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White Paper

The New Face of Governance: How to Coactively Manage the New Sourcing Relationship

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by Cynthia Batty

When outsourcing began to gain acceptance among large companies, the technique for managing new sourced services evolved from traditional procurement methods. Initially, a procurement-style vendor management approach was adequate, but as these services moved closer to the heart of business operations, and as the work of multiple providers began to affect each other, a new style of sourcing management that emphasized service integration emerged. This new management technique looked more broadly at service delivery approaches and more deeply engaged the technical operational roles in provider service management – engagement that took time for most internal company staff to accept.

Increasingly, enterprises accepted sourcing as a way of doing business, and the growing complexity of their sourced environments meant they needed to introduce more and more governance and service integration processes into the conduct of the relationship. Ideas about how to govern these services have evolved at pace, especially as companies increasingly adopt more-deeply integrated digitally  transformed products and services, Agile development and DevOps, methodologies that make it clear that process alone cannot bridge the gaps in relationship and integration required to optimize sourcing’s potential. This is why we propose a new way to govern services relationships. This new way shares strategy and responsibility between the client and provider equally and allows an innovation environment to flourish. We are calling this Coactive Governance.

The figure below shows the evolution of how enterprises have managed sourced services to address the increasingly complex integration of third-party service providers into mission-critical business operations.

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In my recent ISG white paper The New Face of Governance: How to Coactively Manage the New Sourcing Relationship, I explore the evolution of governance approaches, the limitations of current governance models and the potential of a new concept called Coactive Governance for moving us forward.

About the author

Cynthia brings 25 years of experience helping clients develop their sourcing governance and service management design. Having worked with more than 50 organizations to improve business management and service management processes in both single-provider and multi-provider environments, Cynthia has become a recognized expert in sourcing governance, vendor and contract management. She currently serves as the architect for ISG’s service methodology and global integrator of its products and services. Cynthia works to leverage ISG’s accumulated intellectual property resources to help enterprises create effective transformation and governance capability, and maintains a continuing role in the Strategy and Organizational Change Enablement practice.

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