- August 12, 2019
- Posted by: Normand Brien
- Category: Business Planning
Business thrive with the assistance of external resources like vendors, contractors, or consultants. Significant portions of your budget are put aside for a variety of contract or ongoing services. These resources that you hire perform diverse tasks, for example legal assistance, acquiring corporate assets, or implementation of business solutions. They in turn must understand the rigorous business requirements, demonstrate the competencies to achieve what the agreement promises, and continue to identify optimization opportunities for you.
From a technology perspective and long before large mainframes, mobile solutions and the Internet ever existed (let’s say 1970’s), most businesses needed other companies to buy or lease equipment, kept their own inventories and budgets on paper and generally would walk across the hall to work with an associate. Hacking as we know it now, never existed, nor video phones or software to perform our jobs. Business was done with a simple, but trusted handshake. You didn’t have to rely on more than a handful of partners to make your business profitable.
Today, the role of a solutions partner in the enterprise is essential, becoming more of a business colleague, allocating time for strategic thinking and operational dealings of a company. No greater resource to a business leader or an IT manager is the “person behind the curtain”. IT leaders typically oversee business and financial applications and processes, server and network configurations, information security, hardware and software procurement, projects and staffing. Yet aside from the need to develop long-range technology strategies and maintain daily operations, leadership also has to develop “sourcing strategies” to meet business efficiency and financial effectiveness – a leadership competency that necessitates a closer relationship with suppliers.
Business executives strive to be profitable to guarantee customer satisfaction, to hire the best, and to have a pristine operation. They hire the best leaders, professionals, consultants, suppliers or vendors as the basis for long-term success.
Equally critical to having the best resource is how you attain and maintain these relationships. Business units can also rely on a other resources besides employees to support or deliver a service. Unfortunately, the process to vet a service partner is complex and necessitates that you clearly know your requirements. At minimum, vendor selection requires that negotiation be done with leaders from legal, purchasing, technology and finance. Find leading standards practitioners or research firms that can show you the prerequisites for effective relationships with “contractors.”
Businesses should recognize the need to consider a number of factors when performing due diligence in selecting a service provider or “vendor”. As Niel Nickolaisen (CTO at O.C. Tanner Co.) writes, “I have to be selective about what I take on and where I focus my team’s efforts and given the importance of outsourcing as an IT strategy, how can we do it correctly?” He elaborates further on three factors for evaluating and selecting the right model for outsourcing:
- Technical and Industry Expertise
- Operations and Controls
- Financial Condition
Gartner defines vendor management as “the discipline of managing, administering, and guiding product and service vendors in an organized way to drive vendor behavior in order to optimize IT or business outcomes”. Simply put, businesses develop the methods, procedures and policies that govern vendor relationships so that “the organization maximizes each vendor’s strategic value, while minimizing risks”.
Unless you have in-house talent that is educated and experienced in this discipline, the effort can take months or years to mature just to seek out a single vendor. With staff and technology always in transition, use globally accepted practices such as the ITIL Service Framework or the Control Objectives for Information and Related Technology (Cobit) for the proper policies and procedures. Both are longstanding governance tools allowing managers to bridge the gap between control requirements, technical issues and business risks.
The point is to adopt and implement these proven methods to help you evaluate, select and measure the conditions under which all vendors should operate. No two businesses operate the same way; it comes down to how you market, fund, staff and service the organization. If you do not use an outside source, you are very fortunate; but with the complexities of maintaining prosperity and dependencies of technology, you will need to rely on a trustworthy resource to get you to the finish line.What does it take to bring in the right expert?
It’s like food shopping. You make a list of what you need and can afford, sometimes you veer off and splurge to get those “nice to have” items. You may not go to the same market chain, as some items are on sale elsewhere — but you still put money aside for a basic need. In business, there is nothing more frustrating than bringing in the “experts” (even after you have vetted them) and they do not deliver on the expectation.
From my experience, here are the key attributes of an individual or a firm to implement a solution or to be a longtime adviser in a business:
- Provide proof that they are experts in their specific industry — scrutinize resumes and references; don’t rely on just their network peers.
- The processes, activities, functions and roles that they use to enable them to deliver services to their customers
- The ability to organize and manage knowledge; understand how to facilitate outcomes that create value
- Provide services that are fit for purpose, stable and so reliable that the business views them as a trusted provider
- Delivering value to customers by facilitating outcomes that customers want to achieve without taking ownership of any risks or costs incurred
- Using the best practices in the service life cycle or continual service improvement for service design, service transition and service operations
- Understanding and managing all of the costs and risks associated with those services
Both the hiring of the right expert and delivering of the expectations is important, as your integrity can be on the line. That is why every organization should have policies and practices around outsourcing work to vendors.
Use these best practices to ensure the “vendor” is meeting the business requirement:
- Expect to do frequent check-ins – regardless of how often, there was scope of work reviews to earmark issues, new risks or just general status.
- Beyond the assessments, look through service level agreements to make sure the service provider met business expectations. It’s far better to scrutinize the deal and to review the “to do” list and resolve the issues before you make the final payment.
- Treat all transactions and contractual activity confidential — it’s your data! The work and services provided at your expense for the organization is for the organization — all employees and involved vendors must honor the agreements to preserve the business arrangements.
Lastly, nothing lasts forever — strategies change, competition for providers evolves just like the many services that will come and go. Anyone external to the organization that you employ must satisfy the rigorous business requirements, possess the demonstrated competencies to achieve what the agreement promises,and continue to identify optimization opportunities for you. Select your vendor based on examples of work, fair pricing and someone who has your interests in mind. Else, do the alternative, avoid “vendor lock-in” and know when to shop elsewhere. Look for and hire the best!