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How to Use Analytics to Drive Win-Win Relationships with your IT Service Providers

This post is from the Numerify blog and has not been updated since the original publish date.

Last Updated Oct 03, 2018 — AI-Powered Analytics expert

How to Use Analytics to Drive Win-Win Relationships with your IT Service Providers

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IT's role in the enterprise is growing — as is its budget and a pressure to deliver new and more innovative services. At the same time, the supply base is growing at least as quickly as IT, both in terms of number of service providers as well as the scope of their responsibilities.

The complexity of managing service providers increases exponentially with the number of vendors. With service delivery fragmented across multiple systems, processes, geographies and providers, silos of teams and data can lead to problems. Left unaddressed, organizations face a lack of visibility, process inefficiencies, and knowledge gaps.

How, then, can analytics drive better outcomes for both your organization and your service providers?

Laying the Foundation: Why it's Necessary to Constantly Evaluate your IT Service Provider Relationships

Service providers are an important extension of your IT service capabilities. They bring specialized skills to the table and allow you to offer innovative services to your business. But to bring your organization and its vendors to the same page, analytics are instrumental. This is important not only from a governing service provider standpoint, but also for increasing value for both you and your vendor.

The problem? Sixty-five percent of companies are not measuring and evaluating their outsourcing relationships. What's often skipped is setting a baseline before entering into a relationship. Companies fail to ask where they stand, where they see the relationship going, and how to evaluate their goals.

Reasons companies choose a service provider can be lost with turnover or may simply change over time. What's important is to create analytics around the relationship which will offer the ability to constantly evaluate the scope of the service and partnership.

What are common challenges with IT Service Providers (and how can they be overcome)?

Challenge: Lack of Transparency

While many organizations have a trusted relationship with their vendors, a lack of transparency means they are often managing their relationship reactively instead of proactively.  This can manifest itself in many ways, including the following:

  1. The service provider is reporting on itself.
    Beyond a potential conflict of interest, the main issue with these reports tends to be with the value they deliver. A service provider reporting on itself will often take a narrow view of performance that is limited to whether or not they are meeting contractual obligations.
  2. Contract terms often aren't digitized.
    Organizations can track service performance using data in their ITSM system. SLAs, however, aren't usually digitized. If they are, they usually sit in a siloed vendor management system. As a result, companies are unable to easily compare actual performance to what was contractually promised. This translates to an inability to optimize inefficient processes as well as outcomes for both the organization and it's vendors.
  3. SLA driven penalties/rewards
    Service Providers are often rewarded if they beat SLA, and/or penalized for not meeting SLA. However, focus on SLA may translate into a lack of focus on doing the right thing for the customer. If the definition of an SLA is mismatched with customer expectations, meeting or beating SLA will not translate into high customer satisfaction.

How Transparency Creates a Stronger and More Productive Relationship

When you and your service providers are all looking at the same data and analytics, you can work together to create better outcomes for everyone. Specifically, some of the benefits our customers have seen from transparency in their service provider relationships include the following:

  • Drive Standardization: Evaluate Service Providers the same way for all services and drive a consistent customer experience.
  • Be Proactive: Don't find out about service issues from your customers. Move up the tough conversations and fix issues before they affect your relationship with your vendor and customer satisfaction.
  • Improve Service: Discover relationship (or lack thereof) between SLAs and CSAT, optimize processes and contractual agreements to optimize customer experience.
  • Achieve Alignment: Bring Service Providers closer to the business - have:

Analytics-Driven Service Provider Management

In the experience of our customers, the journey to creating win-win relationships with your IT vendors can be broken down into the following steps:

  1. Understand Scope and Resources
    In this first step along the maturity spectrum, you gain an understanding of how vendor delivered services are performing. These include measuring and baselining basic performance metrics like Response times, MTTR/Resolution time, and (if applicable) whether resources are being over or under utilized.
  2. Digitize SLA Contracts
    In conjunction with measuring service performance, it is imperative to hold service providers accountable to their contractual obligations. Digitizing SLA contracts and comparing SLAs with performance metrics will allow you to objectively measure compliance on an ongoing basis. Additionally, it is equally important to measure the metrics behind SLA compliance, i.e., process productivity and incident escalation/pause analysis.
  3. Proactively Manage Vendors
    With success metrics in place, you are now in a place where you can proactively manage your service providers and fix problems before your customers notice them. E.g., you could analyze the end to end lifecycle of a ticket across multiple vendors, identifying opportunities for standardization.
  4. Align Vendors with the Business
    Finally, you will be in a position to measuring SLAs not just from the perspective of an individual task, but from a customer perspective. With transparency comes an incentive for vendors to work together and do the right thing for the customer.

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