How to tame suppliers

Tough IT director John Yard gives his tips on managing outsourcing deals. Tony Collins reports

Tough IT director John Yard gives his tips on managing outsourcing deals. Tony Collins reports

IT suppliers must get real, and stop making ridiculous promises of delivery dates that are not going to be met. This was one of a series of messages to suppliers last week from one of the UK's leading IT executives, John Yard.

As director of business services at Inland Revenue, Yard manages contracts worth £2.5bn with US suppliers EDS and Accenture.

He was an architect of one of the Government's biggest outsourcing IT deals when Inland Revenue contracted out about 2,000 IT staff to EDS in a 10-year contract in 1994. More recently he also took on Accenture's £145m contract to run the national insurance contributions system, Nirs2. A former tax inspector, Yard became IT director at the Revenue in 1993.

Last week he revealed to the supplier trade association the Computing Services Software Association (CSSA) the lessons he has learned managing suppliers.

"'Get real' would be my message," said Yard when asked for his top tip to suppliers who are involved in a long-term relationship with a particular customer.

The other tips he gave to users and suppliers who manage major contracts were:

There is a false assumption that the word partnership solves everything.
"Partnership is not a cosy relationship. It depends on trust and trust has to be earned. Saying that we trust each other is no good. You have to see [trust] in the light of things that happen."

Don't nod like a dog on the back seat of a car even if you don't understand what is being said.
"I have found time and again that at the beginning of relationships when I think somebody is nodding and understanding what I say, they are probably not. Now I find it pays to say, 'Tell me what my problem is. Say it back to me, not using my words, but tell it to me in your language.' Quite often I have realised that they have not understood my problem."

Don't put the contract in the drawer. This would be a huge mistake.
"The contract sets the framework for what you want to do. It sounds boring and bureaucratic but it is the way you keep control."

Tackle personality clashes straight away.
"Chemistry between top people on both sides is absolutely essential. If it is wrong, change the people, not taking ages to do it but on the day. Take them out because it is people that make these relationships work."

Suppliers must be realistic about problems to come.
"People start from glossy information and nobody comes out and says, 'You know there are going to be problems, don't you John?'" Any supplier who talks about problems to come is showing a welcome realism, said Yard.

At the point of starting the contract, manage expectations.
"Typically the user community will say, 'We are jolly glad the IT is being outsourced, we are fed up with the in-house service. It is always going down.' The supplier comes along and says, 'We are wondermen. We can do it totally different for you and we can make it better.' Their service is often hyped up at some hotel like this [The Savoy] and that is before day one, or day 10, when perhaps the system starts to go down. It is important that the supplier community gets real and talks about what can and cannot be done."

If there has been no dramatic change after six months
"One of the things we did in the early days of the deal with EDS was to ask after six months, 'Is this [contract] delivering the ground-breaking sort of changes that we were looking for at that stage,' and the answer was 'no'." So the Revenue called in an outside facilitator, like a marriage guidance counsellor, to find out each side's grievances.

EDS said Revenue staff were bureaucrats who were not focused on delivery and worried about covering their backs when anything went wrong.

Revenue staff complained that EDS was "money-grabbing" and trying to improve the terms of its original contract. "Then we came up with 12 things we needed to focus on," said Yard, "Things that would not be dealt with if we just did what was needed each day." Executives at EDS and the Revenue were then appointed to own each of the 12 problems and solve them -and were paid bonuses if they succeeded.

The biggest challenge of managing a big contract is dealing with your board.
"Everyone thinks the difficulty is managing the supplier. The board has to be managed because you may want to pay more money to the supplier to get your business running the way you want."

We cannot issue to suppliers a clear requirement.
"I know loads of suppliers who will say to me, 'Tell us your requirement and we will do it for you in six months.' But I am not in that business. I will not be able to give you that clarity. Tell me how you are going to deliver a requirement that is changing."

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