4 Ways to Achieve Innovation through Vendor Management

Mar 7th 2014 | Posted by Rick Letourneau

It is essential that innovation have its own unique focus within the contract and vendor management system.  While innovation itself should not be the primary focus for the Vendor Manager, the way that Service Level Management is, it should be an important priority.

It is always best for the Vendor Manager to develop a strategy as to what you want to accomplish through innovation, so you are better equipped to recognize the prospective innovation when you see it.  Here are some examples of what others have set out to accomplish:

  1. Requiring innovation as part of the managed services contract seems innovative for us when compared to the way we normally operate and I want to capitalize on it.
  2. I want to use innovation to ensure technology currency including better readiness for the unanticipated technology changes.
  3. We’ve recognized that we don’t have time to be creative anymore and I want to use innovation to stimulate creativity within the team.
  4. My Managed Service Provider wants to grow with us so I want to use the innovation initiative to identify opportunities for joint investment in research, education, etc. that can fuel growth. 

Managed Service Providers (MSPs) are not always motivated to innovate since the typical innovative idea tends to make quantum leap changes to current processes and support dynamics, otherwise it would not be considered innovation in the first place.  Those quantum leap modifications by their very nature will often cannibalize at least some component of work for which the MSP is currently responsible.  The most utilized approach by Vendor Managers to address Innovation is to jointly plan with your MSP(s) to incent innovative ideas that do in fact get accepted and implemented, and the most successfully implemented management systems negotiate a form of a “gain share” as both the incentive and an award for the MSP once the innovative concept or idea is implemented, and its actual impact is measured and reported.

When thinking about leveraging innovation, one good exercise is to sit down and map out an innovation qualification process that could be used with your MSP’s ideas or nominations.  Be sure to weed out those nominations that are merely continual improvements on existing services.  You’ll be surprised at how well this exercise can illustrate your philosophy re innovation.    

Real innovation is hard to come by, yet when it is identified and implemented within the context of a Managed IT Services Contract it can yield unprecedented value to the business from IT Services initiatives. 

It is critically important to develop and maintain a balanced management system that pays strict attention to the IT Services Management fundamentals, while at the same time the creative thinking that can bring innovations with significant and lasting impacts to the forefront.  By utilizing various techniques and management system prioritization, the Vendor Manager can play a key role in achieving innovation.

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