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.