Contracting Details that Matter

The goal of a well-run multi-sourcing environment is to present a single business-facing IT organization – no matter how many service providers are involved. But managing multiple relationships across locations, tools and operations is a veritable Rubik’s cube.

It is in this complexity that Service Integration and Management (SIAM) can create an indispensable framework to help identify and manage the products and resources needed to migrate knowledge, systems and operating capabilities from an in-house staff to one or more providers. The framework not only helps ensure high-quality service delivery and a positive business user experience, it also helps maintain a healthy relationship between the sourcing buyer and the service provider.

In the normal course of contract negotiations – especially those that include a SIAM component – sourcing buyers find themselves facing countless decisions. It’s during this time that many enterprises are likely to concede several important points without fully understanding their impact on the services they are buying.

Three of the most common concessions have to do with IT service management (ITSM) tools, emails systems and ticket resolution processes. Though these may seem like relatively minor details when it comes to contract negotiations, there’s more at stake than you might expect.  

The ITSM tool. In a multi-sourcing environment, the ITSM tool facilitates integration between the sourcing buyer and its providers. It serves as the source of truth for managing service levels and for tracking up-to-the-minute status on incidents, problems and service requests.

Providers often come to an engagement offering to build a bridge between their own ITSM tool and the buyer’s, claiming it will allow them to leverage a shared resource pool across clients and that it will be more productive and less costly. But building and maintaining a bridge between the provider’s and the buyer’s ITSM tool consumes many resource hours, a cost that often is passed on to the buyer. And even when a bridge like this is actively monitored by the buyer to ensure data accuracy, it often fails to synchronize in real time.

During contract negotiations, buyers should avoid conceding the use of their own ITSM tool for service delivery. If a bridge must be created, a buyer should insist the provider use its ITSM tool to measure service levels and should consider imposing financial penalties if the bridge is not fully operational and the data are not automatically synchronized within thirty days from service commencement. A buyer also must account for the cost of implementation and on-going monitoring of the interface in the business case.

Email systems. Communication is a key part of building a single business-facing IT organization, and this includes email. One way to create the appearance of a cohesive organization is for all provider resources to use the buyer-provided email identification. This also helps ensure the integrity of the onboarding and offboarding processes for provider staff, and allows the buyer to audit security compliance and deliver and monitor training.

Ticket resolution. In a multi-sourcing environment, tickets often originate with one provider and must be transferred to another provider or to the retained organization for resolution. A sourcing buyer should closely monitor the accuracy of ticket assignment and frequently review this key service-level agreement (SLA) metric. Tickets that are not touched in three or more business days and tickets pending the buyer’s feedback also must be closely monitored. The buyer should extract these metrics from its ITSM tool and take an active role in helping the provider minimize the number of tickets in these categories. Buyers should ensure the contract addresses how the movement and suspension of tickets impacts the provider’s resolution times and should account for the resources to monitor tickets in the business case.

These three contract decisions – as minor as they may seem – can have a far-reaching impact on how business users view the services being provided. ISG helps companies think through the brass tacks of a sourcing contract so it serves their goals over the long term. Contact me to discuss further. 

About the author

Raymond Kenneth Tromba is a Principal Consultant specializing in Application Services. Ray brings more than 30 years of IT experience and over 20 years of direct Application Services experience.