There are many benefits both to your customers and you if you are in any kind of service business:

Benefits For You:

1. Improve customer retention

2. Communicate better with customers

3. Generate insights by analyzing interactions

4. New revenue via up-selling, subscription, advertising

5. Reduce customer service costs by automation

6. Reducing cost of operations by automation of processes

For Your Customers:

1. Checking status of services in progress

2. Request new services

3. Get customer service

4. Bill payments

5. Ease of access e.g. mobility, 24x7, better user experience

Did you know that your customers are more inclined to use an app as opposed to going to your website to interact with you?

ZENeSYS along with our partners Maverick Software have developed many such apps for our clients that are disrupting the old business models. 

What is your app strategy?

Image Copyright : Andrew Grossman 

As companies continue to outsource more and more non-core functions such as - networks, data center, applications, voice, video, and security - the job of managing service contracts with vendors is becoming a finger pointing and a data crunching chore. It is because they rely on vendors to provide performance reports on the services they supply. This is like asking students to grade their own papers!

A Google search on “Vendor Management Office” gave me the following result … “A vendor management office (VMO) is an internal unit within an enterprise that is charged with evaluating third-party providers of goods and services, supervising day-to-day interactions and managing longer-term relationships. 

This means that Vendor Management has to look beyond the historical task of simply monitoring contract start and end dates. They have to find non-refutable ways to monitor and benchmark the agreed terms of service agreements to ensure service quality, agility and industry competitiveness on a continuous basis.

Let’s go deeper in the two things I bolded in the definition

Evaluating third-party providers: Evaluating services is a complex thing these days. Imagine outsourcing your Network Services. To do a good job, the metrics that needs to be tracked against your contracted terms should be:

1. The amount of time your Network was available during the year?
2. How long it takes to add a new site or make a change?
3. How many security breaches are taking place or what is being done to prevent them?
4. How well are they adjusting network bandwidth to suit demand?
5. How accurate is the billing?
6. How up to date is the technology?
7. And more but you get the idea...

Our studies have shown that companies hold up to 20% excess capacity in their IT services. The irony is that most services they are consuming is available in a Cloud or a SaaS model which means they can technically “pay for what they use”. But because they have no visibility of demand and capacity, this benefit is a complete waste.

We have seen customers who get thousands of line items in their vendor invoices for just one service line. Can you imagine trying to reconcile the charges? One company we know did start checking and found more than million euros in incorrect billing. That was the good news and the bad news was the discussion to set it right took more than a year.  No one could prove the numbers not to mention the many frustrating hours in spreadsheet wasteland.

The second item I had bolded in the Vendor Management definition was “Managing long term relationships”. They days of signing a 5 or 10-year IT services agreements are gone. Technology is changing at the rate of 2 to 3 years for a complete refresh. Internet Telephony was hot 6 years ago. Three years ago Unified Communications became the new way to go. But today, everyone is using Skype for Business or other multimedia Web based communications systems. I hope you are not the one stuck with a 10-year deal on IP telephony services.

So Vendor Management needs to play an important role in longer term relationship to ensure suppliers are mandated to refresh technology in a timely and non-disruptive manner. This can be done by continuous benchmarking of services and have the ability to build a business case for new technology transformation.

The reason why business cases are not easy to generate is because neither the company nor the vendor has the granular information to build a business case. A good vendor management system will keep track of cost components and help identify the cost drivers which in turn will help with the business case.

Many companies are also realizing that multi service outsourcing is creating a new complexity.  The dependency of one outsourced service supplied by Vendor A with another service from Vendor B. We know one large company that employs 70 people just to keep track of service interdependencies. When your Applications provider starts to point a finger at your Network supplier for slow performance, the onus is on you to prove who the culprit is. By defining a common framework for managing all services, the task of service interdependency will become easier.

If you like to learn more about Vendor Management trends, solutions and engage in a conversation with your peers, join me in a Webinar I am hosting on November 15^th at 3pm Central European Time.

I will be talking about new age KPI (key performance indicators) needed to manage the modern day IT supplier which is based on a recent book I published “Next Generation Service Contract Management”.

To register, please send me an email at ssen@zenesysconsulting.com and I will send you a ZOOM invite.

Lets face it. Your service providers are telling you they are doing a great job. You know the reality could be far from it. As someone put it to me recently. "It's like letting the students grade their own papers" Gartner and other analyst firms are already talking about the importance of a dedicated Vendor Management Team. If you are outsourcing more than 50% of your IT services, you need it.

Here are some vendor management answers that are not worth burying.

1. Pay attention to the Service Level Agreements in your Contract: This is often overlooked in the excitement of big benefits of SaaS, PaaS, aka "The Cloud". Please make sure you ask your supplier for some basics such as percentage uptime guarantee, penalties for making changes, resolution times for incidents etc. You may want to have your own standards on how you may want to define some KPIs across different suppliers. More on this in the last paragraph. 
2. Mind The Service Interdependencies: You may find out that one supplier's service is dependent upon another's. For example, your SAP supplier has dependencies on your network supplier. In such cases you need to align your SLAs so it makes sense. For example a 99.999% uptime on SAP is a waste if your Network to reach that SAP on the cloud has an uptime guarantee of only 98%. 
3. Technology Improvement Assurance: Moore's law says technology improves by 100% every two to three years. So this means that you should not get locked into a contract without demanding efficiency improvements on a year-on-year basis.This will lead to significant cost savings and ensure you are not lagging in the latest and greatest features that your competitor may be enjoying. 
4. Ensuring Vendor Mobility: Also known as "vendor lock-in". The way to avoid this is to keep your requirements as industry standard as possible. Ask your supplier to keep hardware and software configuration and the support knowledge base up to date. Insist on your supplier in sharing it with you. This will make the transition to a new supplier not just easier, but actually feasible. Else it will be like Hotel California... "You can check out anytime but you can never leave!"
5. Adequate Security: What you need for security will often be exceeded by your supplier. This is good news. But it is always a good practice to make sure that your supplier meets the minimum security you need. Another tricky situation is when two suppliers have a split responsibility e.g. your network is with vendor A and the firewalls are being managed by a vendor B. 
6. Too Many Providers: When you will get beyond three service providers, you will realize that managing each one with differing contractual terms and pricing mechanisms will become a management nightmare. When this happens, give us a call. Our XaaS management platform ZENATICS has a common denominator framework to automate vendor management. Oops sorry! No plug-ins in blogs! I forgot. Here is the answer. Create an internal SLA policy in your vendor management function. It will serve as a common standard for all your suppliers. 

For any questions and comments, please feel to contact me or post on our blog page.

Happy Vendor Management !

By Saibal Sen

First came Frame Relay then came ATM, and still widely in use is MPLS. Now the next big thing is SD-WAN. It stands for Software Defined Wide Area Network. Simply put, its the technology that make it possible to use the Internet as your Private Corporate Network or WAN.  The traditional WAN or Wide Area Network is built using private cicruits such as MPLS or T1/E1s that cost a lot.

But more than savings, it's the speed of setting up and making changes with SD-WAN that makes it highly endearing. Everyone has access to good quality Internet. Most SD-WAN solution can run on generic Intel boxes as opposed to purpose built networking hardware such as routers and switches. This translates to easy setup at any location around the globe. You will remember how hard was to interconnect your sites just yesterday when you had to ship networking gear through customs and then order MPLS lines which can take months. With this SD-WAN thing, if you got Internet and a couple of generic Intel boxes, you got SD-WAN.

Here is how it works. SD-WAN creates secure and redundant VPN tunnels (encrypted virtual links) that are intelligently setup and torn down based on Internet traffic conditions at that instant and your application routing priorities. With two ISP lines, SD-WAN can deliver decent quality of service so even your bandwidth hungry apps will run just as well as it did over your MPLS lines. One more game changing benefit is the ease of scaling up and down of your bandwidth needs. Since all the setup is software driven, changes can be done remotely. There is no need for an engineer to come on site. Most SD-WAN providers are offering an "Orchestration Tool" which is like a setup wizard so even non-techies can setup and manage SD-WAN. No need for advanced networking certification courses. 

With SD-WAN you can expect to reduce your cost by up to 70% of your current operational cost using traditional networking gear and links. Cost aside, the benefit of making changes on the fly can be a huge benefit to the business.

Call us for advice if you are considering switching to SD-WAN. We can help with determining if there is a business case. If there is, we can also find the right SD-WAN solution for you. We recently assisted a large corporation with SD-WAN transformation. 

ZENATICS is probably the Industry's first analytics platform for managing outsourced service contracts.

ZENATICS is our Service Management platform on the cloud. We have created our unique Framework of 12 KPIs that can universally manage any IT service. Be it Networks, Data Centers, Applications, Security, Storage etc.  

Listed below are all the KPIs addressing fundamental insights you will need to monitor in any outsourced service:

ZENATICS KPIs
Incidents - Are the number of incidents in a given period too high?
Changes - Are the number of changes in a given period too high?
Availability - Has service uptime fallen below contracted agreement?
Agility - Is speed of service execution is acceptable?

Financial KPIs
Demand/Capacity - How well matched is it?
Budget - Are we over or under plan?
Utilization - Is it optimum?
Billing Errors - Are we being billed accurately? 

Infrastructure Compliance
Standards - Are the vendors compliant with industry or internal standards?
Hardware Contracts - Are they about to expire?
Service Contracts - Are they about to expire?
Age - Is it still in life?

Each of these KPI thresholds can be set by specific service and a specfic vendor making it fully customizable. 

See the two-minute video on our main page www.zenesysconsulting.com for a quick overview and some screen shots. Or call us for a demo. 

I am really excited to announce the release of my book on how analytics can be used for Service Management. As the cover shows, IT departments are still in the dark ages when it comes to managing outsourced contracts. My book Next Generation Service Contract Management explains why vendor performance management is an archaic manual and error prone task today. 

I introduce 13 KPIs that every IT organization must use to monitor outsourced IT services.  The KPIs will lead to significant labor savings and increased service efficiency. 

The book reached #1 in new release and became top 25 in Outsourcing category within a week of releasing it.

The great thing about the publisher Bite Sized Books is that all their books are less than 50 pages. But just in case you don't feel like forking out $5.99 for the book, you can get the gist of the content in a CIO.com interview where I talk about my book and the use of Analytics in IT Vendor Management. 

Generally, a book inspires a product but this time it was the other way around. ZENATICS, our SAAS platform for vendor management embodies 12 out of the 13 KPIs for vendor management. I had to tell the story. Hope you will enjoy the book or the CIO.com interview.

Explaining the total cost of ownership of IT services to the CIO has never been easy. 

Apart from the obvious line items such as OPEX and CAPEX costs the three major sources of hidden costs can be:

Non Standard Change Request Changes: Your service provider may include some standard changes and provide some standard pricing for others, however the ones that can sneak up from behind are the "special changes". Service Providers usually charge time and material (T&M) rates for such changes. These "uncontrolled costs" can add up to significant amounts.

Billing Errors: This might not be intentional, but Service Providers can and will make mistakes in their billing. Most of the time these can be rectified but someone has to take the time and effort to reconcile accounts against agreed upon tariffs. 

Internal Service Provider Support Costs: You may think outsourcing cost equates to what your Service Provider charges you. The reality could be that you are not taking into account how much time your own personnel are spending in hand holding, monitoring and chasing your service provider. We have known situations where an enterprise department has 3 workers for every 10 service provider workers. 

Three things that are "old school" about most Service Provider's monthly Performance Reports.

It is just data and no insights: Service Providers tend to report "just the data" e.g. "Was the service up or down" or "The number of incidents". What would be more interesting to know if the service went down when or where it matters the most. In other words, you need insights and not just plain data. 

Snapshots and not trends: Service Reports are statements that are "after the fact". Meaning, it does not give any indication of what was the historical trend or what might happen in the future. 

Service Provider centric and not Enterprise centric: Performance Reports tend to be about service provider commitments and not about what the enterprise (you the customer) needs to know. The new age performance reports needs to show how Enterprise Goals are being met. For example, "Is efficiency and agility improving or getting worse over time?"

Enterprises must demand more insightful reporting from their service providers in this digtial age. Call us to see how you can get more from your monthly performance reports.