Multi-Provider Management. How does it work?
A series about Service Provider Management.
Welcome to our multi-part series that looks at the topic of service provider management from different angles, provides tips and tricks, highlights potential hurdles and discusses important topics such as governance. The first part of the series asks the central question: who are my providers and how can the collaboration be characterized?
Part 1: Who are my providers?
When you think about provider management, the associations are often related to delegation, reporting and control tasks. We wouldn’t be Blueponte if we didn’t take a broader and more nuanced look at it.
Blueponte’s customers are companies that use a broad spectrum of information technology (IT) for their value creation. These IT services are partly provided by in-house IT departments and complemented by a variety of external companies contracted by the IT department. These are the categories of externally sourced IT:
- Hardware, such as workplace infrastructure, smartphones, network components
- Software, such as licenses, SaaS, operating systems, application software
- Managed services, such as hosting services, network services, workplace services
- Commodity services, such as IaaS and IaaP, mobile communication
- External staff, such as freelancers and consultants
The term service provider is used for suppliers of managed services and commodity services. Pure hardware, software suppliers and external employees are mentioned for the sake of completeness. They are helpful for the correct classification, but not relevant for our topic. However, it is often the case that hardware or software is part of a Managed Service or a Commodity Service.
While commodity services are provided exclusively by external companies, managed services can be provided inside and outside the company. Managed services provided by external companies are generally referred to as IT outsourcing. In the past, the cost factor played an important role here in outsourcing; today, it is also the lack of know-how and available IT professionals.
In an IT department, services are usually obtained from more than one of the above categories. They are bundled to create IT services that meet the requirements of a department and can be used by the employees. In this context, the IT department is the IT customer and the specialist department is the IT user.
Provision of different IT services
The following diagram illustrates how the various IT services are provided. This overview is important because it serves as a classification. It shows which methods can be used for multi-provider management and what you should take into account.
We have therefore created a characterization and quick tip list for each of the IT service categories.
Characterization and quick-tipps of IT-service categories
External managed service and IT-outsourcing
- Based on standards, yet you will receive an individual offer
- Contract with service description available
- Culture and people are important to the success of the project
- Requires close coordination in cooperation
- Expectations are usually higher than actual performance
- Missing services are demanded via change request procedure
- Cost pressure on both sides
- Standard contracts, non-negotiable
- No individualization, no say in working methods
- People and culture usually not decisive
- Bundling into customer-ready IT services takes place outside the company
- Good price-performance ratio because pricing is transparent
Internal managed service, internal IT staff:
- Bundle the purchased services into a service suitable for the customer – refinement
- Loyal, strong identification with the customer organization
- Substitution and compensation for insufficient services
- Training of internal customers
- Low appreciation of services provided
- Internal service providers
- Coordination and management of external suppliers, both in terms of content and organization
- Formulating the needs and consulting for possible solutions
- Takes on service integrator tasks
Do you have an overview of the IT provider landscape in general and can you classify who the IT providers are in your organization? This is an important first step in setting up multi-provider management correctly. In the next part of our series, we will address the question of “controlling or leading”.