IS YOUR IT SERVICE PROVIDER A VENDOR OR A PARTNER? by Jake Sollberger

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1 IS YOUR IT SERVICE PROVIDER A VENDOR OR A PARTNER? by Jake Sollberger

2 What kind of relationship do you have with your IT service providers? Many organizations make the mistake of choosing an IT service vendor and not an IT service partner. At West Monroe Partners, the Performance Services team strives to build partnerships, not just a contract driven support relationship. Service providers in the traditional sense have been vendors. They provide a bill of goods or services for an agreed upon fee. More often than not, organizations choose their provider based solely on tangible items; cost, service definition, location proximity, contract terms, etc. Below, we ll explore some of the intangibles needed to evaluate an IT service provider.

3 VENDOR RELATIONSHIP The vendor/client relationship is two sided. Each party is advocating on their own behalf for their standards, structure, interests, and needs. The engagement is very push/pull. Each party advocates for their own interests. In this relationship structure, the client and the provider are not strategically aligned. While they may have similar interests, they are not having the tactical discussions to create a win/win relationship. Vendor relationships are often focused on the shorter term, where each party is working to meet their own current goals and initiatives. Rarely are parties engaging on how they may better align to create greater value to the business through the services and products. Client (purchaser) objectives are to: Ensure they re getting a high ROI (return on investment) Lower their IT spend Provide a quality end users/business experience Meet the business requirements Align IT services to business needs and roadmap IT service provider s (sellers) objectives are to: Minimize their cost of providing a service Increase margins Expand business development and sales Leverage resources & standardize services across clients Align services to business/sales opportunities

4 PARTNERED RELATIONSHIP By building a partnership, two organizations can work closely together for common goals and mutual benefit. The IT service provider establishes themselves as a trusted advisor and seeks to offer insights and guidance to the client. Throughout the engagement, the client should look to involve the provider in strategic planning (both IT and business focused) to ensure future alignment between the organizations. Characteristics of a Partnership: Both parties are transparent and open with their goals and initiatives Each party seeks to find common ground on which they can engage They create a mutually beneficial relationship Both parties assist each other s development Each party will manage their own independent goals and objectives. Frequent and open dialogue can identify and overcome conflicts of interest. Occasionally, parties will need to concede their own specific interests to ensure overall, long-term health of the relationship. For example, a service provider might direct a client to a lower cost solution despite directly impacting monthly fees, or client might pay higher cost for a specific service to maintain a larger relationship. In the end, a partnership grows from ensuring both parties are meeting their objectives. HOW DO I CREATE A PARTNER RELATIONSHIP WITH MY PROVIDER? Do I have the right IT service provider? Frankly, it s a question most IT leaders ask themselves on a regular basis, but how do you know what the right provider looks like? Often, you need to look beyond monthly spend or tickets closed to get a full answer to this question.

5 In Performance Services, we often get this question when engaging with our clients and we welcome the dialogue. Only by ensuring our service offerings enhance our client s performance can we hope to build true partnership. Here are 5 questions to ask yourself to determine if you have the right IT service provider: 1. Do I have an advocate within my provider s company? One of the biggest influences on a partnered relationship is having strong representation on both sides. Most IT service providers will assign an Account Manager and/or Service Delivery Manager, but how engaged is this individual? To be a true advocate, this person should be continuously engaging with the client organization to determine how the provider can better align to the client/business needs, pose new solutions, and guide direction and growth. This advocate should also be working within their own firm to continually align services, resources, and processes to the client s needs. They should promote greater synergy and understanding between the two organizations. An advocate is not someone that only reaches out when it s time to renew contracts or sell you something new. They are not just an escalation point for issues. This person should be continuously involved in the success of your IT and business. 2. Is my provider capable of meeting my current and future technical needs? The provider should have the technical resources (people, systems, and processes) to meet your evolving business needs. For services they may not currently offer, but are part of your roadmap, the provider should be able to plan their service offerings to meet these needs in the future (whether through internal development or strategic alliances). A true partner is willing to grow their business with yours; not just in terms of revenue, but also in capabilities and services. 3. Does my provider make recommendations and facilitate continuous improvement efforts on my behalf? You provider should be providing recommendations and guidance on CSI (continual service improvement). These improvements come in the form of solicited and unsolicited advice. Providers should seek to increase your business value by guiding the evolution of your environment and services. They should be presenting recommendations on how to better align your IT to your business objectives. Your provider should also be comfortable offering assistance or guidance on areas outside the scope of the contract; value-add services. This does not mean that they should continuously invest large efforts into out-of-scope work, but they should be willing to adjust to the ebb and flow with the ever changing business landscape; a true partner will be flexible.

6 4. Is your provider willing to engage with your other 3rd parties and collaborate to make your overall environment better? Your IT service provider needs to be willing to engage with other 3 rd party providers within your environment to ensure the overall service provided is seamless to end users and systems. Partnered providers are willing to engage and collaborate on your behalf in order to make sure the best possible solutions are achieved for the business. Many times this will require the provider to interact directly with their competitors. A partnered provider will work to create the best value for the client. They ll work to align with all support and technology organizations to ensure a transparent handoff of incidents, requests, and technology updates. This ensures a unified technology presence to your users. 5. Do you often find yourself at opposition with your IT service provider? Partnered relationships should be collaborative. You should not feel like you are on opposite sides of the table from your provider. Look for a firm that works with you to develop a service offering that meets both parties interests. A partner will seek to understand and enhance your overall IT strategy, and ensure alignment with their practices to ensure a long term, beneficial relationship. If you ve asked yourselves these questions about your current providers and are uncertain or uncomfortable with the answers, it might be time to look for a provider that can deliver a true partnership for your business. HOW DO I ESTABLISH A PARTNERSHIP? After you ve selected your future partner, how do you ensure you build a partnership versus a vendor relationship? Here are 5 key considerations for creating a partnered relationship with your IT service provider: 1. Participation and involvement: Invite your provider to strategic meetings, planning, and roadmap sessions. Encourage their input and feedback to your business challenges and seek their guidance where appropriate. This will allow you to gain additional perspective, and will allow the provider to prepare to meet your future needs. 2. Align plans and roadmap: Both you and your IT service partner should build a unified plan. Often, each firm creates their organizations roadmap in a vacuum or with little input from the other party. Clients focus on the business growth and technology alignment. The provider will focus on how to increase their footprint within the client s environment. Moving forward, work from a unified plan to ensure your goals and objectives are properly aligned. 3. Collaborate on contracts: When contract renewals come up or new services are needed, don t simply submit a RFP (request for proposal) to your provider. Work with them to make sure the services and solutions you are requesting properly align to your business needs. Allow your provider to make recommendations on services and SLAs (service level agreements). Often, they have experienced across multiple business environments. They may be able to provide guidance on considerations where you may have not otherwise thought to ask. Also, where relevant, seek their

7 guidance on services and contracts they don t offer. An IT service partner will want to make sure the overall IT environment supports the needs of the business. 4. Create an environment of openness: It s ok for your providers to tell you where they have areas for improvement. You should be open to working with them on process improvement and practice development. Much as technology is always changing and business requirements are always evolving for your organization, the same can be said for your provider. A willingness to help build each other s maturity level is what makes this a true partnership. Additionally, be open with them on your business drivers. Your provider is restricted to a NDA (non-disclosure agreement). Provide you partner enough access to help you make adjustments and to ensure they stay aligned to the business needs. If you re forecasting a period of growth or decline, let them know so they can help you plan for it and make adjustments on their side. 5. Formalize CSI efforts: Just discussing Continual Service Improvement activities is not enough. You will need to work with your provider to formalize tracking and review. This does not need to be complex right out the gate. Just having a simple process and mechanism to ensure improvements are taking place will help manage initiatives going forward. The regular review of CSI allows you to determine how much additional value your provider brings to you and enable the provider to report to the business improvements in services provided. The improvement target doesn t have to start with a hard-dollar valuation. It can be represented as a simple score. Once you have this in place you can establish goals together year over year and seek to mature both organizations. Embracing an IT service partner will help to drive value through both organizations. Aligning your providers interests and incentives with your own ensure they re acting in your best interests. These strategic alliances enable firms to derive the most benefit and value from their partnership, and ultimately provide the best opportunity for a successful engagement.