Handling operations in a multi‑provider environment is challenging.
The creation and termination of sourcing contracts—and everything in between, meaning how a contract is actually operated in practice—often presents our customers with challenges that are not easy to manage. Especially in a multi‑provider environment, handling these aspects is complex. For this reason, we would like to address these challenges in detail in a series of blog posts.
Organizations, particularly those that are part of a group or corporate structure, regularly face the challenges of a multi‑provider environment when sourcing their ICT (Information and Communication Technology) requirements.
As the experience of recent decades in the context of “first-generation outsourcing” has shown, even the targeted and well thought-out management of a single supplier requires extensive consideration and structural measures within the client’s company. When the number of suppliers multiplies – i.e. in a multi-provider environment – the demands on the client also inevitably multiply.
How can a client ensure effective governance of all service providers delivering its information and communication technology?
The tried and tested tool of choice for this is “SIAM” – Service Integration and Management. A practical school of thought for the efficient management of tasks arising from a large number of suppliers. SIAM offers a catalog of measures for the management and control of the services provided by the suppliers – “providers” – as a whole.
However, all the possibilities that SIAM offers, all the considerations and solutions that result from it, are not only manifested in “internal” documents. All the results are condensed and “externally effective” in the document that is not only intended to regulate the relationship between the client and the service providers in a comprehensive legal manner, but ideally serves as an instruction manual for all parties involved in the joint business: the contract document.
The Contract as an Operating Manual
The contract should contain everything, regulate everything. All content, starting with the signing of the contract in turn, through the smooth implementation on all sides and the permanently optimized operation to the last step – the end of the contract with the “disentanglement”: the untangling of the previously established, intimate link between the client and the respective provider with regard to the ICT services concerned. At the same time, however, the contract should not contain excessively rigid specifications, offer scope for adjustments and anticipate regulations that can only be refined during the implementation phase.
SIAM envisages four “key stages” for the implementation of multi-provider outsourcing:
- Discovery & Strategy;
- Plan & Build;
- Implement;
- Run & Improve.
Although the actual contract creation takes place in phase 2 “Plan & Build”, the preparatory work for this should already begin in the initial phase “Discovery and Strategy”. Reviewing existing contracts at an early stage and integrating them conceptually into the SIAM planning of the reciprocal rights and obligations of all parties involved will save time and trouble.
In the “Plan & Build” phase, the draft contract is created, concretized and finally approved by the client for the talks that lead to the conclusion of the deal with all providers. As already mentioned, the contract finally concluded by all parties involved serves as an instruction manual and guard rail for all further phases of the process.
Find out more about interesting legal topics relating to multi-provider management in the near future.
For more information, please feel free to contact us!