Perfecting Service Management

Issue #49

Tuesday, July 20, 2004

Amateur or Professional – Because the Contract Says, Make It So?
by Craig Bailey

How many times, as a service professional, have you been put in the position of fulfilling on a customer contract that included unreasonable terms? Terms that set both you and the customer up for ultimate failure. How you handle this situation will determine if you are an amateur or professional.

The (real-life) scenario: A contract is written such that your company, a Managed Services Provider (MSP), owns the customer's internal IT software change management process governing multiple software development teams' use of the hosted server environment that your company manages. During the initial implementation meetings with the customer, the service team is repeatedly asked "what is the status of our change management process?" The service team, totally disoriented with this request, continues to provide non-committal responses and ineffective updates as they flounder with this contract requirement. The customer can't take it anymore and escalates to management (you).

Upon review of the situation, and contract, it is clear that this specific item in the contract does not serve the best interests of the client or the MSP. As such, a conversation needs to take place to renegotiate this particular term. On comes the suit, and it's off on a plane to visit the customer.

In my case, the approach taken for the customer meeting went like this…

I requested a meeting with 2 key client personnel: the project leader that we interact with on a daily basis (below the power-line) and the business manager responsible for the outcome of this relationship (above the power-line) – recall the 4 quadrants?

I met with the project point person first to learn more about what she was trying to accomplish, her approach and assumptions based on the contract. I learned that she was simply trying to operate within the bounds of the contract, holding our feet to the fire, regardless of it being reasonable or not.

I subsequently met with the business manager who was responsible for the (business) outcome of this project and relationship. My lead-off comments were that of acknowledging the contract as something that smart people at both of our firms put together. However, neither of us were part of that process. I then pointed out a particular term that was troublesome for both of us, apologizing on behalf of our company. I indicated that, while this is a contracted term, we need to change it or we can look forward to mutual failure, which is something that neither of us wanted. The client readily agreed.

We then went back to the client's project leader to indicate that she needed to develop and facilitate their change management process for their internal resources. My service team subsequently got back to doing what they do best, NOT trying to wrestle with contracted terms that are not in our area of expertise or best interest.

Key learnings and principles:

  • Just because the contract says it, does not make it right.
  • If the contract does not support a mutually beneficial / successful relationship, renegotiate terms.
  • Go "up the food chain" above the power-line to resolve these issues.

The next edition of our newsletter will share additional scenarios of "amateur or professional."

View previous articles in this series.

Exploring Outsourcing: Oral Interviews
by Kurt Jensen

So far in this series on Outsourcing, we have discussed the importance of creating a clear and concise RFP and presented strategies for narrowing the list of vendors to proceed to the next stage. In this article, we cover that next stage: Oral Interviews.

Oral interviews allow you to gain a better understanding of respondent capabilities and commitment. Participants for oral interviews are invited based on the outcomes of each previous point of evaluation. The stakes are considerably higher at this point, and closely managing the process is important. High level examples of challenges to be aware of include:

Vendor costs – Up to this point, vendors have spent considerable time and effort developing their RFP response. However, now they are being required to pay for business travel (airfare, hotel, ground transportation, etc.) which adds up quickly.

Internal Coordination – Certain decision makers or subject matter experts need to have their schedules coordinated in order to attend all presentations or facets of each, relative to their area of expertise.

Hierarchal Consensus – In a previous newsletter article, we touched upon the importance of high-level and cross-functional consensus. If a vendor was eliminated prior to oral interviews, you will find out at this step if they are connected and if there was true hierarchal and cross-functional consensus ("bring them in anyway').

Managing the Oral Interview Process

Similar to previous steps, managing the oral interview process has several key points:

Agenda – It is important to provide all participants an agenda. It sets expectations for the allotted time period and allows all participants to prepare.

Vendor Preparation – Providing vendors an advanced list of questions is important. This list can establish the focus and direction of the presentation toward those areas either not covered in the RFP or which are of greatest concern/interest. A few examples of important areas to spend time covering are as follows:

  • Similar Industry Engagements – Does the vendor currently service similar outsourcing requirements?
  • System integration – How does the vendor manage the integration process?
  • Communication Channels – What type of communication channels are being offered?
  • Quality Control – How is quality measured and managed?
  • Branding – If branding is required, how do agents know how to brand the contact?

Group Discussion – It is extremely important to follow a vendor presentation with an immediate internal discussion. The owner of the process should take notes and press participants for their thoughts and ultimately a ranking of the vendor as compared to other participants.

The result of the Oral Interview step is the further elimination (or selection) of vendors with whom you will begin to negotiate a contract. For vendors who have made it this far in the process, it is important to provide realistic expectations regarding the likelihood of obtaining your business. While these conversations can be difficult, they are usually appreciated and may serve you later if negotiations break down with the primary selection.

Contact us if you would like to share outsourcing or RFP experience. If you are thinking about outsourcing, we can help you manage the process, while you focus on your business!

View previous articles in this series.


+ Amateur or Professional
+ Exploring Outsourcing
+ Recommended Reading
+ Benchmark Survey

+ Speaking Engagements


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Recommended Reading
Jason Compton's article "The Challenge of Retaining Customers" in CRM Magazine presents a study of loyalty programs and customer satisfaction. The study examined factors affecting customer loyalty in 3 industries: telecommunications, retail, and financial services. The study's conclusion: "loyalty programs can provide insight, but can't buy loyalty."

Benchmark Survey
A big "thank you" to all of you who participated in our recent, first annual Customer Service and Delivery benchmarking survey. We are currently processing all of the responses and preparing the summary report. The report will be distributed in the next couple weeks to those of you submitted responses and included an email address. In addition, we will be contacting 10 randomly-selected respondents to receive their choice of CCI apparel.

Speaking Engagements
Need more help with Managing the Enterprise Customer Relationship? Customer Centricity has been delivering presentations on this topic to interested organizations. Contact us if you would like a presentation tailored and delivered to your company.

About Customer Centricity, Inc.
We strengthen overall company performance through better service delivery and management.

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In short, we align the resources of your organization to exceed your customers' expectations in the most effective and efficient manner possible.

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