Lack of agility and customer focus in internal providers, or the failure of internal providers
In large groups of companies, internal service activities are often organised in a separate organisation, perhaps the best example being IT operations and development. In our experience, this type of operation usually starts off with a lot of momentum, but within a short period of time typical problems arise which, if not properly managed, can easily lead to the demise of the service company. In this post we would like to draw attention to these problems.
A service organisation provides services to other members of the group as customers. This helps, among other things, to support the implementation of a unified strategy (e.g. IT strategy) and to avoid duplication of tasks that need to be carried out by groups of companies (e.g. implementation of several different CRM systems in several member companies at the same time). But what problems can this operation cause?
1. Slow or very expensive service
Often we see that the service provider sees itself as a non-market player from which other member companies are obliged to order services. This may be true for a while, but as with market players, it is of paramount importance that the quality, price and speed of the service is appropriate for the member companies. If the service provider cannot meet these basic requirements, shadow organisations (e.g. shadow IT) will eventually be created, whereby member companies take over the provision of certain services.
2. Inadequate communication between the customer and the service provider
It is a common problem, especially in the case of a large number of member companies, that the service provider is not able to support and inform the member companies adequately due to lack of capacity or even lack of competence in business analysis/project management. In order to achieve a high level of customer experience, communication between the customer and the service provider should be a key focus.
3. The service provider organisation says what needs can be addressed, lack of customer focus
In many cases, the problem is that the service provider organisation is "backwards on the horse" (this may be due to organisational policy or lack of partnership), i.e. it tries to tell what is relevant and what is not. This can be a problem not only in the IT area, we have all come across organisations where procurement has slowed down or made a project impossible. It's important that the service provider sees that their job is to support core activities in an efficient, value-driven way, not to look for problems and hinder activity.
4. Too many demands, lack of prioritisation
The larger the organisation, the more demands the service provider is likely to have. If the number of needs becomes too high, prioritisation of tasks will be inevitable, as we have described in detail in our post on project portfolios. Without a transparent, universally accepted prioritisation process and methodology, the service provider organisation has two options:
- it will start to deal with all requests immediately and therefore there is a good chance that any delivery will be delayed or slow,
- takes on tasks based on its own criteria, which will inevitably lead to conflicts with member companies.
5. Lack of feedback and continuous improvement
The service providers and member companies often arrange the back-testing by measuring back the project scope, schedule and cost plan at the end of the project, as well as any discrepancies. However, there is often no time and energy left to measure the result products, e.g. whether the outcome of an RPA robotisation project has really accelerated processes, whether efficiency has really increased as a result? Of course, this is not only (or in some cases not at all) the task of the service provider, but the lack of this implementation leaves many areas and opportunities for improvement hidden from the organisations.
6. Low project management maturity
If the service provider implements projects (specific needs, developments), it should be at the forefront of project management at group level, as this is one of its core activities (if not the only one). Although the client side must also have project management knowledge and practices to ensure that services are delivered to the right quality, it is the service provider that must lead by example in this area. Lack of this can lead to customer dissatisfaction.
7. Missing advisory services
In many cases, not only are service providers expected to deliver the pre-defined work accurately, precisely and on time, but in many cases they may also be required to fulfil a consultancy role. To give an example, if a customer manufacturing company has a problem that management believes can be solved with IT, the IT service provider is rightly expected to help select the right system, especially if the manufacturing company has no experience in this area.
The above list of problems is not exhaustive, of course, but if we look behind them, we can find complex root causes such as inadequate staff/management attitudes, lack of a supportive organisational culture, inadequate processes, over- or under-regulation, skills and competences gaps, or even inadequate motivation.
To address these, it is typically not enough to focus on processes or people skills alone. Our experience shows that
- process improvement and optimisation,
- mindset and culture development,
- skills and competence development,
- and optimising the organisational structure
results can be achieved by developing focus areas in parallel, which can often be embedded in operational and organisational development or agility programmes.
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Do you feel you have similar problems? Our colleagues have successfully implemented improvements, agile transformations and operational improvement programmes for some of the largest internal service providers in recent years.
We are happy to share our experience in free consultations, contact us!
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