End (to End) Game: Managing the Multi-Provider Service Chain
Sometimes
best of breed can be a headache.
In
today’s “multi-sourcing” marketplace, organizations seeking the best service
often break into parts what had been a harmonious business operation, particularly
in the IT space. They do this in order to achieve focus and efficiency in the
management of various elements of technology services. The challenge for
the executive overseeing the sourcing relations: How to maintain a high level
of service across the process now that you’ve got myriad providers – including
both internal and external teams – doing the job?
Said
differently, the benefits of cost efficiency can erode quickly if the result is
increased risk of disintegration.
I
tend to agree that fracturing a business operation (such as claims processing,
order management, settlement reconciliation, or even accounts receivable
management) across many different service providers invites some real risks.
Indeed, we tell our clients that job No. 1 is maintaining integrity across the
service chain.
This
demands that the architects of the sourcing strategy think both horizontally
(that is, within a service category like servers, or help desk, or networks)
and vertically (e.g., a business process such as claims administration,
order management, and the like).
Companies
often ask us about using contractual mechanisms to manage and mitigate the
risks of divvying up responsibilities among multiple providers. We tell them
from the beginning that service providers generally aren’t keen to sign
“end-to-end” service-level agreements (SLAs), because the providers are rarely
responsible for each and every service element in the chain.
That
said, a well-designed sourcing strategy can help achieve the desired results.
The goal is not to push providers to be responsible for service elements
outside their direct control but rather insist that they are at least
responsible for managing those service elements on the client’s behalf.
They need to play as good citizens and have skin in the game.
You
need structure. That means baselining the service levels expected so that
providers can measure and manage them. It also entails applying certain rules
of the road for being a provider within the corporate family. There are ways
to achieve integrity and responsiveness without prescribing each situation via
contractual terms.
It’s
less about gaining confidence because of an elegant contractual framework than
it is about setting the tone and tempo of operational cooperation within the
governance mantra of the participating organizations.
