Metrics for MSPs- Using Data to Drive Supplier Improvement

 Tuesday, August 19, 2014

Many Managed Services Providers (MSPs) sometimes find the idea of reporting on their supplier base an overwhelming task, largely due to the amount of data that is available and the amount of interpretation required to effectively assess results. Ultimately, the MSP is held responsible for providing metrics on their supply base, whether the goal is to:

  • Help the customer rationalize their program decisions.
  • Drive competition to create a smaller, more effective supplier list for the customer.
  • Improve the supplier’s results by providing tangible feedback on performance.

Most VMS systems don’t provide reports that suppliers can pull on their own (with the exception of worker-specific data like timesheets or approval statuses). This lack of access is partly what leaves the MSP responsible for defining what data is used to create supplier scorecards. This data is also incorporated into client reports, which is where interpretation can go awry. A supplier scorecard typically includes standard metrics related to general program results, such as cycle time (typically based on submit-to-fill timelines) and turnover (whether favorable or unfavorable). When taken at face value, these metrics can paint a negative picture of supplier performance that often goes unchallenged. However, the MSP can use their Vendor Management System (VMS) to provide additional insights that help drive real change.

The VMS provider partners with the MSP to assist with these reporting efforts. In Provade’s case, we use the best reporting engine in the industry – Oracle Business Intelligence Enterprise Edition (OBIEE) – as the foundation for our analytics. This enables users to get a holistic picture using enterprise-wide data. Sometimes Provade’s team will go into a discussion with a customer and they will be very quick to judge their suppliers. When we ask why, they show us a report provided by the MSP that shows, for example that out of ten submissions, three workers were hired and then all three left their position early or were terminated. As the VMS provider, we can leverage OBIEE (which provides very robust analytics abilities) and dig deeper. In this scenario, at the surface level it does look like the supplier is not performing. But by adding another filter that looks at manager behavior related to interviewing and the hiring process, we might uncover that these three resources were hired without an interview or a phone screen. This would indicate that the supplier is not the issue, and that the manager’s candidate qualification process is to blame.

Because the tendency is for customers to take supplier metrics at face value, it is up to the MSP to provide that additional level of depth and present more sophisticated reports that reflect the underlying behavior and nuances behind the data. Scorecards may include common metrics across the supplier base, but the metrics that matter to each client vary greatly.

VMS analytics are also extremely effective in supplier audits. The system provides time stamping and user information for activities, such as when approvals of work orders or change orders take place. The approval hierarchy can be customized within the system to align with – and enforce – your internal processes, and in the time of an audit, the activities are logged at each stage so that you can identify trends. This allows you to not only audit suppliers but to identify where internal process breakdowns might be negatively impacting your results.

For example, in an analysis of a customer with multiple IT requisitions, we sought to discover at what point the ideal candidate is identified in the hiring process. During the supplier audit, we discovered that on the ninth day, the supplier submitted the candidate that was chosen for hire. This indicated that the supplier didn’t have a pipeline of candidates in place so it was taking them longer to find the right person who was available at the right time. This helped the customer understand that candidates who are submitted earlier might not be the right fit, and that this was more a reflection of the changing hiring landscape rather than the supplier’s overall effectiveness.

Ultimately, clients shouldn’t worry about creating a supplier scorecard through a VMS – this is the responsibility of the MSP. The key stakeholder at the client will define what matters: if they are in procurement, cost savings might be more significant than contractor quality or attrition. MSPs must work with their suppliers to define what is truly important to each client and find the best way to report on the metrics that matter most. This will enable all parties to have a common understanding of what is important, and allow the reporting structure to evolve as overall business goals evolve.

Analytics allow an MSP to provide value-added services to their customers, by enabling the MSP to develop deeper insights into supplier performance and drive improvements in the program. Provade VMS helps our customers make better business decisions by providing the OBIEE analytics engine that allows the program operations to drill down into the data and uncover the real opportunities for change.

To learn more about Provade’s reporting capabilities and their ability to transform MSP/client relationships, request a consultation today.


About Author

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Sreenivas Dinu Davuluri is Chief Buisiness Intelligence Architect for Provade Inc