4.9 A Vendor Management Implementation Strategy

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I was hired as a program manager for a company that was negotiating a contract to provide vendor management services for a large customer. This customer had a division that managed the delivery of approximately 2-dozen communications services to internal users. These services included:

Voice (private branch exchange [PBX], long-distance, teleconferencing)
Video conferencing
Data circuits
Telex (wire transfers)

Internal groups delivered some of these services, whereas others were outsourced. Within this context, the term "vendor management" referred to the end-to-end process of:

Taking internal customer orders for any of these services
Placing orders with the appropriate service providers
Validating invoices against purchase orders
Processing approved invoices for payment
Assigning invoice costs to the user cost centers for cost recovery purposes

The key reason this customer was negotiating with the company I represented was to automate these procedures. The legacy processes were either manual or faced obsolescence issues, not the least of which was the pending Y2K rollover. The intended benefits of this project were to:

Reduce error through the application of Six Sigma.
Reduce order fulfillment time.
Make all order status and fulfillment reports available on an internal Web site.
Streamline the cost recovery process.

Soon after my engagement, my company was awarded the contract after a highly competitive RFP process. The two parties signed a letter of intent. Negotiations over the statement of work were about 25 percent complete. That document would contain all of the requirements and many detailed specifications as well. Once the technologists, business process owners and lawyers had signed off, the document was approximately 200 pages long. Completing this document took 3 months. While it was emerging, I developed the operating model for our target state, which included a call center and a staff of 75 split between two locations. The main location was proximate to the customer, while the other location was 300 miles away. This second location would also contain our disaster recovery site for the midrange and Wintel servers that provided the technology support for this endeavor.

In the following "rolled-up" implementation strategy, my company is referred to as "vendor." The customer is designated as such.

4.9.1 Facilities

The vendor shall retrofit two sites to support this contract. One site will be the main call and data center. It will be located within ten miles of the customer headquarters location, and contain the bulk of the support staff and technology. A secondary site will be located at the vendor headquarters and will contain the telecommunications vendor management group. It will also serve as the disaster recovery site for the vendor's main data center. Construction fit out will commence immediately and be complete within 60 days. The two data center designs will be complete in 60 days as well, and will be operational from an infrastructure perspective within 6 months. Disaster recovery testing shall occur at the beginning of the seventh month. Both centers will be fully staffed and operational at the end of 9 months.

4.9.2 Operations

An organizational chart and operations work flow will be submitted to the vendor's internal management for approval within 2 weeks. ^[5] This will delineate how scope will be honored from a staffing perspective. Once the vendor's management, including human resources (HR), has approved the model and operating budget, the chart will be submitted to the customer as a courtesy even though the customer does not have approval rights over the vendor's staffing model. HR will commence hiring staff and developing operating procedures as per the contracted statement of work. The vendor's program manager has also submitted requisitions to augment existing staff for project management and support, programming, network design, etc. Candidates for key positions are identified and will be hired upon management approval.

4.9.3 Technology

Based on the work invested in the original RFP response, the technology design is nearly complete, with some computing, network, and software components already in development, if not near completion. The missing design elements are subject to statement of work negotiations, but are detailed in nature instead of strategic, so technology work can proceed. Purchase orders for the baseline technology, including systems, communications devices, software, and consulting services have been prepared, and supplier negotiations are under way.

A service bureau has been identified and negotiations are under way to subcontract the call detail reporting component of the statement of work to them. This will greatly minimize the technology investment required of the vendor. This contract should be in place within 90 days. Initial testing of their deliverables is scheduled for the beginning of month seven, with user acceptance testing (UAT) later that month, and production cutover immediately thereafter.

The vendor is tasked with putting up two Web sites. The procurement site is still under requirements discussions with the customer. That should be completed by the end of month two. The initial customer test is scheduled for month six, UAT in month eight, and turn up into production at the end of month nine, as per contract.

The other Web site to be built will provide cost charge back history viewable by cost center, organizational roll-ups, and technology service type (e.g., voice, telex charges). It shall be completed by month five after internal development. Customer UAT is scheduled in month six, with final production scheduled for month eight.

The manner and means by which the system shall interact with the five key suppliers needs additional research and design, after consultation with these suppliers. While the ultimate goal is the utilization of an automatic order processing service, such as an electronic data interchange (EDI) service bureau, with the emergence of eXtensible Markup Language (XML) as a future Web-based data exchange technology, it is likely that automation will be deferred until year three of the contract. This decision will be made within 60 days, with appropriate staffing and technology plans laid out for the course of the contract to ensure that service level agreements (SLAs) are met and maintained within the contract budget, with the likelihood that the technology in this area will be phased in as it matures and is integrated into the vendor's base technology.

4.9.4 Customer-Facing Processes

Because differences exist among the 75 customer sites regarding the use of certain suppliers and legacy procurement procedures, some manual work is envisioned as the customer becomes aligned with the output of this project, and consolidates its supplier relationships in terms of coverage, cost, and service levels, all of which remain the customer's responsibility. The status of this aspect of the implementation, and its potential impact on staffing, technology, and budget, will be reviewed with management from the customer and vendor sides every 90 days.

This was an incredibly complicated project. It featured multiple customers and beneficiaries, too many technology issues, and a few challenges too obscure or painful to recollect. The implementation strategy, however, was sound despite the uphill challenges buried under some of the more optimistic statements it contained. Not the least of these were a general timescale, and the frank admission of unknowns, although they were assigned checkpoint or resolution dates.

Keep this project in mind. It will resurface in Chapter 6 when we get to the equally challenging project management task, which is the development of a truthful but useful project schedule.

^[5]This vendor was a small company capable of such decisions after a single meeting.

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