Vendor Management Strategy

VENDOR RELATIONSHIP MANAGEMENT

The Challenge:

 Following the outsourcing of Application Development and IT Infrastructure to a third party vendor, a major Pension Plan had identified significant gaps in the vendor’s ability to deliver on the committed services. The Pension Plan and the vendor were committed to the success of the outsourcing agreement and their new relationship, but recognized it would not be successful without addressing the root causes of the issues.

Some of the key issues included:

• The vendor was unable to both maintain and improve services committed to in the original agreement. The effort required to maintain services was higher than expected and the teams lacked the capacity and capability to continually improve services.
• The vendor lacked the capabilities required to support specific technologies. Issues that should have been managed and resolved by the vendor often required resolution by the Pension Plan staff.
• There was an increasing lack of trust and confidence in the vendor’s staff across the organization; the two organizations were continually engaged in disagreements, resulting in escalations and increased staff turnover
  

 The Approach:

 CRG was engaged by the pension plan to develop and execute the following approach to address the identified issues:

• Determine root causes of the issues, including the vendor’s ability to deliver their services
• Develop a new operating model, designed to address the identified root causes
• Translate the operating model into resources and capital costs to develop a revised business case for the outsourcing agreement
• Perform a comparative analysis of alternate options and business cases to validate the decision
• Redefine the existing contract to reflect modified accountabilities
• Manage the transition to the new operating model
• Pilot key changes to management of non-production systems
• Review and modify processes impacted by operating model changes
• Develop job descriptions and design hiring strategy for new positions
• Develop KPIs to improve the tracking and management of vendor performance
• Pilot new internal team management models
  -(e.g., Kanbans, continuous improvement, detailed roles and responsibilities)

CRG Delivered the Following:

• Developed a new operating model, transitioning overall accountability of services from vendor to the pension plan. This was effective in ensuring the operation continued to focus on what was most important, and provided flexibility in managing both internal and vendor resources to accomplish goals
• Redesigned the organization, introducing 12 new unique roles, 50 new positions (internal & vendor) to address gaps, while ensuring the overall business case remained neutral to pre-outsourcing costs
• Developed job descriptions, the onboarding strategy, and interview process for each of the new unique roles. This included positions ranging from analyst to director level
• Performed comparative cost analysis of three alternate operating models, providing summary of organizational and financial risks with each option
• Developed summary of business case to be presented to and approved by pension plan’s board of directors
• Reviewed and redesigned 75 unique processes, including roles and responsibilities and key interactions for both vendor and pension plan staff
• Developed and supported the delivery of a change management strategy, including the facilitation of information sessions for impacted teams across the organization