Do you know how much risk your outsourced service provider contributes to your business? Do you know how their low level of organisational maturity could undermine your organisation’s ability to meet the performance expectations of your stakeholders? Do you know if your service provider continues to deliver on its original value proposition?

At a time when companies are focusing on better corporate governance, executives need to be mindful of the impact outsourced service providers have on the success of their business both in the short and long-term. If not managed properly, the initial benefits of outsourcing can quickly be reversed and the many significant risks could go unmanaged.

Too frequently organisations enter into outsourced arrangements without properly preparing themselves for something that is now well known to be inherently risky. With good planning, preparations and management the risks can be managed and the benefits become sustainable.

The start must be a good understanding of the roles and responsibilities that are divided between the organisation and the service provide. This will enable a governance framework to be built for the many decisions that need to be taken and the processes defined and used to reach these decision points. The tool to use is a detailed process flow RACI chart.

At the heart of good governance is maintaining a capability to perform consistently in delivering against the stakeholders’ expectations. When the business success is built on a relationship with an outsourced service provider it becomes critical that the required capability of the service provider be articulated.

Processes which contribute to the organisations efficiency and effectiveness need to reach a process capability level of 3. Where managing the inherent risks in IT is important the organisational maturity level should be 2. What is adequate will depend on the organisation’ s business goals and the role information and the related technology play in supporting the organisation’s value chain.