New IT model shifts relationship manager job from ‘mediator’ to ‘enforcer’

Many companies are moving away from in-house IT development and toward application service providers, leaving the development to outsourcers that often off-shore work to countries like India and Brazil.

But in order to make it work, new roles have arisen to handle the needs of today’s very different IT environments.

Enter the relationship manager, sometimes referred to as a vendor relationship manager and a project team relationship manager (who manages the interaction between dispersed project teams, whether they’re part of the company or a vendor-supported outsourcing arrangement).

For BMO Financial Group, this was recognized as an ongoing way of doing business, says Kathleen Barret, program director of global resourcing at BMO.
 
“A lot of what we do is around governing the relationships we have with our suppliers and ensuring the work is performed to the requirements of the organization, and we act as intermediaries for a number of the governance areas including risk, audit, privacy and information security,” she says. The global resourcing centre of excellence is responsible for managing its offshore development work.

There’s nothing new about working with contractors and outsources. What’s different is working in an environment that sees your working relationships in several locations, scattered across the globe. That requires a new approach to doing business.

“Instead of being a manager of work, you’re a manager of a relationship, and that’s a big difference,” Barret says.

As you start to off-shore or outsource work, you tend to start cutting away at the bottom levels of the organization and migrating some of those mid-level roles into more of a relationship management role – because they’re no longer doing the work, but managing it.

“Companies have a hard time understanding that,” Barret says. “It’s an oversight role as opposed to a ‘doing’ role.”

The majority of your relationships are virtual, so you don’t get a sense of working with a physical team. And that requires a different set of skills, the project manager adds.

“It also requires an organization to think differently about its hiring practices, as well as grooming,” she said. “You have to rethink your whole HR strategy.”

And there’s no rulebook on how to do this – since it’s different from traditional contracting or outsourcing arrangements.

“It probably took us a year to really get our head around what it is that we do,” Barret says. “I know that sounds funny, but it’s stepping up and looking down on it instead of being in the middle of it.”

This meant formalizing processes, coming up with deliverables and developing a vendor engagement model.

“When you hear about organizations failing, I think it’s because they don’t understand they have to manage their business differently,” she said. “We knew it was going to be different, we just weren’t sure what that would look like.”

The key is to start small, understand what you want to get out of it and make sure you have strong support from the leadership team.

For BMO, it’s still a work in progress. In India, for example, the value of the rupee is going up, so some of the cost savings are shrinking – and since there’s overhead associated with managing work offshore, cost isn’t necessarily going to be the driving factor anymore.

“It may be more around hard-to-fill skills and flexibility or the ability to ramp up that will drive a lot of the work,” Barret says. “The operational model has to shift again and continue to change.”

Relationship managers play an important role in organizations where different business units are isolated from each other or where the IT delivery gets complicated, said Andy Woyzbun, lead analyst with Info-Tech Research Group. “There has been a need for a long time to help navigate through this jungle of IT services.”

In the past, the role of a relationship manager revolved around revising service level agreements and making sure the business community understood the rules of engagement.

But in today’s environment, where IT services are not always delivered internally but through a third party – either partially or completely – there may not be anyone left inside the organization who is focused on the needs of a particular business unit.

“This role becomes even more important when the IT services are delivered at arm’s length,” said Woyzbun. “There has to be somebody who is looking out for the best interests of the business users and not just the technical aspects.”

But there are a number of challenges with this role, such as measuring success.
Traditionally the relationship manager was more of a diplomatic position, but now they’re given responsibility for ensuring the supplier delivers on service level agreements.

“These people are more than diplomats,” Woyzbun says. “They’re actually enforcers.”

Courses in IT relationship management are starting to become available, as are more tools from vendors (such as CA’s Clarity product that includes a module on business relationship management).

“There’s a set of evolving tools from experienced and reputable software developers that fit into the category of tools that help IT align with business,” the analyst says. “It’s probably something we’re going to start seeing more of.”

It’s hard to define a relationship manager, however, because each company has different requirements – and different challenges.

“They’ve always had to do this function,” said Mark Schrutt, research manager of Canadian strategic outsourcing research with IDC Canada. “It’s coming to more of a maturity, but it’s not really a profession yet either.”

If you have a large-scale contract, hiring or promoting someone to manage the relationship and expectations of the business is a must. Try to define those objectives up front, he said, so the relationship manager has something to be measured against.

You also require a governance program and executive support – because the ability to negotiate and ensure certain criteria are met requires management to back you up 100 per cent.

“You want to have a cooperative relationship with your vendors and that comes down to making sure expectations are set on both sides and working together on common goals through the governance program you have,” Schrutt says.

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