We all know that managing IT supplier relationships can be complex, time-consuming, and frustrating, especially if things start to go wrong. We recently wrote an article about how to salvage a failing IT supplier relationship, and we realised that we had so much advice, we’d have to split it into two posts. You can read the first one here.
In this article, we take the preventative course, and give you some tried and tested strategies for setting up a successful IT supplier relationship to ensure you maximise the benefits and avoid problems down the line. Here’s our guide to getting it right:
It may seem obvious, but before you engage with an IT supplier, make sure you have a clear understanding of your organisation’s requirements. What often happens is that people on both sides make assumptions, as they know the organisation and the products/services being offered so well.
1. Clearly Define Your Requirements
Documenting the basics – your technology needs, your budget, and your expectations for service delivery – will help you to communicate them more effectively to potential suppliers and ensure that you’re always getting the best possible value.
2. Conduct Thorough Due Diligence
When evaluating potential IT suppliers, it’s also essential to conduct thorough due diligence. This should always include researching their reputation, asking for references, and checking their financial stability. You should also assess their capabilities, including their technical expertise, project management skills, and ability to meet your service level agreements (SLAs).
3. Establish Strong Contractual Agreements
Once you’ve selected an IT supplier, it’s important to establish strong contractual agreements. This should include clear definitions of the products and services being provided, pricing structures, SLAs, and any other relevant terms and conditions. A well-drafted contract can help to avoid misunderstandings and disputes down the line.
But that isn’t the end of the story. We live in a fast-moving world, and often needs, strategy, and technology itself move on during the course of a supplier relationship. For example, emerging issues like ESG (Environmental, Social & Governance) have risen hugely in importance over the last few years. It’s also therefore imperative that you revisit the contract on a regular basis to make sure that it keeps up with changes in strategy and technology, and to ensure that the supplier is still meeting your organisation’s needs.
This may involve renegotiating terms, revising SLAs, or even ending the relationship and seeking a new supplier. By staying vigilant and adaptable, you can ensure that your IT supplier relationships continue to deliver maximum value over time, and help your organisation stay ahead of the curve in an ever-changing technology landscape.
4. Plan Your Team and the Appropriate Governance
Open and regular communication is critical for successful IT supplier relationships. Establishing clear lines of communication, including regular meetings and reporting, can help to build trust and ensure that you are aware of any potential issues before they become significant problems.
You also need to consider whether your team – and indeed the supplier’s team – are suitably skilled for understanding the complexities of a technology contract, and one that is likely to evolve technically throughout the term of the relationship. This requires ongoing investment in not just the skills and capabilities of your team, but also in the shape of your team to manage the supplier effectively.
We advise our clients that 5-8% of the value of any outsourcing deal should be invested in the internal team that manages it. Ideally, you should have a contract manager who meets with the supplier regularly and keeps going back to the contract (and the strategy behind it) to ensure the relationship is delivering maximum benefit for the enterprise.
What we often see is that this role becomes a ‘side of desk’ position, which causes priority conflicts and doesn’t reflect the criticality of the contract. In our opinion, this is an FTE role that delivers real value to the enterprise. Where this just isn’t possible, at the very least there should be an individual who is directly responsible for management of the contract through their objectives and measurement of their success.
Building relationships within the business and having the appropriate governance in place can make an enormous difference to outsourcing outcomes. For example, regular sessions in the diary with Legal – once a month or once a week at key junctures of the contract’s life, really help with contract changes coming down the line as well as if the relationship gets rocky with the supplier.
5. Monitor Performance and Manage Risks
It’s essential to monitor IT supplier performance regularly and manage risks proactively. This includes tracking key performance indicators (KPIs) to ensure that the supplier is meeting SLAs and delivering value for your organisation. You should also assess any risks associated with the relationship and have contingency plans in place to manage any issues that arise.
Even when the reports are saying that everything is great (or green in a RAG report), it’s also worth ensuring that internal stakeholders are engaged regularly. This could be via a forum or more formal board style of set up or could just be through informal 1:1s. This helps you to understand if the service is really hitting the right mark and if the KPIs are still the right ones to measure success.
Managing IT supplier relationships is an ongoing process, and being proactive is the most important thing you can do to ensure that the relationship continues to deliver value over time.
For an informal and confidential chat about how ImprovIT could help you set up and maintain successful supplier relationships, contact us today at information@improvit.com. Or take a look at our approach and case studies of recent projects we’ve worked on.
