The Business Forum

"It is impossible for ideas to compete in the marketplace if no forum for
  their presentation is provided or available."           Thomas Mann, 1896

The Business Forum Journal

 

IT Architecture - For Small & Mid-Sized Firms

Just Enough Architecture . . . Just in Time
 

By Steve Huhta

 

A mature contract and vendor management program occurs over time.  Organizations must actually evolve and develop an increasing level of experience to successfully implement such a program.  The account presented below describes how a concept borrowed from Information Technology Architecture – i.e., a maturity model -- assisted the author during the implementation of a new contract and vendor management program.

Background

In early 2002, the Information technology (IT) group within a PNW-based financial firm began a program to better manage its portfolio of service- and technology-related contracts.  The responsibility for this initiative was assigned to the IT Program Management Office (PMO) of said firm. Moreover, it was at this time that the author moved (from the IT Architecture Group) into the IT-PMO to help initiate and manage this new program.

Almost immediately, questions arose about where to being, how to communicate our progress, and how to proceed.  To address these and other questions, a maturity model was developed to provide focus and support for the program.

This article concerns the progression on how that maturity model was developed.  It is presented as an object lesson about using a maturity model for help in supporting a non-technology business problem.  This account is broken into steps that, to the best of the author’s recollections, roughly identify the events leading to the development and fine-tuning of a Contract and Vendor Management Maturity Model.

Step 1

The first task was to get an accurate inventory of all existing IT contracts.  At the beginning, contracts were dispersed among many different individuals and file cabinets.  Identifying these individuals and acquiring a copy of the contracts was essential.  Moreover, in many cases this identification effort required reviewing invoices to determine what exactly had been purchased, and then running down the associated contract.  But in spite of these challenges, a workable initial contract inventory and vendor list was developed.

While this contract inventory and vendor list was being produced, questions began to arise. 

Some of these questions were quite specific, e.g.,

  • How would the IT organization leverage this inventory to eliminate waste, maximize contract value, manage vendor risk, drive down operating and capital expenses, and just plain save money?
  • How would the inventory be maintained and kept accurate?
  • How do we justify the expenditure in this new contract management program?
  • What is the best way to report back to IT Management and other stakeholders on the achieved savings?

Also, strategic questions arose.  Some of these questions included,

  • What exactly did the IT want to accomplish with this new contract management initiative?
  • What was the desired future state visualized by IT and the PMO?
  • How would the program transition from the current situation to the desired future state?
  • How do we ensure ongoing stakeholder by-in and support?

Most importantly, however, management expectations were being articulated. For example, IT Management began questioning why the program was not yet leveraging our newly discovered information across the both the IT organization and corporation as a whole.  While deemed reasonable on management’s part, these questions highlighted their lack of understanding about the steps necessary to move from a simple contract inventory to actually leveraging our contracts and vendors relationships.  Indeed, no discussions had even yet occurred that would clarify what “leverage” even meant!

These questions were a wake-up call for the IT-PMO.  We had to find a way of managing expectations while maintaining management by-in.  Not only that, we also needed to communicate our progress, and to educate all interested parties as to what we were doing and how they would be involved and benefit.

It was clear to this author -- from experiences and lessons learned while working with IT Architecture – that meeting these challenges would be greatly aided by using a maturity model concerning contact and vendor management.  Fortunately, the IT-PMO Director was very open to new ideas and quickly bought into the idea.

The reader can reference an earlier article in this series for how a maturity model can provide support and value to any project, program, or initiative.

Step 2

After searching the Internet and contacting several of IT’s consulting vendors, it became clear that a contract and vendor management maturity model did not already exist – or if it did, we sure couldn’t find it.  Hence, the author built a series of “straw man” maturity models that were reviewed, discussed, and refined.

Constructing these draft maturity models was not as difficult as one might think.  Different maturity models have a number of common characteristics.  For example, each has a “Stage 0” representing some beginning and undesirable start-point, and a “Stage n” that represents some desired end state.  What makes the maturity model relevant is the set of intermediate steps that are defined – steps which apply to the specific organizational problem or situation being addressed. 

Exhibit 1 below is the Contract and Vendor Management Program Maturity Model (CVMP MM) ultimately created in this step.

Contract and Vendor Management Maturity Model

Stage

Name

Focus is on . . .

5

Leverage

How do we get the most out of the program?

4

Refinement

How do we increase efficiency and effectiveness?

3

Alignment

How do we implement to achieve the vision?

2

Vision

Where do we want to go?

1

Awareness

What do we have?

0

Reactive

How do we put out this fire?

Exhibit 1

 

With this initial model in place, it was possible to now begin educating management about our program.  Specifically, we could communicate that the program was only in the “Awareness” Stage (i.e., building our inventory).  If we were to finally leverage the organization’s contracts for maximum benefit, a number of intermediary steps needed to be accomplished.  And, management participation was critical to defining these intermediate steps.

Step 3

As good as this initial CVMP MM was, it was still lacking.  What it lacked was information about how each stage was to be accomplished and the deliverables/benefits arising from each stage.  Such information was important to both IT management and other departments involved with this contact management initiative – e.g., Legal and Purchasing.

To address these shortcomings, the model was expanded by adding more columns.  Exhibit 2 illustrates the maturity model’s progression after these changes.
 

Stage

Name

Focus is on . . .

To accomplish . . .

Results in  . . .

5

Leverage

How do we get the most out of the program?

Process integration, Continuous program improvement

Increased value from contracts; commonality across organization

4

Refinement

How do we increase efficiency and effectiveness?

Standards, process improvement; metrics

Effective and efficient tools and processes

3

Alignment

How do we implement to achieve the vision?

Identified core competencies,

Program fitting organization’s specific needs

2

Vision

Where do we want to go?

Vision statement, principles; roles and responsibilities

A program design that will work as the organization changes over time

1

Awareness

What do we have?

Inventory, simple reports

Immediate savings from ability to “harvest” low hanging opportunities

0

Reactive

How do we put out this fire?

 

Wasted time and effort; errors; no repeatable processes

© Copyright 2012, Steve Huhta, May not be used without prior written permission

Exhibit 2

         

Step 4

As the Contract and Vendor Management Program progressed and matured, our CVMP MM became an ever more important communication tool.  Ultimately it became beneficial to add additional types of information to the model.  Unfortunately, the “grid” format presented above would not support this ever increasing amount of information types.

It was at this point that the model’s format was changed to mimic a “stair step.”  With this layout, the additional information could be added at the bottom of the model, rather than as an additional column to the right.  See Exhibit 3 for the basic stair step version of the model.

Contract and Vendor Management Maturity Model

Step 5

With the “stair step” in place the other needed information could be easily added.  The information chosen to be added was determined by what needed to be communicated to an ever growing set of stakeholders.  The stakeholder set increased because of our early program successes in consolidating agreements, eliminating waste and, thus, in saving considerable amounts of money.  For example, the Sample Stage Metrics section was added to define the appropriate metrics and measurement drivers for each stage – information of interest to both the CFO and Accounting because it simplified measuring the Program’s progress and performance.

A partial version of the resulting Contract and Vendor Management Maturity is provided by Exhibit 4 – enough detail is provided to give the reader an idea about the types of information added and expanded.
 

Just Enough Contract & Vendor Management – Just in Time

As the model grew, it risked becoming so visually busy as stop being a good communication tool.  In an attempt to alleviate this risk, colors were strategically added to improve its readability. [Not all these color changes are shown in Exhibit 4.]  Also at this time, the title above the model was changed to what you see in Exhibit 4.  This particular change was made to reinforce the nature of a maturity model representing a gradual, focused progression towards increased Program maturity and increased benefits.

Summary

In this article, a concept borrowed from IT Architecture was changed and enhanced to meet the needs of a particular business program.

Maturity models are not just for technology-related projects and initiatives.  Their unique flexibility and adaptability makes them valuable tools for business process initiatives. Maturity models assist with: communicating objectives, educating stakeholders, building support, setting priorities, communicating progress, and performing self-assessment analysis!

Final Comments

For this author, the biggest surprise was how the different groups involved reacted towards the CVMP MM.  For instance, the Legal Department felt that the model made perfect sense and was an excellent planning and communication tool.  The same was the case for the several business units involved (involved because they directly used the services defined within IT contracts.)  Where the reaction was often negative was within the IT department itself.  Luckily, our CTO understood the model and its value.  However, when working with directors of several IT technology groups, the result was just the opposite.  These managers vocally expressed their distain for the model – directly to the IT-PMO’s Director.  At a high level their issue with the model could be summarized thusly:

  • First, the model dealt with a “business process” and architecture was not needed for such things
  • Second, the model was proof that the Contract and Vendor Management Program was being “over engineered” and made much too complicated – especially since the Program was not implementing technology

These final comments are included as a “heads-up” for anyone wanting to utilize a maturity during any sort of project or other initiative.  Make sure that you early on communicate how your maturity works and the multiple ways it provides value.  Also, feel free to adjust your model to best serve your particular situation.  Next, read the articles in this Business Forum series for examples of different ways to build and use your maturity model.  Finally, there are a number of excellent sources out on the Internet that will educate you in the use of maturity models – one of the best resources is here.
 


Steve Huhta is a Fellow of The Business Forum Institute. He was, (until he retired) the Contracts Manager with the Contracts Services Department of the Russell Investment Group. Russell is a global financial services firm with headquarters now located in Seattle, Washington. Steve holds a BS in Computer Science (with distinction), Washington State University, an MBA from Pacific Lutheran University, and a Masters Certificate in Commercial Contract Management from George Washington University. Steve's career includes 30+ years of experience in Information Technology across a variety of industries - including aerospace and forest products - and for both large and small companies. His varied experiences include application development, business IT planning, process change and improvement, development and management of customer centric support and help organizations, definition and implementation of IT-focused internship programs, IT asset management, IT innovation planning, IT metrics, IT Architecture, and contract management. Steve also volunteers his time and effort to advise several non-profit organizations during their planning and acquisition of computer technologies.


Return to


The Business Forum Journal


Search Our Site

Search the ENTIRE Business Forum site. Search includes the Business
Forum Library, The Business Forum Journal and the Calendar Pages.


Editorial PolicyNothing you read in The Business Forum Journal should ever be construed to be the opinion of, statements condoned by, or advice from, The Business Forum, its staff, workers, officers, members, directors, sponsors or shareholders. We pass no opinion whatsoever on the content of what we publish, nor do we accept any responsibility for the claims, or any of the statements made, within anything published herein.  We merely aim to provide an academic forum and an information sourcing vehicle for the benefit of the business and the academic communities of the Pacific States of America and the World.  Therefore, readers must always determine for themselves where the statistics, comments, statements and advice that are published herein are gained from and act, or not act, upon such entirely and always at their own risk.  We accept absolutely no liability whatsoever, nor take any responsibility for what anyone does, or does not do, based upon what is published herein, or information gained through the use of links to other web sites included herein.
 

Please refer to our: legal disclaimer



Home    Calendar    The Business Forum Journal    Features
Concept     History     Library    Formats    Guest Testimonials
Client Testimonials      Search      News Wire     Why Sponsor
Tell-A-Friend     Join    Experts   Contact The Business Forum

 


 

The Business Forum
Beverly Hills, California United States of America

Email:  [email protected]
Graphics by DawsonDesign
Webmaster:  bruceclay.com
 


© Copyright The Business Forum Institute 1982 - 2012  All rights reserved.