You've established a client steering committee, but aren't getting the anticipated benefits.

Challenge

Client steering committees are intended to build clients' understanding of the value your organization delivers, to set priorities such that your deliverables are aligned with business strategies, to filter demand within the bounds of your resources (demand management), and to match expectations with available resources (managing expectations).

Unfortunately, in many cases, these committees do as much harm as good.

Steering committees may review only large projects, so they do not induce an understanding of why your organization costs as much as it does.

Some committees micro-manage internal service providers -- atempting to control how you deliver your products and services.

They may be positioned to review all your projects, even those funded directly by business units on a fee-for-service basis. This makes you difficult to do business with. Clients will run the gauntlet if they have to, but in many cases they may find a way to work around you (decentralization and outsourcing).

Steering committees may be given purvue over investments in your infrastructure, processes, and organization. Given their vested interests in gaining benefits for their departments, they tend to deny you necessary internal investments in favor of client deliverables.

And while they may prioritize major projects, committees may go on expecting you to deliver more than you possibly can because they don't know where "the line is drawn."

Solution

The proper role for a client steering committee in governance processes is strictly to manage the "checkbook" of budget (or allocations) intended for client deliverables.

Both core budget and allocations (but not fee-for-service) put money on deposit which clients use to "buy" your products and services throughout the year. These revenue sources should be treated as a checkbook -- a "pre-paid account," in accounting terms -- that clients control.

A client steering committee is an appropriate purser for such checkbooks.

To make this work, the committee must know how much is in its checkbook at all times, and what all deliverables cost.

Costs must represent the full cost to the enterprise, so that each purchase decision is independent and does not draw on resources designated for other projects or services.

The committee should be given purvue over the entire client-benefitting portion of your budget. It may spend much of it at the beginning of the year on service-level agreements for ongoing "keep the lights on" services. And these decisions may be obvious. Nonetheless, it's worthwhile to engage client pursers. It builds their understanding of the value you deliver, and why the function costs what it does.

What a steering committees should not do:

• It should not serve as a "board of directors" overseeing the entire function. Doing so is a conflict of interests, since clients interests may be short term and parochial while a board of directors looks after the long-term well-being of the business within a business. A separate committee may be needed (albeit with some of the same members) if the department's chain of command feels the need for help with supervision.

• It should not review all work done by the internal service provider. Business units have a right to buy what they wish on a fee-for-service basis without committee approval, as long as these deliverables are fully funded and do not affect other clients.

• It should not be the purser for the portion of the budget intended for enterprise-good activities, nor for internal "venture" investments in the organization's infrastructure and processes.

Comprehensive solution....

Other Resources

Column: Portfolio Management....

Column: Governance....

Column: The Role of Steering Committees....

Column: Making Committees Work....

Anecdote: Attempting Portfolio Management
why a shift in the budget process is prerequisite to dynamic portfolio management

Anecdote: Client-driven Portfolio Management (Out On a Limb Alone)
you're expected to defend the budget that's really there to benefit your clients, and blamed when you don't get enough

Book on resource governance processes....

Speech abstract: The Big Picture
how all the pieces of financial management processes fit together