Outsourcing: Performance management equals ROI

Micro-Sourcing is a modern IT outsourcing strategy which contracts for hybrid delivery models. We’ve covered the importance of governance process maturity and the commercial collaboration obligations to minimize the client/supplier expectation gaps. Now all parties can coalesce on process performance and optimization across product lines, value streams, and services. Reports and service-level agreements (SLAs) still play a role in operational performance; however, objectives and key results (OKRs) are what allows the business to define process performance expectations. OKRs manifest themselves in contracts as critical deliverables or outcomes. Critical deliverables have been available in contracts for decades; now is the time to adapt these tried-and-true methods to cross-supplier processes and outcomes. Using critical deliverables for processes across suppliers is a key transformation lever to encourage proactive governance discussions surrounding optimization, regardless of the number of suppliers or delivery models utilized. The focus of governance meetings will shift from status reports to a driver of cultural change, bringing transparency, disciplined thinking, and focused effort. This keeps all suppliers in step with one another putting the client first and keeping the client “out of the middle,” assisting suppliers with reaching the critical deliverables. The client still plays a crucial role in change and communications management to drive understanding and adoption of the hybrid delivery model, which we will cover in the next blog.

If you would like to read previous blogs in this series, visit Outsourcing (kpmg.us)