Monday, February 27, 2012

Strategic sourcing, pathetic delivery

The poor fellow was looking harrowed after week long meetings sans his CIO with the big global IT services company with whom the company had entered into a long-term strategic services contract. Six months having passed since the signing of the contract, he was wondering whether the decision can be changed or penalties levied for not meeting commitments, the contract protected the vendor in the transition phase. The presales team which was a permanent fixture in the office earlier was now trying to avoid coming to the meeting very well knowing the situation not being favourable.

Over a year of courting, discussions, negotiations and going over a long legal contract, it was a sigh of relief for the vendor and the enterprise when they did sign off the deal. As all strategic sourcing deals go, there was an expectation of maintaining business as usual with improved efficiency and lower cost; then move on to transformation driven by tools and technology which was the investment promised by the vendor. Over the decade of relationship, it was expected that there would be efficiency of scale, savings on the table, and investments in innovation with global benchmarking.

The big team arrived soon enough to transition services and fit or change existing processes into their framework, which they managed with some difficulty. Within a few months unable to scale up to diverse needs across locations, changes in the management team were enforced and that brought welcome improvements though not commensurate to expectations. The first big review meeting was a shocker for everyone. Some milestones achieved, lot of work in progress way past due dates, a few endpoints seemed a long way off; the CIO who was well known for his patient handling of crisis lost his cool.

To begin with interpretations of clauses done by the execution team were in conflict to understanding while drafting them into the contract. Stretched timelines became super-stretched timelines; senior consultants attempted to provide solace with no Plan B in case success eluded the team. The High tension meeting resulted in change of pace and “compromise” in favour of the customer. With new timelines cast, the pressure was on everyone; avoidable pressure as agreed by everyone present.

Why does delivery rarely match presales promises or timelines ? Are sales teams preconditioned to sell unreasonable timelines or commitments to bag orders from unsuspecting and gullible customers ? No, I am not calling the CIO names, but admiring the ability of the sales teams to sometimes get away with untenable contracts. I am also bewildered at the ability of delivery teams to squarely make a hash of even normal service delivery expectations. What causes history to repeat itself in almost every engagement ?

In this case, the CIO summed the case up with one phrase “lack of consistent communication across the ecosystem”. The presales team did not spend adequate time taking the transition team through each and every clause and expectation. The delivery team found significant differences on the ground to their assumptions which required change. The project lead busy fighting fire every day forgot that consistent communication is essential to setting expectation, managing perception and finally success.

I believe that it does not always matter what you do; what matters is how you communicate what you have done or planning to do. No news is not good news when everyone is expecting some change. Otherwise strategic sourcing will become a big tactical pain where real life experience defines success.

1 comment:

  1. I agree with your pain points. If I were to be in such a situation I would do the following on an emergency basis.

    1. Review my project governance structure, strengthen it.
    2. Review the vendor delivery team, if necessary re-look at the individual team member's credentials & track record
    3. Ask the vendor team to rewrite scope, blue print, and Revisit Risks and work with pragmatic mitigation plans and present it afresh.
    4. Review internally with business units, where things are going wrong from our side (Not vendor), who will come forward to fix it?

    This is for a project that is going out of control and not staying within the SLA.

    For a new project, that is yet to kick off

    1. Vendor Evaluation should include validating the corporate value systems match, vendors track record of project delivery success.

    2. Vendors's delivery team should be identified well in advance even before signing the contract and assign them to internal delivery team for relationship building and detailed assessment of capabilities.

    3. Quantify the Business Value derivation of the project in question and make that as a mission statement for the integrated Vendor Delivery team and internal delivery team.

    4. Persuade, business owners to take the responsibility of timely delivery of the project.