This is the sixth article in the series of articles on digital transformation. In the first article, we talked about the evolution of the digital enterprise. In the second article, we talked about building trust among the various stakeholders of the enterprise ecosystem. In the third article, we talked about how experience is an important pillar in the success of a digital enterprise. In the fourth article, we discussed how technical debt slows down the digital transformation journey. In the fifth article, we talked about the importance of architecture; how to build a team, how to engage your partners.
In the sixth article, we’ll talk about the right perspective for partnerships to succeed in your digital transformation journey.
Traditional approach: Parental attitude
IT is relatively a new industry. So, our approaches to manage partners are borrowed from the traditional industries like manufacturing and services, finance, etc. In all traditional industries, there’s a parental approach to managing your suppliers. The suppliers are told what to do, how to do, their systems and processes are audited. There is always a knowledgeable and more evolved set of people on the OEM side who know clearly what needs to be done and how.
This approach does not work in the case of IT. Let’s understand why!
Asymmetry of talent
The reason the traditional parental approach doesn’t work in IT, is because of the asymmetry of talent. In the case of technology, more than 95% of talent is on the Supplier side- either product vendors like Google, Microsoft, Apple, etc or on the system integrator side, which is TCS, Accenture, Infosys, etc. With 5% of talent on the enterprise side, one can understand why the parental approach may not work.
A question may be “Why is there an asymmetry of talent?” The answer is that technologies’ transformative nature makes IT a relatively high-margin industry. This allows the partners to attract great talent compared to traditional brick-and-mortar industries. The global mobility, cross-industry transferability, and fast pace of the industry help it attract great talent.
This is one of the cornerstones of my weekly LinkedIn Live show-ClarITeaChat. Most of the CIOs and leaders have shared their experiences in managing technology partners. We require a completely new approach to managing partnerships for successful digital transformation. Let’s understand how.
Partners, not vendors
One way to mentally shift our paradigm for partners is to stop calling them vendors, which is a term in the traditional sense. Your technology partners have more talent, more expertise than you. Hence, it is our imperative as enterprises to build a transformational and win-win partnership with our technology suppliers.
Knowing the asymmetry of talent, its in our interest to get the best of the talent to work for us. Not surprisingly, the industry players are able to generously make this talent available for engaging with customers, and for architecting the required solutions. Provided you can motivate and excite them with your vision.
How? We can create large and clear business outcome intents for our partners and then let them loose to attack the problem from the latest available technology in the partner’s portfolio. But we also need to support, enable and many times, protect them.
Long back our CRM was growing at a rapid pace. We forecasted that our databases in their current state will not scale up beyond next two years. So, we signed up with our DB partner for the DBA services.
I said to them, “I know what state my databases are in. You guys work with large banks and telecoms whose databases are much larger than us. I want you to bring in best practices from everywhere and take my databases to the world-class level of management, administration, and housekeeping. How much time will you take?”
They answered “Six months”. I gave them one year and a free hand. Then I left them on their own, I let them loose.
I set up the team in a way that they were treated as equals with my team members and their recommendations were tracked and acted upon. I was the sponsor of this initiative, with time-to-time reviews at my end which was always hinged upon benchmarks and best practices of much more data-intensive industries.
Governance and accountability
Given the asymmetry of talent, empowerment is required by partners to drive your transformation. You require a light touch on the operational level but strong governance at the leadership level to hinge the relationship on strategic and business outcomes.
While we will cover governance in a comprehensive way in our second last article, for the limited purpose here, we require strong review mechanisms with our partners focused on outcomes and accountability to the promised action plans. Your success is the difference between a well-governed partnership vs a badly governed one.
With my strategic partners, I ran tough monthly review mechanisms with clear standing agenda, a tracker of past action items, and performance dashboards. The focus of these reviews has been on mutual accountability to actions promised in previous meetings, dashboards of operational performance, and progress on strategic initiatives. These meetings usually end up with a team dinner where the bruises of the tough meeting are healed over a snack.
One important pillar of governance is your own accountability. A partner requires actions and decisions on your part too. The governance should protect no one – neither partner folks, nor your own.
Accountability and governance are two-way streets
As IT, our accountability is to business functions for clear outcomes. We need to pass on these outcome expectations to our partners clearly and empower them to deliver. Bottlenecks to empowerment would be our own people insisting that we’ll not change our ways of working.
The impediments to an empowered working by partners can be the following:
- Insistence on not changing the processes.
- Lack of trust.
- Lack of a clear RACI.
A partner gets money and recognition by making a difference to us. Provided we allow them to. That’s where the IT leaders have to sponsor and support the partners in playing their part and batting for process changes required for effective technology benefits.
Our Core ERP was in bad shape and I signed up with their expert services to bring our systems back in shape. One of the recommendations was the housekeeping of data and archiving. But no one in business wanted to do that. I and my team batted for the partner’s recommendations to be executed – all the way up to creating the archiving policies and getting these discussed at business leaders’ levels.
However, you are the captain of the ship. When the crew is not able to keep pace, it’s your job to lead from the front, and bring it on track. So, sometimes, you will have to roll up your sleeves and get into the brass tacks to show the partner that you will be able to provide the leadership wherever required.
It was half year close last day – 30th September. Our ERP operations were sweating and sputtering – Just 6 months into my taking over the CIO role. It was 10 PM at night and the system wasn’t coming back to normal. Our strategic outsourcing partner was managing the crisis.
I decided to pay a visit to the Basis room as it was called. I spoke directly to the team members and understood the root causes – people were firing half-yearly reports across the organisation, which was slowing the system down, creating a crisis for invoicing folks.
I spoke to the finance head, got the period closing extended by a few hours; empowered the team to kill and reschedule all reports to early morning times, asked them to not argue but give my number to any irate user. “Just do your job and don’t worry – I will handle the business” I reassured them. The period close was brought into control with new energy in the team.
Every good-performing partnership should be taken to the next level. In technology, you are as strong as your partners. The corollary is, you get stronger if you strengthen your partners. When a partner performs, give them more business, ask them to identify and solve more problems for you and give them a place on the table when you are doing strategy or innovation thinking.
We brought in a quality partner who did not have as much experience in our domain. But we trusted them to build the capability. They did build the capability; exceeded our expectations and improved our quality and performance.
I empowered them to look beyond their current mandate. That relationship led to setting up a complete device testing lab, and digital enterprise monitoring for our apps portfolio.
Our vendor management approaches are borrowed from the industrial age. With the asymmetry of talent in the technology industry, these approaches don’t work well. We need a new approach to managing IT vendors around partnership, empowerment, accountability, tight governance, etc. To stress the point, the stronger the partner the stronger you are. So, look at your partnerships in a strategic way and create strong partnerships for a strong digital transformation footing.
Please leave your comments here, or in the author’s LinkedIn Posts. In the next article, we’ll talk about what kind of culture we want to build which attracts the kind of talent we require for transforming the enterprise.
The article has been written by Jagdish Belwal, Founder and CEO, Jagdish Belwal Advisory