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Businesses are no more about stand-alone deliveries and competition. They are increasingly about ecosystems comprising suppliers, vendors and outsourcing partners. All of these are important parts of the same whole and demand proper attention and management.
Effective vendor management can have benefits that extend from cost reductions and efficiency improvement to enhanced customer satisfaction and improved focus on key competences.
Many organisations face a growing challenge in managing multiple vendor contracts. To ensure that each contract delivers long-term business value without putting undue pressure on management resources, organisations look to consolidate and rationalise their supplier lists. The aim is to identify partners who can deliver lasting value to the business relationship.
Adherence to some time-tested principles can help achieve IT managers achieve desired objectives.
Defining the contract
Well begun is half done, they say. The foundation of the relationship should be laid on well researched grounds. The selected vendor should be able to demonstrate a desired level of insight and appreciation of the business and should also be able to identify and suggest some key success factors instead of merely aiming to define the SLAs.
To achieve this, they may conduct some pre-contract, pre-operations research, using a standardised methodology. This initial investment by the vendor in understanding the business goes a long way in aligning their offerings to your organisations long-term business goals.
Ability to manage transition smoothly
Managing the transition is a combination of science and art, and like the saying goes: things get worse before they get better. Mature vendors look at themselves as strategic partners and will have a well defined approach to managing transition. It is during the transition phase that the service level agreements (SLAs) should be defined in detail. And the transition process should include full process mapping, linked to a rigorous review of the documentation. Each step in the transition process should incorporate a set of reviews and measurements, with a defined output.
Driving excellence in delivery
SLAs are the first measure of success or failure, but they should be treated as a baseline rather than the last word on performance delivery. Once the outsourcing vendor has achieved the baseline SLAs, the responsibility should then be to continually improve performance and the vendor should show initiative to propose new or changed SLAs.
It is important for the vendor to understand appreciate this as an important aspect of the relationship, as it makes the alliance strategic rather than a run-of-the-mill supply arrangement. Hence, IT managers should look at selecting a partner who is inclined to help the enterprise achieve its broader business goals.
Multi-dimensional relationship
The vendor should be able to view the relationship as one that has many dimensions and the impact of which also cuts across various aspects of the organisation. Thus, measuring the success of a relationship by monitoring the agreed SLAs can be self defeating. Do remember that SLAs by their nature are focused on specific objectives, whereas overall performance measurement across multiple factors is the true measure of success. Finding the right mix of governance, contract, relationship, experience and operational delivery will contribute to a total value creation, and this must be measured too.
People are the foundation
It is also important to find out whether the vendor has the right kind of workforce to build and maintain the solution or the service it is offering. It is also vital for the vendor to have a robust practices in recruitment, HR, training, and performance management. Besides, look out for a vendor who either has the domain knowledge and competencies across specified business functions or is looking at building these. This will translate into an enhanced capability at their endone that will promise potential value adds for your organisation.
The author is Consultant at Xebia IT Architects India
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