This month, we discuss how innovative organizations are implementing strong governance models and effective relationship management strategies in today’s FAO arrangements.

by Chris Gattenio

Q: If  I have the right SLAs in place, will my outsourcing arrangement be successful?

A: Not necessarily. How you set standards in defining the overall relationship with your provider will be the strongest indicator of long-term success in an FAO engagement. Strong SLAs, while critical, are only a portion of that.

Throughout the FAO industry, companies have learned to focus increased attention on their governance models and relationship management strategies in addition to the SLAs that have become the baseline standard for effective monitoring of day-to-day performance and outcome measurement. SLAs alone cannot ensure the innovation required to achieve best practices, and they won’t drive the effective ongoing improvement and strategic alignment needed for your business.

While governance has always been a part of the discussion, the most effective FAO contracts are now demonstrating an established joint partnership approach in running their deals: strategic alignment of both parties to jointly drive the buyer organization’s business strategy, enable transformation, and support the evolution of the businesses. Effective collaboration strategies embody the broader strategic essence of how FAO can improve an organization, and are the new hallmark of successful engagements.

Top Talent, Strong Teams
Mobilizing senior top talent from both organizations at the start of an FAO process ensures both teams are working together from day one. The willingness to invest jointly in developing a “one team” ethos from the start creates a foundation of a common vision and a mutual desire for excellence.

This model involves all levels of both F&A organizations, providing improved visibility into the overall contract. This allows for greater, more accurate communications and a trusted partnership, while enabling the buyer organization’s management team to focus their attention back into the business.

Governance Framework
A strong outsourcing partnership will establish a relationship management and governance framework that is aligned with the buyer organization’s business strategies and supports the overall FAO relationship. To achieve this, innovative companies are:

• Establishing and fostering working relationships focused on meeting the objectives both parties have identified in the contract;
• Deploying a simple yet comprehensive structure to facilitate communications and decision-making without adding excessive organizational burdens;
• Creating a high-performing organization composed of personnel from both organizations;
• Defining upfront the key points of contact, responsibilities, accountabilities, and escalation procedures to the appropriate strategic levels;
• Providing for regular communication between the organizations supported by a formal quality, review, and performance measurement process;
• Preparing to be flexible and responsive to the ongoing, changing dynamics of the buyer organization’s business;
• Operating on strategic, functional, and operational levels that align with the businesses and needs of the buyer organization; and
• Focusing on continuous achievement of expected commitments, alignment of expectations, and providing competitive advantage.

The organizational alignment between the parties can be structured in a manner that ensures each party knows who their counterpart is in the other organization, and that roles and responsibilities are documented and clear. This alignment is reinforced through an established communications structure and can be facilitated through joint “governance boards” that manage the day-to-day execution of organizational priorities and strategic plans, and conduct more formal reviews on a regular basis.

Manage the Relationship
Tying SLAs to business objectives while formalizing collaborative relationships in governance is essential to driving change and ensuring effective delivery. This formula for success is appearing across the FAO industry, and the characteristics of these contracts are easily recognized:

• Clearly articulated joint vision and strategy;
• Empowered teams with a mandate to execute;
• Strong leadership at global, regional, and local levels;
• Executive change management programs that span the complex, rapidly changing buyer organization; and
• Well-defined process ownership throughout.

Effective measurement is clearly a component of success, but from a strategic perspective, effective governance, a collaborative partnership approach, and strong teams are critical to laying the groundwork for a lasting partnership and ensuring long-term success.

Former CFO, FAO metrics guru, and FAO provider Chris Gattenio has been an advisor for more than 1,000 CFOs. She is vice president, MBPS asset strategy & F&A program management, IBM Managed Business Process Services.

 
To ask her your FAO questions, e-mail askchris@alltel.net.