IT Vendor Visit (Does and Don’ts)

Vendor visit is an important aspect of vendor selection process. Apart from displaying their technical prowess, vendors also need to ensure that they give good impression of their companies. Some points to consider during vendor visit are:

Before visit vendor should:

• Know who all will be visiting the facility and what is their designation or field of interest (Like: Infra  Director will be more interested in Infra offering)
• Travel plan of the client’s team and if any transportation is required from their end
  • If transport is required then ensure that enough cars are hired to comfortably accommodate all client’s team members and their luggage (if required)
  • Ensure that drivers assigned to facilitate transportation knows the address and most convenient route
  • Send agenda beforehand so that client know what to expect and can ask for additional items that may be of more interest to them
  • Know dietary preferences of all visitors if snacks / lunch / dinner are to be arranged
  • Ensure all logistics details are taken care of like
    • Booking conference rooms
    • Speedy access for client at entrance
    • Internet access for client during session. They might also plan to introduce their company and what they are looking for
    • Inform everyone in facility the time and date of client’s visit
    • Arrange customized gift for client

During visit vendor should:

• Ensure that someone is there to welcome client when they arrive
  • Preferably someone who has been coordinating with client
  • Ensure that entry process in the vendor’s premises is seamless
  • Follow the agenda and try to stay on time
  • Presentation should be as per clients requirements and not a generic one
    • Inclusion of questions asked by clients during  previous correspondence is a definite plus (i.e. “We will get back to you” category)
    • Introduce their company and its achievements; But enough focus should also be given to what client is interested in
    • Enough time should be spend on topics that interests clients so session is fruitful for them
    • Ensure that internally one person is not dominating the whole session or people are cutting off each other
      • It might create an arrogant impression to client which is not good
      • Escort client to their car 

Post visit vendor should:

• Write a mail and thank client for their time and interest in their company
  • This helps build relationships
  • Send across any addition information requested by client
  • Send across follow up mail for next steps 

Business Analyst – A value add or an overhead?

Does Business analyst really add any value to the organization? Why is it that any department cannot just rely on existing IT, marketing, finance, engineering and accounting people to solve their business problems? Isn’t hiring an additional professional adding to the cost? Or is there a business value associated?

Value in the business context is simply return on investment (ROI) which is nothing but revenue/benefit generated v/s the cost associated with the investment. Thus it all boils down to how would a business analyst reducing the costs and increasing the benefits, to increase the ROI.

Answer lies in the research conducted by CHAOS. According to research findings, among all IT projects initiated by an organization, almost 25% of projects fail and 50% challenged. That means only a dismal 25% of projects see the light of success. This is not only unacceptable but almost alarming for any organization.

At this point it is important to understand the major factors causing these projects to fail.

• Bad communication between relevant parties (57%)
• Gap in the understanding of project requirements (42%)
• Lack of resource planning and activities (39%)
• Milestones not being met due to unrealistic estimation (34%)

Business Analysis adds value by providing planning inputs to the PM, especially time estimates required to gather information, analyze information, review information document information, and coordinate with team and client stakeholders. The business analyst provides the skill sets (of resources) needed to complete those tasks – including client resources.

The BA becomes the catalyst and the primary driver behind the requirement reviews, thus addressing some of the most crucial issues that cause a project to fail. Hence, even if a BA is able to increases the chances of a project to be a success by 40-50 % it definitely makes a lot of business sense.

Thus it is the sheer criticality of the issues that is handled by the Business analyst makes him a value-add in the project rather than an overhead.

 

– By Harsh Saraogi

Contract Review

A contract is a document that creates a legally binding commitment, and includes letters of intent and memoranda of agreement.

Contracts and proposals are revised every year. Vendors introduce new pricing, licensing models, maintenance options and audit clauses every day.

The best contracts are the ones in which they specify time periods, dates, payment logistics, major and minor responsibilities, and define all subjective terms in detail. Add detail to every sentence so there is no room for a different interpretation. Each and every term discussed and orally agreed upon between the parties should be in writing.

Contract review provides the company with a decision as to whether or not to agree upon all the requirements mentioned in the contract. They requirements can be negotiated during contract review. Contract review provides an opportunity to ascertain that all the decisions finalized and also the payment structure is proper.

Offshore Outsourcing Issues

Offshore Outsourcing is a tactical move and the goal is to build a long-term association in which you expect the unpredicted and deal with real issues. Many companies today are outsourcing offshore. However there are consequences and bigger impacts that come with this decision.

Following are some of the issues faced during Offshore Outsourcing:

Offshore Outsourcing Issues

Cross-Cultural Differences
Cultures are different.People from different cultures are different and have various ways of screening the same problem and often this is a cause for misinterpretation in offshore project. In fact, majority of businesses, offshore IT and BPO projects quote cultural differences to be the one of the major issue they faced in their projects. Often the company is unable to understand the work idea of the offshore service provider and this leads to incapability to work mutually in harmony.

 

To tackle the cultural issues one must:

• Learn and be aware of it during the offshore vendor evaluation process and make definite that it matches with their own corporate culture.
• Execute a model project with the offshore team to understand how they work together with your team in solving and escalating the issues.

Communication Problems
The Offshore service providers operate in a location which follows a time zone which is not same as the client which eventually may cause problems in communicating in real time. In addition to that usually there are chances of misinterpretation e-mails which will result in time-consuming responses from offshore providers. Thus it would delay the project and at last may reduce the efficiency of the team members. Issues with communication are the main reasons for the failure of many offshore projects.

Noncompliance with Government Regulations
In any outsourcing initiative, one need to keep in account the government rules & regulations of both countries. Particularly it is significant to understand the standards of Auditing. Few types of works are difficult to be outsourced to offshore locations due to officially permitted restrictions. You need to do proper due diligence before you consider offshore locations

Unclear Scope of Project
Companies should state the scope and goals of the project unmistakably to the offshore vendor. Though it is not a very difficult simple step, organizations tend to fail to communicate it to the offshore vendor, thus resulting in the failure of the project.

 

IT Outsourcing Models

There are many ways a person can slice and dice various outsourcing models. This is my way of doing the same:

1. Time and Material

In this model client and vendor agree on per hour rate and track the number of hours worked by maintaining a timesheet. This timesheet is reviewed and approved by both parties and payment is made to the vendor.

In some instances vendors insist of fixing some minimum hours of work so that they can cover their base cost.

Some challenges faced in this model are:

• Tracking of timesheet may be tedious if many resources are working on this model
• This model is best for project where lots of factors are uncertain / unknown. However, making commitment of fixed cost to the vendor may cause losses

 

1. Staff Augmentation

In this model companies hires a temporary resource to fill specific role or handle over load of work. Once the task is finished the resource is released.

Generally, companies have tie up with independents contractors or companies which assist them in hiring resources. It is the most cost effective and simple way to address support deficiency in any organization.

However, this model might cause some liability for the company like:

• Ambiguity in quality of work
• Challenges in managing resources (e.g. creating contracts)
• Process standardization
• Knowledge Retention
• Accountability for delivery remains

 

1. Captive

In this model company makes strategic decision to create its presence in the lower cost location and conduct work there as a part of its own operations. The resources hired are part of the company and not by a vendor.

The company retains full control of infrastructure, resource, legal and administrative processes.  They can set up their own processes and quality standards.

On the other hand setting up a captive in an offshore location can be a very tedious process as company has to:

• Setup legal entity in that country
• Clear various legal formalities
• Acquire office space and set up entire infrastructure
• Follow local rules and regulations while hiring of resources

In some case companies hire an external vendor in an offshore location to set up captive for them, this is often referred to as Managed Captive. In this model company has full control, but the liability of acquiring of space, setting up infrastructure and managing day to day administrative work is vendor’s responsibility. Vendor at times also assists in short listing potential candidates before company actually interviews them.

 

1. Service Level Agreement (SLA)
   1. Project Based

In this model company outsources a project to a vendor based on Service Level Agreement (SLA). Vendor is accountable for execution of project and to meet the defined outcome. Company from its end will only monitor the project and ensure that key deliverables and milestones are met.

It is a collaborative model which benefits both company and vendor.

 

1. Managed Outsourcing

This is the best mode if the goal is to gain long term benefits. In this model company outsources end to end responsibility of a business unit / tower to a vendor. Vendor is accountable for the deliverable / outcome.

This model is generally for 3 – 5 years; however in some cases it may be more depending on the company and vendor. Scope of outsourcing is very clearly defined with stringent SLA. Company acts as a reviewer with added responsibility of budget tracking and contract management.

Choosing a correct vendor is very important otherwise company will be stuck with the vendor for 3 years and not get the desired benefits.

Now a day most company adopt updated version of this model in which they outsource to more than one vendor. This model may provide more advantages, but managing multiple vendor may prove to be tedious process.

 

1. Transaction Driven

In this model company is charged as per actual number of transactions. Classic example of this is BPO.

Vendor Management Scorecards

Someone rightly said “Scorecards are more About the Business Processes, Not Technology”. A Scorecard is a structure that gauges a vendor’s performance metrics based on an individual and the organization as a whole.It links two unique trading business partners. Scorecards are said to be unique & action-oriented because they can differ across customers & across suppliers (vendors) for the same company.

Scorecard Benefits

Why do we use Scorecards when there are other tools available? The reason is Scorecard leap frogs all other tools when it comes to offering the following benefits:

1)      Strategic Business Assessment

2)      Planning

1.                                 I.            Management Planning
2.                              II.            Customer Relations Management Planning

3)      Business and CRM Operations/Planning

4)      Initiate Improvement Program

 

In order to understand these benefits it is essential to know what steps are involved in these processes –

1)      Strategic Business Assessment

• It identifies key customers and/or vendors
• It identifies the performance metrics of key customers/accounts/vendors
• It identifies the processes key to downstream quality delivery
• It identifies & establish Key Result Indicators (KRI’s)
• It identifies process “owners”
• It understands the internal process capabilities

 

 

2)      Scorecard Planning

1. Management Planning

• Metrics relevant to customers/vendors
• Create meaningful/feasible metrics which can be managed properly
• Create manager information on demands – change management process
• Assign responsibility for scorecard management to someone

1. CRM Planning

• Create the customer account team for the customer information
• Create a specialized team for programming the Scorecard metric development
• Align all projects/processes for improvement
  • Make sure that the Specific metrics are properly linked in the scorecard
  • Create a proper target & tolerance levels to check the performance levels
• Set up a feedback form for the scorecard customers/accounts

 

3)      Business & CRM Operations

• Analyzing & reviewing the metrics with the account team members & the process owners and also discussing on its improvement projects
• Train & show the team members to convey reviews to the customers/accounts
• Set up meetings with the customers/accounts on a regular basis to analyze & improve the projects

 

4)      Initiate Improvement Program

• Scale
  • Add additional customers/accounts
  • Improve on the technology aspect
• Extend – increase the levels of collaboration

With great outsourcing comes great responsibility

Friday, August 10, 2012

The connection between outsourcing client and supplier is often burdened. Misunderstandings, miscommunications and disappointment are a frequent feature of the relationship, with both sides becoming frustrated by problems. Most clients have feeling of dissatisfaction with their outsourcing partners. Given the critical role outsourced functions deliver for businesses, this is an alarming situation.

While suppliers absolutely need to address this issue, there are some straightforward but crucial steps that clients can take to maximise the value of their outsourcing contract, as well as making sure it doesn’t become a time-consuming and bitter relationship.

Viewing an outsourcing contract as an ongoing partnership rather than a straight handover is an important first step.

For achieving high performance in business the partnership approach must be given a lot of importance. Most of the high-performance businesses consider their outsourcing provider to be a strategic partner. However not all of the typical performers do have this mindset. Clients need to be more realistic about sources of value and what role they’re going to have to play to get that value. By consulting with their outsourcer as more of a partner than a supplier, clients can tap into their specialist knowledge for the benefit of their business. This will deliver the value creation, or transformation, that many clients want to see from outsourcing contracts.

It’s important to look at the effect outsourcing has on the business as a whole; it cannot be seen as a process in isolation as business units are interdependent. Monitoring and measurement are essential for the success of any contract, especially if any company uses more than one supplier.

Trends in outsourcing have seen contracts getting smaller, as well as getting cut in pieces, as companies look for the ‘best in breed’ in each field. Some outsourcers are forming consortium made up of a range of companies – each with different specialties – that allow them to tender for contracts.

Having specialist suppliers provides great flexibility and efficiency for the client, but it does present complications. As the number of parties involved goes up, it dramatically increases the amount of processes and ‘moving parts’ that need to be monitored.

It is crucial for the client to know how each is contributing to the business. But how can they keep tabs and track each process? How to tell where efficiencies could be made? And how to fix a small problem before it becomes a big one?

Software available now allows minute by minute tracking of outsourcing results. No longer do businesses have to rely on slow, expensive reports that are out of date by the time they are issued. This technology offers a relevant and effective means of tracking all the moving parts of a business to give a greater control over the multi-layered processes. Monitoring software allows several providers to be tracked. Not only does this empower businesses to get better results from using multiple specialist outsourcing providers, it offers an efficient way to manage risk.

Software that provides a central dashboard to monitor all the elements offers clients a way to manage risk when moving their business from a single big supplier to multiple specialist providers.

A final important consideration for clients is to be very clear about what they hope to achieve. Often clients can assume that their outsourcer has understood something that they haven’t clearly outlined, and assumptions are never safe. Clearly defined objectives at the beginning set the contract up for success. If something is not working out as planned, then it should be communicated to the supplier and then both client and the supplier should work together to find a solution. If something has gone really wrong then it should be reported at the earliest and no delay should be made to address it.

In summary, clients should see outsourcers as an extension of the business. It is not enough to assign a contract and then expect the outsourcer to run with it independently. Putting a tool in place that can drive and measure the value obtained from an outsourcing contract can always prove to be helpful. The more the relationship is seen as a partnership and the more open the communication, the more successful and valuable results will be for any company.

By,

Prabhakar Ranjan