The Importance of Sourcing Governance

Cassio Dreyfuss
Managing Vice President

During Gartner's Outsourcing Summit that ended yesterday, I had a record number of interviews ("one-on-ones", as we call them) with clients. The scenario and specific circumstances varied, but there was one overarching concern.

Sourcing governance has become very visible in the radar screens of sourcing and IT professionals. On the bright side, they now perceive the need for specific sourcing governance, not just the regular IT governance. On the dark side, they pretty much don't know what to do about it.

Gartner defines governance as "the establishment of decision rights and responsibilities in relevant decision domains to preserve the enterprise's principles and support the achievement of its business objectives." We need a specific governance architecture to create effective decision mechanisms and processes to bridge the gap between the enterprise structure, on the one side, and those of its various service providers, on the other side, allowing both sides to effectively manage their relationships - and the delivery of services.

In the good old days, formal, structured organizations worked fine, and we didn't need something special called 'governance', in addition to the organization structure with its boxes. Each of the decision domains was perfectly clear - the confines of each box - and the decision rights in that domain pertained to each box's boss or, by delegation, to somebody inside the box.

Not anymore. We want the relationship between the enterprise and their multiple service providers to be agile, flexible and dynamic to accommodate changes in the business environment and the technology. So we need to create a specific sourcing governance that will support it.