Deliver outcomes by building a strategic function dream team

It’s time to rethink everything you know about managed services

Today’s managed services providers (MSPs) have evolved beyond mere outsourcing vendors. They are now strategic partners, leveraging their deep domain expertise and advanced technologies to drive digital transformation and operational excellence. Building a "dream team" to orchestrate this strategic partnership is crucial for maximizing business value.

In CGI’s An executive's guide to managed services, we review current trends in the MSP landscape, provide an overview of current service provider capabilities, and lay out a recommended approach to building more collaborative relationships. At the heart of this collaboration is a strategic function team dedicated to managing service supply and demand while cultivating a synergistic partnership between the provider and your organization's business units.

This cross-functional team lives within the client organizations and champions the MSP engagement, ensuring tight alignment between services and evolving business needs. In the first part of our two-part blog series, we outline the strategic function team's key responsibilities. In part two, we explore the ideal size, skill sets, and compositions for assembling a high-performing strategic function dream team.

Leveraging an MSP's full strategic value requires more than procurement - it demands purposeful governance, clear organizational knowledge and a committed team laser-focused on nurturing a productive partnership. With the right team in place, organizations can unlock an MSP's full transformative potential.

Right players, right skills

Building a plane and flying a plane take two very different skill sets. Similarly, overseeing a managed IT services agreement is a very different experience from managing IT operations. A successful strategic function team needs a blend of the following 5 skills:

1. Business: Team members should have deep knowledge of the organization, its business strategy and priorities, as well as its culture and influencers.
2. Technology: An established IT team should refocus its technical capabilities in a managed IT services agreement to concentrate on the following:
   • Strategic thinking that looks ahead, focuses on service provider and partner network capabilities that will advance business objectives and considers future needs that will require new or modified services
   • Outcomes and results rather than the “how”
3. Finance: A detailed understanding of all pricing elements is essential to ensure:
   • Clarity on what is charged and what is paid in accordance with the contract terms
   • Costs are adequately charged back to their business units
   • The financial objectives and anticipated benefits are monitored
   • The ease of forecasting and adaptive pricing alignment with growth strategies
4. Sourcing and contract administration: Procurement is just one dimension of overseeing a managed IT services agreement. New requirements and unexpected issues will almost certainly arise during the life of the agreement. The strategic function team should address these changes and issues in accordance with the master agreement terms to maintain a successful partnership and avoid unnecessary disputes.
5. Change management and communications: As the primary point of contact between the client and service provider, the team should have strong change management, interpersonal and communication skills to achieve the following:
   • Conduct impact assessments to ensure a thorough understanding of how changes will affect people, processes and systems
   • Develop new lines of communication to prepare stakeholders for changes and ensure a smooth transition to new ways of working
   • Reconcile occasionally conflicting demands across different internal client groups
   • Bridge the gap between user expectations and the contracted levels and scope of services
   • Resolve unforeseen or changing requirements with the service provider
   • Maintain a healthy partnership that not only meets the letter of the contract but continues to add value
   • Manage stakeholder and user expectations and perceptions

An estimated 60% of strategic function team members come from the original internal IT organization before a managed IT services engagement. The remaining 40% are members brought in from other areas of the business or external resources that complement the team’s capabilities.

Right-sizing the team

An overstaffed strategic function team can lead to various challenges and inefficiencies. When a team grows disproportionately large, it often results in duplication of efforts, excessive oversight, and a communication overload, ultimately hampering the organization's productivity and decision-making processes. Key issues that may arise due to overstaffing your strategic function team include:

• Redundancy: In attempts to justify its existence, a large strategic function team may perform functions that have been contracted out to the provider—leading to confusion about accountability
• “Checkers checking checkers” with no added value
• Unnecessary reporting and communications creating additional overhead

It’s worth remembering that every strategic function team member generates work – and consequently extra costs – on both the client organization and the provider side. On the other hand, an understaffed strategic function team can also be ineffective. It can negatively influence the client/provider relationship and the outcome of the agreement in several ways, including:

• Slow decision-making and approvals
• Irregular governance meetings and reviews
• Poor preparation and input
• Lack of connection/communication with other internal stakeholders
• Poor alignment between business objectives and expected outcomes
• Risk or more “finger-pointing” reactions as opposed to focusing on business value

Determining the level of resourcing required for the strategic function team

• Your organization’s previous experience with managed IT services: An organization with a mature managed IT services culture and a core team experienced in managing these types of agreements will require smaller strategic function teams to facilitate new or expanding agreements.
• Single vs. multiple providers: An environment with multiple providers requires integration efforts from the strategic function team to coordinate interfaces, manage hand-offs between providers and navigate “grey” areas of responsibility.
• Degree of organizational decentralization: If your organization is comprised of highly autonomous, disparate business units, it will likely require significantly more effort to communicate and deploy processes for working with the service provider.
• Geographic diversity: The number of locations may affect the size of the strategic function team - including language requirements.

Rules of thumb for team sizing

_{The team size may vary during the term as incremental resources are added to support major initiatives such as transition and transformation projects.}

Selecting and transitioning strategic team members

Early in the managed IT services process, most organizations face the challenge of determining which key personnel will be transferred to the service provider and which will be retained as part of the strategic function team managing the agreement. Many factors are at play, including the individuals’ career aspirations and the need for continuity for both organizations.

Those selected to join the strategic function team may have had some delivery responsibilities that will be transferred to the service provider. As such, knowledge transfer should be a key part of the transition plan, as well as establishing an agreement on interim roles and responsibilities where required.

The transition should also include an onboarding plan for the strategic function team, including coaching on the managed IT services business model, processes and organizational change management.

Strategic function team members should become ambassadors for the new business model. They should remain careful not to fall into the trap of comparisons with previous ways of doing things.

Putting the pieces in place for long-term success

Overseeing a managed IT services agreement is a complex and multi-dimensional effort. The breadth and depth of capabilities required cannot come from a single individual or a single source, nor can a high-performing team be expected to be fully in place on day one of the contract. However, when organizations take the time to understand the full scope and challenges of the agreement early on, then assemble the right players and focus on the right priorities, they’ll be better positioned to reap the expected value from their IT services provider over the long term.

Want to learn more about CGI’s managed IT services?  Watch our webinar with Circle K on CIO.com or contact us.