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TABLE OF CONTENTS

GOVERNING TRANSITION 03

GOVERNING GLOBAL SOURCING RELATIONSHIPS 06

GOVERNING SCOPE CHANGES 10

GOVERNING SERVICE LEVELS 14

GOVERNING PROJECTS AND MILESTONES 17

01
 Executive Summary
The client must be prepared for
regular international travel as the
transition team “forms and storms
before it norms and performs.”
IT management must target
investments in knowledge transfer
and create a culture of acceptance
for a successful long-term
relationship.
If staff redeployments are part
of the transition, the client may
use retention bonuses to retain
key personnel during the
transition. Funding for morale and
legal issues must also be in the
budget and schedule.
02
If the client has not completed
ISO certification or a Capability
Maturity Assessment before the
transition begins, investment in
such activities will pay off in time
and money savings as offshore
capabilities are moved into place.
The Project Management Office
(PMO) must review transition
program management
documentation such as time
reports, status reports, and
invoices. These documents are
essential for managing services
in the global environment, which
often consumes more time than
managing services provided
internally.
 Global sourcing changes the day-to-day
responsibilities of technology and business
staff even before the agreement is signed.
Before the provider is selected, clients
can bolster chances of a successful,
manageable, and affordable transition
by properly identifying and soliciting
the myriad constituencies whose
support will be needed during the
transition. IT should draft a marketing and
communications plan soon after the sourcing
strategy is conceived so that the business
can measure and manage expectations for
internal sourcing stakeholders. Most service
providers will arrive at a generic transition
methodology.
During the transition, the PMO must report
transition measures with as much emphasis
on operational as service-level metrics.
Constituents must continually be made
aware that the transition itself delivers
value to the business and that
stakeholders have a role to play in
achieving the overall business
objectives. Institutional knowledge should
be codified into a consistent modeling
language and format. To realize the best
value from a modeling exercise, consistency
in expression is more important than
perfection, and a generic ISO certification
model provides a head start. Consistent
modeling provides the basis for analyzing and
modifying processes as part of the transition
process. Inconsistently expressed models
cannot easily support a common analytical
approach.
The Capability Maturity Model (CMM) is an
excellent tool for reducing miscommunication
and poor capability alignments. Global
sourcing providers operate at a high level of
transition and change management process
maturity (e.g., Levels 4 and 5) and can stretch
a client’s abilities to implement governance
processes. The CMM approach helps both
04
The Capability
Maturity Model
(CMM) is an
excellent tool for
reducing
miscommunication
and poor capability
alignments.
Global-Sourcing-in-Action
A global transportation company uses
offshore resources for its application
portfolio. During the transition of
each new project, the company
assigns a dedicated management
team to establish goals, define
milestones, and measure progress.
Each transition is viewed as a project
of transferring and validating the
transfer of knowledge. The transition
team not only manages the vendor
relationship but helps manage internal
expectations about preparation and
engagement for an outsourcing
relationship. Internal business units
are better prepared and have correct
expectations about evolving process
performance (e.g., CMM) and internal
requirements. Better alignment with
the vendor increases long-term
success across the enterprise.
the client and the provider implement
governance mechanisms that ensure effective
transition without jeopardizing the relationship.
Assessment Checklist
Resistance to a global solution is common, Does the transition program tie to
and the transition bears the brunt of this specific business objectives?
strain. Part of the marketing and
communications program is to keep a finger Do we have contingency plans if we
on the pulse of stakeholders to mitigate human
capital, legal, and operational risks. While most
lose key people during the transition?
Do we have a strong process
companies may already have developed a risk
management plan, it must receive constant
modeling capability and a ready
repository of artifacts to support
focus as the transition program is scheduled
and resourced, so that risks may be handled
transition?
Can we backfill staff so that
while they are still under the client’s control.
Issues develop rapidly during a transition.
members of the transition team can
concentrate 90% of their time to
Successful PMOs implement an issues
management database so that all issues are tasks directed by the PMO?
captured and tracked. Without an adequate
issue management tool, PMOs find
themselves distracted by issues and may not
be able to concentrate on key strategic Common Mistakes
components of the relationship.
Treating a global sourcing
Apart from formal learning, transition’s governance program as
teambuilding, use of a knowledge
if it were a systems implementation.
management system, and mentor
relationships reinforce objectives and Investing too little time or money in
ensure active participation among all team-building with the service
players. Knowledge transfer includes direct provider.
measurement by predetermined metrics and
Implementing a governance
adjustment to ensure that institutional
knowledge is captured and documented. A organization only after issues begin
comprehensive knowledge transfer plan to appear in the relationship.
allows various media, audience, and test cases
to ensure effectiveness. Expecting immediate changes or
improvements rather than an
Third-party advisors may also serve in both
evolution into new solutions.
strategic and tactical roles as advocates for
the sourcing program’s objectives. While the Staffing the PMO with part-time
situation may be difficult for the client to resources or expecting the
confront, an external advocate for the management to “work it into their
relationship will provide a neutral view of the
schedule”.
abilities and resources required from all
parties.
05

Executive Summary
Most sourcing failures are caused
not by technological problems, but
by poor leadership, organizational
or cultural issues, and human
errors. Only about 25% of the
companies invest in relationship
management; yet active contract
management is critical to overall
success.
Governance should be centralized
in a program management office
(PMO) that has hands-on control
of day-to-day resource allocation.
The PMO measures performance,
manages change, and ensures
delivery in accordance with the
contract. Direct subordinates of
the PMO provide continuous
evaluation of effectiveness.
Effective governance of sourcing
contracts includes continuous
alignment of the contract with
business changes. Successful
governance manages exceptions
and mitigates disputes quickly.
The organizational structure and
processes of the governance
function must be developed before
contract signing.
Sourcing contracts should include
a written catalog of deliverable
products and measurable services
as outcomes of the relationship.
Acceptance criteria (e.g., service
levels) must be defined in advance
and escalated promptly in cases
of dispute or uncertainty.
Reaping the benefits of global sourcing is not
a one-time exercise. The client must keep a
steady eye on performance indicators and
react to the changing business requirements,
market changes, and delivery improvement
opportunities. Since change is inevitable in
sourcing relationships, establishing,
exercising, and leveraging the governance
process is key.
Effective governance includes
continuous review of the contract in
the light of exogenous and endogenous
changes to the business. Apart from
periodic meetings of executive sponsors of
the relationship, world-class global sourcing
contract governance manages exceptions
and variances through a defined path for
decision-making, escalation of issues, and
mitigation of disputes before disagreements
become legal issues. Ideally, these processes
are exercised and fine-tuned in early stages
of the relationship and are practiced with
diligence by all parties.
The PMO is the hub of contract management
activities in any global sourcing relationship.
The organization structure and operational
processes will often be a hybrid –
synthesized from both vendor and client
models. The relationship structure and
metrics should be negotiated early in the
relationship. Vital to effective governance,
direct subordinates of the PMO provide
continuous evaluation of business value, risk
management, cost management, and
process change.
Most performance metrics are lagging
indicators; however, leading indicators may
be developed through an objective mapping
exercise as part of developing a balanced
scorecard that supports active management
of the outsourced capabilities.
A balanced scorecard for contract
performance measurement is an
Global-Sourcing-in-Action
A manufacturing company
outsourced its application
development and maintenance to
an offshore provider. The company
had complex and rapidly changing
business requirements. The client
felt compelled to keep a project
manager from corporate onsite at
the offshore facilities at all times.
The client sent project managers
to the India facilities on two-week,
rotating assignments at an
estimated cost of $500,000 per
year, or approximately 10% of the
annual contract cost. While this
investment was periodically
questioned, the targeted results
and benefits of global delivery were
fully realized. Management
sometimes questioned the level of
required vendor governance, but
realized that the risks of failure
were far greater than the cost of
rotating project managers and
ensuring continued alignment with
business requirements. It also
enabled companies to develop
better management and made
employees more aware of the
potential benefits of global sourcing
excellent tool for examining both
leading and lagging metrics and for
communicating messages to all
sourcing program constituencies
consistently.
Active management of the contract and
consistent demonstration of realized and
07
 expected benefits, be they cost,
performance, agility, or others, help keep
expectations in check.
Proper governance often means developing
capabilities within the company to support
the relationship with the service provider.
Some of these capabilities will come to the
table with the global sourcing provider, and
others may be extant in the client from prior
process improvement or business
transformation work. Key capabilities
include process models, process
improvement methodology, active
executive sponsorship, skills
management for staff, IT product or
service managers, project management
information policies and repositories,
and regular review of IT investment
programs, ideally in a portfolio format.
Companies that do not have these capabilities
or have had poor experiences with IT
program governance must be prepared to
invest additional time, money, and staff in
governance processes and PMO development
to prepare for the demands of global
sourcing. The PMO should understand the
power of marketing and communications.
Managing expectations among internal
constituencies is also critical. The PMO’s
attention to managing exceptions,
expectations, and contract changes will go
leagues toward sourcing success.
Beyond internal business partners, the
community at large and government bodies
also have roles in global sourcing contracts.
Understanding the de jure and de facto
standards and customs of conducting
business in intended localities enables
comprehensive risk management and proper
attention to the pitfalls that dot the sourcing
landscape.
06
08
Beyond internal
business partners, the
community at large and
government bodies also
have roles in global
sourcing contracts.
Assessment Checklist
Does the PMO have sufficient
contract management expertise?
Is the organization comfortable with
using a balanced scorecard or a
similar approach to define leading
metrics of transition and delivery
performance?
Is sufficient funding earmarked to
allow the executive sponsor to
approve contract changes without
repeatedly justifying the strategic
value of the program?
Are executives confident that the
PMO’s risk management approach
will effectively identify problems
early enough to take effective
action?
Are internal PMO standards and
procedures comprehensive and
practiced?
Common Mistakes
Developing an incomplete set of
metrics that comprises only
lagging indicators and focuses
exclusively on technical
performance.
Micro-managing service provider
plans and performance so that
governance inhibits work rather
than ensuring compliance and
alignment with business.
Resisting change across the
organization by either not
complying with service provider
requests or intentionally creating
obstacles to interfere with vendor
performance.
Investing too little for the
governance organization to
function properly, putting at risk
the ongoing success of the service
provider and the business benefits
to be derived.
Adding vendor governance to the
responsibilities of managers who
already work long hours, probably
resulting in the governance
function being neglected.
09

Executive Summary
Business requirements will
continue to mature and evolve,
making establishment and operation
of a defined governance process
critical. Creation of repeatable
processes is vital to achieve agility
and derive optimal business value.
Scope changes should include
modifications to goals, objectives,
deliverables, and timing. Formal
change requests modify the project
scope, work plan, and budget as
defined in the contract. The
executive champion of the sourcing
relationship should approve scope
changes that affect budget,
schedule or goals; lesser issues are
To fail to plan for scope changes in a global
sourcing agreement is to overlook natural IT organization
change and evolution of business
requirements. One of the key strategic
benefits of global sourcing is to increase
must evaluate the
overall business agility by concentrating
internal management efforts on business frequency at which
activities that yield the greatest value per
activity unit cost. One straightforward way
to create greater agility is to delegate low-
business units
value-added and non-value-added activities
to a lower cost structure. As the business
require changes to
evolves, processes that yield minimal value
will be identified and will become natural projects.
candidates for global sourcing.
A scope change control process must
be written into the contract so that a
mechanism Global sourcing to
is available differs from
catalog Global-Sourcing-in-Action
internally developed and operated
opportunities for using the intellectual
services. Global sourcing requires A large transportation company
capital of the provider and the
more appropriate for the project working with third-party outsourced a key transformational
management office (PMO). relationship. Shrewd clients
organizations that anticipate
operate in
project. During development, the
scope change and are prepared to develop
different cultural norms, and
Potential scope changes must business units requested numerous
and analyzeoften,
business cases expediently
at a different in
organizational changes, many of which altered the
derive from the program team or
the contextlevel.
of All
thethese
overall relationship
complexities must scope of the project. As the
from proposals made by the service
provider. The contract should be managed
portfolio. Some in ways consistent
clients engineer an issue changes were given to the vendor,
include a Scope Change Control designed towith business
test the objectives.
scope change The
control it never indicated that the price or
System to maintain an relationship
process within requires
the first few weeks greater
of the timeline of the project would
authoritative source regarding the relationshipcommunication and aisthorough
so that the process tested change. Half way through the
status of individual changes and the requirements definition.
and adjusted over a relatively minor change, The project, the provider said it needed
scenarios that cause changes to complexity of communication,
and is prepared to accommodate more more money because the funding
the relationship as a whole. travel, and governance increases
substantial issues that will inevitably surface from the original agreement was
when the third party is in a distant
The contract should specify costs during the transition. spent. The client was shocked.
location.
for defining scope changes at The vendor assumed that the client
Clients must be wary of the temptation understood that the scope changes
various levels –conceptual, While many companies still consider
to increaseglobal
scopesourcing
immediately after
for cost the
savings, would impact cost; the client
functional, and technical – whether
transition begins.
they areThe costs andunexpected
discovering benefits assumed that the vendor would
the costs are fixed price or time-
and-materials. of increasing scope early in the initial
benefits such as innovation, have told them. This breach of
transition transformation,
must be weighed against
partnerships,not
and communications was a failure of
concentrating on the low-hanging fruit. assumptions on both sides.
Once the change control process is proven,
11
 it is often better to put aside some
opportunities, to be addressed when the
global sourcing relationship is more mature.
Strategic initiatives can often act like the
only train leaving the station, with wish lists
becoming extra baggage thrown in without
regard to the objectives of the initiative.
Demonstrating that a scope change process
works and is open to stakeholders inspires
confidence that issues will be addressed
properly, rationally, and in line with the
program’s business objectives.
While business process analysis and change
are necessary elements of partnering with
a global sourcing provider, continued process
improvement opportunities will arise and
often fall outside the scope of the current
contract. Clients should be prepared to
capitalize on such opportunities with a
smooth, open contract change control
process that allows the business to seize
added value at the reasonable moment.
Once a comfort level is established
with the provider and the relationship
starts bearing fruit, scope changes into
new processes and services are natural.
For example, a customer service call center
relationship might benefit from add-on
services such as call-driver analysis, call-
flow analysis, and customer service quality
analysis. In several cases, average hold time
(AHT) dropped significantly (2.5 minutes)
and misrouted calls decreased 40% due to
the analytical services provided with scope
increases.
Trying too hard too soon will lead the global
sourcing PMO away from overarching
business objectives. Failing to give proper
audience to the real and perceived issues
12
Clients should be
prepared to capitalize
on such opportunities
with a smooth, open
contract change
control process that
allows the business to
seize added value at
the reasonable
moment.
Assessment Checklist
Does the client organization
consistently prevent scope creep on
internal projects with effective
governance?
Does the organizational culture allow
PMOs to make tactical scope
changes in a timely manner?
Does the organization use a portfolio
management approach for its
resources, including assets,
projects, and relationships?
Are decision-making processes
within the business expressed as
models or procedures, and are they
followed?
from within the program’s stakeholder
community will create resistance to the
program’s momentum. A solid, openly
marketed and reported change control
process allows the sourcing relationship to
deliver the anticipated business value, and
sometimes, quite a bit more.
Related Documents
4-3: Developing the Scope of Work
Common Mistakes
Locking the scope despite errors or
omissions in the contracted
services.
Recording scope issues within the
PMO but not communicating the
current status or disposition of those
issues across the enterprise.
Trying to solve too many scope issues
at once, especially when the
relationship is young and relatively
untested.
Allowing the service provider to
make decisions and incur additional
costs without the correct oversight,
often because the governance team
is understaffed and unable to keep
up.
Taking too long to approve scope
changes, making the approval
process an inhibitor of business
change.
13

Executive Summary
Service levels are imperative for
managing sourcing relationships;
they provide measures of the
provider’s performance. A
comprehensive set of service levels
expresses processes and
outcomes in business terms,
enables business predictability
(cost), enables mapping skills to
process steps, structures business
transactions, supports portfolio
and product management, and
provides metrics for market-
oriented benchmarking.
The service-level catalog should
define each service, its predicted
or contracted costs, performance
measures and targets, any known
improvement opportunities
(whether or not a change request
is formally logged), and volumes for
transactions.
Proper service-level governance
relates metrics and outcomes to
business results. Service-level
metrics are shared with the
business and help determine
investment and improvement
opportunities. Service-level metrics
drive rewards and penalties in the
sourcing relationship and provide
an opportunity for differential
investment supporting different
user constituencies, e.g., platinum
service for customer-facing roles,
silver service for back-office
functions, etc.
Companies considering global sourcing must
be experienced in managing service levels,
even if current levels are recognized as
unacceptable. Service-level agreements
(SLAs) are essential to govern the relationship
and market its success to internal
stakeholders.
Most clients propose liquidated damages as
a form of compensation for breach of service
levels. While this approach is prudent in some
instances, often the risk premium on the
possibility of paying liquidated damages
greatly increases the cost for the client.
Organizations with a policy of liquidated
damages may wish to consider alternatives
such as shared risk/reward or value-based
compensation while evaluating global
sourcing. Business models that protect the
client’s interests at a lower cost are more
beneficial.
A prescriptive approach to service-level
governance allows fixes, enhancements,
and upgrades to performance so that
service levels can be improved
gradually as the relationship matures.
An SLA with risks and rewards may include
relationship milestones at which the target
values and compensation terms are
tightened. Recognized improvement in these
areas is an excellent means to market
success of the relationship.
A balanced scorecard (BSC) supports
comprehensive service-level development and
management. The BSC is a management
system that facilitates the cultural shift
required on both sides of the equation. The
development of an objective map, a
diagram that indicates leading and
lagging measures of success for a set
of business objectives, allows the client
to develop service levels as leading
indicators of financial results. It also
increases the client’s ability to identify
and react to the state of the business
and encourages vendors to remedy
unacceptable performance.
In information-centric business processes,
developing an Information Supply Chain (ISC)
model will greatly enhance the client’s ability
to understand information supply and demand
throughout the sourcing relationship, and also
identify critical processes for which a keenly
Global-Sourcing-in-Action
In a unique alliance, an airline, an
engine company, and an outsourcing
provider created a contract
structure that paid the outsourcing
vendor for business-based output.
The vendor provided infrastructure
and services for the joint venture
and was compensated based on
engine thrust output. The
outsourcing provider was motivated
to create proactive solutions to
keep engines running and, in turn,
keep airplanes flying. Since the
airline benefited, it placed a higher
value premium on the engines and
the proactive measures to prevent
failure and coordinate maintenance.
This alliance required each of the
three companies to accept some
degree of risk that was outside
direct control; it also created
cooperative effort to help each other
company within the alliance improve
quality.
15
 defined set of service levels will provide the
greatest business value. An ISC depicts Assessment Checklist
both the supply of data and the demand for
information throughout an enterprise. An Does the organization have
assessment of the data sources that drive extensive experience with SLAs for
critical management and operational internal and external providers?
information will clearly indicate the most Does the organization’s metrics
valuable data assets that should fall under approach tie SLAs to business
premium service levels. objectives?
Service levels must be based on defined Are service catalogs available to the
business and are they understood
business processes, real-life metrics
by management?
should be gathered and reported, and
changes to SLAs (whether internal to Are consistent methods used to
the business or external with service determine the services that are
subject to differing service levels
providers) must be managed through a based on their value to a particular
structured and controlled process. All user class?
these will be invaluable in the transition and
governance of SLAs with the new provider.
The most successful route to service-level Common Mistakes
Executive Summary
Global sourcing differs from
internally developed and operated
governance involves a partnership between services. Global sourcing requires A large chemical company wanted
Emphasizing penalties or Just as economic markets are sourcing relationship include an
the provider and the client to measure service working with third-party to evaluate which applications
punishments for missing service defined by margins, governance executive management team with
levels and correct or reward performance level targets. organizations thatdefined
capabilities are operate in
through would most benefit from offshore
different cultural norms, and comprehensive authority and
measured against service-level targets. One- change management. The program labor. The company categorized
Basing service levels on technical often, at a differentoffice
organizational influence over the program, and a
sided service-level management cannot result management (PMO) is its applications into portfolios
or performance targets that are not PMO to execute day-to-day
in an environment focused on achieving level. All these complexities must
responsible for a plan of record that based on common support
aligned with business objectives, business.
measurable business results over the long allowing the vendor to succeed and beismanaged in ways consistent
a composite of “living requirements. Itgovernance
Key program focused on
with businessthatobjectives. Theas strategies
assumed include managing
benefits the by
provided
term. While clients certainly should not the project to fall short. documents” are modified
relationship requires greater
needed to match project progress portfolio of projects
offshore—the as a to
ability whole,
provide
compromise on service levels that are vital Not reviewing SLAs frequently to communication
and changes. and Thesea thorough
documents maintaining a flexiblemaintenance
routine application yet viableand
to business performance, an essential ensure whether the targets are
requirements
include the business The
definition. case, contract amongquality
off-hours the relevanttesting.
element of a globally sourced solution is the aligned with business objectives in
the current market conditions. complexity
statementof of communication,
work, master parties, documenting
Applications and enforcing
that aligned with these
ability to define an SLA and a willingness to
travel, and governance
program increases
schedule, budget, risk system architectures,
requirements weremanaging
considered
support the sourcing relationship’s evolution Micro-managing the service when the third partyplans,
is in a distant
management scope, issues and changes,
higher candidatesand marketing
for using
with consistent SLA achievement and provider by developing redundant
location.
communication, issue theoffshore.
program’s success through that
Applications a
improvement. measurement systems and cross-
checking performance at management, service-level required closer alignment
comprehensive communications with
While many companies still consider
unreasonable levels. agreements, organization plans, business
plan. The PMO will objectives
orchestratewere a
global sourcing for cost savings,
incentive plans, status reporting, considered less
series of successes likely to benefit
to
Pushing the responsibility of they
andare discoveringdocuments.
architectural unexpected
from offshore.
demonstrate the The analysis
validity guided
of the
clarifying ambiguity onto the service benefits such as innovation,
provider rather than taking internal Critical success factorsandfor decisions about the scope
relationship and the potential for of work
transformation, partnerships,
Related Documents responsibility and trusting that the managing change in a global ever-increasing business yield. the
and the skill sets required of
4-4: Developing Service Level provider will assist. vendor.
Documentation

16 17
 Clients with experienced program
management offices (PMOs) are more likely
to realize the business value of global
sourcing. A PMO’s demonstrated ability to
recognize, assess, and react to change
opportunities will translate into tangible
business value. A global sourcing
relationship can be viewed as a series
of nested projects, in fact, during
transition, it is often easier to believe
that “everything is a project” and
manage as such. For PMOs that have
worked primarily with internal resources,
the amount of communication required during
a global sourcing transition is extensive and
demanding, and a project focus on all tasks
helps reinforce the required frequency and
richness of communications.
Key players from the vendor selection team
naturally evolve into the governance PMO of
the global sourcing relationship. An essential
part of governance is a set of mechanisms
and metrics that measure the performance
of the governance function itself. As
providers are selected, the contract written,
and transition begins, the relationship should
always be approached with business
objectives in mind. The relationship team
must publish marketing and
communications plans, portfolio and
project management policies, and the
project management taxonomy, and
also win agreement from internal
stakeholders. Demonstrating
accomplishments early, even if they are not
appreciated by all the stakeholders, gives
the PMO confidence in its own operations
and experience in marketing the program to
its constituency.
To prepare the organization for global
sourcing, the PMO should integrate
operational processes with the rest of the
business, including change management,
quality assurance, budget management, and
some levels of problem management. As
previous chapters explain, the primary
18
To prepare the
organization for global
sourcing, the PMO
should integrate
operational processes
with the rest of the
business...
Global-Sourcing-in-Action
A major communications company
created a wide range of projects to
reengineer its application portfolio.
Each project had a designated
business impact with incentives for
early completion by the outsourcing
provider. Service providers worked
towards a complex and integrated
set of milestones that coordinated
their efforts and ensured business
results. As projects were completed
early, the provider was given a
bonus related to the business
impact that was derived. When
projects were late, the provider
shared in the cost of the overrun
and incurred penalties that reduced
its profit margins. The complex
alignment of many projects and the
relationship with business objectives
made this project approach both
unique and beneficial.
responsibility of the PMO is to manage
changes in the business and in the global
sourcing relationship; excellence at these
operational processes is essential for the
sourcing PMO’s success.
Ideally all program management process
metrics are captured using a balanced
scorecard with an eye toward leading
measures that indicate problems and
opportunities before they affect day-to-day
business operations and the transition
program. The PMO must have
experience in managing and balancing
multiple projects within its portfolio and
must serve as the single voice of the
client in day-to-day relationships with
the global sourcing vendor. At the same
time, the PMO must be open to changing its
own management processes to better fit
the provider’s transition and operational
approach. The PMO should be enthusiastic
about incorporating lessons the vendor has
learned throughout its internal operations.
During the selection and transition phases
of a globally sourced solution, many clients
benefit from third-party assurance or
independent verification and validation. These
can provide an objective view of the business
value, process effectiveness of the PMO,
and delivered business services. In cases
where the oversight body is unfamiliar with
the day-to-day processes of service delivery,
an external relationship advocate can validate
the quality of the relationship and serve as a
mediator to ensure that the business
objectives of all concerned parties are
achieved.
The PMO’s job is not diminished when the
relationship completes its transition to
steady-state operations. Rather, its focus
changes to operational excellence and
continuous improvement of globally sourced
capabilities. A true partnership with the
vendor must be agile enough to recognize,
assess, and incorporate mutually beneficial
opportunities into the relationship to
accommodate changing market conditions.
Assessment Checklist
The organization has a PMO that
manages all projects in a portfolio.
Project authority is delegated to the
lowest appropriate level internally
to minimize micro-management.
The organization supports
communications and marketing as
part of a PMO’s essential functions.
Employees view project assignment
as an opportunity, not as an
additional load on top of their regular
jobs.
Common Mistakes
Losing important internal expertise
or capabilities after the transition
is complete. Some governing
expertise should be retained to
provide guidance and evaluate
service provider performance.
Neglecting to market the business
value of milestones achieved during
the course of transition. Successes
should be celebrated and the impact
communicated across the
enterprise.
Failing to maintain governance
momentum after the relationship
gains good traction and working
rhythm, and letting the relationship
backslide.
Under-investing in staff to properly
manage the service-provider
relationship. The industry rule-of-
thumb is that the client should spend
3%-4% of the annual contract cost
on governance.
Failing to continually evaluate
whether the original project plan still
aligns with business objectives,
because business requirements will
change.
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