In this episode of IT Leadership Insights, Jarosław Granat speaks to Lauren Tennant about the best practices in managing IT service suppliers.
From this video, you will learn why you should spend time thinking about the governance and the way it works at the very beginning of the procurement stage and how to recognise if the governance is working well. Lauren will also reveal how to plan the way the buyer and the supplier will work together and what to include in a contract to clearly define roles, responsibilities and expectations towards each other.
Lauren Tennant is the Co-founder of Horizon Seven, a fun, energetic and world class team of sourcing experts. A leader in the field of sourcing, Lauren is redesigning the way we buy and sell technology services. Leveraging her skills as a former Global Technology leader, Lauren combines pragmatic advice with the latest sourcing practices to achieve the best results for both buyers and suppliers.
Jaroslaw Granat is Future Processing’s Head of Client Engagement, working to ensure the highest level of services for the company’s clients. He is a graduate of Computer Sciences and Psychology in Business and has worked in IT for the last 10 years.
The transcript of the episode
Jarosław Granat (JG): Hello and welcome to IT Leadership Insights by Future Processing. My name is Jarosław Granat and our guest today is Lauren Tennant, the founder of Horizon Seven, a specialist sourcing advisory for buyers and suppliers. In our last episode together we talked about the importance and best practices regarding to request for proposal. And today we’ll talk about the best practices for managing a supplier.
JG: Hello Lauren.
LaurenTennant (LT): Hi.
JG: Lauren before committing to start a relationship with a vendor plenty of companies or buyers think to themselves, “What are the chances that it will work?” So Lauren, what are the chances?
LT: I think the chances are very good if the procurement process is done well. Unfortunately, a lot of the time it’s not done very well. So, sourcing, outsourcing has a bad press because of that. So it’s unfortunate that it’s run poorly and therefore there are poor results. Done well, in fact, it can be a very good outcome.
JG: So what can we do about it?
LT: So I think the important thing we touched on last time a little was the preparation for going to market. So understanding the outcomes that we’re trying to achieve. Once that’s done, I think then managing the contract well is really important. So there are some things around that like making sure that as a client, a buyer, that you have good internal resources and processes to manage the vendor properly. That the governance roles and responsibilities are all really well defined, because if they’re not properly defined from the outset that’s where the problems creep in.
JG: Speaking about the problems, it sometimes happen.
LT: Yes, that’s correct.
JG: So what do you do when you face some kind of difficulties when the supplier is underperforming? Do you have any kind of set of actions to perform, to do?
LT: Yes. I think the first thing to say is that in my experience, and I’m asked to mediate between buyers and suppliers quite frequently when things go wrong, is that it’s not always the supplier’s fault. So I think the first assumption shouldn’t be that it’s the supplier’s fault. And a clear understanding of the facts need to be understood properly first, and that the root cause of the problem is identified before any assumptions around whose fault it is and what should be done. Because quite often there are problems on the buyer’s side as well as the supplier’s side. And quite frankly, when I’m asked to look at these things I find that in fact there’s a difference in expectations rather than a problem with the vendor performance.
LT: Of course sometimes it does happen when the vendor is underperforming. So, inevitably that can happen, it’s important that the client thinks about how they manage the vendor in a consistent way. That they have the right roles and responsibilities defined on both sides. And that governance is very strong, because actually, when things go wrong they should be picked up by effective governance. If things are going wrong and continuing to go wrong it signals to me there’s a problem in the governance structure. It’s probably the least sexy part of outsourcing but is one of the most important pieces to get right. If it continues to be a problem then there are typically mechanisms in the contract to use to address this. So, I think it’s important to use those and not to be frightened of using the mechanisms in the contract, things like improvement plans. And my advice to buyers is that if they’re struggling with under performance then using those things is good because it’s well-defined, it’s well-understood, and they actually become a requirement if you are to go on and take further action against your supplier, which we hope you don’t have to. You have to typically do these things and give the supplier a chance to fix their performance first. So, I would say just crack on and use those good mechanisms and good governance to try and stop it, then address it.
JG: All right. But from your experience are there any particular areas of disagreements between suppliers and buyers?
LT: It normally comes in a mismatch of expectations of scope. So, one party, typically the buyer, is expecting a supplier to do something and that might not be in scope. Or a particular way of doing it might not be in scope. So, a lot of the problems that I see coming through in relationships between buyers and suppliers is because things haven’t been well-defined in the beginning of the process. So, who’s responsible for what, how you’ll communicate, how that’ll be delivered and how that will be managed both sides is often muddy. And when I’m asked to mediate those are the things that end up being the problems that I have to sort out, not really the technical delivery frankly.
JG: Okay, so assuming that everything goes well and smooth, what would be your tips and tricks to make the cooperation even better?
LT: So I think-
JG: On a day-to-day basis.
LT: Yeah, of course, so for me, starting at the very beginning if you’re a buyer and you’re thinking of going to market I think you can make your procuring process a much more intimate experience between you and the suppliers.
LT: So if you work together to define the solution then in fact you’ll both be, a, having a clearer expectation of what’s to be delivered. But, b, you’ll both be clear about the way in which that should happen. You should spend time thinking about the governance and the way that works at the very beginning at the procurement stage because the way you work as a client needs to match the way that the supplier works. So figuring that out at procurement is important. I think on the buyer’s side you have to remember that you have to invest time and energy in your vendors, your suppliers. So, making sure you understand your obligations, that you meet those, that you work with the vendor or supplier on a regular basis in a way that you’re both happy with is really important. And making sure that governance works really well should catch anything, and if it doesn’t then there’s a problem in the design of the way you work together.
JG: All right. So as a summary, if you were to sum it up all together, what we talk about, what would be your list of top three items for best practices for perfect management of IT supplier?
LT: So I think the first thing is get the procurement right. I know I keep saying that but it’s so important that when it goes wrong later it typically is because it’s been inadequately described or the client and the supplier haven’t worked through that properly together. So, getting it right from day one is important. And spending time on the non-sexy things like governance, really important. So that would be, top, top tip number one. Definitely do that correctly. The second thing is about making sure that the governance is well attended and that it’s quality. It’s quite often that I see when I go into these situations that we talk about the governance as it’s written in the contract and then the reality is that doesn’t happen. So making sure that the governance is followed and that everyone stays committed to it on both sides, I think would be my point number two. And then point number three is I think if you get into difficulties is not to be frightened to ask for help, because it can be very difficult being in a relationship with someone like a supplier, as a buyer to see the problems from the inside. So having someone external look at that and facilitate a solution for you if things are getting really difficult, would be my sort of third tip.
JG: All right. Thank you. Thank you very much for that summary and for the whole chat.
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