I have been in the technology arena for more than 25 years, I have had the privilege to work with some of the biggest companies in the world such as IBM, General Electric as an outsourced provider, and I have also had the opportunity to work on the other side of the table as a consumer of outsourced services. As the owner of an international technology outsourced company we spend a lot of effort, time and money on internal reflection and process review around what we as an organization are doing right, what we are doing wrong, and how do we improve across the board to provide our clients with a better working relationship with us which then will translates into a better overall experience for our clients building on a long term relationship model.
My goal in putting this article together is to outline both how to build a strong working partnership with your provider as well as identify some of the warning signs that would indicate your relationship is in jeopardy. We are going to discuss the importance of the Owner / provider relationship and involvement, expectation setting and management, and accountability and task tracking processes. However, in order to move forward we first have to understand that once you decided that you are going to take advantage of an outsourced model for IT you have to understand that you are now entering into a partnership. Like any partnership success or failure can have a tremendous impact on your business translating that into productivity and profitability impacts. Picking the right partner for the right reasons is very important so having insight into the operation of an outsourced partner identified around your specific needs is important information to have.
Let's assume now that you have decided to move forward and take advantage of the many positives that outsourcing can provide. Some of those advantages could be but are not limited to increased technology experience, a wider set of skills available to your company; such as network engineers, security specialists, software developers, and CIO level management just to name a few. You are moving forward now what? Where do you start to ensure that you are picking the right partner? It all starts with your management understanding the needs of your business; you have to know what you are trying to accomplish in order to set expectations and maximize your investment with your technology partner.
A primary reason that outsourcing relationships fail or are successful is based around the involvement of the ownership, upper management of the client and the ownership of the outsourced firm you are presenting your opportunity too. Many owners, or upper management make the mistake of engaging a technology company, then handing off the operational aspect of that relationship to an individual that does not really have full insight into the agreement, nor do they have decision making authority within their own organization. In a successful outsourcing arrangement the ownership of the outsourcing provider should be interviewed and evaluated as if you were actually going to add this person to your senior management staff, because you are. If the background, qualifications, and personality of the ownership of your prospective provider fits your culture your management style and this is actually someone you would hire for their value to your organization, this is a strong indication that the upper management relationship would be strong.
We are currently working with a company that for years has had an up and down relationship with their current technology provider. The client is expecting the provider to recommend new technology, design new systems and provide higher level consulting services. However, when we audited the provider and the services they are providing to the client we discovered that they are a break fix organization. Break fix organizations primarily are focused on keeping current technology running, support of end user needs, and performing basic hardware upgrades or installations. Break fix organizations really primarily focus on the hardware aspect of technology, which is important but in today's business world it is about managing your technology as part of your business. This means you have to know and understand business models, budgets and objectives; unfortunately this is not what break fix organizations do. This client's expectation was focused on a higher level of technology business consulting services with higher levels of expertise on how to run a technology department around a business model. This break fix methodology goes back to the founder of that organization, he was a technician, trained and educated on break fix, not trained and educated on business operations and the business application of technology. The expectation of the client was not in line with the provider's ability to provide the service to manage a technology budget, to design a long term strategy around the business needs and requirements in order to help the organization evaluate, implement and manage technology to meet the business goals. During our audit process we discovered that a big part of the tensions around the satisfaction with their technology was simply based around expectations of service that the provider cannot and will not be able to provide.
Expectations of service and setting of goals and objectives is very important in the provider client relationship. We have also seen instances where we audited clients; put together a strategic plan for their business and then the management of the organization changed. As a result of the change in management, the client ownership disengaged themselves from the process of managing the provider. At that point, primarily due to the disengagement of the ownership, the strategic direction of the company changed from the previously established and accepted strategic plan. However they did not engage the provider to reset the goals and objectives based on the management change; they simply abandoned the process, as the plan unraveled, the client pointed the finger at the provider for the failure. This relationship was doomed from that point forward because of the disengagement of the ownership to mutually redesign the plan, develop a budget, obtain the support of the provider and reset the expectations, goals and objectives of both the new management and the provider. In a recent Pricewaterhouse Coopers report on IT Outsourcing they list key relationships at the top executive levels as the number one critical success factors for getting outsourcing right. In our experience this is true. Direction and oversight of technology initiatives by senior management is critical to the overall success of outsourcing.
When you talk about expectations around your relationship with your provider first you have to ensure that you understand your own expectations and needs around your IT initiatives. Once you have determined what your expectations are, this should become your guide to selection of a new provider.
Expectation management is a two way street, you have to manage your new vendor to your expectations around the agreement, and the provider must in turn help you understand how your agreement is interpreted by them. It is very important that both parties are working towards common goals and objectives and that you have an open line of communication to discuss where the provider is in comparison to their expectation. This should lead to a continued improvement opportunity. In return the client has to understand and manage their expectations to the provider's ability to achieve their goals. If the client is setting unreasonable expectations in their performance matrix, that is as hard on a provider / client relationship as an underperforming provider. In turn the provider must have the available resources to apply to your business in order to meet your goals and objectives.
One of the most common complaints I hear when I am doing speaking engagements, or classes around technology management for executives is "I just don't know what they are doing, and I have no insight into what this is costing me Now that you have a partner managing your technology functions, you must have insight into their activities. One of the biggest faults of many IT firms is that they speak in a language that the client does not understand; combine that with IT being a very dynamic industry thing and things can get extremely confusing. The dynamic nature of the industry means that accountability can be difficult to track and manage. What seemed quick and simple just became a long and difficult process, which could increase the cost of managing your system dramatically.
When you talk about insight what does that actually mean? Go back to a previous statement about how the client and the provider "managing" each other to a common goal? Then, if you break down the functions of an IT department and the services they provide how do you manage those objects? Let's start with breaking down the functions of an IT department first, because when you break that down you will see how easy it is to let things slip through the cracks and how hard it is to gather the proper information so it is useable and manageable.
The process of selecting an IT provider is a difficult one and it is something that you should not take lightly. In my experience sitting on both sides of the table I have seen and worked with many companies that have made good as well as bad choices. Ultimately what you are looking for is a provider who can take responsibility, has the resources to manage and support your business, has a long track record of proven success, along with an established methodology that will provide the tools and insight you need to manage the provider and for them to be held accountable for what they are doing . Over my twenty five years I have worked with many IT companies and each one had a unique methodology for how they manage their business, how they manage their customers, and their the range of resources available within the organization to provide the type and level of service you need. The continued evolution of Winning Technologies is based around a simple methodology of removing finger pointing and providing our clients with a single point of contact, taking control of the entire IT management process, controlling the quality of the product through our ability to control the process and providing our clients with full insight into their account and information about their account. You as a business owner or manager have to determine your needs and requirements, than interview providers as if you were actually going to hire them as part of your senior management, and choose the provider that closest matches your culture, your management style and who can demonstrate an ability to meet your business objectives.