This blog has been kindly provided by Sandy Winschief, a vendor/supplier management specialist at TCS, who previous provided: A Late New Year’s Resolution: Be Nice To A Supplier And See What Happens. They are Sandy’s words with just a little editing on my part. Enjoy…
Service integration (SI) is already one of the IT buzzwords of 2013; you might also hear service integration and management (SIAM) which brings in an IT service management (ITSM) perspective. However, just because it is one the most talked about ideas in the IT industry does not mean it is understood.
For now let’s just say that if you could take your E2E IT operations and the complex multi-supplier environment in which it sits and give that pain to someone else to manage while you concentrate on what you do best, on your customers and their needs, then why wouldn’t you? This, in essence, is what pure-play SI is (Stephen – at Forrester we are also speaking to clients about internally operated SI).
Sounds attractive, doesn’t it? The good news is that it can be. The bad news is that my experience to date has shown SI implementation can be a painful experience if those involved are not prepared.
Planning for service integration
The transition to an SI model is a lot easier if time is invested upfront to:
- Housekeeping key areas of the IT environment
- Engaging a potential SI provider earlier to work with the organization – to help organize and plan for transition readiness.
One area where housekeeping cannot be overlooked is the legal environment in which you work. IT often forgets there’s a piece of paper called a contract that governs you and your suppliers and how your relationships function and that those contracts are governed by a well-established body of contract law that cannot be ignored just because it is inconvenient.
SI is not just a two-way engagement between you and the SI provider
Managing IT operations E2E may involve hundreds of suppliers throughout the value network, from your key strategic partners to the commodity providers, all vital in the chain of events albeit to varying degrees. Just because you want to change doesn’t mean they have to follow. They have a contract with agreed responsibilities and obligations and you cannot unilaterally enforce changes to those contracts.
Why should you want to? Because, if you want true E2E and if E2E is really going to work, the entire value network needs to be involved – to know their roles and responsibilities and to buy into the role of SI.
So what can and should you do?
Plan ahead; think about what would need to be changed in existing contracts to ensure you can transfer management of suppliers to the SI provider. Do you currently have that right or is it a right only if you get consent? Have your legal team draft a comprehensive clause that states if you outsource IT functions or otherwise decide to transfer management to a third party, then you can do so upon simple notification. Ensure that the clause goes into all new contracts and is inserted as an amendment at renewal time.
This is not being deceitful – far from it. Be upfront and discuss the changes and potential future plans with your suppliers. They may have experience of SI with other customers and could provide you with valuable insights. And if you get pushback, you may want to consider why a supplier would not want your business to improve, why it doesn’t want to help you make your business more efficient, and whether that supplier should be part of your future plans. It might be time to start looking at exit and termination clauses? That early engagement of the SI provider could mean help with sourcing new suppliers or even the start of the SI provider taking over those services directly.
Don’t forget to leverage your data
Hand in hand with reviewing contracts comes reviewing the metadata – the contract and supplier information that you hold. Update or start developing your “database” of information. The more information you have on your contracts, the services provided, licenses held, the service-level agreements, etc. the easier it will be for the SI provider to take over those contracts without interruption to services.
The SI provider will want to know as much as they can about your existing contracts as soon as they can, but remember you may be limited in what you can disclose without a supplier’s permission due to the confidentiality of the contract. Up-to-date information on supplier contacts will also mean quicker communications when you need to approach suppliers about your plans.
Understand key relationships and criticality to business
Understanding at this point which suppliers are key to your strategic objectives will also facilitate the move to SI. Think about how you would categorize your suppliers. This doesn’t need to be an exhaustive, lengthy exercise. For example, simply ask which suppliers, if they ceased to exist, would cause critical failures within your business; which could you do without for a month; which could you easily replace. Try not to think about contract value, a £5 million contract may run more smoothly than the £50,000 per annum critical application, think about risk.
Then review your key suppliers in terms of relationship. How often do you talk to these suppliers, if ever? Put some regular governance in place, discuss plans – theirs and yours – theirs may influence your decision to move to the SI model. A better understanding of your suppliers and services will allow the SI provider to better plan taking them, to understand the potential risks, and to put the right contingency and resource plans in place.
Asset management is another area that always needs a good spring clean
What software and hardware do you own, lease, or license? Do license numbers installed match what has been purchased, i.e., are you license-compliant? Link all this information into your database. Start asking users whether they are actually using these assets – this will identify savings and suppliers not needed. It’s good to know where you are unsure of your asset management maturity so you can tell a potential SI provider such that they can plan accordingly, rather than pronounce your estate is without sin.
Don’t forget to look at your IT organization, roles, and responsibilities
Ask: Does the current model work? Where is it failing to provide efficient services to the business? With this information, the SI provider can again plan accordingly, understand the knowledge transfer landscape, and prioritize improvements. This is not the implementation of major organizational changes, just getting greater understanding of your IT organization and how it engages with the wider business.
In summary …
So contracts, supplier and service understanding, relationships, assets, and organization would all benefit from housekeeping. Whether you decide to look at SI or not, there is value in these reviews and the potential to find savings and move to better working practices. But if you do engage with a potential SI provider, they will be in a better position to understand your business, your strengths and weakness, where they need to focus efforts, your readiness to transition, and how best they can manage your current suppliers.
If you move to SI you win; if you never move to SI you win.