slide 1 of 17 it governance title: it governance introduction to it governance vendor selection...
TRANSCRIPT
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IT Governance
• Title: IT Governance
• Introduction to IT Governance• Vendor Selection• Contracting for Services• Contract Monitoring• Contract Renegotiation• IT Governance and Vendor Management
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IT Governance – What is it?
• The governance of the organisational processes/activities
• Decisions to be made– Shall we perform the activity in-house– Shall we outsource the activity?
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Why Have Governance?
• Organisations that cannot structure their IT governance model waste precious resources – capital, time and human in an era where time is of the essence, capital is in short supply and truly qualified IT people are always hard to find
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What is Outsourcing?
“Outsourcing is the delegation through a contractual arrangement, of all or part of
the technical resources, the human resources and the management responsibilities associated with
providing IT services, to an external vendor”
Clark et al.
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Why Outsource?
• Cost and quality concerns• Breakdown in IT performance• Intense vendor pressures• Simplified general management agenda• Financial factors• Corporate Culture• Eliminate internal irritant• Other Factors
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Outsourcing Advantages
• Financial
• Technical
• Management
• Human Resources
• Quality
• Flexibility
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What IT Functions Could be Outsourced [Survey Results]
IT FUNCTION CURRENT FUTURE
Web Development/Hosting 27% 69%
E-Commerce 7% 54%
Website Admin/Management 8% 53%
IT Services(hardware maintenance) 27% 44%
Security Services 2% 40%
Network Management 11% 37%
Helpdesk 4% 34%
ERP Implementation 1% 25%
Application Management 3% 22%
Other 9%
No Plans to Outsource 9%
None/Don’t Know 41% 3%
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Vendor Selection
• Large orgs may employ a management consulting firm for this task
• A Request for Proposal (RFP) is used as a governance mechanism to solicit and compare contract bids from qualified vendors
• Final vendor selection performed by committee
• Vendors assessed on a number of criteria e.g.– Skills, references, reputation, support, flexibility
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What should a Request For Proposal(RFP) for an Outsourcing Vendor contain?
• Objectives and scope• Background• Technology Vision• Services Requested• Transition\migration services• Performance requirements• Resources• Requirements for Vendor Proposal• General Terms and Conditions for Proposal• Proposal Evaluation
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Main Reasons for Past Outsourcing Failures
• Failure to establish performance metrics
• Poor vendor assessment
• Insufficient detail in contract
• Poor vendor monitoring
“when outsourcing is seen as a failure may need to backsource”
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Outsourcing Considerations[Do’s]
• Ask for and check references and exercise due diligence
• Assess the culture of your outsourcing partner• Evaluate multiple options – both suppliers and
approaches• GET IT IN WRITING!• Metrics matters – use them• Open the kimono as much as possible• Pick an outsourcing partner with a strong partner
network
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Outsourcing Considerations[Don’ts]
• Buy on price alone• Overlook the reference-checking process• Use a price contract without considering the long-term
consequences• Forget to provide for contingencies• Communicate via committee• Ever hand over project management• Rely on marquee references• Single-source• Let your head be turned by goodies
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Contracting for Services
• The contract is the principle governance mechanism of vendor management
• Typically done by specialists in the IT organisation with a legal dept assistant
• Case Study : Contract Elements
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Contract Montitoring
• Monitoring the vendor’s performance against accepted industry benchmarks of quality and service levels and preparing periodic reports to IT management on the performance of vendors against these metrics
• Service level agreements along with incentives and penalties provide an excellent vehicle for managing these criteria
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Contract Renegotiation
• Contract expiration• A material breach in contract by the vendor that may
result in contract termination or renegotiation (e.g. poor performance, security lapses, criminal activity)
• A major change in the organisation’s management or industry (e.g. bankruptcy or merger on the part of the organisation of the vendor)
• A significant change in the price for the same vendor services
• New technology
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IT Governance and Vendor Management[Do’s]
• Establish a vendor management team• Monitor service levels and end-user satisfaction• Track the service/product market and the
vendor’s place in it• Continually renegotiate contracts• Keep business units accountable and involved• Think ongoing relationship – not just one-time
transaction• Use the vendor’s expertise to suggest solutions
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IT Governance and Vendor Management [Don’ts]
• Try to manage a vendor without adequate expertise available
• Ignore the need to establish service level agreements (SLA’s)
• Fail to establsh firm accountability and metrics for performance
• Understaff the vendor management function• Rely solely on the vendor’s expertise• Forget to keep an eye on vendor reputation
and profitability