How to better manage your service providers

Last week I heard words I never thought would come from the mouth of a telco executive: "We like to provide bandwidth when we can, but we're a managed services provider."

At long last, a faint indication that telcos might be getting the message that it's not about bandwidth, it's about services.

So here's a question: If telcos start positioning themselves as service providers, what does that mean for IT executives? For starters, they need to think about revamping their organizations to better manage their providers. Some recommendations:

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Last week I heard words I never thought would come from the mouth of a telco executive: "We like to provide bandwidth when we can, but we're a managed services provider."

At long last, a faint indication that telcos might be getting the message that it's not about bandwidth, it's about services.

So here's a question: If telcos start positioning themselves as service providers, what does that mean for IT executives? For starters, they need to think about revamping their organizations to better manage their providers. Some recommendations:

• Institute effective best practices for service selection and provider procurement. Specifically, institute a formal procurement process.

Start by defining the business needs then moving on to technical requirements. In other words, don't assume the requirement is for frame relay if the business need is really high-speed connectivity to branch offices. Depending on the applications being supported, IP Security or Multi-protocol Label Switching IP VPNs also might be a fit.

Once you've established requirements, define selection criteria for the services. Then take a weighted-scorecard approach to evaluating RFPs, with each selection criterion assigned the appropriate weight that's based on your organization's goals and requirements. This approach not only generally delivers the best solution, it also cuts down immeasurably on the political warfare that often surrounds the procurement process.

• Create and train an effective negotiations team. Most carrier negotiations are handled by the procurement department, with help from the legal team, with the fundamental goal of obtaining the best price. But for services in which terms and conditions might matter more than the price, the negotiations team needs enhancing.

An effective service provider negotiation team should include a technical representative from IT and representation from the business units (who have the best insight on what services are and aren't required). Of course, the procurement folks are still key - they're the people who will succeed in closing the most favorable terms and conditions.

• Establish a vendor management team. Managing suppliers requires a mix of human and project management skills to ensure that the right services are delivered on time. Many IT departments have a lack of both types of expertise - which means they'll need to recruit talent (either from within or outside the company).

• Appoint internal customer liaisons. These individuals are chartered with ensuring the services that have been negotiated and delivered meet the needs of the business. This means working closely with business units to understand those needs and then communicating them back to IT - which is the role of a customer liaison.

• Finally, establish cost and performance benchmarks upfront, and revisit them regularly. This lets you gauge the performance of your service providers, but also gives you important feedback as to your own ability to effectively manage the service provider.

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