Database Support Outsourcing Worst Practices – Avoiding a Recipe for Disaster
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Database Support Outsourcing Worst Practices – Avoiding a Recipe for Disaster by Martin Wisniewski
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Database Support Outsourcing Worst Practices – Avoiding a Recipe for Disaster
- 4. Why Talk Database Outsourcing Now? © 2009/2010 Pythian Database Support Outsourcing
- 5. Worst Practice #1 Not Evaluating Vendor Landscape © 2009/2010 Pythian Getting caught up in the romance
- 6. Worst Practice #1 Not Evaluating Vendor Landscape © 2009/2010 Pythian Relying only on the known brand
- 7. Worst Practice #1 Not Evaluating Vendor Landscape © 2009/2010 Pythian Sole sourcing
- 8. Worst Practice # 2 Use Immediate Cost Savings as the Sole Driver © 2009/2010 Pythian Let’s fly him across the globe and save $$ on the surgery!
- 9. Worst Practice # 2 Use Immediate Cost Savings as the Sole Driver © 2009/2010 Pythian Is your database the key asset of the business?
- 10. Worst Practice # 3 Ignore Vendor Capabilities and ... © 2009/2010 Pythian Dinner?
- 12. Worst Practice # 4 Trying To Cheat Your Vendor © 2009/2010 Pythian It’s extremely rare to get a vendor into an unfavorable contract
- 13. Worst Practice # 4 Trying To Cheat Your Vendor © 2009/2010 Pythian ... and when you thought you did...
- 14. Worst Practice # 5 Sign a Long Term Lock-In Contract © 2009/2010 Pythian Do you know what will happen two years from now? 2005 2007 2009 2011 20??
- 15. Worst Practice # 5 Sign a Long Term Lock-In Contract © 2009/2010 Pythian Ensure innovations don’t happen!
- 16. Worst Practice # 5 Sign a Long Term Lock-In Contract © 2009/2010 Pythian Perceived cost savings Vendor protected from abuse with strict SLA’s
- 17. Worst Practice # 6 No Visibility On Vendor’s Service Delivery © 2009/2010 Pythian I don’t care how my server room looks like as long as service is up
- 19. Worst Practice # 8 No Executive Visibility On The Initiative © 2009/2010 Pythian In-house team will undermine the vendor if they are concerned for their jobs
- 20. Worst Practice # 11 No Executive Visibility On The Initiative © 2009/2010 Pythian Black Box vs. Visibility and Control
- 22. Worst Practice # 9 Draw Restrictive Lines of Responsibility © 2009/2010 Pythian Adopt Antagonistic Relationships
- 25. Worst Practice # 12 Ignore Alternative Service Models © 2009/2010 Pythian Utility based / Linear cost to efforts Fixed price / Fixed scope Value based
Editor's Notes
- Quick summary of Pythian P ythian is a leading global independent provider of remote administration support. We have world-class expertise in Oracle, SQL Server, and MySQL databases, their complex applications and the O/S platforms they run on. W e are authorized and even strategic partners with Oracle, Microsoft, and Sun Microsystems/MySQL O ur customers range in size from brand name Fortune 500s (in Finance, Healthcare, Utilities, Resource Extraction, Education, Retail, Logistics, R&D, and Manufacturing) to industry’s leading start-ups. For many we are instrumental in achieving efficiencies critical to their business. http://www.pythian.com/news/successStories.html P ythian manages over 1400 critical production databases and performs project work for some of the world’s most recognizable brands. Around the world we provide day-to-day support and project work for organizations such as Toyota, Australia Post, Casella Wines (makers of Yellow Tail), Harvard Business School, Allianz, AXA, Suncorp, Southern Cross University and Westpac. O ur customer satisfaction is driven by our commitment to collaboration, transparency and accountability in everything we do. Our clients regularly post their praise of our work to http://www.pythian.com/news/testimonials/ W e have unmatched expertise in advanced technologies such as MySQL Clustering, Oracle’s RAC, Dataguard, Streams, Exadata technology, Microsoft’s SharePoint, and much more. Thanks to the multitude of client environments we maintain, our engineers have real world hands-on experience with various technologies, and can be an invaluable asset during R&D, upgrades, consolidation and migration projects. P ythian offices are located strategically in Europe, North America and Australia,; staffed by our production DBAs who provide onsite project support as well as true 24/7 secure support, remote monitoring and proactive maintenance via IPSec VPN technology. These experts are divided into dedicated technology teams; therefore each client works with the same people every time. O ur commitment model is one of complete flexibility, with no long term “lock-in”, 30-day terms, and the ability to disengage with no strings attached. P ythian can be engaged in one of 2 models: Consulting rate per hour where upon a single dedicated expert is assigned to complete a given project. This is a one-off engagement where we perform no other duties. Or, Ongoing per hour rate where a dedicated 5 member team is assigned and the support of the environment is performed by “follow the sun” process. This model provides a full 24/7 monitoring and emergency support, where Pythian is able to proactively maintain the environment.
- Why talk about Outsourcing. Gartner identified new technology triggers. Something new comes on the scene and depending on the marketing and reputation of the company everyone and their uncle adopts the technology, product or service. They are then disillusioned by the faults of this “new comer” and withdraw from the adoption of this product/service/technology. Then the market matures and customers once again pick up the offering, this time wiser and more able to leverage this new invention.
- In the 1980s, the science of supply and vendor management was created in the Automotive industry as a direct result of Romance Oriented Buying. This is still relevant in our industry and it is endemic of how business is done by some corporations Romance; worst practice that exposes you to certain types of abuses: Where purchasing decisions are based on relationships as opposed to who can get the job done best. In our industry that is a difference between saving money or costing you more, or excellent or mediocre results. Referral is an important step to building trust, but it’s only ONE criteria in vendor selection. In most organizations, services vendor selection compares poorly to product & part sourcing vendor selection
- Known brand only; “nobody ever got fired for hiring IBM”. Companies in that space are a behemoth, will they have the right resources and will they be available for you when you need them. These brands tend to replace ingenuity and talent with Process Discipline. It typically results in call center/triage center mentality, where midnight operators are their first line of defense from their customers. It may not suit your requirements for a more agile/responsive resource. This will be your companies strategic decision whether to go with a generic one-stop vendor vs. a specialist
- Sole sourcing; These large brands sell anything and everything meaning they do not specialize. If you decide to buy a lawnmower from Woolies, chances are you will not be able to talk to a sales rep and do comparative analysis of other name brands, warranties, service plans, etc. Eliminates multi-sourcing the greatest of the benefits being specialization to address specific needs. Nature of IT outsourcing with big brands is that once you select one of these brands you than have to buy everything from them. They will not allow you to pick and chose items to match your needs. It eliminates internal competitive dynamic, and makes it very difficult to disengage yourself from the vendor, simply because all your eggs are in one basket. Thus if you need to replace your exchange outsourcer and your help desk, you now have to replace everything which makes it very expensive and difficult undertaking. This will most likely outweigh any cost savings you have contemplated on gaining through the new vendor. meat from a butcher, cheese from a cheese monger database services from database professionals, servers from a hardware vendor ...or you can go to a supermarket - which might be an option but research must be done. Decentralized compare to parts and products - attempt to lower supply base.
- How do you select a surgeon for Ricky Pointing? When he’s hurt, this person is an expensive asset that you are paying for and not getting any benefits. Your IT infrastructure is a lot unlike professional sports player (very valuable, a lot of money to own it, game changer – game might be lost without them). How do you select the team that will perform the interventions during emergency situations? Does cost savings come into effect when you are losing thousands of dollars an hour and reputation. Gartner recently put out a report saying that cost driven outsourcing is done, that it should never be the factor in selecting your vendor. No quick hit’s no immediate price break or cost savings
- This machine (your IT environment) prints you money. You could lose in one hour more than it would cost you to maintain it properly for one year Quality of service goals must be set Optimizing savings within those goals is fine. Starting with the savings not.
- You may choose the vendor on brand, reputation, cost, but in your interaction you have not researched their characteristics. Do you know their capabilities, where they stand in the community, where they are leaders (what technology area?)/where they are average. Pythian for example is awesome DBA outsourcer, we are an average to good SA practice provider This vendor will not sell you filet-mignon. Know your vendor’s capabilities.
- It is really important to understand how your vendor makes money. Understanding this item will allow you to understand their motivation and what expectations you should have from their service. Furthermore it will give you a window into your responsibilities as vendor manager (What will it take to get what I need from this relationship? How much oversight?) Flat rate motivation vs per hour/pay as you go/cloud Will they save you money by: being more efficient? automating and innovating? relying on less expensive labor? all of the above?
- This is a very difficult undertaking. You may have entered into 3 or 4 contracts this year, whereas the vendor enters into 3-4 contracts a week. Odds are they have been through various unfavorable scenarios and have learned to protect themselves against the very item you are trying to exploit
- So chances are at the moment you think you have one over them it turns out you are paying more than you bargained. SLA typically involving bonuses when hitting the targets and limiting exposure when they fail. This is an insurance policy for the vendor. All good relationships has winners on both sides. Ultimately your vendor needs to make money as well, otherwise they are not motivated and the relationship won’t last If it’s too good to be true, it’s probably too good to be true. There may be an SLA trick, or Scope trick at play
- Traditional IT outsourcing required a long term commitment. In Canada just last year, a company called CGI signed a 10 year contract for outsourcing. 5 years is still very popular, 3 years is now becoming the norm. This is a worst practice due to the simple fact that the world we live in (IT and otherwise) changes dramatically every year. Chances are your business will change every 18 months. If last year you locked yourself into a Cyrus or Exchange IMAP email service, this year you are not able to benefit from a cloud based system
- During your contract time you are not moving forward a centimeter. This means your vendor is not suggesting better ways of doing things, means your internal team is keeping status quo as they have no ability to affect change. (side effect of this is that their skills are becoming dated) Scope and SLAs are set - if vendor costs become cheaper to deliver on, the vendor is the only beneficiary Some kinds of efficiencies are difficult to claim, example when cost must be borne at vendor site to achieve customer efficiency, or vice-versa
- Long term locked-in contract gives you perceived cost certainty and perceived savings. Chances are your vendor is better at estimating the future work requirements and has insured a tidy profit for themselves. Meanwhile in a year’s time when for changes to industry reasons, or new technology, or new security threat, or new CTO initiative, you need to update your infrastructure, your vendor will demand penalty fees for changing the contract. The vendor has learned a long time ago to protect themselves against abuse and has SLA enforcing the fine print in most agreements
- If your attitude is that because you are paying fixed rate you do not need to see what the vendor is doing, than chances are no innovation, no efficiencies, no best practice are enforced in your environment. Furthermore you will never know if by switching to another vendor you will be better served, save money and have better performing environment. Always be wary of vendors who refuse to open their shop to your inspection Vendor tries to avoid providing visibility - claims it's their trade secret (avoids embarrassment and frustration for themselves) Customer sees it as the vendor's problem if they are inefficient (meanwhile - inefficient vendors have less room to reduce costs than efficient ones) Customers rarely ask for it – They don't know it can be provided, don't claim their power of negotiating Understanding the cost of provisioning certain services enables you to make better buying decisions (i.e. if this request costs half the dollar value of the contract - do I really need this that much?) Sometimes, even if customers do get visibility - they don't have key resources to use this knowledge to their advantage
- Without internal resources you cannot hold your vendor to a level of excellence you desire, because you simply don’t know. Don’t know if the vendor done an outstanding job recovering the downed server in an hour or if the Sev1 emergency never should of happened at all. How will you decide Transparency loses value if you don’t understand what you’re seeing Intervention when outstanding drifts to excellent is mandatory in order to maintain outstanding service. Will you be able to tell... (everybody can see BAD)
- Outsourcing is always a sensitive and political initiative that requires executive oversight and support. These decisions are made based on strategic leadership, following industry trends, competitive edges, technology adoption, etc. Executives in charge of these relationships need full accountability to judge performance of the vendor. If they are just seeing one sided reports, these may be skewed by adversarial internal staff. This is human psychology which means if your staff is worried about their jobs, they will not play well with others. It will lead to a soured relationship and eventual exodus of either your key internal resources or your vendor While execs are often the ones that push for it, the way it typically plays out is “set it and forget it”
- The chicken machine is your executive dashboard. How are you reporting to the powers that be, as to what is being done, and how it is being done? And yes, they just might want to eat chicken, but a rotisserie that allows them to see how the chicken is cooked, will give them the greater confidence that they made the right choice. Anti-black box, visibility and control
- In a lot of scope oriented outsourcing relationships it becomes imperative that all tasks are either the vendor’s responsibility or the client’s responsibilities. It’s either in scope, which means you already paid the vendor to do “it”, which means you should not spend any money on doing “it”, or it’s out of scope and because the vendor is not getting any money to do “it” and their motivation is to keep costs down and do as little as possible, they will not help on the task in any way. As a result a line in the sand is created. The reality is that many important initiatives and even daily tasks require collaboration and joint effort by all involved. This approach creates a “my team” vs. “your team” dynamic. Cross-company teaming is hard to achieve (not impossible) but mandatory for achieving maximum ROI
- By adopting agnostic relationship methodologies you will gain productivity of a well gelled team as opposed to them concentrating on whose responsibility is it to solve a problem (whose problem is it?). You don’t want to adopt an antagonistic relationship with the vendor that will eventually lead to you firing the vendor or the vendor quitting the contract. You can have customer vs. vendor or customer + vendor as one team vs. problem
- This could be considered the dirty little secret of the IT outsourcing industry. Most clients think that SLAs are there to protect them, where in reality, SLAs are designed to protect the vendor. SLAs are a method by which the client is fooled/forced into being contractually happy. Even the best negotiated SLA can leave you a bit unhappy. The fact that you signed a contractual agreement to be happy, will frustrate you when you encounter an exception not covered by the SLA that prevents you from taking any type of action or changing the contract. (Keep in mind, the vendor is delivering on all SLA requirements, therefore contractually you must be happy). SLA penalties (violation discounts) appear to be penalties to the vendor when they fail to meet the SLAs, but what they really are, is the vendor’s insurance policy that if they screw up your “money making machine”, they are not exposed to the cost of your down time or lose of reputation. Most of the time these penalties are immaterial (your down time is $1Million, your vendor gives you $1000 off). The way to avoid this is that if the vendor fails X amount of times, you are then automatically liberated from your lock-in contract (early cancellation). This way if the vendor is under performing at least you aren’t stuck with them for 5 years
- Imagine if you were only allowed to order pizza from one place. If you are going to be locked in for 3 years you will want to nail the contract down pact. You’ll want to quantify how many minutes to deliver, how many grams of cheese, how many olives per square cm, how thick the crust. The reality is that that it is not the way we buy pizza. We pick a company, if the pizza is good to exceptional, we purchase from them again. If the pizza is not to our liking, we order from someone else. This is called “Performance based procurement” it is a much healthier procurement dynamic simply because you are now in charge of whether you are delighted. You no longer have the need for “how many grams of cheese pizza SLA” which cost you management effort… and can you really measure how many grams of cheese were put on the pizza after it has been delivered? And if you are not delighted, you get to change the vendor. At MDS IBM has the Help Desk contract, IBM has the Oracle Apps functional support contract, Pythian has the database support contract, and Cap Gemini has the system infrastructure, network and pipe. As a result if they chose to move one component to another vendor, all they will need is assistance in the transition phase. This becomes impossible in a single source dynamic and moving to a performance based procurement model loses all appeal. So the key is to have 2 or more outsourcing partners whose services can be interchanged. You get to have access to more trained teams, you get to blend them into your overall IT strategy, you get them performing better as they are aware that in a sense they are competing for your business against each other (keeps them to a level of excellence). This dynamic will also have your internal team perform better, and if they are performing exceptionally well, then they are not a target for outsourcing (their jobs are safe). M aintain competitiveness between vendors and in-house groups - all earning share of work
- You should not ignore alternative service/cost models. Projects often require a blend of more than one model. Development should be outsourced to a fixed cost vendor. Day to day operations should be outsourced to a pay-as-you-go vendor. Value based model is new to the industry. It allows the vendor to share in the risk and the profit of the endeavor. It means that they will take a percentage of your savings or profit. If it goes really well, they get a higher reward. It can serve as a motivator to engage the best vendor resources available and get them to become more (a partner)
- Please contact me for a one-on one discussion [email_address]
- Please contact me for a one-on one discussion [email_address]
- Please contact me for a one-on one discussion [email_address]
- Please contact me for a one-on one discussion [email_address]
- Martin Wisniewski [email_address] Twitter: @pythian Visit: http://www.pythian.com