05.11.2024

Strategic and operational provider management

Strategic & operational provider management Intero Consulting as your enabler

In an increasingly interconnected and globalised business world, organisations are increasingly reliant upon external service providers and suppliers to effectively manage their operations and remain competitive. With the rapidly growing popularity of cloud solutions, providers are becoming indispensable, especially in the IT environment. Nowadays, the management of external partners plays a crucial role in the success of modern companies. In this context, provider management is becoming increasingly important as organisations must efficiently manage their supplier base to increase flexibility, minimise costs and risks and strengthen their competitive position.

However, working with external service providers and suppliers also brings challenges, particularly in terms of ensuring quality, security, and compliance. Effective provider management is, therefore, essential to overcoming these challenges and to take full advantage of external partnerships.

Tasks and challenges of provider management

The interplay of strategic and operational tasks is crucial for effective provider management. A holistic approach allows these objectives to be maximised:

Übersichtsgrafik über die strategischen und operativen Aufgaben des Provider-Managements, wie Kundenbeziehung und Risk und Compliance

Strategic tasks of provider management

Provider portfolio management

Provider selection, analysis and optimisation through market analysis and monitoring competition

Strategic provider planning concerns the complex decision-making process involved in selecting the most suitable service providers and suppliers. This requires carefully balancing compliance, costs, provider performance, innovation promotion and corporate goals. For provider management; it is crucial to take the sourcing strategy (e.g. single/multi-sourcing or vertical integration) into consideration. A key challenge to this though lies in continuously adapting to changing market conditions.
Market analysis

In provider management, market analysis comprises the continuous review and analysis of the service market to ensure the optimal selection and integration of providers. Here, it is crucial to track current trends and developments in terms of vertical integration. Even in the highly regulated financial sector, a significant increase in vertical integration in outsourcing has taken place in recent years. This is especially important in the context of digitalisation, allowing organisations to stay up-to-date and adjust their service portfolio accordingly.
Governance

Governance in the context of the company - how is provider management set up; and governance in relation to co-operation with providers as well as the contractual basis with the relevant standardisations.

An overarching governance model is a framework for the standardised management of providers and is largely dependent on the structure of the provider management. This model defines roles and responsibilities, specifies performance indicators, establishes governance structures, enables risk management, takes compliance requirements into account and promotes continuous improvement. Harmonising provider governance allows for quality and efficiency improvements. The level of detail included in the specifications is essential for success, as this enables the guidelines to be applied across multiple providers whilst also addressing the specific requirements.

Operational tasks of provider management

Customer Relations (SPOC)

Provider management represents the company to the provider while also representing the provider within the company to specialist departments, procurement, management and other stakeholders.

Effective communication and co-ordination between internal departments and external service providers is the foundation for smooth demand management, performance management and projects or services. In this, provider management plays a key role as the single point of contact (SPOC) between both parties.
Risk and Compliance

Provider management faces the challenge of dealing with the continuously growing and increasingly complex regulatory requirements of German and European regulatory authorities. As a result, the risk assessments of providers and sub-providers are becoming increasingly significant, complex and time-consuming. At the same time, the management and maintenance of a comprehensive register of information (Register of Information - DORA) is being mandated with greater precision by regulatory authorities. In this context, the management of providers is becoming increasingly important. The financial services industry is leading the way with DORA setting the precedent.
Demand management

Demand management in provider management involves co-ordination with internal departments and providers. Here, challenges may arise in accurate demand forecasting with regard to staying agile amid changing requirements, all while keeping costs under control. Provider management also serves a quality assurance role by taking the service portfolio and long-term business objectives into account throughout the demand-handling process.
Performance management

Operational performance management within provider management ensures that a provider's contractually agreed-upon services are monitored. An overarching government model for providers establishes a standardised approach to monitoring providers, ensuring both validity and compliance with SLAs.

Effective performance management requires maintaining an overview and focusing on key performance indicators.
Commercial management

Commercial management in provider management focuses on ensuring cost control, budget planning and effective contract design to ensure that the services provided are in line with the agreed commercial terms.

Intero services

Intero Consulting positions itself as an enabler in the conception of customised solutions for client companies as well as seamlessly implementing these approaches into operational processes. This includes:

Developing a customised IT strategy - Intero combines corporate goals with industry expertise
Intero Consulting supports companies in developing a customised IT strategy that is closely linked to corporate goals and strategy. With in-depth industry knowledge and best practices, Intero Consulting helps to define a future-oriented technological direction and framework that not only creates competitive advantages but also fulfils regulatory requirements.
Introducing a governance model for efficient provider management
This includes integrating the model into the company structure, defining roles and responsibilities and establishing clear processes.
Supporting demand assessments and provider selection
This includes carrying out benchmarks and using best practices alongside the Outsourcing Contact Assessment Tool (OCA) to negotiate and draft contracts with service providers.
Managing regulatory requirements
Intero Consulting supports companies in the effective implementation of regulatory requirements, such as by supporting them in addressing audit findings and compliance assessments using in-house optimised assessment tools.