Service Provider/Vendor 

Most of the complaints in this area came from companies with IT budgets of less than Rs 1 crore

Monday, January 03, 2005

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The first major challenge with respect to vendors and service providers seems to be handling project time and cost overruns, which got 25 percent votes from CIOs. Interestingly, three other issues were not very far behind in terms of votes. These were handling the delivery schedules of hardware and software vendors, managing service providers and SLAs, and finally managing AMCs. Vendors and service providers, are you listening? 

A majority of those who mentioned project/time cost overruns as their primary challenge were from manufacturing, IT and other services segments. Interestingly, of the people who rated project time/cost overruns as their biggest challenge, many didn't seem to have an answer on how to resolve this issue. Those who did were either regularly monitoring their projects, or planning in advance and doing proper time management. Sixty percent of the CIOs facing this problem of time/cost overruns had IT budgets of less than Rs 1 crore. Possibly their IT budgets didn't leave any margins to afford the extra costs. 

Sixty one percent of the CIOs who mentioned that managing service providers and SLAs was an issue had a decent IT budget of Rs 1-10 crore. So how were CIOs handling the delivery schedules of software and hardware vendors, a concern that got 22 percent votes? According to the responses we received, the answer seems to be to maintain a close relationship with vendors. CIOs plan out their hardware and software requirements in advance, and keep their vendors informed of the same. The interesting part was that most of CIOs said that they had to strictly and continuously follow up with vendors to maintain delivery schedules. Does that mean that vendors are complacent about delivery schedules once an order has been booked, or is it that their distribution channel is poor? We'd love to get the answer to that. While only a few CIOs mentioned having penalty clauses in their agreements with vendors on delivery schedules, the undertone was that it was a serious issue and a must-have in all agreements being made. 

In challenge 2, the biggest concern was managing service providers and SLAs, which was largely voiced by those in the manufacturing segment. Most of the CIOs who raised this as their primary concern were at a mid-management level, and from companies with over Rs 500 crore turnover. 

The second major concern in challenge 2 was managing delivery schedules of hardware and software vendors. Most of the responses here came from the manufacturing and the government sectors. Surprisingly, nobody from the BFSI sector raised this as a concern. 

The other concern worth mentioning from challenge 2 is managing AMCs.

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