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1st Annual IT Service Management Leadership Forum
What’s The Perspective & Challenges Of
Managing A Diverse Supplier Group?
George Spalding
Executive Vice President, Pink Elephant
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
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Introductions
Troy DuMoulin
Vice President, Professional Services
Pink Elephant
Nicole Foster
Director, Strategic Sourcing & Vendor Management
McKesson Corporation
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
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Managing Diverse Suppliers
Why are many outsourcing relationships still ending in tears, broken
promises and canceled contracts?
How do we assess whether the latest innovative start-up service
provider can give us an edge and be worth the risk?
Are there specific diligence techniques we can apply before getting
in too deep?
How do we salvage an outsourcing arrangement that’s on the rocks?
Today, IT has to manage a collection of diverse service suppliers, each
one controlling mission critical aspects of IT. Guidance for Supplier
Management abounds, yet:
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
Today's CIO – The Broker Of IT Services
On any manufacturing production line now, the vast
majority of parts like car entertainment systems, seats, or
heating systems are pre-built by third parties, brought in,
and fitted on the line. It’s called the dynamic supply chain.
Henry Ford said in his 1922 book My Life and Work, “If
we can buy as good a part as we can make ourselves
and the supply is ample and the price right, we do not
attempt to make it ourselves.”
http://blogs.computerworlduk.com/cloud-vision/2011/03/todays-cio---the-broker-of-it-services/index.htm
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
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Drivers For Outsourcing
Companies outsource IT services/products for a variety of
reasons:
Lowering costs
Enabling variable capacity
Risk Mitigation (capability and resources)
Process Improvement/Discipline
Adopting new technologies
Increasing agility
Improve focus on core competencies (e.g.: business
directive to outsource commodity/operational services)
What would be wrong reasons for outsourcing?
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
Thank You!
Session Evaluation
Please take a few minutes to fill out an evaluation on this
session. We greatly appreciate your feedback!
http://pinkforum12-4b.questionpro.com
6
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
APPENDIX
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What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
8
Sourcing Services
Business Sourcing
Task & Business Process Sourcing
IT Service Sourcing
IT Product Sourcing
Janitorial Services
Linen Services
Plant Maintenance
Refining Services
Fleet Management
Based On Source: eSCM-SP Part 1
Engineering Services
Finance and
Accounting
Human Resources
Call Center
Purchasing
Data Center Services
Software As A Service
Telephony
Messaging
Desktop Automation
End User Services
Hosting / Storage
Laptops
Shrink wrapped
Software
Network Equipment
Servers
Memory
eS
ourc
ing
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
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Service Unit 3
External Business Unit A
External
Supplier
Business Unit D
Service Unit 4
Embedded IT
Business Unit A
Business Unit C
Business Unit B
Business
Units
Service Value Network
Service Ecosystem
Service Unit 1
Service Unit 2
Shared IT
Services
3 Service Supplier
Types
Service X
Service Z
Service Y
Service W Dedicated
Service
Shared
Service
Outsourced
Service
Service Catalog
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
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External Suppliers
External Suppliers
Traditional Supply Model
Internal Business
Customers
IT Function
IT Services
(Service Catalog)
External IT Suppliers
Products
Services
Customer Organization
SLAs Contracts
Occasional Contact
Hardware
Software
Environment
WAN Services
Telephony
Data Center Services
SaaS / Cloud Services
© Crown copyright 2007 Reproduced under license from OGC Figure 3 Managing Supplier Relationships, page 17
IT Supplier Mgmt. Business Process
Outsourcing
Warning: Direct Business Relationship Bi-passing IT Supplier Mgmt. is a risk
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
11
Higher cost Variable standards and quality Reinvention Lack of integration
Accused of being unresponsive
Limited business
Ownership or control
Doesn't meet
business needs
Enterprise IT Governance
Organization wide Service Strategy and architecture
User priorities are met
Business
ownership & control
Economies of Scale Standards Common Processes Strategic Supplier Mgmt.
IT Federated Model
Centralized IT Federated IT
Decentralized IT
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
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Classic Outsourcing Mistakes
Not having a strong Supplier Management Process / Governance
structure established before contracting
A belief you can outsource your problems
Belief that you can outsource accountability for the results and legal
compliance – (accountability versus execution)
Not having your requirements established before you outsource
(outsource only what you understand)
Not considering a balanced score card approach to the outsourcing
question (finance, customer, agility, maturity)
Not remembering that lowest possible price gets you exactly what you
pay for
The belief that when it comes to outsourcing the bigger the supplier the
better
Not having an exit strategy or exit conditions defined before your decision
to outsource
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
13
External Supplier Types
The Commodity/Transactional Supplier
The commodity supplier provides off-the-shelf products or well
defined repeatable services
Operations Supplier
Responsible for project or operations success
The Services/Tactical Supplier
The services supplier provides end-to-end technical and
professional services
Strategic Partner
In which a supplier takes on responsibilities for an integrated
set of services and technologies
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
14
Sourcing Lifecycle
Initiation Delivery Completion
Start
Engagement
Receipt of RFP
Short List
Supplier
Due Diligence
Contract Signing
Start Transition
Service Design Begin Steady State Operations
Begin
Closeout
End
Contract
Know
n D
eta
il
Supplie
r O
rganiz
ational K
now
ledge
Source: eSourcing Capability Model / Carnegie Mellon U.
What’s The Perspective & Challenges Of Managing A Diverse Supplier Group? © Pink Elephant, 2012. All Rights Reserved.
Internal IT Provider Supplier Managers
Procurement
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Supplier Management Roles Map
Annual Service Review
Supplier Service Owner
Account Manager
Monthly Service Report
To Supplier
Mgr.
Monthly Service Report (to Customer)
Supplier Service Delivery Owner
Supplier Mgt Process Owner
Managed Services Contract
& SLAs Supplier
Management Office (SMO)
Services Control Team IT Stakeholders & IT Service Owners
Business Relationship
Manager
Monthly Service Report
to BU Mgr.
Monthly Service Report (to Customer)
Business Customer
Se
rvic
e
Cata
log
External Services
Internal Services
Statement of Service
Requirements
• Functional • Service Levels • Technical • Process