G2I 2023 Session Recap
There are a lot of options to get IT projects done when you don't have the capacity or skills in house. Staff augmentation, offshore, the big 4 consultancies, boutique vendors - how do you pick the right one for your initiative? Of even greater importance, how do you ensure that the hundreds of thousands or even millions of dollars needed achieve results for the business?
These are the questions our panel discussed at Gateway to Innovation on April 26, 2023, including Anika Gardenhire, Chief Experience Officer at Centene; Scott Richert, CIO at Mercy; Marie George, CIO at MOHELA; Jonathan Andrews, Director of Global Data Governance at Mastercard.
You can view the full recording of the session, but here’s a recap of the key takeaways.
Capability and differentiation drive the choice to do a project externally versus internally
In weighing whether a project or problem should go to an external vendor, these leaders agreed that it really comes down to capability. Is this an area you need to supplement capability or capacity that your internal team doesn’t have presently? One example that Scott spoke about was building a new surgery center in Creve Coeur. Mercy had a lot of aspirations on changing the customer experience alongside a new app to allow for a more continuous experience. They worked with a real-time location services partner, a capability they didn’t have internally, to roll out the app as a new platform for their elevated care experience.
Another important consideration in deciding between an internal or external response is differentiation. “Think about if it’s something that should be part of your secret sauce,” said Anika. In that case, you want to be more self reliant on that competency rather than outsourcing to a vendor. Ask yourself whether you’re responding to an external change that someone may already have an answer to, allowing you to jumpstart your response to that change.
Anika thinks about vendors in three groupings:
- Solutions: Vendors with tangible products that you implement, focusing on adoption within contained framework
- Services: Typically staff aug vendors that give you the ability to beef up or beef out for a specific initiative and scale up to accommodate volume
- Consulting: Vendors that provide advisory services
She continued, suggesting that consulting firms are hired for three reasons:
1) You want an outside perspective to think differently and bring new ideas.
2) You need to deliver a really hard message that you want delivered by an outside person.
3) You genuinely don’t know the answer and need advice.
Relationship is the key to successful vendor partnerships
While capabilities and skills are important, for all four of these IT leaders, success with a vendor really comes down to the relationship. That relationship is about mutual understanding, trust, and flexibility.
To be a valued partner, vendors have to truly understand your business model, your culture, and your driving forces - not just the IT solution they’ve been tasked to build. Understanding means the vendor doesn’t just take orders but truly understands the underlying need. Jonathan pointed out, “How closely does the vendor listen to and understand not just what you tell them what the problem is but what the problem actually is?”
Ultimately, that vendor has to build an understanding of your internal processes as well. “Are they following your process? They should follow the same requirements as you have for your internal teams,” said Marie.
Trust is demonstrated through communication. Can you have open communication with that vendor? Can you build the rapport required to effectively collaborate? Is there transparency in that relationship? As Scott put it, “You put a lot of trust (and money) in these organizations. But then right before delivery, they surface all sorts of issues.” That is a mark of an untrustworthy - and ultimately unproductive - relationship. The ideal working relationship is one where issues are surfaced throughout the engagement, not just at the end, Scott continued.
Anika pointed out that she’s a fan of partners who aren’t just seeking more business and will push back when they need to. “That speaks to the integrity of the relationship,” said Anika. Radical candor and the ability to have those hard conversations builds more trustworthy and successful relationships.
The reality is: the deliverables you end up with are often not the requirements you started out with. With the complexity, number of stakeholders, and long timelines often involved in enterprise IT projects, a lot can change - and it’s not always easy for vendors to change with you. Depending on how that vendor structures contracts, there’s sometimes little room to pivot.
“A lot of time, we bring in partners when we’re doing something new and unknown. Sometimes projects end with a very different set of deliverables than at the start,” Scott said. “Our go-to partners are the ones that demonstrate they can zig and zag with us.” Anika agreed, saying that the ability to flex over time is critical in a vendor relationship. A strong vendor is one that understands your business is dynamic and can keep up.
The decision to offshore should be about more than just cost
While cost is a big factor in offshoring, these leaders brought up many other important factors. Often the business itself has constraints, as Marie pointed out. “Federal contracts make offshoring tough,” she said. Similarly in the healthcare industry, Scott sees minimal opportunities to use offshore vendors.
However for Anika and Jonathan, that decision is really around what they’re developing toward and how involved that internal team needs to be. “You need a really clear understanding of the job to be done. What is the product competency?” said Anika. Sometimes that means balancing both offshore and onshore components. Both spoke to the need to have a strong communication channel and agreement on the level of team involvement upfront to ensure success.
Ultimately, “Just because it’s cheaper by the hour doesn’t mean it’s going to be done as quickly,” summarized Jonathan.
The choice of which vendor to use for different IT projects can be difficult - and have tremendous cost impact. Working with the wrong type of vendor can lead to rework, missed deadlines, and hundreds of thousands or even millions of dollars wasted. And it’s not as simple as just choosing a vendor that has the capabilities you’re looking for.
If this is a question you’re trying to answer, we’re building a framework with some of our clients to provide a data-driven assessment of projects to help recommend the best suited, most cost-effective approach. We’d love to get your input.