"Lawyers and contracts are part of the problem," Alistair Maughan, partner with world leading technology law firm Morrison & Foerster and CIO columnist, told members of the CIO Plus community at the second members only event. The supplier management masterclass saw 14 CIOs from major pharmaceutical, engineering, leisure, construction organisations as well as the NHS, charity and business services discuss frankly how they manage their key strategic technology providers.
Maughan has been a leading technology lawyer in London for 25 years, a partner with MoFo for the last decade and an author on CIO UK since 2010. His full archive of articles that cover the legal aspects of the CIO role can be found here.
"The vendors have changed, initially when I began writing for CIO I was very involved in dealing with big vendors and major deals, now with cloud computing and system integrators (SI) contracts and supplier management has gone back to where it was when I began as a lawyer," Maughan reflected on the current vendor market.
A great deal of the debate focused on the value and usage of contracts and the service level agreements (SLAs) within those agreements.
"It can be a very adversarial relationship," he said. "Work towards a level of continuity. A lot of the problems with a business change project come from other areas of the organisation and it is the vendor management relationship that cops the flack," he said in relation to mission creep and poor requirements that inhibit change management. Maughan's comments reflect perfectly the points made by fellow columnist Jerry Fishenden that too often organisation and the public sector in particular layer a new technology on top of old and outdated processes, rather than thinking of a new and more efficient process that uses the strengths of technology to deliver change.
Maughan has worked with major Whitehall departments including HMRC and the Department for Work and Pensions, including work on the HMRC Aspire outsourcing contract that CIO reported recently is to the worth of £813 million a year.
"There is no desire to accept risk in the public sector," he said describing the excessive levels of oversight that can exist with government contracts.
"A classic case of a deal done the wrong way is the NHS National Programme for IT (NPfIT). Aspire has elastic sides so the scope of the project grows like topsey," Maughan said, but other than this costly disaster the lawyer sees no real evidence for deals done on the golf course or as a result of nepotism, which reinforced the evidence that programmes fail because of wider cultural problem.
"Failure can start with picking the wrong vendor, but late changes are a particular problem and public sector contracts are susceptible to late changes because they are organisations led by politicians and politicians are experts at the late change," Maughan says.
"Get the right balance for the process engineering, spot what can be dealt with on a case by case basis," Maughan said of examples of rare and unique cases being added to the requirements of an application integration when it would have been more cost effective for the client to create a manual work around rare examples of disruption to their service.
Of particular interest to all the 14 attendees was today's multi-vendor environment that CIOs have created to deliver more innovation to organisations and the complexity this creates in vendor management.
"I am seeing issues in the multi-vendor environment now, and it is for CIOs to work out how to create an eco-system that is mutually beneficial to the vendors and your organisation." The attending CIOs shared a variety of experiences and best practices such as insisting on being a reference case for their vertical market, selecting the vendor account manager themselves, paying the account manager's bonus/commission, contract length, positioning yourself to be a potential for more business and a focus on future market outcomes.
"Both sides can do more to educate themselves," Maughan said about returns on investment. "Vendor management is more than just about keeping the train on time, it is about where the plans for both organisations are heading and looking at each other's future.
"Engage at a personal level, make sure you understand the bonus structure of the vendors as that is important if you are going to manage them."
Debating whether the contract is put in a draw as soon as signed, or kept on the desk and "used to hit the vendor over the head with everyday" Maughan warned CIOs that should a dispute ever reach a judge the judge will use the contract as it could be understood by "the man on Clapham High Street".
"So the contract is an important document and it is important to manage it," Maughan said, adding that the average contract length has decreased and that he sees few five-year contracts today, many are for just two years.