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A new romance

Carol Ko | May 1, 2008
<p><span>There are many nuances to the delicate art of handling IT purchaser-vendor relationships. A project management executive, from a US firm that has helped thousands, discusses this specific art.</span></p>

Good co-operation

A good example of a deal, according to Ward, would be the co-operation between HP services and ESI, which "built a relationship from the beginning to work together to achieve results that benefited both parties"."HP needed a single international training provider for project management training [it didn't exist at the time]. ESI wanted to expand their capabilities internationally. Both parties worked together, sharing experience, costs, and knowledge to achieve the goal. This resulted in a 15 plus year strong relationship, where both parties benefited, grew their capabilities and achieved their business results. It is probably one of the strongest and most professional partnerships between a client and vendor that I have ever seen," says Ward.Ward also relates a bad example, which is "when a vendor is not treated as a trusted partner and is constantly beat up on price and horrible terms and conditions. They do only what they are asked to do, without any flexibility. It becomes very adversarial and neither party achieves business results. One of them usually walks away before the goal is achieved."

Benchmarks of success

There are some key issues relating to service-level agreements (SLAs) that purchasers should know, according to Ward. He advises that "purchasers should be very clear about deliverables and definition of success-they should be reasonable and data should be collectible and measurable. If the SLAs are vague, then they will be a constant source of disagreement between the two parties. The measurements used to determine success should be clear and objective [not subjective], and the data should be readily available and easily collectible. "There should be a minimum number of these service levels to measure-just enough to determine success or failure. "Adding additional data points only adds an administrative burden on both parties and increases the overall cost and price of the solution," says Ward.The best SLAs should have the following features to "provide maximum protection for purchasers, while also protecting vendors", says Ward:1.Clearly defined service levels that can be measured and verified.2. A practical (minimum) number of SLAs which can, and will, determine success or failure.3. SLAs based on objective data with goals which both parties agree are reasonable and achievable (that is, within industry-accepted norms).4. A defined startup period during which the data to measure SLAs is gathered and tested for accuracy and service is ramped up, before the vendor is formally measured on SLA performance. 5. Clearly defined roles and responsibilities for both parties as it relates to the collecting, measuring, reporting, and participation in achievement of SLAs. 6. A well-defined process and associated period of time in order to cure an SLA problem.7. A clearly defined escalation process to handle disputes between parties.8. A clearly defined set of terms for termination-both with and without cause- including ramp down process, financial reimbursement and recovery, and so on. The purchaser-vendor relationship is special in the IT industry because "the IT industry is going through significant changes and CIOs are being held accountable for helping to achieve the business goals of the company they support in the most cost-effective way possible. "The days of over-spending in IT and expanding their budget to whatever the collective business units are willing to fund are at an end. IT is being asked to do more with less [just like every other business unit manager] and at the same time maximise the IT spending to achieve the greatest business results for the company. They are being held jointly responsible for the business results achieved through IT spending. This is very different from previous decades," says Ward.

 

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