A Late New Year’s Resolution: Be Nice To A Supplier And See What Happens

When I very briefly joined TCS (Tata Consultancy Services) as an IT service management (ITSM) consultant a year ago today, I met a fellow new recruit Sandy Winschief – a vendor/supplier management specialist armed with a pair of Six Sigma black belts. Sandy was/is a key piece in TCS’ Service Integration offering jigsaw and someone who made me think more about the relationships between IT infrastructure and operations (I&O) organizations and their suppliers.

Sorry, you said, “Service Integration”?

For those new to Service Integration I offer the following “definition” from a Forrester colleague’s “thinking”:

“To make multisourcing arrangements effective, customers must get suppliers to work together, both from the commercial and operational standpoint. The services integration layer, comprising elements of process, tools, service-level agreements (SLAs), and related structures, is absolutely critical to the success of these arrangements.”

My ITSMWPROW podcast colleague James Finister gives a more detailed overview in his personal blog.

So how can Sandy’s vendor/supplier management expertise help I&O professionals?

There has been a lot of talk about ITSM and 2012 challenges: cloud, improving service, cloud, outsourcing, cloud, but not a lot said about the service providers – your suppliers, the people that could actually help you with these challenges.

You’ve probably spent a lot of time and effort through your procurement departments setting up an RFP process, sourcing suitable providers, going through the whole elaborate selection process, but, since the ink has dried on the contract, have you actually had an in-depth conversation with any of your key suppliers?

When suppliers are mentioned it’s sometimes in hushed tones of “they’re only there to do as little as possible and for as much money as possible. Not provide value for money.” And the first focus on suppliers is often via SLAs, ensuring that the contract provides a “swift kick” to obtain service credits at the first opportunity – doesn’t that suggest you’re expecting failure?

Have you ever thought that suppliers don’t actually want to disappoint (by providing a poor service)? Who in their right mind goes to work to do a bad job? We are now more than ever in a “reputation economy” and suppliers know that you will tell your colleagues and peers about poor supplier performance (maybe at the next ITSM conference you attend) – surely they need positive customer feedback to maintain and increase revenue?

Think differently (sorry for the subliminal Apple plug)

Instead of just thinking about incidents, also think about: the positives, collaborative meetings, and discussing the possibilities not just the issues. Think about how suppliers:

  • Might have a better knowledge of your industry trends than you do.
  • Can help you develop your ideas. You never know, they may already have the answer to that problem you’ve so far been unable to solve.
  • Can make your life easier by managing more of the day to day operations, leaving you to concentrate on your strengths.
  • Are more than happy to help you drive out savings, but would maybe appreciate a share of the spoils.

Then try this:

  • Pick a key supplier, one that should be aligned with your strategic objectives.
  • Identify the supplier’s account manager (suggest they find one if not already available).
  • Set time aside to really talk undisturbed – not a corridor encounter or cafeteria coffee.
  • Develop an agenda (maybe use the first meeting to discuss what’s needed). Suggestions:
    • An update on your company’s goals for the next year.
    • An update from your supplier on their aims for the next year.
    • Provide the supplier with concrete business feedback – not an opening to detail the number of P1 incidents, leave that to the service managers.
    • Ask your supplier to identify areas they have seen where improvements could be made.
  • Make it clear this is not a meeting for a plethora of formal presentations and is certainly not for the sales pitch.
  • Consider letting your supplier out of the “IT cage” and taking them for a walk through the business, meet key stakeholders, letting them hear firsthand the opinions (good and bad) on the service they are providing that only you normally hear.

Above all else, build a relationship and establish regular contact. This is not a one off exercise and is definitely not about onerous, weekly meetings. Try quarterly updates – just focus a little more on the people involved and less on the tools and processes.

Letting suppliers really get to know your organization and business drivers could be invaluable. Did you know that 65% of senior managers are more productive when in a collaborative relationship with a supplier? – Sandy made that up, but you never know ... and if you are a supplier reading this, YOU could always make the first move...

My thanks to Sandy for providing the above content and hopefully enticing others to think a little differently about their suppliers. Comments? Thoughts? Coffee?

 

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If you enjoyed this, please read my latest blog: http://blogs.forrester.com/stephen_mann  

Comments

What's It All About, Alfie?

Stephen,

Since you were in subliminal plug mode, I thought I'd plant one of my own! ;-)

On a more serious note, what's it all about?

In my view, I'd say it's about people coming together to lead, communicate and accomplish.
It may sound all "soft and fuzzy", but the truth is that it's quite tangible and practical.

A little time, intentionality and a willingness to "not know how to do it (and do it anyway)" are all one needs to get started.

It's not faux social -- it's *real social*
This is the future, folks.
Embrace it and let's go!

kengon

Common ground

Ken,

There is a very hard headed aspect to this as well. Suppliers don't get to understand a customer's business by using some advanced form of telepathy, and they are also not usually in a position to present their full range of services to a customer without being taken for overly pushy salesmen. Creating a forum for honest discussion exchange, perhaps with multiple suppliers in the room is a great way forward. It is amazing sometimes what your suppliers can see that you can't. Likewise, as Sandy says, no supplier sets out to do a bad job, but they do sometimes fail to understand your real requirements. Generating some common ground can avoid that problem arising.

Where Does Common Ground Start?

James,

I don't disagree with you.
I am advocating engagement as the means to this end and I see it as more than a "forum."
An appropriate forum could be as simple as being the person in front of the supplier (or the supplier rep in front of a customer) and starting the conversation for generating that common ground.
None of it is tough, but it does require that someone *start*!
It really doesn't matter who does...

kengon

Recognition

Ken,

I think it starts with recognising the real position held by the other other parties in the discussion, and recognizing when they are genuinely trying to reach out to you rather than thinking that suppliers only want to sell and customers only want to complain. we hear what we expect to hear unless we make a conscious effort not to.

When I look back over the years at all the IT contracts I've been tasked with rescuing they've nearly all had in common that both parties thought that because they'd agreed the contract they understood what the customer wanted and what the supplier was going to deliver when in reality they had massively different interpretations of the same words. So the sooner the relationship starts the better. So often customers dictate to suppliers what they should deliver and how when the supplier is yearning to give the customer what they really need.

Back To Basics...

James,

You have a really good point here which reinforces what I said initially!
And my experience matches yours quite well.
I've had more than my fair share of engagements where I've looked like the "bad guy", because I walked into a train wreck waiting to happen (thought you'd appreciate the train reference :-P) and stared working on resetting expectations!

Part of what has communication occur is being open and available.
Walking through the door with an agenda (be it personal or organizational) or an "already understanding" of what's wanted/needed *doesn't* lead to open and available.
Both customer and supplier have a responsibility here!

All it takes is one person with an authentic interest in communicating to start it going in that direction.
Of course, it won't always work.
There's more happening than one person can do by themselves.
That doesn't mean that we shouldn't play for it though.

If we never try, we know how it's likely to turn out...

kengon

We've been talking about

We've been talking about "running IT like a business within a business", multisourcing, and IT operating as prime contractor for many, many years.

Everyone knows it's coming to them - one cannot miss the "Cloud" commercials.

What we're not seeing, however, is much change in IT to modify their organizations to exploit the new possibilities of using the experience of suppliers to improve the effectiveness of their business.

Suppliers are eager to help their customers improve their effectiveness. Customers are skeptical and have budget constraints.

I find it's tough to show and prove value when the customer is not, already, doing some measurement of costs and value. When IT is an "overhead" and no specific budgets and financial controls are established for the services and supporting services - there is simply no good way to prove the value of the supplier by making an evidence-based make/buy analysis that will convince the CFO of the CIO's good decision. Perhaps we should start there.

The service integration equation

Cary,

To some extent that is the thinking behind service integration - and why Sandy sits in my team. By effectively bringing a key supplier into the Retained Organization the IT department can reap some of that supplier experience. To complete the Si equation you really need the good business governance of IT, hence also my championing of ISO 38500.

ISO 38500 is an important

ISO 38500 is an important start.

I find, however, it is not as useful as it looks.
Top-down strategy has serious constraints on effectiveness.

Also, being a former accountant and manager of finance for a large shared services organization, I've come to believe that developing an investment-based budget for each service (and supporting service), instead of by function, is more effective.

When each service (and supporting service) is viewed as a separate Professional Services Firm (as Tom Peters would describe it) or a services bureau, then each of those can be managed as an intrepreneurial "business unit" where each one has its own (bottom up) service catalog (to the other services, really a fulfillment catalog) and cost structure.

It's not that hard to do with today's service catalogs and time-driven ABC.

It's the budget that counts, though. Because that's where control is structured in every company.

Measuring benefit in complex services

An issue we've come across, and I think I've discussed this with Cary before, is where there is both a complex set of interactions between services within the business and with the underlying IT services. Especially if there isn't a reasonable cost model in place. From a supplier perspective I find we can often make suggestions for improvements that SHOULD filter through and even be multiplied within the business, but the business lacks the tools to monitor the benefit delivery.