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Project VC: Managing IT Vendor and Contractor Relationships
How to reduce costs, select partners, monitor performance, and capture value
:: completed list main ::
By the end of 1997, over 60% of major companies in the U.S. and
U.K. were contracting for one or more information technology (IT) services.
Conservative estimates have the IT services market increasing at about 20% per
year, and the average company doubling its expenditures on IT services providers
by 2002. Even large companies with well regarded IT departments are contracting
for services such as help desk and applications development and just about every
company uses contractors to supplement its IT workforce.
The IT organization's most critical vendor relationships are for
staff-intensive services, where the product exchanged is people and their
expertise. There are three types of staff-intensive vendor relationships, each
with different management challenges and recommended management techniques:
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Technology services where the vendor provides staff for data center/telecom
operations, help desk operations, or desktop technology support. The key to
success is active performance monitoring and management, rather than
relinquishing these responsibilities.
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Staff augmentation where the vendor provides "contractors" to supplement IT
staff in times of peak demand or in areas of needed expertise. The key to
success is attention to performance at the individual contractor level much as
you would an employee and using this performance feedback in ongoing management
and negotiation with the vendor.
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Alication development where the vendor develops custom software or
modifies, implements, and integrates software packages. The key to success here
is timing pilots and other key activities so that any serious vendor performance
problems can be detected early, as well as carefully inspecting the work in
progress rather than waiting for the finished product and hoping for the best.
This Re.sults® report details techniques for managing the entire life
cycle of vendor and contractor relationships for staff-intensive technology
services from preparation and vendor selection through performance management to
exit strategies and termination. It also includes an economic overview of
outsourcing relationships and recommendations on minimizing contract risk.
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