risk management - vendors issues
DESCRIPTION
A document on Risk management. It will give you most common issues with Vendors, consultants and outsourcing. How to detect them, Taking action once detected and way to prevent them before they happen.TRANSCRIPT
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RISK MANAGEMENT
VENDORS, CONSULTANTS AND OUTSORCING
2014
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2014 KILEO
OUTLINES Introduction
Inadequate vendor performance
Vendor staff who do not share information
Vendor that use their own proprietary methods and tools
Vendor that do something different from what they agreed to do
Substantial vendor staff turnover
Unstructured vendor communications
Vendor that was politically selected by management
Vendor leader who miscommunicates with vendor staff
Vendor staff being thinly spread over multiple clients
Vendor that overpromises
Highly unqualified vendor staff
Conclusion
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2014 KILEO
INTRODUCTION
Outsourcing has increased as firms try to
implement new systems and technology.
Firms outsource support activities, such as
maintenance, network operations, help
desk, and other work.
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2014 KILEO
INADEQUATE VENDOR
PERFORMANCE
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Discussion A common complaint in surveys of outsourcing is that the vendors performance either is highly variable or deteriorates over time and we had to have the people
not only restate the instructions, but then also define exactly how they were going
to go about the work.
Impact
In addition to higher cost and longer schedules for the work to be performed right,
there is the political cost in the relationship between the customer and the
supplier.
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Detection You should have quality reviews. Never accept it as truth
when the vendor says everything is fine and on schedule.
the vendor assured an insurance company that they would get a new version of the software. Then they said it would be
delayed the vendor told the firm that they were going out of
business.
Action and prevention Start with the fact that any vendor acts in their own self-
interest. This is obvious and true for all of the issues . You
must be achieve a reasonable level of knowledge and control
about the vendors activities. the vendor performs when resolving problems and issues.
This can be an early warning sign of quality problems.
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2014 KILEO
VENDOR STAFF WHO DO NOT
SHARE INFORMATION
Discussion
Individual vendor staff may not want to share their methods and tools because of fear that they could be copied or misused. They
may even fear sharing these with other employees at the same
vendor. If this is the case, they sure will not want to share them with
the IT staff
Impact
You might think that providing documentation constitutes sufficient sharing of knowledge. However, you can see from automobiles that
the manual you got with the vehicle is insufficient. You learn much
more about the car when you talk to mechanics who have to repair
or maintain the same type of car. If the information is not shared,
then when problems or questions arise, you have to call the vendor
often and very early in the problem-solving process
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Detection
You should have quality reviews. Never accept it as truth when the
vendor says everything is fine and on schedule.
the vendor assured an insurance company that they would get a new
version of the software. Then they said it would be delayed the
vendor told the firm that they were going out of business.
Action and prevention
Start with the fact that any vendor acts in their own self-interest. This
is obvious and true for all of the issues . You must be achieve a
reasonable level of knowledge and control about the vendors activities.
the vendor performs when resolving problems and issues. This can
be an early warning sign of quality problems.
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2014 KILEO
VENDOR STAFF WHO DO NOT
SHARE INFORMATION
Discussion
Individual vendor staff may not want to share their methods and tools because of fear that they could be copied or misused. They
may even fear sharing these with other employees at the same
vendor. If this is the case, they sure will not want to share them
with the IT staff
Impact
You might think that providing documentation constitutes sufficient sharing of knowledge. However, you can see from
automobiles that the manual you got with the vehicle is
insufficient. You learn much more about the car when you talk to
mechanics who have to repair or maintain the same type of car. If
the information is not shared, then when problems or questions
arise, you have to call the vendor often and very early in the
problem-solving process
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Detection
Early in the vendors work you can ask about how they do the work. You can probe into what methods and tools they
use or will use. This can be performed as part of vendor
evaluation.
Actions and Prevention
At the start of the work and even in contract negotiation,
you can spell out what and how information is to be
transferred from the vendor to your organization.
You should also inform the vendor that you expect and
require sharing of information. Here are some additional
actions you can take.
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2014 KILEO
VENDORS THAT USE THEIR OWN PROPRIETARY
METHODS AND TOOLS
Discussion
Everyone has tips and tricks. Software vendors have their own routines and utilities that have been developed
and honed over many projects. Most vendors view these
as proprietary and part of their competitive advantage.
Impact
If you always are going to use this particular vendor, then the issue may be significant. However, if you think
the work may be shifted to another vendor, then this is
an issue.
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2014 KILEO
VENDORS THAT DO SOMETHING DIFFERENT
FROM WHAT THEY AGREED TO DO
Discussion
The vendor agrees to do some work or take some action. However, the person you talked to is a
salesperson or project leader. He or she will then have
to translate the instructions to the vendor staff lot can be
lost in translation.
Impact
miscommunication, then this grows into a trust problem.
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Detection
How do you detect this problem?
Actions and Prevention
When we have managed outsourcing in other
countries where English is spoken well, we have
found that this problem surfaces from the start.
we had to have the people not only restate the instructions, but then also define exactly how they
were going to go about the work.
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2014 KILEO
SUBSTANTIAL VENDOR STAFF
TURNOVER
Discussion
Look at the work from the vendors view. Just like you, the vendor has only a limited number of good people.
Their good staff, like yours, are in demand. So there is
turnover in the vendor staff. In addition, a number of
vendors pay wages and provide benefits that are less
than the industry average. As a result, many IT people
in vendor organizations see their position with the
vendor as temporary.
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Impact
The vendor usually organizes the work so that employees are assigned to specific projects and
customers. There is no cross-training. When a
vendor employee leaves, he or she not only walks off
with his or her experience and knowledge, but also
takes the training you provided in your business and
IT processes.
Detection
At the start of work, you want to identify the key vendor staff who will be working on your projects and
efforts. Then you should insist on being informed of
any change. Also, take advantage of informal ties
between the technical staff of the vendor or your
organization.
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Actions and Prevention
The best prevention is to state to the vendor that turnover must be planned. Here are some specific
guidelines to pursue.
If the vendor uses subcontractors, inform them that you want to be notified. You also want to meet and
have meetings with these people.
Have internal staff stay in informal social contact with the vendor staff. In that way, you can learn what
problems and concerns the people have.
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2014 KILEO
UNSTRUCTURED VENDOR
COMMUNICATIONS
Discussion
The company did a careful evaluation of five different vendors. A contract was negotiated with the selected
vendor. The vendor work was initiated. But what
happened next? The successive and persistent actions
in coordinating, communicating, and managing the
vendor relationship are keys to the success of the
overall work.
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Impact
Communications that are mainly negative and about problems can sour the entire vendor relationship. The
vendor thinks that the only time the customer cares is
when there is a problem and that when there are no
problems, the customer does not care.
Detection
Look at the nature of contacts with the vendors. Is status gathered before a formal status report? What
happens between status reports? What informal
communications occur? What rough percentage of the
communications is about
problems and issues?
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Actions and Preventions
To prevent this problem, you want to set some rules for
communications. These should include the following:
Regular meetings on issues Presentation of results in lessons learned meetings Proactive communications from the customer side to
the vendor regarding staffing, the work, interpretation
of requirements, etc.
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2014 KILEO
VENDOR THAT WAS POLITICALL BY
MANAGEMENT
Discussion
In a small organization, the head of the firm often selects vendors based on who they know and on their
past experiences with them. In a large organization, you
might think this could not happen. However, it still does.
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Impact
The impact is similar to that when the head of the firm
brings in a young relative to work in an organization.
The person has to be treated differently by everyone.
All know that the person is favored. Having a politically selected individual or firm creates many
issues. If the individual or firm is assigned work and
fails, there are problems.
Detection
Try to find out how the vendor got the work. Here are
some other questions to answer.
How did they learn about the work? Who do they know in the company? Did they do work with the organization before?
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Actions and Prevention
Forget prevention turn to actions. If you find out that someone is going to be given or is given the work,
narrow the scope of that work. Ahead of time, you
might divide up the project and isolate some of the non
risky work to be awarded to the firm favored by the
manager. If the firm is selected, you should conduct a
frank meeting with the vendor. Indicate that you are
aware of the ties with management.
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2014 KILEO
VENDOR THAT DOES NOT RESOLVE
ISSUES
Discussion
You have identified an issue that falls under the vendors scope and work. The vendor is assigned the issue. The issue never seems to be completely
resolved. Promises are made and not kept. Why doesnt the vendor want to solve the issue?
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Impact
As you observed in the first part of the book, the longer a
major issue goes unresolved, the greater the impact. The
issue can grow so that it has to be addressed at higher
organizational levels. Then there is the direct impact on
the work.
Detection
You want to use the issues tracking in Chapter 2 here.
Make sure that the vendor and you have the same list of
issues. In this manner you can track how fast and how
completely the vendor solves the problems. You can also
determine
whether solving one issue generated new ones.
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Actions and Prevention
Issues management is a main way to prevent the
problem. In vendor evaluation, make issues
management a key part of the evaluation. Have
potential vendors explain how they define priorities in
dealing with issues.
Another step is to focus on issues in regular meetings.
Here is another tip. Separate meetings on status from
meetings on issues. In a status meeting you can identify
an issue and determine where it stands.
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2014 KILEO
VENDOR TEAM LEADER WHO
MISCOMMUNICATES TO VENDOR STAFF
Discussion.
Its a common problem.
This issue led directly to the failure of many project and IT works.
Therefore when hiring a vendor, leader has to be identified. The ones who you will channel your communications.
Impact
Vendor stuff mat be given wrong information or incomplete information
Customer will think everything is OK, the problem will be discovered later.
It will impact the schedule because, work must be redone and the previous work done will be waste.
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Detection
Request some feedback from vendor liaison when providing information
Then conduct meetings with the vender's stuff. Action and prevention
Train vender employees (NOTE: This should be done even if it raises cost)
Hold regular meetings with both vendor project leader and technical stuffs. This can be difficult to all
issues, however you can concentrate on major ones
with higher risks
Carefully define vendor project leader role and point to this issue This will make vendor aware of the problem
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2014 KILEO
VENDOR THAT OVERPROMISES
Discussion
Salespeople of the vendors will often make many
claims and even promises. They may see that as
part of what is required to get the work. Most
people know this. That is why vendor claims and
promises are checked out in detail during the
vendor selection process. There is less attention
after the award of the work. People tend to trust
the vendor project leader. After all, he or she is
not a salesperson. Right? This is not a good idea.
Follow the old axiom Trust but verify. The approach laid out for this issue focuses on the
communications with the vendor.
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Impact
Vendor loses credibility with the customer This will then jeopardize vendor customer relationship.
Detection
Preview all written promises from vendor and check the status of each promise.
Action and prevention
Make sure you document any and all promises made.
Have vendor explain how they will make them come true By doing so vendor will know a promise has been made and you are aware of it.
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2014 KILEO
VENDOR STAFF BEING THINLY SPREAD OVER
MULTIPLE CLIENTS
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Discussion
If your IT staff members are spread across a lot of different work,
you can bet that the same holds for the vendor. If you hire a good,
qualified vendor, that firm is in demand by other customers. You are
competing for their attention in the same way that children in a
family compete for the attention of their parents.
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Impact
Some gets priorities. Rushed job when resources are not available. Quality problems and work may be delayed. Detection
When talking to the vendor project leader, find out about their other work.
Do an observation of the time spent by vendor stuff on your work.
Action and Prevention
Discuss with vendor on the matter and ask how they can allocate people to work.
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2014 KILEO
HIGHLY UNQUALIFIED VENDOR STAFF
Discussion
the best vendor staff are in great demand. As with your IT staff, their total staff have a variety of qualifications.
The ones with lesser qualifications have to be put to work. The vendor may place them with whatever firms
they can get away with.
The output may be unpleasant
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Impact
The new junior person has to be trained and brought up to speed. In the worst case, the vendor is using you to
give this person more experience. You are paying a lot
and getting much less in value.
Detection
When the vendor assigns staff, you can see how busy they are. Are they on the telephone a lot? Do they seem
to get many phone calls and e-mails? This shows that
they have many other interests.
Actions and Prevention
When assigned vendor stuffs ask a vender, how long will they work?
Ask about their other assignments. Ask, if they happen to leave what will be the
replacement? Point out your minimum qualification
for the work.
Insist on interviewing several of vendor stuff to make the best selection
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2014 KILEO
CONCLUSION
Here there has been a clear message that
you want to establish a pattern of behavior
with the vendors early in the work. This
applies to:
Expectations
Promises and commitments
Issues management
Transfer of knowledge and information
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