Outsourcing has grown from a mere cost reduction tool to a powerful business strategy that can act as a competitive differentiator, allowing companies to increase productivity and the quality of their offerings. Nowadays outsourcing is used to pursue a broad range of business opportunities.

Common sourcing objectives:
– Reduce operating costs or headcount
– Improve quality of service
– Access to innovation
– Reduce operational risk
– Focus on core business
– Access to skills and capabilities
– Reduce management attention

One of the biggest problems in sourcing is the loss of value during the life-cycle of the engagement.
In times of unstable economic forecasts for many organisations, this loss of value can undermine the success of the endeavor. In conducting sourcing contracts and relationships, organizations are often faced with ‘value leakage’. This loss of value comes about during the run stage of the agreeement.

Common causes of value leakage:
– Ad hoc approach to governance
– Missed obligations and ineffective productivity norms
– Inaccurate pricing and invoicing errors
– Skewed onshore/offshore mix
– Unnecessary change orders
– Non compliance with business objectives
– Suboptimal value/control balance

Governance of sourced services is the set of people, processes and technology that collectively enable an organization to mitigate risk and drive value of sourcing efforts. At Leadmark we conservatively estimate the gap between strong and weak governance to be 30% of the annual contract value.

How other firms estimate the negative effects of ineffective governance:
– Alsbridge | 40% – 70%
– Everest Group | 38% – 50%
– KPMG | 17% – 40%

Leadmark services allow organizations to streamline and empower their sourcing governance efforts to save costs and maximize value realization from sourced services and supplier relationships.

Operationalizing the contract and the use of the TRAC platform can streamline the governance function resulting in a 20 – 30% efficiency gains within governance teams. These effeciencies are mostly realized in the Supplier Management and Procurement domain and for a smaller part in Legal and Compliance functions. Improved efficiencies result from:
– structured and ongoing governance
– automation of key governance processes
– quick deployment of governance functions – not reinventing the wheel
– clarity on who needs to do what and when
– all governance data available in realtime
– no time lost juggling spreadsheets and email chains
– fewer human errors and mistakes, and the ones that are made are quicker found and fixed
– focus on critical events and issues

Optimizing the contract for manageability and the use of the TRAC platform will empower the governance function making it more effective in driving value from the sourcing arrangement.
Improved effectiviness result from:
– clarity instead of confusion
– in control of risks and issues
– visibility of supplier and portfolio performance
– fewer invoicing errors
– visibility of meeting minutes, actions and decisions
– more time available for driving value
– high compliancy levels