White Paper:

Organizing
Sourcing
Governance
 A Sophisticated Balance
of Focus Areas, Skills and
Service
As long as IT has existed, so has the problem of insuffi-
cient alignment between IT provider and business. The
challenge has been one of ‘moving goalposts’. In recent
years, major changes have been taking place. On the one
hand, business processes are becoming increasingly de-
pendent on IT, and customers are developing ever-higher
expectation levels that in turn impose even greater
requirements on IT support processes. On the other
hand, IT services are being forced to deal with shrinking
budgets and increasingly complex IT landscapes. The
number of applications in use is rising, the influence of
internet is growing still further and demand for mobile
applications is increasing significantly. Add to this com-
plexity the strategic options of outsourcing, offshoring
and cloud computing, and it becomes readily apparent
that those responsible for IT governance are being faced
with an extremely complicated decision- making process.
One thing is certain. IT will have to provide business with
greater added value while keeping its costs under tighter
control. Maintaining a balance between value and cost
will also have to become a goal. Aligning supply and
demand, i.e. governance, will play a crucial role in this
respect.
This white paper explains how governance is evolving
to become increasingly results-oriented. It then outlines
how governance and the governance organization itself
should be structured. It concludes by examining numer-
ous governance applications.

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Proper process defini-
tions are not enough
in their own right to
achieve outsourcing’s
objectives.
Figure 1 – Governance and management – indispensable elements
Business Units
Strategy & Monitoring
Supply & Demand Management
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The Ever-Evolving
Governance Arena
Sound governance is essential for guaranteeing the pro-
vision of the correct services – on time, on budget and to
specification. This would seem rather self-evident. However,
governance came about as something that you had to do
after entering into a contract with an IT service provider
(Quint – The Smart Buyer). The much-used Sourcing Gover-
nance Framework (Quint, 2004) identified at an early stage
in its evolution which activities and focus areas actually
define the governance domain. Using this framework, it is
possible to identify the processes that are essential to man-
aging sourcing relationships within the outsourcing organi-
zation and across the interface to suppliers’ own processes.
Countless organizations’ governance-related experiences
have led to the conclusion that proper process definitions
with clearly defined roles for the staff members involved
were not enough in their own right to achieve outsourc-
ing’s objectives. Since the publication of Demand Supply
Governance Framework™ (Quint, 2008), greater attention
has been paid to governance’s other major challenge –
determining demand for IT services – in addition to sound
supply management. This addresses demand from within
every business unit throughout the organization and focuses
on the needs and the clearly defined requirements of the
organization itself and those monitoring it – within a context
that makes commercial sense. After all, you always need to
be able to justify and earn a return on your investments.
Governance
Suppliers
3
 In addition to the focus on the demand for IT services, great-
er attention is also being paid to those persons responsible
for carrying out various governance roles. We can improve
staff involvement and effectiveness when structuring gover-
Greater attention is nance activities by putting people – professionals – first. By
also being paid to building successful teams of professionals, it is possible to
governance’s other create an organization that can operate on a basis of equal-
ity with its contracted suppliers. This helps avoid a common
major challenge: pitfall – the silent assumption that an inexperienced gover-
determining demand. nance organization can manage experienced suppliers.
On balance, it has proven essential to differentiate more
clearly between establishing the desired level of governance
and managing related IT service levels. Governance entails
constant examination of objectives and motives, ‘Why are
we doing this?’ and ‘What do we aim to achieve?’. Gover-
nance is not a goal in its own right. A set of rules is needed
in order to achieve this form of governance – rules that
ensure that all parties involved conduct themselves in an
appropriate fashion. Governance is about ‘... specifying the
decision rights and accountability framework to encourage
desirable behavior in the use of IT’ (Weil & Ross, 2004). The
Control Objectives for Information and Related Technology
(COBIT®) framework – the standard in the field of enterprise
governance and IT management – states the following,
‘Governance ensures that stakeholder needs, conditions
and options are evaluated to determine balanced, agreed-
on enterprise objectives to be achieved; setting direction
through prioritisation and decision making; and monitoring
performance and compliance against agreed-on direction
and objectives’ (ISACA, 2012).
Governance also demands sound management, or as
defined by COBIT®, ‘Management plans, builds, runs and
monitors activities in alignment with the direction set by
the governance body to achieve the enterprise objectives’
(ISACA, 2012).
Governance and management are two key concepts. They
are essential in terms of actually being able to provide
long-lasting benefits to customers. Both terms – gover-
Governance and nance and management – are intrinsic components of the
Demand Supply Framework that Quint uses as a basis for
management are both
designing, structuring, implementing and further developing
essential concepts. an organization’s governance activities.

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 Results Count
As previously mentioned, governance’s essence centres
on organizing and realizing the benefits that IT can pro-
vide an organization. A shift is therefore occurring from
a process- oriented approach to a more results-oriented
approach. After all, proper governance is essential to
guaranteeing the provision of the correct services – on
A shift is occurring time, on budget and to specification. A characteristic of
this form of governance is management based explicitly
from a processoriented on results for the organization as a whole, and clear
approach to a more objectives and KPIs. Foremost aspects include realizing
results-oriented the business cases put forward for the various sourcing
initiatives, as well as safeguarding quality and customer
approach. satisfaction levels – rapidly, agilely and transparently for
all links in the chain. Governance ultimately has to be
able to act as a professional customer with respect to
IT suppliers (internal and external) and in turn a reliable
supplier of services to its own internal customers. In
doing so, major emphasis needs to be placed on sys-
tematic working practices and minimizing the number
of ad hoc IT-related activities. Consequently, governance
should not only focus on standard IT services and short-
term solutions, but also on ensuring that attention is paid
to the long-lasting business benefits provided by services
and projects.
This will result in increased efficiency and effectiveness
where important issues are tackled and more is achieved
at lower cost by fewer people. A crucial point in this re-
spect is alignment of services with business demand and
smart consolidation of services for the organization as a
whole. Consolidation is not about creating a one-size-fits-
all approach – the customer and his/her business case
should continue to play the leading role. Standardization
can be an important objective in this respect because it
can provide long- lasting benefits in terms of coopera-
tion, quality and costs. This naturally has to be achieved
within pre-defined boundaries (strategy and monitoring)
so that objectives remain aligned with company-wide
strategy, risks are mitigated, and existing legislation and
regulations are complied with.

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 Governance Organization
Figure 2 – DSG Framework

Demand Domain Governance Domain Supply Domain

Strategic Level
Internal
Business
Service
Unit Policy Provider

External
Business
Service
Unit Tactical Level
Demand Integration

Provider

Supply Integration
Projects

External
Business Changes Service
Unit
Provider

Operational Level
External
Business
Service
Unit
Standard Services & Requests Provider

Demand Supply Governance (DSG) and Demand Supply

Management (DSM) require different approaches. Frameworks
are needed to establish proper conduct, strategy and policy.
Corresponding procedures also need to be established for each
of these. A large number of issues (focus areas) also exist that
staff members need to incorporate into their duties in order to
provide the correct IT services. These have been incorporated
into a framework (see Figure 2).
The DSG Framework is an aspect model and as such is a sim-
plified representation of reality. It is a tool to help understand
reality better and is based on an information management
model developed by Maes (2004). We have identified three
domains – demand, governance and supply. We have also
identified three levels – strategic, tactical and operational.
The matrix above has been populated with those focus areas
that require governance within every organization. For example,
at a strategic level within the supply domain, managers gen-
erally focus on the business plan, as this charts the business’
course and its objectives for the year ahead. Managers working
in the IT domain at an operational level generally focus on
customer service levels. We have identified thirty-six focus areas
as shown in Figure 3.

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 A common error when implementing governance is to con-
vert all the focus areas listed into processes. This results
in a proliferation of processes and procedures that make
A common error is to it difficult to act effectively and efficiently. The DSG Frame-
convert all the focus work therefore uses a limited set of processes depending
on the governance organization’s duties for which process
areas listed into definition is intended. The framework uses process models
processes. such as ITIL® and COBIT® for defining these processes.
We have identified three value chains for managing day-to-
day IT services – Standard Services, Changes and Projects.
These three chains in turn pose three key questions – these
being how to deal with:
Project delivery (correct specifications and delivery)

Standard service delivery (contractually based)

Intermediary services – Changes (standard or non-stan-

dard) that are frequently forgotten at a management
level, yet are essential in terms of agility and need to be
supplied – on time, on budget and to specification

A fourth value chain – policy – has also been included in

addition to the three day-to-day value chains. It would be
impossible to manage the other three without this fourth
chain. Particularly within young governance organizations,
a lack of strategy and clearly defined policies is often a
major obstacle blocking the path to success. The four
chains are central to the governance organization’s perfor-
mance management.

Figure 3 – Focus areas, value chains and DSG Framework interfaces

Demand Supply Domain

Business Provider
Strategy & Control
Risk, Security & Internal
Business Business Plan Financial Policy Architecture Compliance Service
Tehnology Innovation
Unit
Policies Provider

Planning Project & Service Sourcing &

Business Program Portfolio Procurement

Demand Supply External

Business Information
Demand Integration

Service
Supply Integration

Unit Business Case Contract Design

Provider
Business Requirements
Solution Development
Management Projects Project Assurance
Change Request
Test
Impact Changes Change Control
Test External
Business Implementations
Service
Unit Release Acceptance
Provider
Implementation

Client Service Provider Service

Functionality Catalog Catalog Service Improvement
External
Business
Unit Service Level Service Request
Standard Service Management
Service
Service Delivery
services Provider

Service Cost Service Performance

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 It is also vital to pay attention to interfaces, in addition to
the focus areas and the value- chain driven performance
management. When implementing Demand Supply Gover-
nance, it is all too easy to get lost in the details. The number
of interfaces between the various parties involved can easily
run into the hundreds given the number of focus areas
and their conversion into processes. This may result in the
risk that governance then evolves into a structure defined
by constant meetings. Individual meetings may make a
positive contribution, but the sum of the parts results in slow
and laborious decision-making processes and deliverables.
Identifying the right interfaces and focusing on these en-
Concentrate on sures proper process implementation on the one hand and
achieving goals rapid completion on the other. The governance organization
can then evolve to become a professional organization that
when implementing ensures that the right services are supplied – on time, on
governance budget and to specification.
The interfaces between business and governance, and be-
tween governance and supplier(s) are of course the most im-
portant, as they provide added value. Those interfaces that
ensure correct framework development are also important.
Prime examples include service selection and architecture,
i.e. in terms of providing direction and setting boundaries.
Staffing – the group of professionals providing governance
– should not be viewed as a random group, i.e. a collection
of roles assigned a job title. These professionals need to be
able to form a successful team. The professional element
in the DSG Framework may not therefore be viewed as a
separate entity outside of the team in which he/she acts as
These professionals a successful governance professional. This requires proper
structuring to ensure that everyone is on the right page and
need to be able to form is cooperating so that others feel supported, share the right
a successful team. information and achieve results for the business.
In summary, the Demand Supply Governance Framework
identifies the following elements:
1. The focus areas that to a greater or lesser extent define
the governance organization’s day-to-day activities.
2. Governance and management interfaces whereby
emphasis is placed on making and monitoring essential
agreements.
3. Supply chain management that from the outset is
focused on the end result, i.e. value chains. These in turn
focus on the required strategy and policy framework,
project results, and non-standard and standard service
delivery according to contractual agreements.
4. Process definition that ensures that activity results occur
in a predictable and efficient fashion. Value chains con-
nect processes, are performed by professionals, support
focus areas and make communications more effective.

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 5. Ultimately, it is all about the professionals who carry
out this work. They are the determining factor. Pro-
fessionals need a set of rules (governance) and need
to be managed with the aim of achieving specific
objectives (performance).

Figure 4 – It is all about the professionals who carry out this work

Value
Chain

Focus
Professional Interface
Area

Proces

Governance Organizations
– All Shapes and Sizes
Governance organizations can have a diverse range of
tasks and responsibilities. Some only manage a large
number of suppliers who jointly supply all the required
IT services. Others have to manage both internal and
external suppliers, and to integrate these services with
one another. A different staffing structure is required de-
pending on the governance organization’s specific tasks.
After all, we also see governance organizations that only
provide strategic governance, i.e. they only make the
rules; they don’t get involved. They leave this to commer-
cial departments and suppliers.

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 Governance Across the
Board
Our vision regarding governance took shape within the context
of IT being subcontracted by government bodies to external
suppliers. In recent years, however, governance has proven
applicable to every sector – from government bodies to industry
and from banks to hospitals – and to managing virtually every
type of service – from IT to mortgage administration – regard-
less of whether they were being provided internally or externally.
Moreover, the phenomenon of supply chain governance has
now been fully recognized, this being management of both
internal supply chains and examination of the organization’s
role within external supply chains and its interaction with
other organizations in those chains. Governance has proven
to be a sound approach for managing ever-greater specializa-
tion and increasingly longer value chains.
In addition to the points above, we also foresee the following
developments:
Uncoupling of Supply and Governance – Even if services
are still being provided in-house, uncoupling governance
responsibilities will provide greater clarity and improved
efficiency. After all, distancing oneself from internal supply
chains allows the governance organization to bear its
sourcing responsibilities more effectively. Governance then
evolves from being a mere conduit into a managing role.

Figure 4 – Governance’s wide-ranging applicability

Sub provider X

Business A Provider A

Strategy & Monitoring Strategy & Monitoring

Supply & Demand Supply & Demand

Consumers/Customer Organizations

Sub provider X
Management Management

Business B Governance Provider B

Strategy & Monitoring Strategy & Monitoring Strategy & Monitoring

Supply & Demand Supply & Demand Supply & Demand Sub provider X
Management Management Management

Business C Provider C

Strategy & Monitoring Strategy & Monitoring

Supply & Demand Supply & Demand Sub provider X

Management Management

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 Service Virtualization – This is the emergence of the cloud
and app stores, whereby actual suppliers are virtually
invisible and business can procure services independently.
On the one hand, this requires clearly defined boundaries,
i.e. what is and is not permitted, so as not to jeopardize
the business, and on the other, it reduces the likelihood
that governance will have to play an operational role.
Broader Scope – Nowadays, we often see governance
organizations dedicated exclusively to IT, HR or Facility
Management. Opportunities exist in the consolidation
of governance across all of an organization’s resources
and services. Consolidation entails that projects can be
integrally managed – a major benefit. Implementing
new-style working often requires personnel-, facility- and
IT-related aspects to be consolidated. The disadvantage
is that these governance organizations can become too
large when trying to accommodate every specialism,
making them unmanageable.
Architecture – Often, the governance landscape is
defined by historical decisions, i.e. legacy. However, to
actually achieve improved quality levels, agility and cost
savings, governance will have to redesign services based
on today and tomorrow’s business objectives. This also
provides opportunities to source from the best IT
solution providers, instead of placing all services under
one roof with a single supplier.
Improved Professionalism – Business expects perfect
services. This can only be achieved if both supervisor and
integrator roles are professional and adhere to standards.
It is no coincidence that proper functioning governance
organizations employ staff who have been trained in
governance, and in the services that they govern and the
business for which they work.
Innovation – Throughout the recent financial crisis, the
main drive for virtually every governance organization
has been cost reduction. However, we have been wit-
nessing an increasing realization of the fact that an entire
organization’s level of innovation (including its products
and services) can be shaped by the level of innovation of
its internal services. The ability to govern innovation will
become a decisive factor in an organization’s success.
Cooperation – Because services always arise in part-
nership with customers and suppliers, it is becoming
increasingly important to structure these partnerships
properly. Entering into shortterm business relationships
The ability to govern and contracts – whereby one of the two parties is
innovation will become squeezed out – is and will remain a potential strategy.
However, we anticipate that for reasons of sustainability
a decisive factor in an and agility greater attention will be paid to the partner-
organization’s success ships existing between all the links in the supply chain.

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 Conclusion
Governance’s success lies in its ability to achieve a bal-
ance. This involves establishing a suitable combination of
focus areas and skills to provide the right services. Which
combination is most suitable depends partially on the or-
ganization’s strategy as a whole. If it operates in a highly
dynamic marketplace, then this will impose very different
requirements than when low cost and operational excel-
lence play the main role. With this as a given, governance
organizations should maintain a constant watch on value
chains – standard services, changes and project results.
After all, proper governance is essential to guaranteeing
the provision of the correct services – on time, on budget
and to specification.

Authors
Ronald Israels and Marco van der Haar

References
Citations:
ISACA, COBIT® 5, 2012

Maes, R., ‘Information Management: A Roadmap’,

PrimaVera Working Paper, 2004/13 (University of
Amsterdam, 2004)

Quint Wellington Redwood, Sourcing Governance

Framework, White Paper (2004)

Quint Wellington Redwood, Demand Supply Gover-

nance Framework, White Paper (2008)

Weill, P. & Ross, J.W., IT Governance: How Top Per-

formers Manage IT Decision Rights for Superior
Results (Harvard Business Press, 2004)

Other References:
Dekker, H.J., ‘Rol ICT-leverancier bij innovatie’ [‘The
Role of the ICT Supplier in Innovation’], Informatie,
September (2013)

Dermout, G. & Israëls, R., ‘Anders denken over inno-

vatief organiseren: Mensen als motor van innovatie’
[‘Thinking Differently About Innovative Organization:
People as the Motor Behind Innovation’], http://www.
innovatieforganiseren. nl/gastcolumns/ andersdenk-
en-over-innovatieforganiseren- mensen-als-motor-van-
innovatie/ (2 June 2013)

www.quintgroup.com 12
 Graaf, R. & Israëls, R., ‘Samenwerken bepaalt succes’
[‘Partnership Determines Success’], Outsourcing
Magazine, 2013/2

Haar, M. van der, ‘10 stellingen over regie’ [‘Ten State-

ments About Governance’], Outsourcing Magazine,
(November 2012)

Haar, M. van der, ‘Schoenmaker blijf bij je leest – De

rol van de klant bij dienstverlening’ [‘Let the Cobbler
Stick to His Trade – The Customer’s Role in Service
Provision’], IT Service Magazine (October 2013)

Haar, M. van der & Lousberg, J., ‘Regie en de toe-

gevoegde waarde van IT’ [‘Governance and IT’s Added
Value’], Outsourcing Magazine, (December 2009)

Israëls, R., Graaf, R. de & Gondhalekar, S., Collabo-

ration selection and assessment, SCMC Conference
Bangalore (December 2012)

Israëls, R., ‘Regie goes virtual, de invloed van de cloud

op regievoering’ [‘Governance Goes Virtual – The
Effect of the Cloud on Governance’], Outsourcing
Magazine, (August 2013)

Israëls, R., ‘Regieorganisatie als knooppunt’ [‘The

Governance Organization as a Hub’], Outsourcing
Magazine, (June 2010)

Israëls, R. & Schrieken, N., ‘Transparantie als droom of

nachtmerrie’ [‘Transparency – Dream or Nightmare?’],
Informatie (October 2011)

Quint Wellington Redwood, Customer Supplier Part-

nerships, White Paper (2013)

Quint Wellington Redwood, Regie: Trends en ontwik-

kelingen [‘Governance: Trends and Developments’]
(2011)

www.quintgroup.com 13
 ABOUT QUINT WELLINGTON REDWOOD
Quint focuses on two major changes taking place in the world: digital
transformation and the increasing need for sustainability. Technology is
one of the driving forces of change. Many organizations have difficulty in
keeping pace with today’s rapid successive developments and applying
them successfully. They wonder if they are flexible enough to implement
change and whether they will still be a relevant player in a few years’ time.
We see that organizations have to make fundamental choices about
business models, management and technology under pressure from
these trends.

In our vision, technology is not the only deciding factor: the knowledge,
leadership and culture that are must-haves for organizations to recognize
relevant technology and apply it to provide value to their organization
and environment are even more important.

Quint supports organizations in designing and implementing their

digital strategy. Together with our clients, we build roadmaps that facili-
tate fast and effective change, anticipating or responding to opportunities
and threats. We bring technology – and its application – to life.

Digital Strategy & Lean IT, Agile Data Management Transformational

Transformation & DevOps & Governance Leadership

Sourcing Strategy, IT Governance, Risk Service Integration, Training & Coaching

Contracting & & Compliance Automation &
Transitioning Management

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