Because outsourcing both creates (money-saving and money-making opportunities) and destroys (existing internal IT infrastructures), the multi-billion dollar global outsourcing industry has given rise to the field of outsourcing relationship management (ORM) and a US$500 million market for ORM software tools from niche players like Janeeva, Kelsar, Digital Fuel, Oblicore and RealTime Bookkeeping.
ORM encompasses elements of organizational structure, IT infrastructure and management strategy. To support ORM requirements, numerous commercial ORM software packages are now available. Though this software varies in approach and capabilities, the common functionality among ORM tools includes managing contract documents, tracking metrics, providing dashboard views and alerts, issue tracking and management, and analytics and reporting. The technologies are diverse in their delivery models, with some offered as on-premise software packages and others as on-demand Software-as-a-Service (SaaS).
ORM software should provide data that helps buyers diagnose and prevent problems and more effectively allocate resources, according to Sara Parker Enlow, principal at Boston-based Vantage Partners, a negotiation and relationship management advisory firm.
“Tools should enable good dialogue about performance, rather than be used as another stick to beat the provider with,” Enlow told the E-Commerce Times.
The appeal of a SaaS ORM implementation comes from the need for quick entry, because companies today just do not have time to wait for big, long software implementations, said James S. Diggs, VP strategy and business development for Janeeva, a provider of ORM software to Fortune 100 financial services, healthcare and pharmaceutical companies.
“Outsourcing buyer client companies need to be connected with their service providers, partners and users regularly,” Diggs told the E-Commerce Times. “There is a major cost associated with not using ORM solutions. Without ORM, outsourcing companies run the risk of never seeing the value of their outsourcing engagements fully realized, and it may ultimately cost them in significant operations performance, communications, compliance, control and financial problems.”
Janeeva Assurance is the company’s family of SaaS outsourcing management and governance tools and a leading on-demand ORM system. The most recent addition to the Janeeva Assurance family is Janeeva Summit, a Web 2.0 collaboration and communication tool designed to connect companies and their networks of service providers. It enables outsourcing buyers to post notices, announcements, surveys and other critical information for their provider network, as well as offer comments, blogs, RSS (really simple syndication) feeds and other collaborative tools. For service providers, Janeeva Summit offers the ability to post announcements, notices, master documents and other information through an interface within the security of Janeeva Assurance. Both provider and company users can collaborate and communicate on critical outsourcing management issues within the context of their relationship.
“Just getting started is the biggest challenge facing outsourcing buyers,” said Diggs. “The other major challenge is organizational — many companies are not consistently aligned around the management of their service providers. We have found the greatest success when the operating departments take ownership.”
Another 100 percent Web-enabled ORM package is the ORM suite from Kelsar. The Kelsar ORM suite is an open architecture, Net-centric framework that integrates with most commonly used program management, process control and project management software, including in-house tools to build customized development environments. Features include distribution and control of work over selected service providers in multiple locations, collaboration and communication tools, requirements change management and traceability matrices, impact analysis reports, and defect log and quality process reports.
Service Level Management
A major ORM variation involves SLA (service level agreement) management. However, decisions about which software to use in keeping service levels high must be preceded by decisions about people if the relationship is to function properly, according to Frank Casale, CEO of The Outsourcing Institute.
“One of the top mistakes that companies make in this area is assigning a left-side-of-the-brain person with a traditional ‘me client — you supplier’ mindset, when what ORM really requires is someone comfortable in gray areas and with a win-win perspective and philosophy,” Casale told the E-Commerce Times.
Enterprise ORM software vendor Digital Fuel Technologies, a service level management specialist, identifies itself as “the leader in customer-facing Business Service Management (BSM) software.”
Digital Fuel is a provider of service catalog, service level management and service financial management software solutions for IT, communications, HR and commercial service providers. The company’s ServiceFlow business software applications manage telco, IT and other business services at companies and governments around the world.
The ROI on ORM solutions is achieved by optimizing the sourcing management processes and enhanced vendor management capabilities that ultimately reduce the cost of sourcing, according to Benny Lehmann, Digital Fuel’s former CEO. [*Editor’s note]
“While evaluating ORM solutions, companies tend to measure the cost associated with service level audits and service level breaches, vendor incompliance and failure rate as well as the amount of labor and lost productivity due to manual sourcing management procedures and contract administration,” Lehmann said in an Outsourcing Institute interview in 2003. “These elements ultimately define the ROI on implementing an ORM solution.”
Oblicore is a provider of service level management software to both service providers and Global 1,200 enterprises. Its flagship product, Oblicore Guarantee, automates, activates and accelerates the monitoring, reporting and management of all business technology service level agreements and service delivery for enterprises and service providers. Designed to enable business management, Oblicore Guarantee allows organizations to understand the cost implications of service delivery agreements — in real time — for penalties, rewards and new opportunities. Oblicore Guarantee promises enterprises and service providers complete visibility and the ability to manage service delivery across business and technology infrastructure from one solution.
To get the most out of your investment in an ORM tool set, it is important that tools do more than just report on SLAs, said Vantage Partners’ Enlow.
“Alongside a view of SLA performance, the tool should provide an ability to manage issues, assess and track the health of the relationship, provide easy access to documents and other key information, and manage change orders — for multiple providers, all in one place,” Enlow said.
*ECT News Network editor’s note: The original publication of this article implied that Benny Lehmann is the current CEO of Digital Fuel. In fact, Yisrael Dancziger is Digital Fuel’s current CEO. We regret the error.