Today we start a new series on agile IT supplier management. Agile Supplier Management? Isn't supplier management a dust-dry topic with endless contract negotiations, which has exactly zero to do with agility? Our guest blogger Marcel Teichert, himself IT Supplier Manager at a global corporation, will explain in this and the next articles how he believes IT Supplier Management can also benefit from agile approaches.
We would like to ask you to make use of the comment function in this series even more than in the other series and to discuss the approaches with Marcel and us.
In this first article, Marcel will outline the basic phases of IT Supplier Management in order to create a common understanding for the discussion of agile approaches in the next articles.
Have fun with it!
What is IT Supplier Management?
IT Supplier Management concludes and manages IT Supplier contracts. Suppliers are IT service suppliers for e.g. IT infrastructure, IT hardware or software (here not the manufacturer is meant) and services. The Supplier Manager acts as integrator and coordinator. He has the most important internal interfaces to the legal department (attorneys and lawyers), to the contract manager (who processes the formal contracts), to the purchasing / financial management (official assignments and operation of the internal accounting processes) and to the respective department.
The core tasks of supplier management can be divided into the following elementary phases: Tender, transition, contact period and exit / renawal.
In the tender phase, information packages about the sourcing project are sent to a selection of potential suppliers with the request to make a corresponding first offer. If the supplier is basically interested in this tender, he reacts with a rough solution design and a price indication. These interested suppliers (the group of suppliers is called "long list") are then evaluated according to general criteria. In order to start specific negotiations, usually the best 4 suppliers (called "short list") are selected. This selection is then used to conduct detailed negotiations, exchange information and hold technical discussions. After these discussions, these suppliers are reassessed and the final contract is negotiated with the best, usually 2, suppliers. In this last part of the tender, the supplier is fully informed of all necessary and critical technical information in detailed form (due diligence) and evaluates the information to make a critical and binding commitment to feasibility. After all content details have been clarified, the remaining suppliers submit a final binding offer (BAFO: best and final offer). The contract with the most suitable supplier is then signed on both sides.
In the transition, the contractually agreed services are handed over to the supplier. This includes the professional and technical contents as well as the processes, if these are contents of the contract. Each supplier must be integrated into the existing organization to varying degrees. This includes organizational and mostly technical interfaces as well as service transfer points. This phase is controlled as a project. Supplier Management assumes tasks and responsibilities in the areas of governance, SLA, reporting, financials and contracts.
During the term of the contract, Supplier Management ensures both the mutual delivery of the contractually agreed services and compliance with the rules and structures (e.g. governance and its committees). Service levels and key performance indicators are an important control element. The monthly Service Level Report is accepted by Supplier Management and transferred to Service Management for further processing. Technical cooperation takes place at the operational level.
Exit / Renewal
The conditions for the termination of a contract are contractually regulated, whether extraordinary (premature or partial) or ordinary termination. As long as the supplier service is required by IT or directly by the business, the service provision must be planned and regulated after the contract term. Such a strategic decision is usually made by top management and implemented by supplier management. This means that a new bid invitation is carried out parallel to the completion if the service is still required. No matter whether final processing or transfer to another supplier or even insourcing, these measures are managed as a transition project.
These are the core tasks of Supplier Management. In the next article we would like to discuss with you whether and how these activities can be done in an agile way, what that means and what added value it brings. If you have any further hints, experiences or questions regarding Supplier Management, please let us know in the comments...