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Recession Service Management: Talking about money at the service delivery level

By on March 5, 2009 in Uncategorized

In this economically challenging time, I’m finding that my clients’ service delivery managers are on the front lines having difficult discussions. Their companies are asking for base services from their service providers to be maintained, often with smaller overall services budgets than before the recession hit. These reduced budgets make conversations with service providers painful and become a challenge at the service delivery level when providers simply refuse to deliver the base contracted services.

This is where a strong governance process really helps the service delivery team. These people often will try to take the burden of negotiating these matters into their own hands – though they shouldn’t. While I think that issues should be solved at the correct level, matters of policy or basic service delivery simply can’t be negotiated outside of an executive process. My advice to teams with this kind of problem is to escalate and refuse to engage in the discussion with their service provider counterparts. It’s not a failure to ask for help. To maintain a good outsourcing relationship it is essential to have a governance escalation path that everyone understands, provides clear lines of decision-making and authority, and is immediately responsive to problems.

How do you deal with this in your world? Can your service delivery team get immediate escalation for these types of problems? Are you seeing this discussion in your relationship? I’d love to hear how you are solving the problem, and in a day or so I will talk some more about the challenges of the service delivery team, and how companies I work with are meeting the need to continuously growing their ability and knowledge about good outsourcing management practice.

Cynthia Batty

About Cynthia Batty

Cynthia Batty is the U.S. lead for the ISG transformation market area, and a leader in the Organization & Operations practice. She brings 20 years of practical experience to advise clients on their sourcing governance and service management design, as well as organizational change management and maturity development. She is a recognized expert in sourcing governance, vendor and contract management. She has helped more than 40 governance organizations with business management and service management processes in both single-provider and multi-provider environments. Twitter: @CynthiaBatty Email: Cynthia.Batty@isg-one.com
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  • Chris Gallivan

    Cynthia, we have recently taken your advice and have engaged our executive management in a more formal escalation process, but to be honest, progress is slow. Due to the number of issues that have piled up, escalation has become a full time job for our execs. Our governance front line managers are still spending so much time trying to diffuse relationship issues, that continuous improvement activities are getting put on the back burner. Ironically, these improvement activities are critical to improving the health of the relationship. I look forward to your suggestions on how we can better approach these situations.

  • Eric Drescher

    Cynthia, as you know we’ve implemented a governance process that includes deliver oversight at the service delivery management level as well as at the Sr. management levels. We’ve also included escalation paths for critical, time sensitive issues to both the Operational Sr. management level as well as the Sourcing and Contracting Sr. management level. I believe that the ongoing oversight at these various levels along with the escalation paths we’ve defined have put us in a better position to manage the relationships with our suppliers

  • Cynthia Batty

    It’s never too late to create (or reinvigorate) an issue managment process. As Chris notes, when issues back up and go unresolved, it can really get in the way of the relationship. I have seen situations where clients have left issues sitting for years, only to have them erupt into emotional actions that work against their own interest and damage the relationship – even when the issues are due to the service provider’s failure to perform. It points to the need for balance, timeliness, and attention from the executive to what is happening across the relationship.
    Clients sometimes think about governance metrics a little backwards, thinking that fewer issues indicate a better relationship. Show me a relationship that has few issues, and in all likelihood I can show you a relationship with festering issues. The more issues are documented and resolved, the healthier the relationship. This may mean a long issues list that is worked on together over time, but it ensures everyone knows what is happening and where the responsibility lies to correct problems – which, by the way, is not always on the service provider’s side.