Capítulo 2. Marco teórico
2.2 Ecología de la percepción humana del entorno
2.2.4 Secuencialidad de la interacción, gestualidad, sistemas de actividad situados103
With IT service providers, the main risks beyond the failures relate to:
•
Finger-pointing rather than accountability;•
One-horse races rather than contestability;•
Poor value for money;•
Inflexibility;•
Difficulty integrating services with those provided by others;•
Bumpy transitions;•
Unfulfilled transformation objectives;•
Poor visibility; and•
Lack of control.Finger-pointing rather than accountability
When each service provider is responsible for only a part of the end-to-end IT service an all-too-often occurrence is a finger-pointing of service failures that cannot be unequivocally slated back to one of the service provider’s discrete domains.
Unfortunately, common in the world of IT is a multiple contributing factors problem space where all participants must cooperate to both identify and resolve underlying issues. Occasional forays by lawyers intent on contractually defining responsibilities in this space can further compound the trench warfare approach. Beware if allocating blame and responsibility is the official first step of the contractual problem resolution cycle.
Many IT service providers are organized internally to deliver services by technology silo. One group looks after servers, one local area networks, one desktops, another applications, etc. The silos are only thinly wrapped with a customer-aligned service management layer to (appear to) provide integrated services delivery. Unfortunately contracting with a single provider for an end-to- end service may not completely avoid accountability issues.
One-horse races rather than contestability
All incumbent suppliers have power. They know and understand the existing environment, they have relationships with key people on your team and they already have in-scope responsibility to leverage. They can erect barriers to entry for new players that work to your disadvantage with respect to future contestability – and not just for currently in-scope activities.
Other competitor service providers must carefully allocate their scarce sales and business development resources – any dollar spent in sales is an overhead that must be recovered from the profit margin on contracted accounts. An account that is locked up by a competitor can easily fall foul of their bid qualifica- tion regime. If a calculated probability and resultant business value of winning is low then either a ‘no bid’ or a notional bid may result.
You are left with an incumbent who may become lazy and unresponsive – knowing that any threat to call in competitors is an empty one. Alternatively the incumbent may take advantage of your captured-customer status by advancing their own technology agenda and increasing prices to premium levels for anything new or different.
Poor value for money
When contestability is lost, the perception of value for money is too. If every initiative or piece of work that needs to be done goes to the incumbent service provider (for better or worse) then there is no point of comparison. In such cases there is a natural tendency for stakeholders to question whether value for money is being achieved.60
The notion of benchmarking is an attractive one to some seeking to determine where they currently sit vs. industry norms and top quartile performers. However, service providers have perfected the art of obfuscation of benchmarking results and many will drag the anchor on any improvements that may be indicated.
Inflexibility
Many IT outsourcing contracts are established for a period in excess of three years. Typically the service provider is investing at the front end of the contract period and taking higher profits towards the back end. Generally it will suit the service provider to hold an environment stable and squeeze the delivery cost structures down over time. As a consequence it is common for the service provider to limit flexibility.
If flexibility must be accommodated it will be with significant additional cost.
Difficulty integrating services
Most service providers will attempt to operate according to some form of standard or ‘cookie cutter’ operating model. While there are benefits from having
60 An example: ‘Contracts signed under the federal government’s defunct information
technology outsourcing program are running at least A$750 million over budget after it was revealed that spending on the Group 8 agreement has blown out by up to A$70 million’ (AFR, 2004f ).
the service provider delivering to a tried and true formula, in adopting to fit the service provider there is often the need to disrupt your existing IT service man- agement and delivery processes. When multiple providers are engaged this can be most acute as each (of course!) has their own ‘best’ way of doing things. It is important not to underestimate the effort required to integrate – even only at the interfaces between organizations – the most straightforward of trouble-ticket processes or basic control of asset and configuration data.
Bumpy transitions
Changing from an in-house to an outsourced model is fraught with transition risks, which mostly translate as a risk to IT service continuity over the transition period. Switching or bringing a service back in-house can also be subject to similar risks as outsourcing.
Risks in transitioning to new technologies are not only about the trials and pitfalls that crop up with the component or system, but also in the learning curve in the operations and support teams and in the newly established vendor relation- ship. For example, how long do known defects remain outstanding? What is the frequency of new releases and how is backwards compatibility assured – that is, how do we know the new version will do at least what the old version did?
Unfulfilled transformation objectives
A contract in which the IT service is to be transitioned and a subsequent (or parallel) transformation is to occur can suffer from either of two common failings: 1. The transformation never completes.
2. The transformation occurs but is significantly biased and skewed in favour of the service provider – e.g. improvements that will benefit the service provid- er’s cost structure are introduced without consequent reductions in service prices or valued improvements in service quality.
When confronted with this reality, many choose to strip back a core contract to the day-to-day performance of duties and separately contract for the transforma- tion agenda. This can provide incentive in the form of revenue enhancement for the service provider hungry for the transformation pie. Unfortunately for these ‘unbundled’ sourcing contracts, any transformation will most typically be part revenue substitution and part risk for the service provider and may be marginally less attractive than retaining the status quo.
Poor visibility
The real cost and effort of delivering a service is typically not communicated from the service provider to the customer. Open-book accounting remains, in
general, nothing more than an interesting concept and is mostly absent, other than in minority ‘cost plus’ deals.
It has commonly been viewed that managing IT service providers should be about managing the ‘what’ rather than the ‘how’ – that is, specifying and manag- ing to outputs and outcomes rather than dictating the means and/or the processes by which work gets done.
This is fine when things are going well. However, when things are going wrong, as evidenced in outputs missing the mark and loss events crystallizing in your business, there is a need to get into the IT service provider’s shop and develop a good understanding of the real contributing factors. This is ‘dirty laundry’ and any incursion will be resisted unless contractual levers and relation- ship development has paved the way.
Lack of control
At the heart of many IT service provider disputes is a customer’s perceived view that the service in another’s hands is out of control. Perhaps it is clearer to consider this as difficulty managing IT by contract. Certainly for any customer unhappy with an external IT service provider there will be another who is unhappy with their internals!
In terms of IT risk it is important to be absolutely clear what the service provider is now responsible for. Furthermore, within the agreed scope it is necessary to ensure adequate implementation and functioning of risk manage- ment controls. Recognizing the shared nature of risk management and the importance of two-way communication, agreeing to and adopting a common IT risk management model between yourself and your major providers may be an excellent start.