How to get multiple IT outsourcing providers to play nice

How to get multiple IT outsourcing providers to play nice

Here's a few tips when there's no incentive for providers to work together

There's no doubt that multisourcing -- parceling out the IT services portfolio among a number of vendors--has its benefits: competitive pricing, increased flexibility and access to a deeper pool of talent, among others. But working with multiple providers creates multiple challenges, not the least of which is trying to get all of those competing vendors to play nice.

In fact, almost everything in the typical outsourcing transaction, transition and operation is conspiring against them getting along.

For one thing, they may be no incentive for the providers to work together. Multisourcing has entered the mainstream, but outsourcing contracts and negotiations haven't kept pace with the trend.

Collaboration Is not in the contract

"One major challenge is simply the way that outsourcing contracts are typically negotiated," says Lois Coatney, director with outsourcing consultancy Information Services Group (ISG).

"At a basic level, providers are financially motivated to get the highest possible fee for the least amount of work. This leads them to focus on their particular scope of responsibility, and to be very diligent about specifically defining what they are and aren't responsible for."

Each provider is often focused on a specific tower of service -- infrastructure services for one, application support another -- and focus their negotiations on service levels on that domain.

"The touch points between towers are frequently neglected," says Coatney. "Providers, again, have little incentive to build bridges and take on additional responsibility for issues that aren't within their scope."

While the outsourcers may agree in theory to collaborate, contractual terms related to collaboration are either absent or toothless. "As a result, you often see individual providers conclude that it's in their best interest to protect their turf and to find ways to show that fixing whatever problem arises is the responsibility of another team," Coatney says.

Not only does the client not get the benefits of collaboration, it also spends most of its time solving disputes and putting out fires.

Meanwhile those IT professionals best-equipped to manage any inter-operational issues have been outsourced to one provider team or another. "This means the client's retained organisation isn't prepared to play the role of problem solver," says Coatney.

"So while the intent is to leverage best-of-breed capabilities, the outcome is often a hodgepodge of discrete services that doesn't benefit the business."

Multisourcing can work, here's how

Coatney offers some steps outsourcing customers can take at various phases of the mulitsourcing lifecycle to encourage their provider team to work together:

During the contracting phase....

Use this period to build an understanding of what the multisourced environment will look like, setting expectations for collaboration that providers can build into their offers. "The language in the contract needs to require interactions between providers and specify how collaboration will happen when issues arise," says Coatney.

Mandate activities such as regular cross-provider governance forums. Consider a "pain-sharing" mechanism like service-level agreements that span end-to-end transactions involving multiple providers. If the end-to-end SLA is breached, all involved service providers are penalised. "You want to spell out who is responsible for what and to eliminate the opportunity or incentive to make excuses," Coatney says.

During the transition....

Begin by inviting all the providers to a workshop that examines each key process an interaction point. It's the most effective way to specific the details of collaboration and integration, says Coatney.

"This makes it possible to break down activities at a granular level of detail and allows providers to reach collective agreement on how each shared process will work and how the various providers will engage with each other, and what the specific accountabilities will be for within each collaborative process."

Role play with different business scenarios to walk through how cross-provider interaction will play out and anticipate potential issues that can arise during the ongoing operations phase.

During day-to-day operations....

Don't let dust collect on those collaboration processes laid out in the contract. "The operational governance forums need to be convened on an ongoing basis to enable collective analysis of process performance measures and continuous improvement actions," says Coatney.

Such cross-provider governance teams encourage each vendor to collaborate on problem-solving rather than retreat to finger pointing. "By reporting and addressing operational performance as a collective exercise, you also create a culture of positive peer pressure," says Coatney, "where no provider wants to be identified as the one hurting the team."

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags businessbusiness issuesMultisourcingIT outsourcingIT service providersManagement TopicsManagement Topics | Outsourcinghow to get your outsourcing providers to get alongmanaging multiple outsourcing providers

Show Comments