Thought Leadership
Improving Service Provider/Contractor Effectiveness to Drive Greater Organizational Value
Introduction
In many IT organizations, the vast majority of service delivery is performed by external providers, or contractors, who are responsible for a variety of services, from help desk support and cloud service management to application development and platform support. When relying heavily on contractors for service delivery organizations can greatly improve their own performance when they are able to enhance the performance and value from these external partnerships. This white paper explores the strategic management of contractors, providing ideas for improving contractor engagement from the initial selection phase to the execution and management phases, improving their contribution to the organization and its own outcomes.
Pre-Award Techniques
During the acquisition phase, organizations can improve eventual contractor delivery using three specific techniques as summarized below.
1. Emphasis on Resource Quality
Selecting the right resources is critical in setting the stage for service success. During selection, organizations must prioritize and evaluate the intrinsic qualities and skills of specifically proposed contractor personnel over their past achievements or reputations. Past performance, while helpful, is often only valuable when the exact same resource team responsible for the past performance is being proposed. This shift towards a competency-based evaluation focuses on the ability of contractors to meet specific project demands effectively. By aligning contractor capabilities with the organization’s requirements, organizations can significantly mitigate risks associated with under performance by lower quality resources.
2. Delivery Format
The strategic selection of contractor delivery structures based on the nature of the underlying work ensures efficiency and effectiveness. For operational tasks that are routine and commoditized, staff augmentation is often suitable as it allows for flexibility and direct control over workflow without compromising the quality of the output. Alternatively, efforts requiring specialized knowledge or those that are high in complexity should leverage consulting service approaches, where expert advisors provide strategic insights and innovative solutions. The use of the wrong delivery format for the nature of the requirement is often why service costs are higher than necessary or why services are not being delivered effectively due to lower than required resource skill quality.
3. Selection Evaluation Techniques
Evaluation techniques such as conducting oral presentations and real-time problem-solving sessions with proposed personnel during the contractor selection process often provide deep insights into their true practical abilities and creative thinking. These methods allow decision-makers to observe firsthand how potential contractors approach problems, think on their feet, and interact in team settings. Such interactive evaluations are crucial for assessing the true readiness of contractors to handle the specific challenges they will face during service or project execution.
Post-Award Techniques
Post-Award, organizations can directly improve service delivery and its quality using additional techniques as summarized below.
1. Contract Management
The role of the Contract Manager, or Contracting Officer Representative (COR) represents the "‘CEO’ or ‘CIO’ of the contract - which involves more than just routine contract administration. This role requires a proactive approach to contract leadership and strategic decision-making. Effective leadership in contractor management includes setting clear expectations, fostering open communication, and driving the team towards common goals.
2. Resource Management
Managing resources post-award is absolutely critical for maintaining project momentum and ensuring alignment with strategic goals. Effective resource management strategies include careful monitoring of resource performance, timely adjustments to team composition, and strategic resource graduation—where resources are thoughtfully advanced or replaced based on their performance and service/project evolution. These practices help maintain a high level of effectiveness and adaptability, crucial for dynamic project environments and keeping the best resources on the team.
3. Outcome Measurement
Embedding a rigorous benefits realization process throughout the service lifecycle is essential for measuring the impact of contractors on service or project outcomes. This process involves regular assessments of whether the contractors' activities are truly driving the expected benefits, followed by adjustments to strategies based on these insights. Effective outcome measurement helps organizations achieve not just project deliverables but also broader business impacts, enhancing the value derived from contractor engagements.
4. Continuous Improvement
Embedding continuous improvement in contracts as explicit scope and in the organization’s own contractor management practices is vital for adapting to evolving environments and service/project requirements. In addition to requiring the provider/contractor’s to engage in continuous improvement, organizations should regularly review and update their own contractor management strategies, incorporating lessons learned from past contracts and aligning them with current leading practices. This ongoing refinement process ensures that contractor management remains efficient, effective, and aligned with the organization's long-term strategic goals.
Summary
There are no shortage of mechanisms for improving contractor performance across all contract phases, from pre-award considerations to post-award management and advanced strategic initiatives. By implementing one or more approaches, organizations can ensure that their contractor engagements are well-managed, aligned with strategic goals, and capable of delivering superior value.