Multiple Vendor Strategy

Why Multi Vendor Strategy

Here are some reasons why you do not have a choice but to adapt.

• Information provisioning requirements from different business groups within an organization are drifting apart and are getting more specific by the day.
• Explosive growth and cost control needs, do not really complement each other. Organizations are pressed to reuse existing components of their IT landscape (modernizing legacy apps). Bring in shared services on a pay-per-use dynamic infrastructure (SaaS).
• Previously a simple functionality fulfilled by a single application is now more disparate and is supported by different resources and technologies, in other words the number of resources required to develop, maintain and manage an application has greatly increased. (consequently increased not only the need for multiple vendors but also the need for specialists.)
• The traditional division of roles between application development and maintenance is blurred, taking a step further back between application and infrastructure management is also blurred, with increased use of standard components, shared services and platform. (the bell curve continues to take shape with this hybrid at its pivot, however today 2013 both ends of this spectrum still exists.

These are compelling trends that point to organizations being more beneficial with a supplier constellation.

Vendor Categories in the Market

Here are the major categories vendors can be grouped into today.

• Integrators - offer a multi vendor management platform that combines services provided by other 3rd party vendors to create a functional whole.
• Specialized product development or service provisioning vendor (forming part of this whole), the requirements are provided by the client/integrator and the product/service is tailored to those requirements.
• Standard product or service vendor, (used by many organizations).
• Producer of configurable platforms such as SAP, Oracle, other packages, that are used and configured either by self or by 3rd parties.
• 3rd party vendors who configure and maintain such platforms for organizations with or without association with other services or with underlying infrastructure.
• Dedicated vendors, who provide custom services to an individual customer.

and everything in-between.

Big vendors with global operations dabble in more than one group today and unless the client asks all the right questions and has a clearly defined strategy, it is very easy to end up in the wrong model and with the wrong partner. For example:

Harmonization and standardization of service delivery chain is a popular pitch among vendors, one of the top benefits is maximum control and with control comes complexity,  internal overheads for managing and deploying this design to every vendor and every time they change. At the same time the vendors will not be excited about abandoning their cost effective leveraged model to a dedicated silo's adopting client processes, also the client being the designer the onus on results shifts to clients and the accountability on vendors diminishes.

The benefits of the most common and less controlled alternative, where the vendor is treated like a black box, interested only in the output, interfaces and SLAs is that, it allows vendors to be more flexible in pricing and provisioning, flexibility in design than an all encompassing standardized process will ever provide. Over the years the model has matured to easily overcome an old issue related to vendor lock-in, which makes switching vendors almost effortless.

Depending on the clients business, operations model, benefits of one can easily outweigh the other, in all - it is a worthy assessment to conduct to determine the best step forward.

What makes an Operational Integrator click.

Traditionally, the vendor with the highest TCV and broader scope took on the integrator role, this method has its inherent benefits, but it is important to realize at a very fundamental level all vendors are financially motivated to get the highest possible fee for the least amount of work. Vendors focus on their scope and are diligent in defining what they are and are not responsible for, this turf protection inadvertently leads to passing blame.

When clients tried to manage it themselves, it often lead to eventual in-sourcing or with a broken cost case with high overheads to manage.

A more modern solution is to get integration on an independent contract and provide incentive to build bridges and take responsibilities for issues that are not their own. It is not easy to get competing vendors to play nice, but a well laid plan which calls out every vendors contracted responsibilities to facilitate integration and forces their hand to take joint responsibilities is the quintessential step forward.

Building blocks of an integrator:

• Contractual language on how each vendor will interact and collaborate when issues arise.
• Pain share model with SLAs that span end to end transactions involving multiple providers. All service providers are penalized when a SLA is breached. (This is practical using a risk-share model)
• Clear documentation on key processes and interaction points, which help define the collaboration and integration details.
• Run mode has a governance forum that meets at regular intervals and collectively analyzes process performance and improvements.
• A collaboration platform that includes a bridged ticketing tool, knowledge base, reporting tool, dashboard, a self help portal and other necessary means to provide a united front for all vendors, enabling a common user to run his show with zero downtime.