The supplier delivers the ordered goods - and if not, then the purchasing department just hangs around! That simple, isn't it? Of course, the purchasing department has full transparency about what the ordered service has to look like and knows the requirements and use in the specialist area very well. And we have a sophisticated scoring system for supplier evaluation. And yet the unpleasant feeling is growing that the supplier is not meeting expectations and is more expensive than expected!
The procurement of regularly provided, complex services is fundamentally different from the traditional procurement of the famous men's socks. And it is precisely this situation that companies are increasingly entering through the outsourcing of entire process parts, the purchase of software-as-a-service (SaaS) and even the establishment of intra-group shared service centers. To describe contractual performance, there are contracts, service slips, SLAs and OLAs and so on - right. But with what love for detail were these defined? How regularly are the reports analysed and then discussed with the provider? How often have the terms been adapted verbally on demand instead of cleanly adapting the contract? The list could be extended at will.
As is so often the case, one of the causes is already at the beginning of the process, in this case in the tender for the service. Is the organization ready for complex sourcing?
What does sourcing readiness actually mean?
It can't be that difficult! Others give the operation of the computer centre, the bookkeeping or the fleet management to third parties. But what others do does not have to be good for us! At the beginning there is always the strategic analysis! How important is the process part for my business model and my added value? Processes that are annoying administration for one company are a key success factor for others.
Then you should ask yourself how you controlled the process part and whether it can be controlled by you at all for the provider and the provider. The answer to this question implies that you can precisely describe the performance and also measure it in volume, quality and costs. How close do you need to be to service delivery?
It is also important that you have established a process responsibility in the company that knows and will know about the process. Finally, there is the question of existing instruments for controlling service providers. More on this later. Basically, it is obvious that the ideal process part can be isolated modularly, is stable and has as homogeneous a degree of system utilization as possible.
In addition, the risks occurring in the process part should also be controllable by the provider.
When all this is in place, the strenuous part comes: documentation, standardization and the unconditional willingness of management to maintain this status - in other words, to adapt the documentation time and time again to the actual situation and to refine the standards again and again. On this basis, the tender and the RfP process can be started. On this basis the implementation project can be started and on this basis the provider management works after the implementation in the daily control.
The outsourcing of part of a process is anything but a matter of course - neither in the short nor in the long term. Topics that could previously be regulated by acclamation suddenly become formal. Things that colleagues used to simply go along with suddenly cost extra. My colleague's knowledge of my process is suddenly no longer self-evident - and at some point the organization also loses its knowledge of the supplier's process. Why should I? To keep the grip on optimizing the entire chain.
So what exactly is provider management?
This is a regular, dedicated task and not a "do it with a job". This task requires real knowledge of the overall process on both sides, the contractual service description at the interface and analytical knowledge for interpreting the - mostly aggregated - SLA and OLA. Otherwise you will never be able to classify the regular requests for "out of scope". Especially the internal organisation has to keep the contractually promised part! This is the task of the process owner and provider management. And you will never be able to assess performance correctly in any other way and you will never be able to oppose anything in the recurring price negotiations.
Provider management will play a strategic role in the future!
