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<br> <br> Contact <a href="mailto:John.Wyzalek@TaylorandFrancis.com">John Wyzalek</a> editor of <b>IT Performance Improvement.</b> <br> </td> </tr> </tbody> </table> </td> <td width="1px"> <p style="font-size:.05em; text-align:center; vertical-align:top; color:black;">&nbsp;</p> </td> <td width="550"> <table border="0"> <tbody> <tr valign="top"> <!--November 2010--> <td> <h2>Risk Management as a Competitive Advantage</h2> <p style="font-size:1em; text-align:left; vertical-align:top; color:black; font-weight:bold;">J. LeRoy Ward, PMP, PgMP</p> <p class="text"> Whether buying or selling outsourced products or services, organizations can t afford not to have a risk management plan in place. Assessing and responding to risks of outsourced projects directly impact an organization s financial and operational performance, making risk management expertise essential, for both buyers and sellers of outsourced projects. New ESI International research shows that although more than 75&#037; of organizations carefully scrutinize vendors technical abilities, they seldom ask for, or review, the vendor s ability to manage risks. In our view, including one s ability to assess and manage the risk of delivery on an outsourced project would move your proposal to the head of the pile; and, those that write evaluation criteria should definitely be looking for the vendor s ability in this area. </p> <p class="text"> Risk management capability should be thought of as a competitive advantage by organizations that buy or sell outsourced products and services. When assessing a vendor s ability to fulfill a contract, buyers should ask that risk management planning and execution be evident throughout the outsourcing lifecycle. </p> <h4>Manage Risk Across the Outsourcing Continuum</h4> <p class="text"> The level of risk management depends on project complexity and scope. For example, a purchase order to purchase a commodity would have a lower degree of business risk than crucial business process outsourcing. Project managers should consider the level of risk as it relates to the kinds of outsourcing in which they are engaged. The following is ESI s outsourcing continuum: <ul class="text"> <li>Purchasing&#151;Buying simple products or services from an external vendor</li> <li>Project-based Contract&#151;An agreement to purchase a specific set of deliverable items at an agreed price and defined schedule</li> <li>Out-tasking&#151;Turning over a narrowly defined function or activity of the business to the external vendor</li> <li>Selective Outsourcing&#151;Turning over an entire function or activity of the business to the external vendor</li> <li>Business Process Outsourcing&#151;Turning over an entire business process to the external vendor</li> </ul> </p> <h4>Manage Risk Throughout the Project Lifecycle</h4> <p class="text"> A recent ESI International survey<sup>1</sup> shows that less than half of organizations adhere to best practices for risk management, thereby giving organizations which can demonstration risk management capabilities a significant competitive edge. <ul class="text"> <li>Only 38&#037; agree that they use quantifiable metrics to assess risk</li> <li>Only 40&#037; agree that their outsourcing teams put sourcing and risk mitigation strategies and plans in place after assessing project risks</li> </ul> </p> <p class="text"> Assessing and managing risk throughout the lifecycle of an outsourced project is as important as knowing the level of effort appropriate to the type of sourcing. While risk management plays a larger role in some stages than others, the opportunity exists for collaborative risk management between the key competencies in project management, business analysis and contract management throughout the sourcing process: <ul class="text"> <li>Strategy and Planning</li> <li>Search and Select</li> <li>Negotiations and Contract Award</li> <li>Start-up and Transition</li> <li>Relationship and Governance</li> <li>Termination and Migration</li> </ul> </p> <p class="text"> Developing these risk management capabilities in outsourced projects will enable organizations to build competitive advantages, whether by helping grow market share or enhancing organizational growth through improved performance and results.&#9830; <br> <br> <b>Note</b> <br> <sup>1</sup><i>Risky Business: Organizational Effectiveness at Managing Risk of Outsourced Projects</i>, ESI International, 2010. <br> <br> <b>Read more <a href="http://ittoday.info/ITPerformanceImprovement/index.htm"><i>IT Performance Improvement</i></a></b> </p> <!--DISCLAIMER NOTICE AND COPYRIGHT--> <p class="copyright"> <br> <br> Certain names and logos on this page and others may constitute trademarks, servicemarks, or tradenames of <a HREF="http://www.crcpress.com" TARGET="_parent">Taylor & Francis LLC.</a> Copyright &#169; 2008&#151;2010 Taylor & Francis LLC. All rights reserved. </font> </p> </td> </tr> </tbody> </table> </td> <td width="300"> <table> <tbody> <tr> <td> <table style="background-color:#E0E0D1;" cellpadding="10" margin="5" border="0" valign="top"> <tbody> <tr> <td colspan="2"> </td> </tr> <tr> <td colspan="2"> <h4>About the Author</h4> <p class="text"> <b>J. LeRoy Ward, PMP, PgMP</b>, is Executive Vice President, Product Strategy & Management, <a href="http://www.esi-intl.com/" target="blank">ESI International</a>, and has more than 33 years of expertise in project and program management to the refinement of ESI s portfolio of learning programs. In addition to being quoted by media outlets from the <i>Financial Times</i> and <i>PM Network</i> to NBC news, he regularly authors articles that appear in a broad range of publications including <i>Chief Learning Officer</i>, <i>Project Manager Today</i>, and <i>Human Resources Magazine.</i> <br> <br> He is also coauthor with Ginger Levin of the forthcoming book <a href="http://www.crcpress.com/product/isbn/9781439851111" target="blank"><b>Program Management Complexity: A Competency Model</b></a>. <br> </p> </p> </td> </tr> <tr> <td colspan=2> <h4>Also by J. LeRoy Ward</h4> </td> </tr> <tr valign="top"> <td> <center> <img src="http://www.ittoday.info/catalog/images/covers80w/N10241.jpg" Border=0> </center> </td> <td> <p class=text> <a href="http://www.crcpress.com/shopping_cart/products/product_detail.asp?isbn=9781890367527&AF=WAUER" target="blank">PMP<sup>&#174;</sup> Exam: Practice Test and Study Guide, Eighth Edition </a> </td> </tr> <tr> <td colspan="2"> <p class=text> This spiral-bound edition includes 40 multiple-choice practice questions in each of nine knowledge areas and in the professional and social responsibilities domain. It presents a composite 200-question practice test intended to simulate the PMP&#174; exam. A comprehensive resource, it also contains fully referenced answers keyed to the five project management process groups, a complete bibliography, and a study matrix to help readers key in on specific areas that require further study. </p> </td> </tr> </tbody> </table> </td> </tr> </tbody> </table> </td> </tr> </tbody> </table> </table> </body> </html>