Establishing and running Managed Services - Challenges that occupy the CIOs mind

The CIO and the IT leadership team make critical decisions in defining the scope of Managed Servicesand selection of a suitable vendor to drive the delivery of services.

Given the nature of the competitive environment, vendors inundate the CIOs mind with highly differentiated services including myriad options for the commercial aspects and design of the managed services model.  It is but expected that a mature end-to-end service proposition is indeed a possibility.

The parity in the maturity of the IT organization and the vendor, and the challenges involved in integrating the in-house and the externally managed services in a non disruptive manner occupy a significant share of the CIOs mind.

In order to drive a successful engagement, one that can provide an upswing to the IT organization's service model, metrics and reporting, the CIO office has to focus on the following considerations:

Work Culture - It is necessary to gauge how well the vendor's work culture will align with the organizations culture. This involves understanding the level of operational differences that will be caused by an external agency working alongside and bringing in a new service model. The organization should collaborate with the vendor to find answers to pertinent questions like how fast the vendor can culturally align with the workforce? What methods will it adopt on the journey towards operational excellence? How quickly will key IT leaders make a successful shift from current roles of "doer" and move to that of a "driver"?

Organizational Structure - Is there adequate leadership bandwidth or potential that can be groomed towards shifting the roles from a "doer" to a "driver" of externally managed services. How will the new operational organizational structure align itself to the new roles and responsibilities? 

Barriers - What are the barriers for moving towards operational excellence and adopting new methodologies, tools and operating models? Will these barriers present themselves in the form of people challenges, geographic disparities/cultures or inability to integrate new tools and methodologies?

Consolidated Service Measurement - How will the CIO office get a unified view of metrics out of in-house and externally sourced services? What effort would be required to build a consistent dashboard to measure all services both internally and externally managed? Will these present challenges in the form of tools, methodologies and operating processes? Absence of a consolidated dashboard to measure all services on a common parameter base will lead to inconsistent view of service measurements and perceptions.

Business Alignment - How will the changing operating model ensure alignment to business stakeholders and ensure that objectives towards business enablement and stakeholder management are facilitated? What changes in the organizational structure should be carried out to ensure effective business participation and buy-in for IT initiatives and IT delivery?

Contract Design - What is the level of flexibility that can be built into the service contracts to enable the organization to facilitate and shift the overall maturity and adoption of best practices? Which elements in the contract would be impediments and what is the resolution?

Multi-Vendor Services - What is the management effort that needs to be invested in effectively integrating multiple vendors and creating an alignment within the IT organization?
The CIO office is perennially busy, once an engagement is initiated, any time and effort that can be focused towards the above becomes reactive and falls into a fix-as-you-go model. In spite of having selected a vendor(s) with adequate capabilities, the end goal of IT excellence will tend to seem like a mirage.

The factors mentioned above should be addressed much before the vendor 'down- selection process'* and to meet this objective with an effective Change Management Program would be an appropriate step. The Change Management continues through to the initiation of new contracts until a steady state goal is successfully reached.


*down selection

Reduction in the number of contractors or sub-contractors working on a project, as it moves from one phase to another, in accordance with the criteria established usually in the request for proposal (RFP) documents.

Comments

[Satyen Parikh]

This blog is very insightful.

[Sujoy Mitra]

Very good blog

[Chetan Bhor]

Prashant, this looks interesting from a large picture standpoint. It also reinforces the fact that value proposition of a managed services model can emerge only through a holistic evaluation.

The other important consideration is the level of “outsourcing maturity” – your blog does touch upon it, however I am adding some more point. CIO’s / need to understand their current state of outsourcing...is it driven by pure labor arbitrage, is it just about reducing headcounts, is there a vendor management group, and are there any outcome driven projects. They need to then put in a roadmap for moving to a Managed services model.

I think as one matures one learns, as one learns one gets better at what one does, and so it goes. There is no end state, instead there is continuous evolution

[Irfan]

You have made some good points here about shared services but i think "Work Culture " is the most important factor.

Thanks

[Managed Services]

Just like larger companies, small businesses need technology to operate efficiently and to compete effectively. But as reliance on IT grows, the resources to support an increasingly complex IT environment may not. In many small businesses, IT resources are scarce, and can be quickly overwhelmed with the day-to-day responsibilities of keeping the IT infrastructure that the business depends on up and running.