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How to Manage the Multi-Vendor Environment


The charge of the IS department has traditionally been simple and direct: deliver technology solutions to support business operations. However, the growing popularity of outsourcing—and multisourcing in particular—is changing how these solutions are delivered and the responsibilities that IS staff must take on as a result. Some companies have discovered a new approach that helps them realize the benefits of the multivendor environment without sacrificing undue resources to manage it.

From Outsourcing to Multisourcing

As companies seek to make the most of their IT dollars, outsourcing continues to be widely-used strategy for reducing operational costs and obtaining expert assistance. A May 2002 Gartner report titled “Aggregate Multiple Delivery Sources” states, “It's virtually unheard of for an IS organization to source all of its IT needs from internal resources and services.” The report goes on to say that by 2005, 80 percent of enterprises with revenue of more than $200 million will have outsourced at least 80 percent of their IT operations and business process functionality needs.

The next phase in this evolution is multisourcing—using a combination of internal and external service providers to create a highly-customized, cost-effective solution for the IT infrastructure. This approach involves:

  • Choosing best-of-breed providers for different IT functions. A company may choose one vendor for hardware repair, a second for application development, a third for desktop support, and a fourth for system administration. This is common in very large, geographically dispersed organizations.

  • Functions shared by internal and external resources. For example, some companies find it cost-effective to outsource Level 1 and 2 Help Desk support and perform advanced troubleshooting in-house, or to perform basic network admin duties internally and outsource planning and strategy functions to a specialist.

Managing the Multi-Vendor Environment
The emergence of multisourcing is significantly changing the demands on the IS department. In the past, a CIO was responsible for an internal team that delivered well-defined and easy-to-track services. When a company adopts the multisourcing approach, however, its IS department essentially comprises a large group of internal and external service providers, each with distinct service levels, escalation guidelines, reporting structures, warranty agreements … and as any CIO knows, the list goes on.

Overseeing such a diverse assortment of service providers is no easy feat, especially for a department that has been trained to deliver service and not necessarily manage it. Effectively managing the multisourced environment requires addressing these challenges:

  • Customer Confusion—Using different vendors may be beneficial for improved service and decreased costs, but it can also create a confusing web of vendors and service providers.

  • Inconsistent Quality—When different vendors have varying service levels and ill-defined escalation points, problems can easily fall through the cracks. In addition, there’s often no mechanism to ensure service levels are met or issues are resolved.

  • Lack of Business Intelligence—With data dispersed across vendors, it’s hard to get a “big picture” overview of the IT operation and make apples to apples comparisons. Businesses often receive very different reports from each vendor, so data analysis becomes a time- and labor-intensive process. This makes it difficult to:

    • Target recurring technical issues

    • Assess field operations and take steps to streamline and improve operations

    • Assess vendor performance and ensure use of best-of-breed providers

    • Assess customer satisfaction

The key to managing the shared, multisourced IT environment effectively is centralized information. The aforementioned Gartner report agrees, stating, “An enterprise cannot have a sourcing strategy without a process for managing the expanse of information and information resources required to achieve its objectives.”

A Proven Solution—The Service Management Model
Some companies have turned to a new approach to help simplify the task of managing multisourced IT environments. The Service Management Model (SMM) provides a single, centralized contact for all technology issues and escalations, including those from internal and external service providers.

The SMM comprises two core elements:

  • A single point of contact (SPOC) for all technology support. All users have just one phone number to call for any technology issue; the SPOC forwards the call to the appropriate vendor.

  • A Service Management Center (SMC), which delivers:

    • Quality management. With all support calls and escalations centralized, the performance and service of all links in the service chain (including the SPOC itself) can be monitored and managed proactively, ensuring quality management. This also ensures that issues don't fall through the cracks.

    • Centralized decision support data. The SMC provides centralized, real-time data collection and analysis for all service delivery activities and providers. The data is available through real-time, Web-based access, and can be used for decision-making, strategic analysis, and identifying vendors with the best performance and service.

Benefits
For IS departments, the SMM approach provides a valuable tool for selecting the best outsourcers and monitoring service quality both internally and among external providers. Benefits include:

  • A “Big Picture” View of the IS Operation—With disparate information about internal IT and external service providers centralized, the CIO can easily monitor the performance of the IS department, including quality, project status, and areas for improvement.

  • Improved Customer Satisfaction—Customers/users have just one phone number to call for any technology issue. The SMC quickly identifies the responsible service provider so the user isn’t bounced around to different vendors.

  • Improved Service Quality—With centralized data from the SPOC, the business is well equipped to:

    • Target recurring technical issues and improve operational efficiencies. The SMM approach has helped companies correct gross inefficiencies in their IS operations, which in turn provides a speedy ROI.

    • Ensure that vendors meet their service and warranty obligations. IS staff rarely have time to monitor warranty agreements for so many vendors. The SMC takes care of this function, and has identified cases where companies were overpaying vendors by thousands of dollars.

    • Identify poor performers and eliminate them from the vendor network. In one company, many in the user community felt a vendor was not providing the high-quality products and services that it promised. The SMC helped the company gather data to address this claim.

    • Contact users directly to conduct surveys on vendor performance. Because the SMC centralizes all technology-related user calls, there is a comprehensive user list that can be used to conduct customer satisfaction surveys.

  • Improved IT Procedures— Implementing the SMM requires formalizing processes, such as escalation points and service levels, for anyone remotely involved with the problem. This is especially helpful for issues that involve both internal and external providers. This eliminates ineffective and redundant procedures, and results in streamlined operations.

And for IS staff responsible for managing vendor relationships, the SMM takes care of the need to assess and track vendor performance, so there’s more time to improve operations and focus on strategic initiatives—improving productivity.

Conclusion
As businesses leverage the potential of multisourcing, it is important to manage service providers effectively to realize the full value of the technology investment. The SMM is a proven approach to supporting the multisourced environment. It simplifies user support, ensures customer satisfaction, and provides valuable data for business intelligence and vendor management. In planning for current and future outsourcing needs, the SMM can help improve operations, provide highly-responsive, single-source support, build a top notch service provider network, and make highly informed business decisions.

Greg Lewis is an SEI Vice President and Managing Director with extensive experience in business management. He has played a key leadership role in SEI’s delivery of customer support services, and has supervised support operations for 33 clients, including McDonald's and R.R. Donnelley.  For more information contact SEI at (630) 413-5050, info@sei-it.com, or www.sei-it.com

 


 

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