Vendor management is an internal IT function that often has room for improvement. A maturity model is a helpful tool for evaluating the state of any given vendor relationship, and determining the overall balance of your organization’s dependency on vendors.
Situations abound where a business could use supplemental C-level IT expertise to get through a transitory period of change. Maybe you’re between CIOs, or your senior IT leader needs some temporary executive-level help. Maybe the executive team needs some strategic IT advice, or the IT department needs a “shot in the arm” to get to the next level or deliver a new capability.
Flexible access to CIO-level expertise on part-time or temporary basis can serve to strengthen your IT function. Staffing services or consulting firms will provide a resource to cover strategic and/or tactical IT leadership needs. The resource can help with a short-term transition, organizational change, or other executive-level responsibility. Such a solution provides a viable and affordable option when an expert IT Leader is needed to augment the IT team or the business executive team.
Congratulations! You’ve decided to outsource some of your IT services, based on a sound resourcing strategy. And you’ve found a reliable outsourcing partner. Now you need to manage your outsourced IT team.
If you’ve ever managed a vendor, you may have had one of the following thoughts cross your mind:
- “This team just doesn’t get it. I have repeatedly expressed how they can be successful here, but they keep doing the opposite!”
- “We didn’t award them a new project they bid on, and now it seems there is a lack of interest in the entire account.”
- “The resources assigned to this contract are incompetent, but the account exec is unwilling to switch them out.”
- “During management updates, they only focus on the positive. They are not being transparent.”
Such warning signs usually mean a key resource management responsibility has been fumbled or forgotten.
To set yourself up for success, manage your outsourced IT resources on two dimensions: the relationship and the outcomes.
Here’s why we designed the iterative engagement model, and how it works:
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IT outsourcing can be risky.
You’ll invest a significant amount of time and resources defining your needs, seeking out promising candidates, and evaluating options. You’ll need to clearly communicate what the organization needs, and what level of performance you will expect.
Then, if you start working together and feel like it’s not a good match, the relationship could turn sour. And if you can’t turn it around, getting out of an outsourcing commitment is not easy—especially once the resource has amassed an in-depth knowledge of your processes and systems.
Quantitatively, 50% of companies feel their outsourced suppliers are reactive, not proactive; 40% experience a lack of innovation and underqualified resources; and 30% suffer high attrition and costs. (Source: Deloitte)
To mitigate risk, I recommend the following systematic approach to ensure you pick the best outsourcing vendors for your organization. I have used this process on many occasions with great success.
The following post is an excerpt from The Iterative Engagement Model: A Calculated Risk and a Whole Lot of Reward.
The traditional vendor engagement model is flawed.
Technology initiatives are only getting more and more complex, time consuming and costly. Consequently, the risks associated with technology investments continue to pile up.
Complexity increases the number of weak links, prolonged timelines introduce changes to landscape and priorities, and budgets are inevitably blown by vendors that offer unrealistically low costs that they cannot later sustain. While some organizations may feel that the problem is the result of selecting the wrong vendor, the challenge may in fact be the typical vendor contract.