Choosing a provider for highly specialized services

Selecting a service provider should not be taken lightly, but it does not have to be an overwhelming and painful experience either. In my 18 years in the IT services world, I have seen it done both poorly and well. Allow me to illustrate for you the typical approaches to selecting a resource and their proven outcomes.

Saturday, February 25, 2017
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Approach 1 – “Let’s use our strategic partner.”

Many big organizations have “Strategic Service Providers” whom they use for a whole range of services including hardware maintenance, IT help desk support and more sophisticated advisory services. These service companies are often big, multinational organizations who have good executive level relationships with their customers. Using a single provider for multiple lines of services has its cost advantages. There are fewer contracts to execute, and the services rates are typically pre-negotiated at a relatively low price point.

In most cases the circle of “Strategic Service Providers” is hermetic as introducing a new supplier requires quite a bit of effort. This leads to the main setback of this approach, which is that the strategic partner might not be able to provide the services with a high level of quality. Additionally, this may not be recognized promptly as the customer has limited possibility to judge certain aspects of quality which are not easily visible on the surface.

Approach 2 – “Let’s leave it to a software vendor.”

Another common method is to request for the software vendor to provide the services related to their software. This can help in avoiding the “who’s responsible?” situations, particularly with newly introduced software. On the other hand, the service rates provided by software vendors are typically on the high end of the spectrum and hard to afford in the long term. Especially when the project enters the maintenance mode.

Approach 3 – “Let’s run an RFP.”

Another mode of finding a services provider is going to the market and asking selected vendors for their quotes. This may work for services that do not require a high level of specialization and experience. However, the risk is that companies who respond can claim to be competent, but it is hard for the customer to verify this. As a result, the daily rates become the main deciding point and typically a vendor that presents the cheapest offer is selected. This type of selection process is a comparison of apples and oranges.

Approach 4 – “Let’s ask for recommendations.”

Finally, a few customers, particularly those that have failed with one of the previous methods, decide to do proper due diligence and find service providers using their network. The same way as you and I would do when trying to select a contractor to do some work on our house or a doctor to perform surgery – we ask our friends for recommendations.

Word of mouth remains an excellent way of gauging what the service provider can deliver and how good they are at it. This is a simple fact because the quality of services is strongly dependent on how good the people are who are delivering them. That is why asking for references works as project risk mitigation. Low rates are still vital, but they should be compared to relevant market offers.

What continues to surprise me is that applying the “A Resource is a Resource” mentality is relatively common when selecting services providers. Well, to be fair, that usually applies to the organizations that use the “body shopping” approach. In a case of specialized services, such as MES, this might be a recipe for a project failure. Highly qualified specialists do not drop down from trees like the earlier mentioned apples and oranges. They need to be trained on multiple projects and coached for many years so that they can lead projects and provide valuable services to their customers. This requires that a services vendor has a stable team of experts that can mentor and coach other consultants and a culture of investing in the growth of their employees.

Let me conclude this article with this final piece of advice: if your organization is considering hiring a very specialized service provider, always ask for references from other companies which are already using such services. Visit them if possible to get their perspective on issues they experienced and benefits they are getting from their services provider.

When done right and early enough, this way of selecting a vendor will pay off in the form of lower risk and fewer surprises during your project.

About the author

Grzegorz is the VP of Services at Andea. His responsibilities include applications and solutions architecture, knowledge management and quality standards assurance. He has over 20 years of professional experience including 13 years at Apriso – a leading manufacturing software provider where he was recently managing a team of Solution Architects. Grzegorz is recognized by customers as a trusted adviser and by his colleagues as an open minded, reliable and supportive manager and team player. Grzegorz has graduated from Rzeszow University of Technology where he received his MSc in Control and Computer Engineering