Mystery Governance Predictions

VRemember our mystery blogger who evangelizes on best practices for vendor management?  Well that mysterious individual has challenged me to a predictions dual this morning (gasp), where he /she said "I'd be willing to wager a drink on who gets a higher percentage right.  After all, I didn't bet on England in the World Cup, so I'm pretty optimistic :) "  We'll see about that sunshine…

In any case, our friend has come up with some pretty eye-catching and profound statements, for example:

"After testing outsourcing’s shallow waters, companies new to outsourcing will cliff dive into the deep end without further investment in governance, only to find that pool parties should be supervised by a lifeguard and that the pool is more shallow than they think."

Agree 100%

"Allow me to coin a new term, Vendor Management Organization Outsourcing (VMOO), which also has an easy to pronounce verb version: to “vmoo” or “vmooing.” In 2010, the big outsourcing companies, like Accenture and IBM, will begin to market VMOO solutions. They will explain the incompetence of vendor management organizations (which, I have argued, should not exist), link this incompetence to it’s competitor’s performance, and build the case for managing other vendors for companies. In 2010, someone with a moderately complex, underperforming vendor portfolio will will outsource their VMO – leaving a vendor to manage their vendors and clients. The skeptics will call it a lobotomy."

Hmmm… not too sure about this one.  While it could make sense, most sourcing executives will prefer to remain in control of a messy multi-sourced relationship than offload to another party and admit they're struggling.  Might start to happen more in 2011 when some CFOs wise up to the fact that their sourcing managers aren't doing the job well enough.

Cloud computing is at its hype cycle zenith. However, for non-core processes, it simply makes sense. HRO, FAO, and Procurement are all prime areas for cloud computing. Companies struggling with justifying capital expense related to purchasing and customizing these systems will seek solace in cloud computing models and vendors in this space will begin to provide software as part of their solution.

Financial systems in most companies simply have to extract too much legacy back-end data to make this financially viable - although it's a great concept.  Think it may take more time than a year, but it's definitely the future.  HR and procurement?  For standard apps such as payroll and indirect procurement, most definitely.

Anyway, thanks mystery person for taking the time to share your views, especially when noone knows who you are -:)

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2 Comments

  1. Posted December 16, 2009 at 6:01 am | Permalink

    VMOO is not a new concept. It’s a variation of prime/sub-contracting. While one could argue that if a buyer stinks at outsourcing governance and supplier management they should outsource that layer as well, unless they are willing to cede control over all dimensions of a function or process (and just purchase that service as a commodity) a buyer must maintain a strong hand in managing the provider that’s peforming those activities. While selectively supplementing staff and skills through a third party can help, as can the provisioning supporting software tools, the main value a third party can bring to outsourcing goverance is best practices, processes, training and education to help the buyer improve their own skills. Typically this support is best provided by an entity other than the outsourcer itself.

  2. Phil Fersht
    Posted December 16, 2009 at 10:52 am | Permalink

    Stan – agree that its third-party advisors and management consultants who are getting much more involved in this “VMOO” concept. Only really see demand in this space with those companies who’ve been outsourcing for some time and have finally realized they need management help. Most companies still want to try and govern themseves initially, and its only when the situation become majorly costly / troublesome that third-party support is sought. For example, we’re beginning to see advisors specializing in outsourcing “rescues”, where they’re brought in by either the buyer or vendor to terminate / mend the contract. A couple of the large vendors are already actively sending in “rescue consultants” to offload unprofitable clients…

    PF

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