Managing Vendors – Articles by Jim Everett

Tips on managing vendors, skills and competencies required

Handling Service Level Changes


This post is about IT professionals, vendors, compliance, communication, changes in service levels, assumptions, problem-solving, and the bigger picture. I am not an IT professional, nor do I play one on TV. But I do work with IT groups on outsourcing, problem-solving, and techniques for managing vendors. My career has been focused on helping new managers become skilled and effective. And I have worked in the technology field for 20 years.

Our hypothetical scenario

Suppose you are an IT professional in a US-based company that outsources a data center and applications development. The data center is located in London, but applications development is being done in-house.

The data center agreement was set up two years earlier, with a lead time of one year from first putting out an RFP. Some incremental provision was made in the terms of the agreement for 10% increase in bandwidth per year to handle the increase in data traffic.

With emerging mobile technologies, increasing emphasis on Social Networking, and greater ease of creating and deploying video, your company adopts a video-rich approach to knowledge management internally, Customer Support embraces this and makes extensive use of this to help agents handle user calls in real time, and Marketing makes greater use of mobile video in product and services training around the country.

This creates an exponential increase in bandwidth requirements, much beyond was was allowed for in the data center, and expansion in the UK at the new rate becomes an expensive proposition. Delivery times increase and effective data rate served per user drops below what was agree in service levels.

On top of this, the supporting applications are showing their age, and no longer work efficiently under these new and more diverse requirements. They have been expanded and patched, but clearly some need to be built from scratch. But there has been a 10% cut in staff across the company, and Apps Development took a 15% cut

This level of expansion is not reflected in the agreement, and the vendor providing the data center contends that the failure to meet service levels is not their fault. As the program manager for this particular vendor, you look to see if funding is available to allow for the extra cost of expansion, which the vendor has put forward in a request for a change order.

But, when you seek an increase in funding for the project, you find that IT expenditures have been capped for the remaining nine months of the company financial year, and the pressure is on you to come up with a solution.

You see the only solutions are

  1. Push the vendor and try to get them to comply
  2. Outsource the development of critical applications
  3. Work with the data center vendor to see if they have applications developers, or a 3rd party vendor, who can handle the task quickly, or if they can invest in a more powerful delivery mechanism
  4. Look for an aggregator with a ready-made solution for this type of situation, and buy a plan with them
  5. Source a new vendor with the needed capacity and scope to expand, and transition the work to them.

So what do you do? (Feel free to add your thoughts and comments – click on link in subtitle…)

Key points coming out of this scenario

Vendor managers are held accountable for ensuring the vendor meets the service levels, but it is important to go back and look at the written or documented assumptions upon which the agreement, service levels and pricing were based. The vendor manager can only be responsible for those things within his or her control.

It is essential for those working out the scope of work with the vendor to document these assumptions in the first place, and include them in the agreement, or as an appendix.

Clear procedures for program governance within the company need to be in place and followed for situations such as this. It is OK for a vendor manager to use his or her own internal connections to liaise with other departments and get day-to-day problems solved, but this scenario outlined here requires a more high level and strategic resolution.

There needs to be an effective escalation path for raising red flags when the metrics start showing problematic changes.

For the vendor manager, being able to clearly show large discrepancies between the present requirements and the assumptions on which the service levels and terms were based, is the strongest lever to begin getting attention and raising this to the level where the broader picture is addressed.

Another factor that needs to be considered is how this complies with labor laws, and whether the increased volume of work or expenditure goes beyond mandated thresholds for local worker percentages.

Changes in any company programs that utilize the services need to be looked at in a total picture. Individually, any one initiative may not be a problem, but three unrelated new initiatives deploying at the same time may create the perfect storm. And the front-line interface with the vendor, the program manager, needs to be part of that review process.

Challenges for the outsource vendor manager

The Vendor Manager (aka Delivery Manager, Outsource Project Manager) needs to be equipped with the skills and requisite knowledge to manage this kind of situation. This is often beyond what traditional IT professional training and experience provide. Yet often, the IT professional is thrown in at the deep end and asked to manage highly complex and ambiguous situations where there is no single solution, but one that must be balanced, negotiated and optimized across all parties

In future posts I will explore more what these competencies are, and how an IT professional can acquire this expertise. You can also subscribe to my audio podcast, Managing Vendors, on iTunes, or at, where you will find the full series of podcasts and transcripts as PDFs.



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About Think180

Think180 helps companies get best results with service providers (vendors). Our core product is an in-house customizable workshop for Vendor Managers, or entire teams who outsource. This has been run for many clients, including Palm, Philips, Harrah's, BP USA and Canada, Vantive, Alkermes, Avaya, Government of Canada, Fidelity Investments, Quantlab and others.

We now also can offer live and interactive videoconference services and webinars, Training Modules for team events, planning tools and consulting on Vendor Manager competencies, and 1:1 coaching for individuals with videochat (desktop and mobile) on managing vendors.

Call Jim Everett 310.346.8042 for more information to assess if these service are of value to you.

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