- BY Michael Basher
- ICT Strategy
The traditional train of thought to managing vendors is changing with the wider adoption of cloud services. Partnerships are key for business critical ICT services; as is transparency as to both what the organisation expects and how the vendor proposes to provide the service.
Management of cloud based services requires a change in thought regarding the construct of three key components being; contracts, relationship and performance management.
Contracts: The contract must address the relationship, based on the vendor type, required by the organisation. Vendor’s relationships under service based contracts for ICT services require more performance based with outcomes defined rather than products specified, well defined inter-vendor dependencies and integration points, not just with the organisation but its partners also.
Relationships: The more strategic the partner (ie. the greater reliance the customer has on it), the greater the risk to the organisation of things were to go wrong. It is important to categorise your vendors and manage each category accordingly e.g. a Legacy or commodity cloud service could be deemed as low risk whereby a new or strategic partner should have a higher focus from the outset of the vendor management function as it will deliver the highest return in terms of strategic business outcomes but also introduce higher risks that require mitigation.
Performance: The cloud vendor must be accountable for the delivery of services in a similar manner to the organisations IT manager being accountable for the delivery for an on premise service. Vendors must be performance managed over the life of the services contract against agreed criteria to ensure the organisation is achieving optimal performance from their cloud services. As important as it is to agree performance criteria during the establishment of a contract it is of utmost importance that the organisation understands the criteria and has the ability measure it. Performance must be measured and reported against agreed KPI’s – and the services contract should include penalties on the service provider commensurate with the lost value or productivity to the organisation noting that incentives and rewards should be considered for the vendor exceeding the KPI’s and increasing organisation value or productivity (e.g. positive media releases regarding the success of the service).
Organisations must understand the varying levels of control they will have across public, private and hybrid cloud solutions for managing their cloud service contracts, relationships and performance. Understanding this in advance will significantly increase the likelihood that an organisation will select the correct cloud service model to support their business needs whilst aligning to their business risk appetite.
The traditional models of vendor management have changed. Three key components can ensure successful cloud deployments, reduce the risk of excess costs and ensure the organisations data integrity is maintained and is accessible through all stages of the cloud service agreement.