November 14, 2005 (Computerworld) --
Managed service providers sell IT-enabled services, which large businesses are increasingly buying piecemeal rather than charging their own IT organizations to acquire, install and run departmental applications in-house. In many cases, individual lines of business or functions such as marketing or human resources departments are contracting and paying for the services, bypassing internal IT organizations in the process.
But experts say the most successful arrangements with MSPs are those designed and negotiated when business and IT managers work together. "This is because most services are not provided in a vacuum. Data from an MSP still must be fed to the customer and vice versa. IT is still involved," says Mike Slavin, a partner at TPI Inc., an IT sourcing consultancy in The Woodlands, Texas.
Here are five questions you should ask to help your business users effectively negotiate the best MSP contracts -- and keep IT in the loop.
1 Who owns the license? The MSP almost always owns the license to software used to provide a service. In fact, the MSP typically owns virtually all hardware, software, support and maintenance involved in delivering services such as sales contact management or benefits administration, according to Slavin.
"An MSP's value proposition is an end business result," as opposed to delivering services using specific tools, he says. And that's just as well, he adds, since buyers of MSP services -- typically business managers rather than IT managers -- don't care about the "IT plumbing," as long as they are regularly getting the reports, sales leads or other services for which they've contracted.
2 Who owns the process? The customer owns the process, and the MSP executes it. For example, Whirlpool Corp. recently signed a 10-year contract with Cincinnati-based Convergys Corp. to provide Web-based human resources services to the appliance manufacturer's 68,000 employees worldwide. Whirlpool's compensation requirements vary by country, and the company is able to modify its processes on a country-by-country basis, says Abby Luersman, vice president for HR solutions at Benton Harbor, Mich.-based Whirlpool. At the same time, Convergys is using SAP software worldwide to deliver the Web-based services, so Whirlpool gets the benefit of global data consistency.
"Our HR generalists can leverage data globally around issues like diversity reporting and talent pool management," Luersman says. "We have one global [software] platform, with consistency and standardization."
3 How will users be affected? The biggest change with an MSP arrangement is that users can now bypass internal IT organizations. At the same time, users should expect to interact with the MSP in a more structured, disciplined way than they interact with internal IT, experts say. MSPs are very process-oriented, and there is
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