Governing Large Implementation Projects: Execution Is Key -- Findings From Forrester's Recent Sourcing Forum

We met with 30 Sourcing & Vendor Management Professionals during an action session at Forrester’s Sourcing & Vendor Management Forum in Chicago to discuss how to improve governance for large implementation projects. Clients were looking for help across the sourcing life cycle – from determining who manages the RFP process, to determining scope with internal stakeholders, to driving governance after the contract is signed.

What tactics are Sourcing & Vendor Management Professionals using to tackle these challenges?

1. Renegotiate rates with current players. Forrester’s recent survey found that 68% of organizations are renegotiating with their existing suppliers. One attendee said, “This has always been a priority, now we are bringing more efficiency and innovation to the process.”

2. Drive innovation from vendors. Everyone wants innovation from their suppliers but few receive it.  Attendees shared tips for how they overcome major hurdles to achieving this in their supplier relationships:

a. Define what you mean by innovation. Many struggle to get innovation from their providers because they haven’t defined what that means — are you looking for idea-sharing or process improvements? Determine which type of innovation you need and communicate that to your vendor.

b. Identify metrics. “It’s not just how you measure innovation; it’s how you measure successful innovation.” Clients shared a variety of metrics such as:

i. Requiring the vendor to submit continuous improvement ideas they agree are impactful to your organization

ii. Number of ideas submitted for approval

iii. Number approved

iv.  ROI of implemented idea

c. Drive vendor alignment to your business through incentives. One attendee has found success by using a reward structure for SLAs instead of the commonly used penalty structure. When the vendor hits the target set, they receive additional compensation.

 3.  Address challenges with internal stakeholders. Many attendees said their primary challenges are with internal stakeholders as opposed to the vendor. It is difficult to get your internal teams on board upfront, resulting in costly change-order requests. Attendees shared best practices such as:

a.  Send an in-depth questionnaire to internal stakeholders during the requirements gathering process.

b. Use SharePoint to make documents (contracts, business goals, and drivers, scope of work) available for stakeholders to access.

c. Conduct a postmortem after the engagement ends to review lessons learned.

d. Run a workshop to have live discussions with your core team. Helps consolidate information you get from different groups which can be overwhelming.

 We welcome your comments and insights!

Thanks,

Sarah Menard, Liz Herbert, and Caroline Roeleveld-Hoekendijk

Comments

Nice post, but...

Really like the honesty here and hope it pays off in revenue for Forrester.

I can't help but think that the indoctrinated social knowledge worker in large organizations are just being exploited - it isn't my cynical self saying this, but rather observing both sides over long periods.

Essentially what I see is market failure, or very close to it --as it relates to the needs of customers-- and I would include greater society. Tragic social herding behavior regarding the innovation pipeline in organizations dependent upon IT now for functionality.

My second thought is that do we really think that innovators like say Apple are sending internal questionnaires and using SharePoint to make decisions?

Maybe, but I would take the bet --not.

That said, thanks for sharing-- enlightening, and frightening. -- MM

Re: Nice post but....

MM -- interesting but perhaps idealistic viewpoint versus the reality of large enterprises facing organizational and political hurdles across multiple stakeholders with often conflicting goals and often spending 10s of millions on large-scale IT projects. We are doing a lot of work around innovation as well as newer technologies such as cloud and social networking -- but the reality for most of the large enterprises we work with is that traditional governance is still critical for larger initiatives, for a variety of reasons. --LH

Idealistic?

This post 50 year old ex senior consultant (boards of multi nationals 30 years ago), ex VC, and advisors to many of the world's leaders who worked with quite a few of the world's leading companies prior to their initial investment, and lead on many anti trust issues... has never been called idealistic! Not since I was about 15 anyway.

Believe I am fairly well briefed on the realities of large organizations, but thanks-- I feel younger now! --MM

Re: idealistic?

MM -- thanks for the comments on this blog. Like I said, we have a great body of work around areas such as social network technologies, cloud computing, and ways to foster innovation. However, it is not our experience that major organizations in sectors like government, utilities, financial services, and oil and gas are turning to an Apple-like culture of innovation across the board, particularly in areas like these often multi-provider multi-million dollar SAP initiatives or other similar larger technology implementation projects. So, Forrester clients (and many very senior partners at leading SIs) often see that traditional governance can foster success, though it may not be as sexy as what Apple or salesforce.com is doing. --LH

Sexy?

Most of my time over the past 15 years has been with innovation on crisis prevention, which isn't sexy at all, but is the most important in terms of finance and economics. The topic that I am apparently failing miserably to advance here is that the methods cited aren't credible. The very same tactics and tools were used by every major crisis in every large organization in recent years. No mission on earth is more important-- regardless of organization type.

I have empathy for anyone being placed in a position who feels the need to defend these strategies and tactics.

Best of luck, MM