Multi-vendor Governance

There are 3 layers of ITO governance that are typically crafted before the transition takes place - strategic governance, cross-functional or integration governance, and operational governance. The framework and the related processes need to be in place prior to transition.

ITO governance becomes even more important when a client needs to manage a multi-vendor environment. It provides a standard platform in which both the client and the service providers agree to communicate, monitor progress, and make strategic decisions collectively. The output from these meetings provides a roadmap to enhance the relationships and focus on improving overall performance and unlock the value of the ITO deal.

Establishment of ITO Governance

As mentioned earlier, ITO governance needs to be established before transition takes place. Typically, a Transition Management Office (TMO) is established to help manage the transition. It is recommended that the transition is run by the client with input from the various service providers. Specific transition metrics and milestones need to be established and agreed upon prior to the commencement of transition.

It is vital for the client to dedicate full-time internal ITO transition managers to help smooth out any issues that typically are encountered during this major change in the IT environment. Working closely with the internal HR team ensures that a proper change management program is established and the right expectations and incentives are discussed and communicated.

An often overlooked task that many IT organizations forget to look at is deciding what the new IT organization will look like and behave in the new environment. Hence titles, roles, structure, span of control, etc, need to be clearly articulated of what the new IT organization will look like. A strategy session should take place between the IT senior management team and invite the service providers to participate as well.

Although it is hard to establish specific demarcations of responsibility between the client and the service providers, these sessions provide good guidance on how the client and the service providers should interact.

As the transition is taking place through the TMO office, it will become apparent that some of the client team members will become part of the steady state vendor management office. It is recommended that if a PMO office exists in the organization then both the VMO and PMO offices should be integrated to allow for a seamless operation relating to the demand management process.

Since the service providers will become a large source of human capital supply for projects, enhancements, and steady state operations, it is recommended that a common resource monitoring/performance dashboard is created to provide visibility into the demand and performance of the resources.

Top of the Pyramid

Starting from the top of the pyramid, a strategic committee should be established with an agenda to discuss changes in the IT strategy (based on business requirements) and how these changes are affecting the ITO strategy. Critical issues, financials, relationship management, and high-level performance metrics should be shared as part of the monthly or quarterly strategic governance meetings.

As part of the VMO/PMO team, an integration or cross-functional ITO governance structure should be established to communicate the changes across geographies, service providers, IT teams, business units and how activities in one group or service provider impact other IT teams.

A common knowledge management platform should be established to collect the learnings and procedures/documentation from various service providers, so that it can be leveraged over many IT teams. The purpose of the VMO/PMO team is to provide standards and guidelines to the project teams and ITO operational teams on how to collect the various metrics associated with SLAs (CPIs, KPIs, GPIs) and elevate them to the VMO/PMO office to create the overall dashboard.

Financial and Contract Management

Financial and contract management is also a part of the integration or cross-functional governance team. The contract should be reviewed once a year, and depending on circumstances changes should be mutually agreed upon to make the relationship work. Always look for a win-win scenario when dealing with strategic partners.

A comprehensive vendor management score card should be built that monitors the main service providers and includes a financial risk assessment, geo-political risks, operational risks, managerial risks, and regulatory/legal risks. The score cards should then be analyzed and provide the VMO/PMO office with the necessary information to create short to medium/long range action plans. Depending on the financial size of the contract deal and scope, a dual vendor strategy may be a good idea to mitigate any risk associated with 'putting all your eggs in one basket'.

The day-to-day operational governance is typically handled by the various IT teams in conjunction with their service provider counterparts. Weekly operational meetings should take place to capture issues, performance SLAs, financials, resource management, RCAs, incident management, problem management, etc. A good start is to use the ITIL v3 framework as a guideline to build or enhance the current IT service capabilities.

The right tools need to be implemented to capture the data and make the SLA adherence process as easy as possible. If SLAs have not been established, then Service Level Objectives (SLOs) should be mutually established with the service providers to establish an accurate baseline that perhaps in 2-3 months time could become a contractual SLA.

This information needs to be shared on a monthly basis with the VMO/PMO team that will then create an enterprise view of the ITO operations and publish a strategic ITO dashboard.

Conclusion

The 2 key takeaway concepts I would like to leave everyone with are relationship management and metrics. If the relationship fails then all the other governance concepts will not be effective. Regular CSAT surveys should be conducted to received feedback and share it with your service providers. The second concept is 'If I can't measure it, I can't fix it'. Establishing the metrics and sharing the results helps both the internal IT organization and the service providers. Metrics take out the ambiguity and makes it clear as far as what the goals should be. Goals are then entered into action plans that keep teams and personnel accountable.

MICHAEL SERGHIOU
The author is VP,
head of vendor management, Ann Inc
maildqindia@cybermedia.co.in