In the following, we show how to set up business relationship management in IT vendor management based on the ISO 44001 approach in order to lead to better IT services for your own company. Cooperation with IT service providers offers companies many advantages in today’s world: Cost savings, professional handling of service operations, rapid introduction of new technologies and services for their own core business. Nevertheless, companies pursuing a multi-sourcing strategy often find it difficult to create efficient collaboration between all parties involved. The reasons are essentially conflicting objectives of the parties. As a result, the quality of the externally provided services suffers and the goals set with outsourcing are increasingly missed over time. ISO 44001 (Collaborative Business Relationship Management System) can provide a remedy, enabling the active design of collaborative business relationships.
With this article we would like to give a short overview of the standard and provide hints on how to get started with Business Relationship Management in provider management.
The structure of the ISO 44001 standard
ISO 44001 is divided into two elements. The basis of the standard is the High-Level Structure (HLS), consisting of 10 sections (see Figure 1). This was introduced to harmonize various ISO management system standards and give them a uniform structure. Thus, the information security standard ISO 27001 (2013) was the first “heavyweight” standard to use this HLS standard (for more details, see also Annex SL).
Based on this, an eight-stage life cycle (see Figure 2) was developed that addresses the requirements specific to ISO 44001 for the development, introduction and management of business relationships – in particular, shared governance, required personnel skills and the design of joint collaboration. This is applied in the eighth phase (operation) of the High Level Structure.
In the following, the main sections of the HLS, divided into the following three phases (see also Figure 1) – will be briefly presented: Prerequisites (Sections 1-7), Operation (Section 8 in interaction with the eight phases of the life cycle), and Performance Monitoring (Sections 9 and 10).
Phase 1: Create conditions in the company
The first seven sections of the HLS describe how to create the right conditions in a company.
Section 4, Context of the Organization, is particularly important here. In this step, the needs and expectations of the various stakeholders are identified. In addition, issues such as legal requirements are analyzed. Furthermore, the area in which Collaborative Business Relationship Management is applied is defined.
Section 5 Leadership describes the requirements – leadership, accountability and commitment with regard to the collaborative business relationship management system – for top management (C-level). Furthermore, the top level of management must ensure that the objectives of the management system are in line with the strategic direction of the company. Among other things, ISO 44001 requires the appointment of a Senior Executive Responsible (SER) and the introduction of governance structures. One core element here can be a code of conduct, along with others.
Section 6 Planning focuses on setting up risk and opportunity management and aligning it with the business objectives: The who, what, how, when of a business objective must be identified.
Section 7 Support deals with the selection and provision of all necessary resources. Here, it is particularly important to select competent personnel with the (soft) skills required for collaborative working. These can be honed in training courses if necessary. It is important that the people selected are aware of their important role in the introduction of the business relationship management system. However, support also means providing or maintaining all the necessary documentation.
Phase 2: collaborative work based on the ISO 44001 life cycle model
Section 8 Operation (Operation is the heart of ISO 44001). Here, the eight steps of the life cycle model are presented in detail. The following graphic provides a brief overview of the eight steps of the life cycle and their contents.
Phase 3: Performance monitoring
Section 9 Performance Evaluation states, among other things, that evaluation methods and criteria must be defined for evaluating the collaborative business relationship. Regular evaluations must then be carried out on the basis of this evaluation system.
In the last step – Section 10 Improvement – the aim is to make continuous improvements to the relationship and relevant processes and activities in order to respond to changing requirements, needs or goals. In addition, it is important to identify and correct deviations from one’s own concept that occur in practice.
Introduction – Business Relationship Management in IT Vendor Management
In order to introduce a collaborative business relationship management system in IT vendor management, the company’s own concept should first be tested and validated as part of a pilot with a service provider before it is introduced to other service providers.
The Choice of the Service Provider for the Pilot
First of all, it must be clarified for which service providers a minimum expected benefit can be achieved through the introduction of such a formalized management system. As a rule, these are the business relationships with strategic service providers. Their services are essential to the core business of their own company: if the relationship with the service provider deteriorates, the performance of the core business can quickly be impaired.
To identify strategic service providers, it makes sense to categorize all service providers. The following graphic shows examples of categories and criteria for category assignment. Once the strategic providers have been identified in this way, the most suitable one for the pilot must be selected from among them.
The piloting
Once the strategic provider has been selected, the business relationship management system is introduced together with him as part of a pilot project. Experience gained in the pilot can thus be incorporated into the system concept. After the pilot is completed, the results of this first pilot will serve as a blueprint for adapting the results to other service providers.
The persons auditing the implementation of business relationship management in vendor management must be familiar with the content of the standard and obtain management’s approval and support for the audit. Accordingly, the appropriate personnel and management for such an undertaking must also be selected in advance. In the next step, a gap and awareness analysis should be conducted in workshops. Other parameters must also be investigated or defined before a recommendation is made regarding the introduction:
- Impact and costs of pilot implementation
- expected benefits
- Scope of application
- …
Once management has approved the recommended rollout, nothing stands in the way of an initial rollout as part of the pilot. At the same time, however, an evaluation process must also be implemented. This is used in the pilot phase and later in regular operation to compare all activities and processes of the (pilot) project with the standard in order to identify gaps and deviations. From this, in turn, measures and action plans can be derived to better align the existing processes with the standard. After their implementation, a second evaluation of all processes follows.
Conclusion – Business Relationship Management in IT Vendor Management
ISO 44001 offers companies the opportunity to put their collaborative business relationships with their strategic service providers on a solid foundation. The standard takes a detailed look at various areas of collaboration, such as governance, personnel, skills and behavior. This creates a framework for actively shaping and developing relationships with strategic service providers and thus significantly increasing the benefits of the IT services that are most important for the company’s own core business.
