Management of the contract

Over the last few years a certain degree of standardization has developed in the way that the outsourcing contract is managed. Most often this involves a management team of equal numbers of client and provider executives on a joint review board or steering committee which meets on a regular basis during the life of the contract.

The steering committee will probably come into being at the start of the transition. It will be apparent that normally the transition will comprise a whole range of special and probably ’one-off’ projects to bring about the required changes. At the end of the transition new projects will be less frequent and take up a smaller amount of the available resources as the service beds down and something approaching normality returns.

On occasions one person has successfully managed the transition and then gone on to do a perfectly adequate job for the duration of the contract. However, most people would argue that these are very different roles requiring people with different backgrounds and mental outlooks. The person managing the transition will actually be managing a number of separate projects such as:

• location change – which may involve creating a new infrastructure, purchasing and installing new equipment and relocating staff;

• counselling and transfer of staff including preliminary training;

• selection, installing and implementation of new systems; and

• the transfer, setting up and management of the ongoing service.

Typically, the project manager for new systems will have been supplied by the provider and the project manager for the existing service by the client.

The person managing the transition is often termed the Programme Manager. This person must be an experienced project manager used to managing a range of technology and other projects of major size and cost. The position will probably disappear after the transition is completed and this is one reason why the role is usually given to one of the provider’s most senior consultants. Logically, if the service provider takes leadership of the transition it will wish to make the Programme Management appointment from one of its own people.

Once the transition has been completed, new management must be found to manage the ongoing contract. Typically, the provider will appoint its own contract manager and this may or may not be the person responsible for the service delivery. The client’s own contract manager can come from anywhere, in theory, but usually the job goes to one of the project managers involved in the transition.

Client organizations should give early and serious thought regarding the person they choose to manage the existing service project during the transition. It is not unknown for the client to make this appointment from an executive it intended to retain after the transition only to find that the circumstances have evolved in such a way as to make his or her transfer inevitable.

The success of the ongoing outsourcing arrangement will depend to a large extent on the ability of the managers involved on both sides. It is, therefore, of vital importance at an early stage in the pre-transition negotiations to consider the range of skills, experience and personal qualities that are necessary to perform well in this position. The ideal ongoing contract manager will have:

• experience of the functions concerned;

• the ability to feed the right level of information up and down the management tree;

• sufficient technical knowledge and common sense to anticipate problems;

• the ability to build relationships with the individuals involved;

• a genuine belief that the service can be continually improved.

The steering committee will probably meet quite frequently during the transition, often once a month at first but probably less frequently thereafter. Overall the steering committee will be responsible for:

• ensuring that the existing service is sufficient to meet the client’s needs;

• a continual analysis and review of the performances of both client and provider in order to stop potential problems from developing;

• approving the appointment or dismissal of key staff involved in providing the service;

• approving any changes necessary from the contract arrangements; and

• the overall performance of the management.