Value-based outsourcing programs start with a clear definition of what value means to the customer's business. Understanding what the business wants to achieve from the outsourcing relationship, along with the customer's priorities, will establish the baseline for the services.

To ensure that desired business results are achieved and that targets are adjusted as business needs change, we recommend that customers conduct regular "value health checks" on their outsourcing program. This allows the outsourcer, the customer and interested stakeholders to continually monitor the pulse and vitality of the relationship — and to make adjustments to ensure alignment and continued focus on business value.

The following are four questions that managers should consider as part of their outsourcer-relationship review process.

Are we focusing on the right things?
To understand if you are focusing on the right things, you need to begin by considering the degree of alignment between your IT organization and your overall business objectives, and those of the outsourcer. The degree of divergence is an important indicator of the health of your relationship.

The clearer and more cohesive your shortand long-term perspectives are, the stronger the bond between the two organizations. One fundamental factor supporting a long-term outsourcing relationship is the sharing of responsibility for joint success. Focusing on this factor helps to ensure that the relationship is dedicated to win-win objectives and delivering what is needed for the success of the customer's business. Moreover, the decisions and directions taken through an outsourcing program should correspond to the values and impacts on the business.

Understanding the portfolio linkages between decisions and impacts, and how the outsourcing program and business priorities change over time, helps to guide necessary changes in both the contracts and the broader outsourcing relationship. Plus, a strong linkage between these elements can significantly increase the contribution of the outsourcing program to the bottom line.