How to Manage Poor Vendor Performance. IT Outsourcing Best Practices.
Monday, March 16th, 2009POOR VENDOR PERFORMANCE
In today’s IT environment, organizations depend upon outsourcing for major and significant IT activities. Vendors may support daily operations, the help desk, system development, software maintenance, computer and network management, and software package implementation to mention a few activities.
Poor performance impacts the schedules for the work and projects and can also create operational problems. When these problems arise, the client firm may be forced to consider alternatives. If an entire function has been outsourced, then there are no internal resources to take over. Even if there are internal resources, there will likely be a learning curve required for internal employees to get up to speed.
When problems occur, the tendency is for the business managers and staff to blame IT. Yet, IT may not have even been responsible for the outsourcing. It could have been imposed by upper management.
This may be either a real or perceived problem. The word “poor” is relative to the specific situation. Poor vendor performance can mean some or all of the following:
The vendor is not addressing issues that they have been given on a timely basis.
The vendor staff assigned to the work is not as qualified as you thought or expected.
The work products produced by vendor staff are not acceptable.
There can be many factors behind vendor performance. One is the availability of qualified vendor resources. Another common factor is misunderstandings generated by the lack of communication or poor communication. A third factor may be high client expectations created during the marketing of outsourcing.
PREVENTION
The best way to prevent problems with vendors is to identify potential issues at the start of the outsourcing engagement with the vendor. This will create an awareness of what will be looked for. Next, beginning with the start of the vendor work, there must be a close tracking of the work, issues, and potential problems. A key lesson learned is that you don’t want to wait until problems are major.
Another part of preventing problems is to institute common issue tracking. That way, both the vendor and the client are working off the same list. Issue reporting goes both ways. The client is also dealing with issues that may hold up the vendor work.
DETECTION
You can often detect problems early. If there is reduced contact with the vendor, then you might become concerned. If there are misunderstandings evident in meetings with the vendor technical staff, then this could be a sign of problems. If there is no direct communication between the vendor workers and the internal employees, then there can be misunderstandings. This arises when the vendor inserts a project manager to act as an intermediary with the internal staff. Then there is the potential for translation problems.
You can also detect that there may be major problems if it is taking too much time to resolve smaller, more minor problems. These minor problems tend to fester and get worse. Impacts grow.
ACTION
If there are problems in performance, the client managers and staff need to make a list of all outstanding issues—assigned to both the vendor and client. These need to be discussed internally in terms of importance and impact. Then you should institute multiple, regular meetings on the unresolved problems. Insist that some progress be made soon. If people make promises regarding problems, these should be documented and circulated.
In general, the more regular and consistent the contact you have with the vendor, the better the performance will be. Lack of contact and persistence may give the vendor the sign that the issue is not important. That is why you clearly have to indicate the impact and importance of the issue.
