlasting—success.

In our work with client organizations and throughour liaison activities with service providers, TPI hasidentified a set of drivers for the entire outsourcingChangeManagementprocess.Thesedriversprovidea framework for developing specific actions andtechniques, help categorize issues to mitigateproblems and enable the realization of intendedbenefitscreatedbythechangeimplementation.

Bythemselves,thedriversdonotrepresentground-breaking innovation—theprinciplesandtechniquesassociatedwithChangeManagementarewell-knowntoexperiencedpractitioners.

However,itistheapplicationofthedriversandover-all commitment to Change Management by clientsponsors that is required tomakeanactual impact.The lack of sponsorship and commitment is thereason that issues related to Change ManagementandgovernancearesoprevalentonourTop10list.

ChangeManagementmaysoundlikea“nicetohave,”but—asevidencedbyourTop10list—itisessentialtoachievingexpectedresults.TodemystifytheconceptofChangeManagement,thefollowingdriversprovideaframeworktolayoutavision,makesureeveryoneunderstandstheirrolesandgoals,developaroadmaptomakeithappenandthenexecute.

Thedriversincludethefollowingthematicelements:

• Leadership Vision and Commitment:client and service provider leadersmust beclear about the future state and drive thechangesrequiredtogettherethroughwords,actions and commitment of appropriateresources.

• Staff Effectiveness: clientand servicepro-viderstaffresponsiblefornegotiating,imple-menting, performing and managing out-sourcing services must have the necessaryskills,knowledgeandcapacity.

• Organizational and Procedural Align-ment: client policies, programs and otheroperatingmodelcomponentsarealignedtosupportandenablethechange.

• Governance Readiness: the outsourc-ing governance model is in place with ashared understanding of responsibility,decision-making authority and how servicesaremanaged.

• Change Acceptance and Adoption:client groups and individual stakeholderswhoareinvolvedunderstand,acceptandarecommittedtooperateaccordingtothenewmodel.

9© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

ThefollowingtableprovidesthelistoftheTop10issuesandtherelativeimpacteachofthefivedriverscanhavetoeliminateormitigate theproblems. Inaddition to the tablebelow, the following sectionprovides specificactionsinfurtherdetail.

IMPACT OF UNMANAGEd CHANGEUnmanaged change causes a severe performance gap during the outsourcing implementation and results in expected performance not being reached

drIvErS ANd IMPACT ON MITIGATING PrOBLEM

TOP 10 PrOBLEMS Leadership vision & Commitment

Staff Effectiveness

Organizational & Procedural

Alignment

Governance readiness

Change Acceptance &

Adoption

Post-contract processes 1.and decision rights not understood

Little or no support 2.from client leaders receiving services

Poor mutual 3.understanding of the contract

Client retained team 4.not in place or too small

Client retained team 5.lacks required skills

Loss of key talent/poor 6.knowledge transfer

Inability to meet pent-7.up demand for services

End-user resistance to 8.adopting new methods

Culture clash between 9.client and service provider

Changes don’t last10.

=HighImpactonMitigatingProblem =LowImpactonMitigatingProblem

10© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

SPECIFIC ACTIONS TO MITIGATE THE TOP 10 PrOBLEMS ANd FACILITATE CHANGE

k Actions: Leadership vision and CommitmentMitigationforProblem#1:Post-ContractPro-•cessesandDecisionRightsNotUnderstood.The client sponsor must be aware of theneed to design new processes, and assignnecessaryresourcesandimportancetotheseactivities.

MitigationforProblem#2:LittleorNoSupport•from Client Leaders Receiving Services. Theclient sponsor for outsourcing must holdsubstantialone-on-onediscussionswitheachkeyleaderduringthepre-contractstageandduring implementation. At the appropriatestage, the service provider executiveresponsible for delivering the outsourcingservices should also meet with the clientsponsor and business unit leader. Theseactivities create a dialogue about specificissuesand/orconcernsforthatorganizationalentity receiving services, and they buildmutualunderstanding.

Mitigation for Problem #4: Client Retained•TeamNotinPlaceorTooSmall.Eventhoughtheclientisoutsourcing,itdoesnotabdicateresponsibilityforresults.Seniormanagementwithin the client organization must paintthis vision, andcommit anappropriate levelof management staff to achieve intendedresults.Thecontractorserviceprovider—byitself—isnotenough.

k Actions: Staff EffectivenessMitigation for Problem #3: Poor Mutual•Understanding of the Contract. To enhancefuture effectiveness, continuity and mutual

understanding, thenegotiationteamshouldincludeexecutives fromboth the client andservice provider whowill be responsible forfuturedelivery.

Mitigation for Problem #5: Client Retained•Team Lacks Required Skills. Outsourcingnecessitatesmodification to some roles andcreationofnewonesintheclientorganization.Assess internal staff to see if the necessaryskills and capabilities exist to fill the roles,andwhether theywill be able tomake theadjustmenttoanewwayofworking.Strategichiring/contractingofexternalstaffthathavesubstantial experience with outsourcing willcomplementandadddepthtotheteam.

Mitigation for Problem #6: Loss of Key•Talent/PoorKnowledgeTransfer.Allemployeesand contractors are important in achievingoutsourcing success, but in the early pre-implementation stage, the client shouldidentify the top 5–10 percent — essentialdue to their knowledge and skill base.Specificretentionstrategies (andsometimescontractual requirements) are created orappliedtothisgroup.Whenappropriate,theclient should obtain the service provider’sopinionand jointlydevelopapproaches thatlimit staff turnoverbothprior toandduringtheimplementationperiod.

k Actions: Organizational and Procedural AlignmentMitigationforProblem#1:Post-ContractPro-•cessesandDecisionRightsNotUnderstood.Theclientandserviceprovidershouldjointlydesignkeyoperationalprocessesanddecisionrightspriortotheimplementationperiod.

Mitigation for Problem #4: Client Retained•Team Not in Place or Too Small. Integratedwith the design of processes and decision

11© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

rightslistedabove,theclientmustinitiateandcompleteorganizationaldesignfortheoverallretainedorganization.Thisallowsinclusioninthebusinesscaseforoutsourcingaswellasafullend-statevisionoftheoperatingmodel.

MitigationforProblem#6:LossofKeyTalent/•Poor Knowledge Transfer. Develop retentionpolicies.Thesepoliciesvaryfromrelianceoncommunication and trust to bonuses beingpaidtoallorasubsetofstaffbasedontheircontinuedemploymentandachievementofspecificgoalsandknowledgetransfer.Reten-tionpoliciesshouldaddressbothemployeesandcontractors,andshouldbedevelopedaspartandparceloftheclient’searlyoutsourc-ing strategy—wellbeforeanyRFP,contractnegotiationsorimplementationtakesplace.

k Actions: Governance readinessMitigation for Problem #3: Poor Mutual•Understanding of the Contract. Notevery person engaged in the outsourcingimplementation should be a “contractexpert.” The client and service providershould designate single accountability —eitherinonepersonordepartment—foranyissuesassociatedwithcontractinterpretation.The client and service provider should havea defined process for individuals to submitrequests for contract interpretation, resolvethe issue and communicate the correctinterpretation.

Mitigation for Problem #4: Client Retained•Team Not in Place or Too Small. The clientorganization should “stand up” the newretained organization by placing qualifiedstaff indefined roles inadvanceof requiredactivities.

Mitigation for Problem #7: Inability to•Meet Pent-Up Demand for Services. Createcapabilityto“fasttrack”keyservicerequests.During the pre-contract period, the clientshould continue to engage its customersand end users regarding demand forservices. The client should prioritize needsso the most important ones are addressedfirstaftercontractsigning.Theclientshouldengage the serviceproviderduring thepre-contractperiodtoprovidevisibilityregardingdemand,anddetermineajointplantoaddressthisduringimplementation.

Mitigation for Problem #10: Changes Don’t•Last. The client governance organizationneeds to define ways to continuouslydemonstratevaluethroughobjectivemetricsanddata.TPIhasworkedwithorganizationsthatusemetricsasawaytoachievefundingandbuy-inforactivitiesandchangesrequired.Many times the retained organization isable todemonstrate that the value and riskmitigationitdeliversfaroutweighsthecost.

k Actions: Change Acceptance and AdoptionMitigation for All Top 10 Problems• . Acomprehensive communication programshould be designed and delivered to allstakeholderswhoareaffectedbychangesfromoutsourcing. All communication strategiesandmessagesneedtoaddressonequestion— “what about me?” The communicationsnot only need to be targeted to differentlevels of employees and contractors, butshould also include individualized, one-on-one communications and forums topersonalizethemessageandfeedbackloop.

12© Copyright 2008 — All Rights Reserved Technology Partners International, Inc.041508

Communications should be continuous andconsistent — stakeholders want informationandwanttobeheard.

Mitigation for All Top 10 Problems.• Inadditiontoacomprehensivecommunicationprogram, education and training should bedeveloped and delivered to all stakeholderswho are affected by changes fromoutsourcing. Appropriate training for newprocesses,newroles,basiccontractualscope,and — above all — consistent educationabout the overall objectives and businessbenefits expected through outsourcingis required. Where appropriate, jointtraining/education sessions between theclient and service provider is effective topromotemutualunderstandingandtheabilityto“walkintheotherperson’sshoes.”

Mitigation for Problem #9: Culture Clash•Between the Client and Service Provider.For clients using global/offshore deliverymodels, specific education about multi-cultural awareness helps to improve theteam’sunderstandingoftheserviceproviderstaff’snormsandcustoms.Serviceprovidersareoftenwilling tohelpdesignandprovidecontentforthistypeofawarenesseducation.Manyserviceprovidershavesuchprogramsinplace for theiremployees,andarehappytosharewith their clients how they train theiremployeesaboutculturalawareness.

CONCLUSION

Ifaclientwereabletoachieveitscost,capabilityandcapacitygoalsbyitself,thenoutsourcingwouldnotberequired.Bydefinition,outsourcingrequireschange.

The initial switch from internal to external servicedelivery is the first and most obvious change.

Over time, additional changes are driven byorganizational strategy, leadership, available talent/skills, technology, business processes and regulatoryrequirements. The changes emanate from multiplesources:theclient,theserviceprovider(s),orexternalstakeholders. Consequently, getting buy-in andgovernance right is not a one-time event, but acontinuousprocess.

However, implementing and sustaining change isone of the more difficult aspects of organizationalleadership. It ischallengingenoughtoalignmultiplestakeholders within the same company who havedifferent priorities and agendas. Outsourcingintroduces additional complexities — stakeholdersdon’tbelongtothesamecompanyororganization,can include different nationalities and cultures, andmaybesepara-tedbydistance,timezones,languagesandcommercialinterests.

OurfindingsofTop10problemspointtothecriticalneed for clients and service providers to cooperateand make Change Management and governance apriority.Itneedstobeintegratedintooverallprogrammanagementandnottreatedassomething“nicetohave”butastheonlywaytoachievelasting,mutualsuccess.

LOOKING FOr A STrATEGIC PArTNEr?

TPI’sexpertscanhelpyouachieveyourorganization-algoalsthroughobjectiveadvice,knowledgeofyourindustryandexperiencewithsourcingarrangementsfromsimpletocomplex.

Looking for a strategic partner? Contact Shawn McCray, Partner, TPI, at +1 941 730 4499 orshawn.mccray@tpi.net.

ABOUT TPI: TPI,aunitofInformationServicesGroup,Inc.(ISG)(NASDAQ:III)isthefounderandinnovatorofthesourcingadvisoryindustry,andthelargestsourcingadvisoryfirmintheworld.Weareexpertatabroadrangeofbusinesssupportfunctionsandre-latedresearchmethodologies.Utilizingdeepfunctionaldomainexpertiseandextensivepracticalexperience,TPI’saccomplishedindustryexpertscollaboratewithorganizationstohelpthemadvancetheirbusinessoperationsthroughthebestcombinationofbusinessprocessimprovement,sharedservices,outsourcingandoffshoring.Foradditionalinformation,visitwww.tpi.net.

AmericasNigelJonesManager,BusinessDevelopment+1 650 384 5405ornigel.jones@tpi.net

EMEADeniseColganMarketingManager+44 (0)1737 371523ordenise.colgan@tpi.net

Asia PacificArnoFranzPartner&ManagingDirector+61 (0)2 9006 1610orarno.franz@tpi.net

041508

ABOUT THE AUTHOr: Shawn McCrayisaTPIPartner.Hehasextensiveexperienceinhelpingclientswiththefullsourcinglifecyclereviewingstra-tegicalternativesandpriorities;evaluatingandnegotiatingcontracts;andimplementingthird-partyserviceprovidersolutions.Shawnhas substantial internationalexperienceandparticularexpertise inassessingexistingmanagementorganizationsandprocessesandassistingwithinitialimplementationandlong-termoperationalmanagement.

BeforejoiningTPI,ShawnworkedforEDSinanumberofmanagementpositions,includingBusinessDevelopmentManager,Ac-countManagerandFinancialAnalysisManager.Shawnwasdirectlyinvolvedincreating,implementingandmanagingsourcingagreementsworthmorethanUS$8billionforclientsacrossavarietyofindustries.

ShawnholdsaBachelorofScienceinBusinessAdministrationfromtheUniversityofMissouri.