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.
Managing the Relationship with an Outsourcing Partner
A win-win premise is at the foundation of any business relationship. If either side feels the relationship is not based on this premise, it likely will not be successful in the long run. The long run is what counts in outsourced relationships because the cost of switching vendors is high, and disruption to the organization is significant.
To keep the relationship in balance, there must be mutual trust and plain old customer service.
Trust is a two-way street. Both parties need to respect each other, be transparent, and communicate regularly at all levels of the organization to maintain this trust.
Once broken, trust is very hard to repair. If this happens, first have a frank conversation with your account executive. Escalate the issue to the vendor’s management team, if necessary.
Remember to take responsibility—an individual or group in your organization may be the guilty party. In this case, your organization needs to take appropriate action or you’ll lose the trust of your outsourcing partner.
Customer service is the responsibility of the vendor’s staff and their account executive. You are the customer. You decide what is important, you define quality, and you structure the relationship.
Some like to call this relationship a “partnership” and that is often sincere. However, you are dealing the cards. Be clear, honest, and consistent in all your dealings. Don’t hold the cards close to your chest. But remember, as the dealer, you get to set the house rules.
Managing the Outcomes from an Outsourcing Partner
Even if the relationship is cozy and the account executive is service-oriented, the team needs to deliver outcomes. Outcomes are why you are trusting—and paying!—your outsourced vendor.
First, define and quantify your desired outcomes. As Peter Drucker famously said, “You can’t manage what you can’t measure.”
Tip: Use a management tool like The Balanced Scorecard. This framework helps quickly communicate the status of the relationship at a high level. Each line item is supported with details:
Innovation should not be optional. Build a requirement into your contract stating suggestions for improvements are to be reported and outcomes reviewed. Whether or not the ideas are implemented, regularly assess the recommendations from your outsourced team.
Set a Service Level Agreement (SLA)
The SLA should be specific, time-based, flexible, and reviewed regularly at operational levels. When crafting your SLA, think about driving the right behaviors.
Tip: Incentives work far better than penalties. Also, remember to include process improvements and corrective actions.
Governance efforts on multiple levels of the organization should gage outcomes, communication, ideas, and strategy. Keep this review transparent, respectful, and mutually beneficial. I suggest the following cadence:
Weekly: Line manager and outsourced lead review impediments, staffing changes, results, and process ideas or innovations proposed
Monthly: Operations team reviews SLA, impediments to success, and corrective actions required and taken
Quarterly: Executive reviews balanced scorecard, strategy, value creation, process improvements, and innovations
Every 6-12 months: The vendor manager organizes a Health Check of your outsourced relationship. This evaluation should cover a review of and, if necessary, adjustment to the guiding principles of the relationship. Internally assess the relationship. Get input from IT and the business. Review findings with the vendor.
Maintaining an excellent relationship with outsourced IT resources takes work, consistency, transparency, respect, and a focus on outcomes. But the effort is well worth it when the team exceeds your expectations.