Science & Technology

Co-Managed Technology Outsourcing Model

As described in the article ‘types of technology outsourcing models‘, Co-Managed Model is another of the Governance based Models.

This is a bridging model between the Staff Augmentation model and the Managed Services model and is usually adopted by organizations to reduce the risks associated with Staff Augmentation. Co-Managed model retains a certain level of management control with the outsourcing organization and the vendor is only required to manage certain aspects of the engagement.

This is also a model that can be leveraged to achieve an improved measure of quality control in the Staff Augmentation model and as a consequence organizations often tend to use this model as a risk mitigation approach.

Salient Features

Salient features or key characteristics of this model are as described below:

  • This model is usually adopted by organizations when the nature of the systems involved is too critical to allow the vendor complete control of the delivery of services.
  • It is also pursued when organizations do not have complete confidence about vendor capabilities.
  • This model can be fully onshore or a combination of offshore and onshore.
  • There will be a designated Project or Program Manager from both sides to manage the engagement.
  • The outsouring organization’s PM will be typically responsible for selection of key personnel to work on the project, definition of key deliverables, process definitions, stakeholder interactions and high level project management.
  • Vendor side PM will be responsible for work allocation, day-to-day management of project activities, team management and reporting.

Example

This is an original example of an investment bank with IT back-office operations in Singapore. The back-office handles Level 0, Level 1 and Level 2 support for its operations worldwide on a 24 x 7 basis.

Within each delivery group, the contracted vendor personnel are co-managed by the bank’s program manager for that delivery group and also by the vendor’s technical account manager who is based onshore within the bank.

Another example could be of an Oracle Retail application that is used by an apparel retailer. While an internal project team rolls out new modules of Oracle Retail, there is a vendor team, partly based onshore and offshore, who manages the support and maintenance of the same Oracle Retail application. The vendor team also manages an Operations Help Desk for internal users.

The aforesaid examples are operationally different, but the model that is leveraged is the Co-Managed Model.

Pros and Cons of Co-Managed Model

Pros

  • Outsourcing organizations can have tight controls over mission critical processes and functions within the outsourced system without bothering about low level, day-to-day details. This is mainly where the Co-Managed model scores over Staff Augmentation.
  • Quality of deliverables can be managed at a high level by the client manager, and at the same time vendor teams can be less stressed about managing stakeholder expectations.
  • This model gives the vendor teams an opportunity to get closer to the stakeholders and get to know their expectations better so that it becomes easier to move into a Managed Services model.

Cons

  • Vendors generally tend to take a back-seat and becomes more comfortable doing mundane tasks as critical decisions are taken by the client, resulting in client managers spending more time in decision making.
  • Client managers will spend a lot of time in tackling vendor issues and management bandwidth gets unnecessarily stretched.
  • This model is not meant for longer durations and can become expensive to manage.

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