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6 Tips Toward Painless Service Provider Relationships

  • Businesses of all kinds are outsourcing their WANs to managed network service providers. Several factors are driving growth in this area, including: 

    • The expectation that a service provider's economies of scale will reduce operational costs
    • The expectation that a service provider will be able to more adaptively make changes to the WAN in response to changing business needs
    • The need to access skills and experience not easily acquired and retained in-house
    • Broader IT outsourcing strategies intended to keep in-house staff more focused on core business imperatives than on general technology operations
    • A quest for better network performance that will contribute to improvements in both the digital customer experience and internal end-user productivity.

    While these may theoretically be perfectly good reasons to engage a managed network service provider, the reality is a bit less simple. All service providers are not alike -- so network decision makers have to carefully evaluate any potential partner. And a successful service provider engagement doesn't just depend on a careful evaluation upfront. Even a relationship with a great partner can go south if you don't manage it correctly. 

    Here, then, are six practical tips -- based on the hard-learned lessons of companies that didn't apply them -- for making sure that you build and maintain a successful long-term relationship with the right network service provider.

    (Cover image: anadaBGD/iStockphoto)

  • Tip 1: Look inward.

    Perhaps the most common problem that arises in service provider relationship is IT's own failure to have the right discussion with the business first. After all, the whole point hiring a service provider is to better support the business. So it's only logical to make sure you fully understand business goals -- including any long-term plans or strategies -- before forming a relationship with a service provider that also has to work over the long term.

    Key questions to ask include:

    • Are there any plans in the works for geographic expansion?
    • Does the corporate strategy include M&A or the selling off of any business units?
    • Is there a possibility of increased telework due to new HR policies, the shifting of some positions from employees to contractors, or other factors?

    By asking questions like these, IT can avoid a variety of potentially big mistakes -- such as contracting with a service provider who can't offer the right footprint or remote access services.

    (Image: SoumenNath/iStockphoto)

  • Tip 2: Agree on SLA metrics

    Service level agreements (SLAs) are obviously important in any service provider contract. Vendors have to be accountable for fulfilling the terms of their agreements. Those terms, therefore, must be clearly defined -- whether they relate to the performance and availability of the network itself or to operational response times to trouble tickets and change requests.

    But what people often forget to clearly define is how exactly those SLA metrics will be measured. Will you measure response times, for example, by your own records or the service provider's own internal ticketing system? And will the service provider self-report on network link performance -- or will you use your own probes to keep tabs on packet behaviors?

    Some buyers of managed services think they're being clever by allowing service providers to self-report, while they capture their own data to "keep the provider honest." This kind of clandestine monitoring, however, can be a bad move -- and will eventually make the relationship much more adversarial than it ought to be.

    A better approach is to openly and explicitly agree on the best way to capture and report on SLA metrics up front. That way, everyone can work from a single version of the truth and avoid having technical problems escalate into squabbles over personal integrity.

  • Tip 3: Formulate appropriate SLA disincentives and incentives

    In addition to agreeing on SLA metrics, service providers and their customers have to agree on what happens if those metrics aren't met.

    Here is where things can get tricky, because the two parties obviously have very different agendas. Service providers don't want to pay too high a price for being less than perfect. IT buyers, on the other hand, want to establish strong disincentives for failing to fulfill much-needed performance and response-time goals.

    Two basic principles can help both parties over the long term:

    Disincentives: Any penalty a service provider pays for failing to meet SLAs should be based on actual business impact, rather than being purely punitive. They should also be proportional to the cost of the service. In other words, it's hard to support the argument that your service provider should compensate you at the rate of a million dollars an hour for downtime (because that's how much revenue you're claiming it would cost you) when you're only paying a thousand dollars per hour of uptime. Disincentives must thus be crafted to appropriately defray business impact. They cannot provide complete indemnification for a severe outage. Nor can contractual penalties offer a complete substitute for actual legal redress of contractual noncompliance.

    Incentives: Service providers' customers often think purely in terms of punishing non-compliance, rather than also rewarding exceptional performance. But partnerships work better if they include positive reinforcement as well as negative. That's why it's a good idea to structure your contract to leave room for bonuses for performance that exceeds baseline expectations.

  • Tip 4: Establish a contract change process

    Technical people often think about changes to the network in strictly technical terms. But engagement with a service provider abstracts that technical process into a contractual one.

    And there's the rub. Sometimes the bureaucratic processes required to modify an existing contract are slower and more complex than the provisioning of a few VPN connections. So before you sign anything, conversations about change management should happen between purchasing and legal, as well as between IT and service provider technical staffs.

    And those conversations shouldn't just be about adding services. Agility often entails reducing certain services as well. The possibility of such reductions should therefore also be part of the upfront negotiation.

  • Tip 5: Drill down into vendor relationships

    When it comes down to it, networks really belong to equipment vendors, not service providers. Sure, service providers configure and operate that equipment. But the capabilities and quality of the network are ultimately bounded by its constituent technologies.

    That's why it's essential to both understand what technologies a service provider is using -- and, perhaps even more importantly -- the nature of the relationship between the service provider and the vendors of those technologies.

    It's pretty easy for a service provider to cite vendor certifications. Those certifications simply require that some members of their technical staff go through requisite training. A service provider's ability to meet your needs over the long term, though, is contingent on understanding the technology roadmaps of their vendors of choice.

    Evaluating a service provider should thus include a review of their track record implementing new technologies, as well as their participation in vendor ecosystem activities such as advisory councils or beta programs.

  • Tip 6: Consider culture

    Because they deal so much in "speeds and feeds," technology decision makers often discount business culture. But this can be a real mistake when it comes to selecting a service provider. Yes, a service provider has to be able to reliably deliver the right amount of bandwidth with the right QoS controls and the right encryption. Over time, however, a service provider relationship involves much more than technical execution. Problems have to be collaboratively resolved. New applications have to be accommodated. Plans must be formulated to better support an evolving business while controlling costs.

    This kind of partnership requires a true cultural fit. A button-down service provider whose account management culture has been groomed to support large financial institutions will probably have trouble speaking the same language as a startup e-tailer intent on building a strong social brand. Similarly, a service provider catering to greenfield cloud-first IT organizations may not be as sensitive to the needs of a highly regulated business like healthcare.

    So don't focus exclusively on technical execution and deliverables. Get a feel for how any prospective service provider manages its own business and treats its own people. Those cultural attributes could spell the difference between a successful long-term relationship and one that you have to jettison as soon as the going gets tough.

    (Image: Orla/iStockphoto)