IT service provider consolidation tips: A CIO talks vendor management

IT service provider consolidation can simplify enterprise IT vendor-management strategies, says our CIO columnist. Learn how to categorize IT services and ace vendor consolidation.

Some days, in those rare, quiet moments, I think about simplifying my life. I am not talking about selling everything

and moving into a tent in the woods. Instead, I think about what I can do to take some of the hectic out of my IT life and eke more meaningful time out of my day, amid all the conference calls, emails, project and process reviews, presentations, new technologies, problem-solving and more.

Niel Nickolaisen
The Real Niel
Niel Nickolaisen

This past year, I have been actively consolidating my IT service provider relationships. I figured that doing so would allow me to shrink my time in vendor meetings, reduce the number of IT service provider invoices that have to be reviewed and paid, and simplify our problem-resolution process (the "one neck to choke" idea). But I also needed to ensure that my IT service provider consolidation did not increase the already high risks in my IT life. That meant I had to be careful not to increase costs, reduce service levels or miss out on opportunities. As a result, I have taken what I consider a measured, rational approach to IT vendor management and consolidation.

My first step was to stratify my IT services into two broad categories: commodity services and expert services. I assigned services to the commodity category that I can get at similar service levels from a wide range of providers -- for example, long-distance telephone, local telephone and Microsoft licenses. Services that require special or higher-level knowledge I assigned to the expert category. Following this model, in order to keep my critical Citrix Systems connections healthy and available, I outsourced management of my Citrix environment to someone who is really, really good at Citrix management.

After I assigned my IT services, my second step was to get serious about consolidating my commodity services' vendors. These services are available from a variety of providers, so I wanted a single source that would provide as many as possible.

An easy decision was to get rid of all but two of my wireless telephone providers -- and if one of the providers had had good coverage for my widespread employees, I would have reduced this number to one. I also consolidated my local telephone, network and long-distance services, placing them with a single provider. Now, if one of my sites has a problem with its local phone service or network, there is no question about which provider to call: We call the same one for everything.

It was not this easy with some of my IT services. Some years ago, we consolidated our Microsoft licensing with a single service provider recently, however, I wanted to consolidate my non-Microsoft licenses as well. I started by asking my current Microsoft license provider whether it could handle my other licenses too. It could not, so I asked my ERP vendor if it could manage the licenses for my third-party ERP bolt-ons and extensions -- and it turned out that it could! So, while I could not get my licensing down to a single service provider, two is better than many.

My final step was to look at my expert IT service providers. Could they take on some of my commodity services? Even better, were there additional expert services they could take on? For example, in addition to my outsourced Citrix management provider, I use another service provider for large-scale network design. Could my Citrix expert also do network design? Lo and behold, it could, and I reduced my provider count by one more.

When I first started pondering an IT service provider consolidation and vendor-management strategy, I was skeptical that it would make much of a difference in my life. Was I ever wrong! Cutting down on IT vendors not only gave time back to me and my staff, but also resulted in our developing much stronger, win-win relationships, even with our commodity service providers. Because we each matter so much more to each other, we communicate better and our IT service levels have gone up.

And now I have a lot more quiet moments.

Niel Nickolaisen is CIO at Western Governors University in Salt Lake City. He is a frequent speaker, presenter and writer on IT's dual role enabling strategy and delivering operational excellence. Write to him at nnick@wgu.edu.

This was first published in March 2010

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