The COVID-19 Pandemic has made clear the importance of IT service resiliency.
Technology organizations and their service providers had to absorb and respond quickly to the most massive IT operating model and service delivery shift in history. Business continuity plans were engaged, and the full-on work-from-home experiment has been [mostly] successful. As they move from pride in initial success to contemplating longer term impacts, IT leaders may be wondering: “what does all this mean for my supplier relationships?”
And the reality is that many will find limits to change in their contracts or their sourcing programs — and these limits will become increasingly apparent in the months and years to come.
But these problems are solvable, and many of our clients have solved them. We suggest there are several aspects of a sourcing program that can help absorb change more easily over time:
- Individual Contracts: Every contract should support flexibility and alternatives.
- Contracts for managed IT services, although they contemplate specific actions at the time of signing, are really contracts for a relationship over multiple years.
- The contract must support evolution and change in service volumes and service types.
- Conditions like minimum revenue commitments must be replaced with variable pricing; new services provisions must adequately consider tradeoffs; termination provisions must be equitable.
- Integrated Contract Portfolio: Contracts are individually variable components of a program with collective goals.
- Every services delivery program is inherently multisourced, and the operational contracting framework should recognize this.
- Contracts should have common operational provisions to support the integrated, enterprise delivery program with shared accountability; service requirements and tower-specific metrics will remain unique.
- Operating level agreements should be contractual; service management manual should be a single enterprise document; alternative sources of supplier (both external and internal) should be plug-and-play.
- Ongoing Market Engagement: Buyers should have a continual relationship with the marketplace of providers.
- Solutions are ever-evolving; buyers and sellers must stay attuned to one another.
- Ongoing strategic sourcing programs like our “market test and rebid” help keep the customers current on market offerings, the service providers current on customer needs, and speeds the acquisition process with pre-qualified firms.
- Private sector clients have an opportunity to learn from our public sector clients in this case: use strategically structured ongoing processes such as RFIs, RFQs, RFSs, and RFPs to support agility as may be needed in the future.
Tim Ryckman, October 2020 – [bio]