New IT service provider? How to avoid a false start with a new IT provider

Companies are purchasing more and more IT services from external providers – or they change providers in order to reduce costs or purchase additional competencies. However, expectations and results are sometimes far apart if important details have not been clarified from the start.

The division manager is annoyed: IT has replaced her computer, but the new PC lacks important tools she needs every day. On top of that, the service employee simply handed in the PC at the company reception – and the user has to take care of the setup herself. An internal IT employee submits a complaint to the provider, who believes that nothing had gone wrong. He thinks he is innocent: “Ready for operation” is what the contract says, and from the service provider’s point of view that means delivering a computer and ensuring that the user can log on. At the agreed price, a complete setup would be unusual.

The example shows: IT outsourcing can cause frustration if the contractual partners do not clearly define tasks and processes from the outset. On the one hand, this is about terms, on the other hand it is about practical and technical questions. The following four points play an important role when it comes to whether the new external partner delivers what the company expects from it:

1. Detailed service description

Concerning the text of the contract, the client and the provider do not necessarily pursue the same interests. The service provider will prefer vague agreements in order to preserve certain freedoms. On the other hand, the company wants and should determine exactly what services are expected. Both interests can be reconciled: The desired result should be described as precisely as possible, while the exact procedure should not be defined too narrowly. In this way, frequent contract changes can be avoided if the customer and service provider later discover that the planned processes do not work properly yet. Let’s take the term “ready for operation” as an example. The customer has to break down what is involved: delivery to the workplace at all locations, setup of the PC and all peripheral devices, network connection and first login, as well as all necessary software.

2. Prepare comprehensive cooperation

Service providers normally use their own systems, which do not always harmonize easily with the customer’s applications. A typical example is different service management tools. Contractual partners should plan early on how they want to enable seamless collaboration: Will the external partner work exclusively with the customer tool or will he develop a technical interface between the two systems? Less is often more. The service provider should be given the freedom to use as many of his own systems as possible. And the customer must provide the necessary information for interface development.

3. Plan performance tests carefully

So-called Service Level Agreements (SLAs) define the manner and delivery time in which the provider must provide a specific service. These SLAs are usually checked on the basis of performance data from a service management tool. If the service provider fails to meet the agreed delivery time, the system automatically initiates an escalation. This may lead to a contractual penalty. If, for example, it is agreed that an ordered computer will be delivered the next working day, the question is: Does the 24-hour countdown run in the customer or provider system or in a combination of both? The status information must flow fast enough so that the system only reports delivery problems when they actually occur. Again, you should plan the details before signing the contract so that mutual expectations are clear from the start.

4. Do not change too much at once

Admittedly, that’s often a pious wish. Sometimes you cannot avoid that several IT optimizations overlap. For example, when standard tools replace self-developed systems and the company simultaneously outsources operations. The more complex the project, the more difficult it is to find out why external IT services cause problems: Is it because of the new standard tool, incompatible file formats or a changed technical infrastructure?

So how does an service partnership begin at best?

  • Not only purchasing and sales staff will sit at the negotiating table. Specialists from current and future IT operations are also involved. (In the case of a change of service providers, the transition managers, who control the transition, should also take part).
  • The finished contract includes a glossary in which key terms are precisely defined – in particular the expected results and technical terms. Here’s a tip: Have the terms and the contract read by two independent persons, and let them reproduce this content in their own words. Do they understand what was meant?
  • In addition to technical aspects, it must also be clarified at an early stage: How are internal employees enabled to steer external partners? There must be enough time and the necessary budget for training.
  • The same applies to external specialists: What training do they receive, for example, for working with customer tools?
  • If a long-standing external partner has to leave, he will be reluctant to share his knowledge with his successor. Early documentation of current processes is therefore important. Regardless of this, it makes sense for the company to continuously document all processes and changes and to review this information before entering into new negotiations.
  • If certain processes change for end users, internal service staff or other providers involved, IT should inform these groups at an early stage – and offer training or support if necessary.
22.03.2019, Grosse-Hornke

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