The Importance of Maintaining Formal Governance
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When a vendor is performing well, the client may have a tendency to relax governance requirements and routines—but this can lead to trouble.
By Christopher Stacy, Director, Pace Harmon
IT vendor relationships are most successful when overseen by strong governance programs that effectively leverage contractual terms, conditions and functional requirements. By implementing specific governance practices and committees, enterprises can ensure proper escalation and handling of issues as well as ensure accurate service level measurement, financial credit application and review of operational reports. Upon contract signature, these enterprises need to implement a formal governance program together with the vendor, and the two parties should formally maintain that program throughout the entire contract term.
When a vendor is performing well, the client may have a tendency to relax governance requirements and routines. However, program maintenance is critical because practicing the routines and developing relationships during periods of high performance enhances the ability to fix problems and remediate issues if and when vendor performance is not delivered as expected. Consistent governance enables the following key benefits that help drive successful, long-term IT vendor relationships.
Faster and more meaningful response from vendor leadership
Relationships between key client and vendor personnel and executives make a difference in how a client account is handled, and these relationships must be fostered over time. Executives who have the authority to apply extra resources and make decisions for the account, and who have skin in the game for financial performance of the account, need to be intimately familiar with the client’s operation in order to properly react when problems occur. Familiarity with the client’s business, and the requirements of the contract, is achieved over time, often through consistent governance routines and meetings between the parties at all levels.
Evolution of the vendor relationship with changing client needs
Consistently applying governance ensures that vendor leadership is apprised of changes to client business objectives, plans for scaling up or down in certain geographic locations, and other changing conditions that impact the support model required of the vendor. Clients rightfully expect vendors to act as business partners, but it is difficult for vendors to act in such a capacity if they are kept at arm’s length with respect to decisions that impact their responsibilities. Clients should continuously update vendors on immediate and upcoming changes to the business that will affect their priorities for service delivery.
Awareness of vendor strategy changes and client impact
Just as clients should share their strategy changes with vendors, vendors need to share their strategy and objectives with clients. Clients must be able to understand the direction of their vendors in order to evaluate the long-term potential of the vendor relationships as well as improvements and new technologies that are being offered. These improvements may become available at any time during the contract term, and consistent governance meetings can be utilized as a way to ensure that this dialog occurs.
Better collection and trending of performance data
Collecting data that shows a vendor meeting or exceeding expectations is important for comparing against data from low performance time periods . This data is shared and evaluated in governance routines, which should have consistent periodicity to make evaluation most effective. Perhaps more importantly, governance committees should evaluate the types of data being collected to determine if they are indicative of the true perception and effectiveness of the vendor operation. Sometimes a contract is established with a set of metrics that are consistently measured as meeting expectations, but the client’s business is nevertheless suffering due to vendor failures. Governance committees are the proper forums to evaluate the effectiveness of data analysis and whether the team is “measuring the right things.”
Consistent messaging to users
Users sometimes have different viewpoints on service quality versus internal management or a vendor. If internal management teams and the vendor agree on interpretation of service delivery successes and failures and share this common understanding across governance tiers on a regular basis, it is easier to respond in a streamlined way to user inquiries or complaints.
Both clients and vendors can maximize these vendor governance benefits when both parties consistently follow governance routines. Alternatively, resurrecting governance activities only after problems have materialized creates a defensive dynamic between client and vendor that inhibits this interaction. Clients should make it a priority to maintain strong governance at all times–those efforts will inevitably pay dividends throughout the contract term.