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Getting the Desired Business Outcomes from IT Service Providers



Abaran Deep of PCI Group Pty Limited, a sponsor company at the marcus evans Australian CIO Summit 2014, on vendor selection and getting the desired business outcomes from IT contracts.

LONDON, June 16, 2014 - (ACN Newswire) - The best way to manage risk and achieve the desired outcomes in a large outsourced Information Technology (IT) project is to establish a collaborative contracting framework with the vendor, says Abaran Deep, Partner, PCI Group Pty Limited. A collaborative contracting framework ensures risks and rewards are shared and a positive psychological foundation is laid. Where this is not the case, as with most traditional contracts, there is a high probability that the project will not deliver its business goals.

PCI Group Pty Limited is a sponsor company at the marcus evans 13th Annual CIO Summit taking place in the Gold Coast, Queensland, Australia, 28 - 30 July 2014.

- What should Chief Information Officers (CIOs) do to ensure that they get the desired business outcomes from their IT service providers?

Large outsourced IT projects have a high degree of risk or uncertainty. For such projects the CIO should avoid traditional commercial frameworks with a fixed contract price or a schedule of rates. Traditional approaches are counter-productive - they tie up a lot of time and energy in specifying all the details early on to put a fixed price on a fixed scope. Vendors are better at playing that game than clients and always find grounds for scope variation.

Instead CIOs can ensure the success of their IT projects by focussing on three areas: develop the right technical contract (clarify project outcomes in terms of business objectives); develop an appropriate commercial contract (link vendor profits to achievement of customer's objectives); and establish a sound human contract (foster collaborative behaviours and effective leadership).

- How should CIOs engage their vendors to ensure project success?

Large and complex projects need vendor and client teams to work together collaboratively. This requires CIOs to understand the psychology of the contract that they use to engage a vendor. In our recently published thought leadership paper, "An overview of collaborative contracting: Making collaboration effective and choosing the right framework", we contend that more often than not, the procurement relationship is based on a win/lose paradigm where client organisations end up paying vendors to do the wrong things.

Specifically, in most complex projects that under-performed we have found that the commercial framework drove a win/lose outcome where - if difficulties arise - one party wins at the other's expense.

Furthermore, the vendor selection process must place equal importance on the quality of people and leadership of the vendor team to ensure that the client gets people with the right values, skills, and competencies to join the project. Thus, the selection process must not be based solely on the "hard" technical competencies, but also the "soft" leadership and teamwork competencies that affect motivation and performance.

- Selection and procurement are front-end activities but what happens in the rest of the life of an IT project?

At PCI, our experience shows that the conduct of the selection process establishes the DNA for the project culture. Therefore it must be conducted in a way that establishes the foundations for a positive working relationship, one that is able to stand the stresses and strains of complex project delivery over time. Hence, vendor selection and contract establishment must address technical, commercial, and human dimensions.

Once the contract is established, investment is needed to integrate client and vendor people and coach them to become a high performing team - this does not happen by accident. This investment is necessary to cement the "your success is my success" mindset enabled by the collaborative contracting framework.

More importantly, the project team needs the change management capabilities to skilfully engage the multitude of stakeholders and enrol their support for business changes required for successful IT implementation. Change management is a critical and inherent aspect of large IT projects and the project team needs to be given skills and capabilities to work alongside the business to support the implementation needs throughout life of project.

About the Australian CIO Summit 2014

The Australian CIO Summit is the premium forum bringing elite buyers and sellers together. As an invitation-only event taking place behind closed doors, the summit offers enterprise and government chief information officers and IT solution providers an intimate environment for a focused discussion of key drivers for IT innovation. This unique forum will take place at the newly-renovated RACV Royal Pines Resort, Gold Coast, Queensland, 28 - 30 July 2014. The Summit features presentations on implementing the right cloud model, crafting simple and powerful mobile solutions, streamlining processes and living up to shifting realities for the IT leader.

For more information please send an email to [email protected] or visit the event website at www.australianciosummit.com/AbaranDeepInterview

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Please note that the Summit is a closed business event and the number of participants strictly limited.

About PCI Group Pty Limited

PCI is acknowledged as a leading advisor, facilitator and coach for the establishment and delivery of collaborative contracts for complex projects and programs. PCI works with client organisations on complex procurements to create an environment in which suppliers and customer objectives are aligned ('win or lose together') and in which team members from all parties can work together in truly integrated teams which perform at very high levels. Please visit www.pcigroup.com.au.

About marcus evans Summits

marcus evans Summits are high level business forums for the world's leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-on-one business meetings. For more information, please visit www.marcusevans.com.

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