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IT organizations put great focus into drawing up their outsourcing contracts, but those agreements alone do not guarantee satisfactory outcomes. Attorney Brad Peterson has seen it time and time again. “Time and money are spent on drafting the contract—often a substantial amount of money. And a tremendous amount of potential value is created in that contract,” says Peterson, partner in Mayer Brown’s Chicago office and leader of its technology transactions practice.
But then the engagement is handed over to a well-intentioned supplier management team that wasn’t involved in the contract and often can’t make heads or tails of what’s in it. “It’s understandable. Contracts are complex and confusing, and relationship managers are selected based on their knowledge of technology or their skill in building relationships, not on their knowledge of how to run a contract,” Peterson says.
Those professionals managing the engagement often don’t understand how their conduct or communication can impact their company’s legal rights, which can cause a number of problems should disputes arise. “The result is that the benefits for which you negotiated hard and are paying great amounts may be lost,” says Peterson. What’s more, disputes may be more difficult to resolve, and those that aren’t becoming costly to litigate, requiring interviewing dozens of witnesses and sorting through thousands of emails to figure out what has happened and who is responsible.
The real value of IT outsourcing is achieved through active governance—not only of the projects in play, but of the communication and interaction between customer and provider. “Protecting the value of the contract after the ink is dry is about motivating suppliers to deliver on their promises,” says Peterson, “and preserving remedies for failure.” Peterson and Robert Kriss, litigation partner in Mayer Brown’s Chicago office recently share some best practices for governing the IT outsourcing contract once the ink is dry.
1. Control your communication
If someone on the customer side isn’t already designated in the contract, send a notice to the service provider at the start of the engagement identifying one employee authorized to speak on behalf of the customer. IT service providers are savvy. If they want to push a change in approach or document through, they will find the employee most likely to sign off on it. By designating one spokesperson, “You avoid the inadvertent but unfavorable change that occur to your contract when lower level people are approached by the provider to approve a procedural manual, for example, that ends up changing the obligations of all the parties,” says Kriss. “That makes it clear up front and in writing who represents and can bind the customer. It’s just good for the relationship and will result in fewer misunderstandings.”
Designating a customer representative enables the IT organization to control messaging, better adhere to the contract, and avoid situations where the communications or conduct of less informed personnel create ambiguity and uncertainty. And when disputes arise, you’ll only have to review the email of the one person whose communication has legal relevance versus dozens.
2. Require the provider to log requests and complaints
In many outsourcing situations, the only obligation of the customer is to pay the supplier. Not so in IT, where engagements required the customer’s contribution or collaboration. “The customer will tend to have obligations, and if the customer doesn’t perform those obligations, those may be an excuse for performance,” Peterson says.
However, should the IT outsourcing provider have a request for the customer or raise an issue of customer performance that it says excuses one of its obligations, it’s important to compel the provider to write the issue down and keep a log of all such problems.
Require a log showing requests and responses on contractual matters.
3. Clarify cloudy terms early
It’s important to keep the written record of the engagement as clear, complete and accurate as possible. When there are projects or situations that the contract does not explicitly address, the customer should clarify them early on and in writing. “That’s the best time to reach agreement because the parties are most open to cooperation at that point,” Kriss says.
If the details of a more granular project isn’t specified in the main agreement, write down a summary of what each parties responsibilities are and have everyone sign off on that before embarking on their work. “If there’s clarity in the written record, the likelihood of the situation getting worked in the context of outsourcing relationship is much greater,” says Kriss. “It matters so much.”
4. Send breach notices right away
Peterson sees customers who endured problems in their outsourcing relationships for years, but had no record of them because they thought sending notices to the provider would create tension or contention. That’s a mistake. Customer should send a written notice of breach or failure the very first time it occurs—and every time thereafter. “This needs to be a standard best practice that a company always uses,” Peterson says. They need not be combative, but rather polite and factual. “If you can establish that pattern, particularly with a single person comfortable sending these notices that are clear and useful, you will establish a much better record,” Peterson says.
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9 things your service provider wants you to know
The relationship between enterprise IT and service providers can be difficult. IT has frustrations in achieving optimal service levels. Service providers, as it turns out, have an equal number of bugaboos when it comes to their enterprise clients' readiness for and acceptance of provider intervention.
We asked providers across a range of services what advice they can offer to smooth out some typical bumps in the road for their clients. Here's a look at what they had to say.
1. Focus on the business users' needs, not the technology.
One of the biggest mistakes that enterprise IT makes when engaging a service provider is focusing too much on finding technology to solve the problem instead of fully understanding the problem that needs to be solved.
Consider the problems that can arise if you take a "technology first" approach to data management. Stan Christiaens, CTO at service provider Collibra, which specializes in data governance, says focusing on the technology rather than the problem can create chaos, especially if different technologies are pieced together and critical information is siloed in different groups and departments within the organization. Such a hodgepodge strategy erodes user trust about the reliability of data.
"There needs to be a much greater emphasis and focus on the business users and the processes and methods they use to find the data that's most important to them," Christiaens says. Once you understand that, he explains, IT can help create governance rules and policies accordingly, enabling business users and data scientists to find, understand and trust the data they need to fuel critical insights.
2. Don't get caught in the 'expert' trap.
Companies must be careful to choose services that work for the whole company, not just one person. Catering to power users can get you into a heap of trouble.
This is especially true when it comes to services that rely on certain skill sets. "Just because you have someone on your team who is an expert with a specific tool or programming language doesn't mean it is what's best for your specific enterprise system," says Steve Logue, senior business development manager at Surety Systems, which focuses on ERP systems.
Logue gives the example of a client, a women's apparel company, that had implemented a system primarily because it had an in-house developer who could build custom programs and outbound interfaces for the application. The developer subsequently left the company, making it difficult for the remaining users to "future-proof" the system, he says. For instance, that developer's custom-built programs might break if users installed patches that the software vendor had intended for the off-the-shelf version of its system, Logue explains.
Companies should make sure that the services they choose will still work even if an expert user isn't around to maintain the system. Most providers nowadays have tools that need little customization and easily adapt to updates.
3. Know the problem you need to solve.
"One of the most challenging things for solution providers is that the customer often doesn't have a complete understanding of the problem they're trying to solve," says Jeremy Larkin, CTO at Imgix, a provider of real-time image processing and delivery services.
Therefore, service providers often spend a lot of time trying to understand the client's enterprise environment when the client should have had that information ready before the engagement began.
Larkin acknowledges that "it kind of makes sense" that clients may not fully grasp their own problems, because "part of the reason they're outsourcing in the first place is they have something they don't know how to solve on their own." But it nonetheless "makes things very hard on us, because it means they often can't [provide answers] we need to structure the best solution for them," he adds. "At the worst, it could mean they end up buying something that doesn't actually solve their core issue."
Carlos Meléndez, COO at Wovenware, a software development and engineering company in Puerto Rico, agrees. "By providing more information to service providers, IT teams would help bring more value to the projects and to their own organizations," he says, adding that they could also "potentially save money."
A good place to start is to know the requirements of the system you want to develop. Meléndez encourages IT to work with end users to make sure they capture the correct requirements.
Knowing the requirements in advance enables service providers "to efficiently develop a system that meets the company's needs," Meléndez says, adding that it also enables them "to bid their project fees based on the actual requirements rather than factoring in potential scenarios."
Part of the problem, according to Meléndez, is that IT sometimes sees service provider relationships as opportunities to offload responsibility. "System development is a partnership. To get the greatest value, it shouldn't be about transferring responsibility from the IT team to the service provider, but rather about both strategically collaborating throughout the process," he says.
4. Be prepared to share details of your current IT infrastructure.
Clients that aren't well acquainted with their own IT infrastructures create problems for service providers.
"One of the biggest issues we face on a consistent basis is a lack of knowledge about the current IT infrastructure," says Emil Sayegh, CEO of Hostway, a global cloud and managed hosting provider. "So, before we can begin on transitioning to a public/private/hybrid cloud or dedicated infrastructure, it requires an assessment by one of our solution architects."
When a service provider is forced to study a client's architecture, timelines are delayed, requirements must be revisited, and costs start to rise.
"We run into situations where software is cobbled together running on multiple operating systems and on multiple generations of hardware — and it's still on physical servers," Sayegh says. "It's much better if the customer has made some transition to virtual servers, which is a good steppingstone to the cloud."
5. Remember: Training isn't a one-time exercise.
When engaging service providers, IT shops have been known to budget for initial training on the application but not for ongoing instruction. That's a big mistake, says Sarah Lahav, CEO of SysAid Technologies, a help desk and IT service management provider.
"Things will change," she says. Additional training will be needed when new people join the IT team and new features are added to the system.
Therefore, IT's contracts with service providers should allow for as-needed training.
6. Identify a point person to act as IT's sole liaison with the service provider.
Service providers may have difficulty interacting with IT departments that have multiple silos, so it's important for IT to choose someone to act as a single point of contact.
Nathan Ziege, director of application development at software development and technical services provider GlowTouch, says the client must appoint a technical liaison who can work across the entire enterprise IT team to gather specifications and resolve incidents.
For instance, if Ziege's team is working on an API and runs into a problem downstream with a billing system, they want a champion on the client side who can bring in the person responsible for the billing system.
"Whoever represents the enterprise IT team should be someone who can reach across the various departments within IT to get all the relevant teams on board and ready to participate," Ziege says.
7. Make sure your provider understands how you like to communicate.
Communication can be a big hurdle for service provider-enterprise IT relationships. Service providers must know at the start how the client likes to communicate, including the key systems they use.
"Working on an internal infosecurity team for a security service provider provides an interesting perspective on improving communication," says Katie Ledoux, an information security analyst at security provider Rapid7. "For both sides, whether you're on an internal IT team or a service provider, the first step must be setting expectations, defining goals and adapting to each other's communication styles."
She emphasizes that knowing the specifics of a client's approach to communication — "when to use email, phone, ticketing systems etc. versus more casual channels like Slack or other chat platforms" — can help teams work together more effectively. "No one wants to disrupt another team's workflow," she says. "We know it's not effective."
Make sure to stipulate in your contract the communications systems essential to enterprise IT's workflow.
8. Be as clear as possible about your expectations.
Every business relationship involves certain expectations, but IT doesn't always make its expectations completely clear in contracts with service providers.
One detail that's often overlooked is the metric IT will use to gauge whether its expectations have been fulfilled. "Trust can only be built and maintained on the basis of mutual clarity. Therefore, transparency of IT's priority measurements for each service provider relationship is foundational to success," says Michael Hubbard, global vice president of ServiceNow's Inspire advisory program.
Enterprises must be clear from the outset which metrics, such as cost, quality, availability, value and adoption, they plan to use to judge how well the service provider met their needs.
"Service providers can optimize their delivery in many ways, but don't make them guess on your priorities, nor on how you will measure their achievement," Hubbard says.
He recommends an exercise where the enterprise envisions a future headline it would share in an internal memo defining the success of the engagement with the service provider. The headline would include quantifiable outcomes, such as cost savings, the project's deadline and projected ongoing returns on investment.
Hubbard says this exercise helps everyone work toward the same goal. "Day in and day out, especially in times of crisis or tough decisions, this anchors the team," he says. "When weighing the options of going right versus left on a topic, asking which route best supports the outcome quickly drives to a preferred direction of action."
SysAid's Lahav says enterprise IT should manage contracts by the "spirit of the agreement" rather than the "letter of the law."
"Service providers rarely try to fail against contracted service levels — it's bad business to do so," she says. So, while some type of remedial action may be necessary to address persistent failure, she suggest that, in general, if a service provider is working hard to meet tough service-level targets, it might be better to evaluate the provider's performance on a monthly basis, in the context of the full duration of the contract, rather than on short-term results.
9. Understand that service providers have been hired to help, not harm.
Enterprise IT teams can be wary of working with third parties, especially if it wasn't their idea to hire a service provider. Therefore, service providers spend a lot of time — sometimes too much time — trying to convince IT that they are there to help.
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As one of the biggest, brightest and friendliest IT companies in Southern California we want you to take advantage of our free security assessment or just request a quote for managed services. We can even work on your behalf to get appropriate projects funded by Microsoft. Call Managed Solution at 800-790-1524.
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Employee devices bring added security concerns
By Cindy Bates
The explosion in recent years of mobility solutions and ‘bring your own device’ policies has had a big impact on small businesses.
In fact, 52 percent of information workers across 17 countries report using three or more devices for work, according to research from Forrester and 61 percent of workers mix personal and work on their devices.
On one hand, there are huge benefits for organizations and employees — employees can be far more productive and work on the go with untethered access to the information they need. Business owners can also realize cost savings while reducing the time spent managing IT. Yet, there are risks: namely, how do businesses protect confidential information from leaking outside of the organization when employees can access and store data in a multitude of ways across devices.
When employees use personal devices for work, they can be mishandled inadvertently, like an accidental forward of a confidential mail, or in more nefarious ways, such as a hacker gaining access to confidential information through stolen credentials. According to a Verizon data breach investigation report, 75 percent of network intrusions used weak or stolen credentials to gain access.
It’s important to have a strong device policy in place but even when the rules are clear, there is room left for costly errors. CEB found that as many as 93 percent of employees admit to violating information security policies. That means, depending on your business, there is a wide variety of data that could be at risk. It may be customers’ personally identifiable information, such as in healthcare, retail or financial institutions, or company confidential information, such as trade secrets, company financials, or employee records. With so much data available, traditional company firewalls and perimeter solutions no longer suffice to protect confidential information wherever it lives. Today, many small businesses are cobbling together a number of solutions to attempt to solve this problem. But none tie it all together until now.
Microsoft has developed Microsoft Enterprise Mobility Suite (EMS), which is the only comprehensive solution that protects information assets across four layers: user identity, content, applications & cloud services, and devices. When combined with Office 365, it offers native protection for applications and services. Best of all, it’s about half the cost of competitive solutions. Not only is EMS flexible and easy to integrate, it offers enterprise-grade security for small businesses. Key security features include:
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Threat detection: Detect abnormal user behavior, suspicious activities, known malicious attacks and security issues right away.
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Conditional access: Control access to applications and other corporate resources like email and files with policy-based conditions that evaluate criteria such as device health, user location etc.
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Single sign-on: Sign in once to cloud and on-premises web apps from any device. Pre-integrated support for Salesforce, Concur, Workday, and thousands more popular SaaS apps.
To Learn More about Professional Services, contact us at 800-208-3617
Network Assessment & Technology Roadmap
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4 Ways Outsourcing IT Through Managed Services Will Help Your Business
Businesses around the world are turning to Managed Services to improve their workplace. Boost efficiency while reducing costs by outsourcing your IT department.
Here are 4 ways outsourcing IT through Managed Services will help your business:
Managed Services
1) Experienced professionals
There are very few problems that an IT outsourcing company has yet to see. Although having in-house IT is beneficial, a one-person or small IT team does not necessarily ensure that you have the faculty needed to manage every IT problem that your business might need help with.
A Managed Services Provider will always have experienced professionals that have faced an outstanding variety of situations and knows how to fix them. Meaning, they can provide the resources and expertise to give you assurance that your IT infrastructure needs will be met top to bottom.
2) Reduce IT and labor costs
By outsourcing IT, you can convert fixed costs into variable costs so you can see and budget for exactly what you need. Benefits such as flexible payment models allow you to scale your business up and down so you pay for what you really need day-to-day, and not for what you think you might need.
Furthermore, MSPs (such as Managed Solution) frequently offer discounted rates on software licensing & hardware, while also analyzing your specific technology needs to provide consolidation and elimination of unnecessary technology to maximize your spend.
Lastly, the hiring process of new IT professionals is becoming more and more difficult, lengthy, and expensive. By outsourcing IT you can override this costly step while still getting the best professionals without the hiring hassle.
3) Increase core business efficiency
By eliminating the headache of an IT department, businesses can get back to focusing on what they do best. This means having more time and resources to implement new business ideas, increase competitive advantage, and also relay these benefits onto the customers.
4) Decrease risk (and increase security)
One of the biggest fears of companies today is losing data. With the digitalization of so many, if not all, important documents, files, research, records, and more, companies have to be more and more aware of backup and disaster recovery.
Managed Services providers can easily implement and explain BDR plans that are custom-fit to each company. This means no more worrying about whose hands your data is in if your employee loses his mobile device or company laptop. All your data can be secure and reliable.
Learn more about managed services provided by Managed Solution
Cloud services now account for a third of IT outsourcing market
By Stephanie Overby as written on cio.com
In the latest reflection of cloud computing’s impact on the IT services market, outsourcing consultancy Information Services Group (ISG) for the first time expanded its quarterly market index to look specifically at the as-a-service segment of IT and business process services industry.
The as-a-service market, which includes Infrastructure- and Software-as-a-Service (IaaS and SaaS) activity, now represents more than one third of the combined global market for sourcing services — nearly double its share from early 2014, according to ISG. And the firm predicts accelerated growth in the cloud computing segment longer term—both in absolute terms and relative to traditional sourcing activity—as more and more work is automated and moved to the cloud.
CIO.com talked John Keppel, President EMEA and Asia for ISG, about the rapid rise of cloud offerings, the especially sharp increase in IaaS deals, cloud’s new role in digital transformation, and the future prospects for traditional IT outsourcing market
CIO.com: It was already clear that the uptake of as-a-service offerings was rising rapidly. Were you surprised at how big a chunk of the business services market they had consumed?
John Keppel, President EMEA and Asia, ISG:I don’t think ‘surprised’ is exactly the right word. We’ve known for some time now that the as-a-service sector has been eating into the market share of traditional service providers. How else to explain that contract counts are soaring, but contract values are remaining relatively stagnant in the traditional market? We knew anecdotally that a lot of client work was moving to the public cloud infrastructure and cloud software markets, and we also knew it was time to begin an empirical measurement of that growing shift. That’s why we decided to move beyond our initial examinations of this phenomenon and officially expand the coverage of our [index].
The drivers for cloud have changed noticeably over the past three years. Initially, cloud interest and adoption was concentrated primarily on cost reduction, in line with what we traditionally have seen as a driver for outsourcing. It was an evolutionary process up until about 18 months ago, when we began to see the real cloud revolution: using public cloud infrastructure and software to dramatically boost agility and grow the business. More clients are taking the savings from deals created a few years ago and re-investing them into their digital transformation initiatives; indeed, the public cloud usually serves as the foundation for many of these emerging services.
CIO.com: Your report looks at all business services. What was traditional and as-a-service IT activity like in the second quarter?
Keppel: Taking a look at the combined market—that is, traditional sourcing and as-a-service activity—we saw overall market value decline 2 percent to $7.9 billion in the second quarter. Compared to the first quarter of 2016, the market was down 9 percent, but still within the healthy range of around $8 billion it has averaged over the last five quarters.
Looking for a partner in your business' managed services needs? Call us at 800-790-1524 to learn about all that we offer!
