Vendor Management Heads Speak Out: The Trouble With IT Service Quality

Using a plethora of metrics to successfully deliver five-9s service levels proves that customers are satisfied, right? Enterprise IT uses metrics for everything from financial management to uptime to tracking reliability of device manufacturers. As technologists, we love to measure results and prove our value. Why not rely on them to assess service quality when dealing with third parties? Though metrics serve a purpose, even in outsourced service delivery, they are no guarantee of user satisfaction even when all metric levels have been achieved.

Loyalty and commitment in the relationship, along with a healthy spirit of competition across service providers is much more likely to achieve results. Donald Mones, Certified Outsourcing Professional with extensive experience in managing multi-source relationships in the financial services industry, stated it eloquently, “quality service delivery depends on a combination of requirements, metrics, output and most importantly the relationship.” Sourcing professionals agree that relationships are the key to service quality. Further, some sourcing professionals believe face-time with the service provider(s) is critical. Arriving on-site helps all parties understand the importance of the relationship. The relationship is the most important determinant of service quality.

Multiple service providers in the service delivery chain create layers that demand a cohesive management strategy. To illustrate this, an enterprise may choose to outsource its service desk for several levels of problem escalation. The service provider, in turn, may choose to outsource front-line support to an organization that can handle that function at a lower cost while retaining more technically demanding support needs internally. This scenario shows how multiple business entities can be involved and create a need for smooth handoff in the issue resolution chain. Processes need to be developed and quality measured at each step of the process; more importantly, multiple relationships must be managed holistically either by a lead service provider or the enterprise itself.

Beyond Metrics

A common mistake is to rely too heavily on metrics—defining and measuring key performance indicators that measure every facet of the service. This approach is often combined with an assumption that best practice standards work as a means to ensure quality service. However, both suppliers and buyers agree that the best way to ensure quality IT services is to develop, nurture and manage the relationship between organizations. If the relationship is solid, then all parties involved in the service delivery chain are more likely to be pleased with the outcome. Opinions differ as to how to create the most steadfast and effective partnerships.

Beyond the relationship, best practices do play a role in the delivery of quality IT services. Widespread acceptance of the IT Infrastructure Library (ITIL) for streamlining IT operations and aligning with business needs and using the Capability Maturity Model Integration (CMMI) to drive quality software development may have a buyer convinced that best practice alone delivers results. Buyers indicate that best practice certification has become a check-off item in the proposal process.

Standards, however, are not a guarantee of acceptable IT service. Execution and loyalty trumps most quantifiable metrics. According to Tim Norton, Director, Vendor Management for UPS, “many folks view an outsourcer as pure horsepower needed to get the job done. This viewpoint carries no meaning or belief that they [outsourcer] can contribute expertise to broader technology strategy of the company.” In reality, the outsourcer often brings knowledge that frequently exceeds best practices and has the advantage of significant industry experience to solve both process and technology challenges that arise.

Following the advice of buyers, these guidelines will help purchasers use outsourcers to achieve service quality:

• Scope of Service/Requirements:  Clearly identify the intent of the service to be provided by the outsourcer.
• Metrics: Include metrics only within reason. Too many or too complex metrics create more work for all parties. Keep it simple and reduce KPIs to those that are most important.
• Escalation: Define an escalation path that will be used when issues arise. Ensure the relationship has visibility and importance with executives in the service provider organization.
• Audits: Incorporate the right to conduct audits to gain a first-hand look at operations periodically. Showing up tells the service provider that you take the relationship seriously.
• Garner Input from Outsourcers: Ask vendors what measures they can put in place to ensure quality. The vendor response tells a lot about how they do business. Are they willing to put a stake in the ground?
• Penalties: Define penalties that are due when a contract is breached recognizing that a typical penalty model uses debits/credits. Make sure to evaluate how penalties are triggered and if the service provider is proactive.
• Competitive Spirit: Keep the vendor on its toes and the situation competitive. Your business is not a guarantee and it is possible to switch providers as necessary.

Service providers are eager to meet customer requirements within reason. As Enrique Cortes, Country Sales Manager North LATAM, Wipro explained, “customers are smart and savvy. They know what they want from service providers and are accustomed to multi-sourcing arrangements for all types of services. Wipro understands that customers need to know how the business is impacted i.e. transactions, policies, customer service, etc. and that variability in service quality impacts the enterprise bottom-line.” Wipro uses an internally developed tool to manage service quality and any related issues that may arise, incorporating technical metrics with a business perspective of their impact.

Buyer demands for higher levels of quality and lower costs are increasing. Yet, there is a direct correlation between service quality levels and cost. Enterprises and outsourced service providers alike understand that the cost to contract an IT service increases exponentially as expectations for higher quality rise. Adjustments are made collectively based on how strategic and critical the service is to the enterprise. This is where the relationship begins. As the terms are negotiated, compromises are made. The partnership has roots when acceptable terms enable it to start with agreement and develop over time; creating a resource for the enterprise and business growth for the outsourcer.