What s The Perspective & Challenges Of Managing A Diverse Supplier Group?

Transcription

1 What s The Perspective & Challenges Of Managing A Diverse Supplier Group? George Spalding Executive Vice President, Pink Elephant g.spalding@pinkelephant.com 1 st Annual IT Management Leadership Forum

2 Introductions Troy DuMoulin Vice President, Professional s Pink Elephant Nicole Foster Director, Strategic Sourcing & Vendor Management McKesson Corporation 2

3 Managing Diverse Suppliers Today, IT has to manage a collection of diverse service suppliers, each one controlling mission critical aspects of IT. Guidance for Supplier Management abounds, yet: Why are many outsourcing relationships still ending in tears, broken promises and canceled contracts? How do we assess whether the latest innovative start-up service provider can give us an edge and be worth the risk? Are there specific diligence techniques we can apply before getting in too deep? How do we salvage an outsourcing arrangement that s on the rocks? 3

4 Today's CIO The Broker Of IT s On any manufacturing production line now, the vast majority of parts like car entertainment systems, seats, or heating systems are pre-built by third parties, brought in, and fitted on the line. It s called the dynamic supply chain. Henry Ford said in his 1922 book My Life and Work, If we can buy as good a part as we can make ourselves and the supply is ample and the price right, we do not attempt to make it ourselves.

5 Drivers For Outsourcing Companies outsource IT services/products for a variety of reasons: Lowering costs Enabling variable capacity Risk Mitigation (capability and resources) Process Improvement/Discipline Adopting new technologies Increasing agility Improve focus on core competencies (e.g.: business directive to outsource commodity/operational services) What would be wrong reasons for outsourcing? 5

6 Thank You! Session Evaluation Please take a few minutes to fill out an evaluation on this session. We greatly appreciate your feedback! 6

7 APPENDIX 7

8 esourcing Sourcing s Sourcing Task & Process Sourcing IT Sourcing IT Product Sourcing Janitorial s Linen s Plant Maintenance Refining s Fleet Management Engineering s Finance and Accounting Human Resources Call Center Purchasing Data Center s Software As A Telephony Messaging Desktop Automation End User s Hosting / Storage Laptops Shrink wrapped Software Network Equipment Servers Memory Based On Source: escm-sp Part 1 8

9 Value Network Units Ecosystem Shared IT s Unit A Dedicated W Unit 1 3 Supplier Types Unit B Shared X Unit 2 External Supplier Unit C Y Outsourced Unit 3 External Unit A Unit D Z Unit 4 Embedded IT Catalog 9

10 Traditional Supply Model Warning: Direct Relationship Bi-passing IT Supplier Mgmt. is a risk Customer Organization Internal Customers Process Outsourcing IT Function IT s ( Catalog) IT Supplier Mgmt. Products s Hardware Software Environment External External External Suppliers Suppliers IT Suppliers WAN s Telephony Data Center s SaaS / Cloud s SLAs Contracts Occasional Contact Crown copyright 2007 Reproduced under license from OGC Figure 3 Managing Supplier Relationships, page 17 10

11 IT Federated Model Centralized IT Federated IT Enterprise IT Governance Decentralized IT Accused of being unresponsive Limited business Ownership or control Doesn't meet business needs Economies of Scale Standards Common Processes User priorities are met Strategic Supplier Mgmt. Organization wide Strategy and architecture ownership & control Higher cost Variable standards and quality Reinvention Lack of integration 11

12 Classic Outsourcing Mistakes Not having a strong Supplier Management Process / Governance structure established before contracting A belief you can outsource your problems Belief that you can outsource accountability for the results and legal compliance (accountability versus execution) Not having your requirements established before you outsource (outsource only what you understand) Not considering a balanced score card approach to the outsourcing question (finance, customer, agility, maturity) Not remembering that lowest possible price gets you exactly what you pay for The belief that when it comes to outsourcing the bigger the supplier the better Not having an exit strategy or exit conditions defined before your decision to outsource 12

13 External Supplier Types The Commodity/Transactional Supplier The commodity supplier provides off-the-shelf products or well defined repeatable services Operations Supplier Responsible for project or operations success The s/tactical Supplier The services supplier provides end-to-end technical and professional services Strategic Partner In which a supplier takes on responsibilities for an integrated set of services and technologies 13

14 Known Detail Supplier Organizational Knowledge Sourcing Lifecycle Initiation Delivery Completion Start Short List Engagement Receipt of RFP Design Begin Steady State Operations Contract Signing Begin Start Transition Closeout Supplier Due Diligence End Contract Source: esourcing Capability Model / Carnegie Mellon U. 14

15 Catalog Supplier Management Roles Map Monthly Report (to Customer) Monthly Report to BU Mgr. Relationship Manager Monthly Report To Supplier Mgr. Supplier Mgt Process Owner Monthly Report (to Customer) Account Manager Supplier Delivery Owner Customer External s Internal s Supplier Management Office (SMO) Managed s Contract & SLAs s Control Team IT Stakeholders & IT Owners Internal IT Provider Supplier Managers Procurement Supplier Owner Functional Levels Technical Process Statement of Requirements Annual Review 15