Governance or 'how to manage the alliance'

The 'management' perspective on sourcing and global sourcing incorporates many tools, frameworks, methods etc. but tends to leave the 'management' model itself underdeveloped, presumably because firms already know 'how to manage', i.e. align and control resources. To phrase this differently, we assume management know how to manage, therefore remedies, techniques, and structures proposed for global sourcing are presented as unique or appropriate to the global sourcing context. Management simply needs to apply these novel or customised techniques in their own organisational contexts. Management simply wants new tools, the activities of management itself, "the acts of harnessing and controlling human activity to achieve desired goals or objectives", remains unchanged.

In the case of sourcing initiatives (projects) through to sourcing industries (addressing or creating markets for sourcing projects and services) we can bring focus back onto the overarching activity of management under the heading 'Governance'. Governance is the administration of activity, of people, projects, and resources. Governance retains the notion of its politics, of hierachy, of the concentration of resources and their control. Thompson (2003) refers to governance as action concerned with creating the conditions for ordered rule and collective action, but that it can be employed across multiple organisational forms: hierachies, networks and markets. Oshri et.al (2009) define governance as "the processes and structures that ensure the alignment of strategies and objectives of the parties involved" (Oshri et.al:112, 2009)

For sourcing initiatives governance capabilities are defined in terms of client and supplier perspectives by Oshri et.al, (2009). For the client organisation they are the processes that "align the client's objectives and strategies with the vendor's delivery system" (Oshri et.al:57, 2009). Governance from a supplier's perspective is "the dynamic alignment of the activities of the IT function with those of the overall organisaton." (Oshri et.al:84, 2009)

Reverting back to earlier research into the ITO (IT Outsourcing) industry, 'outside service management models' (Clark et.al, 1998) fall into five types: User Managed (functional manager), IS Managed (divisional), Vendor Managed (supplier), Committee Managed (e.g. a joint board or similar), Mixed Management. Each of these different types require differing forms of management or governance. Governance structure according to Clark et.al (1998) deals with and varies across three areas: Contract, Governance Costs, Governance Mechanisms. Contracts may be lengthy and detailed or short and general. Governance mechanisms can span close meticulous oversight through intensive compliance monitoring, through to 'light touch' intent monitoring. Costs and the need for cost control vary accordingly in direct proportion.

Aside: The very idea of 'Management', its purpose, meaning, legitimacy, culture, and consequences, has been widely and continuously debated by practitioners, theorists and researchers. Few deny the need for management as an activity, however the apparent necessity for Management as a specialisation is debated; see (Grey, 2005) for a gentle introduction to the issues of management of organisations.

References:

• Grey, C. (2005) A Very Short, Fairly Interesting and Reasonably Cheap Bookabout Studying Organizations, Sage Publications Ltd.
• Clark, T., Zmud, R. & Mccray, G. (1998) The Outsourcing of Information Services: Transforming the Nature of Business in the Information Industry. IN WILLCOCKS, L. P. & LACITY, M. C. (Eds.) Strategic Sourcing of Information Systems. Chichester, England, John Wiley & Sons.
• Oshri, I., Kotlarsky, J. & Willcocks, L. P. (2009) The Handbook of Global Outsourcing and Offshoring, Palgrave Macmillan.
• Thompson, G. F. (2003) Between Hierachies & Markets: The logic and limits of network forms of organization, Oxford University Press.