Successfully Outsource Your Construction Business’ IT

A primary factor in determining whether an outsourcing relationship succeeds or fails is the involvement of the ownership, upper management of the client and the ownership of the outsourced firm.

Many owners, or upper management make the mistake of engaging a technology company, then handing off the operational aspect of that relationship to an individual that does not really have full insight into the agreement, nor do they have decision making authority within their own organization.

In a successful outsourcing arrangement, the ownership of the outsourcing provider should be interviewed and evaluated as if you were actually going to add this person to your senior management staff, because you are. If the background, qualifications and personality of the ownership of your prospective provider fit your culture and your management style, and this is someone you would hire for your organization, this is a good indication that the relationship would be strong.

My company is currently working with a company that has had an up-and-down relationship with their current technology provider for years. The client is expecting the provider to recommend new technology, design new systems and provide higher level consulting services. However, when we audited the provider and the services they are providing, we discovered that they are a “break-fix” organization. Break-fix organizations primarily focus on the hardware aspect of technology, which is important, but today’s business world is about managing your technology as part of your business. This means you have to know and understand business models, budgets and objectives – not what break-fix organizations do. The client’s expectation was for a higher level of technology business consulting services and expertise on how to run a technology department around a business model. This break-fix methodology goes back to the founder of that organization – he was a technician, trained and educated on break-fix, not trained and educated on business operations and the business application of technology. The expectation of the client was not in line with the provider’s ability. The client wanted someone to design a long term strategy around the business needs and requirements in order to help the organization evaluate, implement and manage technology to meet the business goals. During our audit process we discovered that most of the dissatisfaction with their technology was simply based around expectations of service that the provider could not meet.

Discussing the expectations of service, goals and objectives, is crucial in the provider client relationship. It is also important to discuss any changes to management in the strategic direction of the company. Not engaging the provider to reset goals and objectives based on a management change will lead to the plan unraveling and the client pointing the finger at the provider. In a recent Pricewaterhouse Cooper’s report on IT outsourcing, key relationships at the top executive levels are the No. 1 critical factor for successful outsourcing. Direction and oversight of technology initiatives by senior management is critical to the overall success of outsourcing.

When you talk about expectations with your provider, you first have to ensure that you understand your own expectations and needs.

Some things to consider as part of setting your expectations:

Consolidation of Vendors

One of the biggest design flaws in systems is the lack of continuity within the technology and determining if present and future technologies will properly work together. When you are evaluating potential vendors, do you want one that can manage the entire functionality of your IT department or just one aspect?

360 Degree Management Structure

Under a total management methodology, you have to break down the functions of your IT department into manageable categories such as: project management, asset management of software, hardware assets and compliancy issues (such as licensing agreements, telecom agreements and software support agreements).

Integrated Performance Matrix

How are you measuring tasks, service requests, project management and resource management? How are you going to measure the success of your vendor? What type of insight do they provide you on their internal functions and work processes? When you get an invoice, what type of accountability and reconciliation do you have against the bill you just received? When you think of managing your IT as part of your business, not as simply a cost of doing business, these performance matrixes are critical to managing the vendor.

Continued Improvement Practices

Does your potential provider have continued improvement processes in place? How well documented are your potential providers work processes and policies? How often are they reviewed and updated? Do they have continuing education programs for their employees? What is their staffing situation, and how are they managed?

Documentation of Structure and Work Processes

Documentation of vendor processes is especially important when considering the possibility of organizational turnover and the time it takes to train new employees. Is the documentation well organized, well structured and do the people I am counting on to help me run my business all work off the same script?

Expectation management is a two-way street, you have to manage your expectations of the new vendor around the agreement, and the provider must in turn help you understand their interpretation of your agreement. It is very important that both parties are working towards common goals and objectives and that you have an open line of communication to discuss how reality compares to the expectations. This should lead to a continued improvement opportunity. In return, the client has to understand and manage their expectations about the provider’s abilities. If the client is setting unreasonable expectations in their performance matrix, that is as hard on a provider/client relationship as an underperforming provider. In turn, the provider must have resources available for your business in order to meet your goals and objectives.

One of the most common complaints I hear is, “I just don’t know what they are doing, and I have no insight into what this is costing me.” Now that you have a partner managing your technology functions, you must have insight into their activities. One of the biggest faults of many IT firms is that they speak in a language that the client does not understand. Combine that with the dynamic nature of the industry, and it means that accountability can be difficult to track and manage. What seemed quick and simple just became a long and difficult process, increasing the cost of managing your system.

What does “insight” actually mean to you? Remember how the client and the provider are supposed to be “managing” each other to a common goal? If you break down the functions of an IT department and the services they provide, how do you manage those objects? Let’s start with breaking down the functions of an IT department first, because when you break that down you will see how easy it is to let things slip through the cracks, and how hard it is to gather the useable, manageable information.

CIO Oversight

Many organizations underestimate the need for oversight and management of their IT departments. They appoint a technician as the IT manager because he is a good technician and long standing employee, thus thinking he would make a good IT manager-WRONG. A good CIO-level manager is someone who understands the technology aspect of the business as well as the business processes, budget management, strategic planning and is a forward thinker and planner. A good CIO will bring a solid methodology to your business, manage the return on investment, and bring a cohesive approach to how your business uses the many technological options that are on the market today.

End User Support

Support of the end-user environment is an important function but not the only function in successful management of your IT. The end-user support is, however, what you will hear about in meetings. The dissatisfaction of your provider regarding support will always be a topic of discussion. Understand that you will never make everyone happy – clash of personalities, clash of processes, speed of service and timing of service are always going to be issues. This is where a strong CIO can help, by documenting the corporate objectives, policies and procedures and the operation around the expectation of the provider. Many times, you will be able to respond to user complaints by acknowledging that the enforcement of the company policies which have been documented and published. Along with proper escalation processes and quality control checks, many end-user support issues should be easily and quickly resolved.

Systems and Network Management

Systems and network management are not end user support, but rather the management of the backend systems and servers.

Dealing with the SUPER TECH Myth

There is a myth I want to dispel-that is that there is one “super technician” who knows it all. We now have a security specialist, backup specialist, network engineers, desktop specialist, an internet specialist, etc.  So in your evaluation of a technology provider, evaluate how diverse their work force is, and determine how that will impact the overall management of your system and network.

Asset Management of Hardware and Software Assets

As part of technology is becoming more of a business process rather than an isolated event, proactively managing software and hardware assets has become increasingly important. These assets now can represent a significant capital expenditure on your part. How are the specifications of hardware determined? How are those assets purchased? How are those assets deployed? Then how do you track who, where and what has happened to that asset, and when is it time to lifecycle those assets out of service?

Systems Monitoring

Wouldn’t it be nice to know in advance that you are going to have downtime? Well, proactive systems monitoring is a powerful tool for your business. The mistake many organizations make is that although they are monitoring the system, nobody is listening and then no action is taken. Typically this happens because of the lack of mutual observation of the system. The provider is relying on a text message or e-mail for notification that there is an issue. You should investigate who is actually watching the system for problems and what policies and procedures are appropriate to correct them before they create an outage for your business.

Contract and Vendor Compliancy and Management

It is essential to look at how to maintain Business Software Alliance (BSA) compliancy within an organization and perform risk management assessments around compliancy issues. This is another area where a strong CIO Management Consultant can guide and ensure that you have the processes and procedures in place to manage and oversee any compliance issues related to your business.

Telecom Management

One of the biggest management issues we face is dealing with telecommunication companies – contract management, renewal, phone issues, getting service to jobsites, billing compliancy and managing the process to ensure the best rate. The market is returning to the service model for telecommunications, removing your burden of purchasing, maintaining and managing the phone system hanging on the wall in your back room or warehouse.

Management of Security and Internet Usage and Compliancy

I am still amazed at how many organizations don’t take security seriously, and how many still don’t understand that data is worth something to someone. The buying and selling of corporate data is a multi-billion dollar per year business, and if someone gets your data, there will be a buyer for it. So how do you identify, manage, mitigate and resolve security issues and events?

Project Management

The management of projects for a client is typically very frustrating. How do you track tasks, equipment orders, timelines, project team members, documentation, change orders, delays, time against cost . . .  list goes on? In choosing a potential IT partner it is important that the provider have the ability to track all these tasks, and that you have insight into those tasks. This is where documented policies and procedures come into action – if the potential provider can prove they have this process under control, then you should be happy with the results of the project.

Quality Control

As a client, what kind of quality control would you expect? How do you monitor quality of service in order to have a continued improvement process in place with your provider? When you are selecting a provider, have them walk you through their escalation processes, their quality control processes and how those translate into a continued improvement program. Every provider is going to struggle with quality of service from time to time, just like your business does, but it is the matter of how we improve and how we help each other improve that strengthens the relationship.

The process of selecting an IT provider is obviously a difficult one and should not be taken lightly. Ultimately you are looking for is a provider who can take responsibility, has the resources to manage and support your business, has a track record of proven success, along with an established methodology that will provide the tools and insight you need to manage the provider and for them to be held accountable for what they are doing. You as a business owner or manager have to determine your needs and requirements, then interview providers as if you were actually going to hire them as part of your senior management and choose the provider that closest matches your culture, your management style and demonstrates an ability to meet your business objectives.

Construction Business Owner, December 2009