Some of the industry's biggest technology suppliers risk missing out on outsourcing contracts if they cannot lift their lagging service management standards, according to a group of IT managers.
At a panel discussion at the IT Service Management Forum (itSMF) conference in Sydney this week, IT managers from the public and private sector agreed there was a general lack of compliance with service management standards by many vendors.
IT service management governs service delivery and support. Certification standards such as the Information Technology Infrastructure Library (ITIL) framework and ISO 20,000 are increasingly being used as best practice benchmarks in the industry.
"It's amazing how many of the vendor relationships are stifled because of the lack of compliance with ITIL practices," said Roger McPhee, acting director -- business and information services, Queensland Transport.
Many of the vendors who weren't up to scratch were "multi-billion dollar organisations", according to McPhee.
QLD Transport implemented the ITIL framework to make up for vendors' failings in this area, he said.
"Some of our key services fall over and the first we hear of it is when a customer calls.
"That was one of our key drivers for going down the ITIL path," he said.
"Certainly the vendor relationships are proving to be problematic. Not to say that they don't understand the concepts, but I don't think it's part of their practice."
ITIL expertise was a key factor in TransGrid's decision to award a multi-million dollar IT services contract to Mincom this week.
The framework was "core" to service management at TransGrid, said chief information officer Tony Meehan, and had contributed "a lot" to reducing IT costs by more than 20 percent over the last three years.
Both ITIL skills and ISO 20,000, which is an international standard covering parts of the ITIL benchmark, were a requirement of TransGrid's request for tender.
"Our tender that we went out with earlier in the year asked [vendors] to do a self-assessment, and tell us how they thought they were going against [ISO] 20,000."
"We'll want to come back to that now with Mincom as the winner and look at detail of that and target some areas where we might agree on improvements," he said.
The Commonwealth Bank, however, was struggling to find vendors well-versed in ITIL.
The bank uses ITIL as part of its "blended sourcing" approach to share and gain internal accountabilities and expertise with vendor partners.
Yet many vendors had not caught up with this approach, according to John Talbot, general manager, operations management, at the bank.
"I think the large suppliers really quite struggle with it," he said.
"I think the dilemma for most outsourcers is a lot of their revenues are consumption-based....Where's their incentive for problem management?
"If I give a supplier 25 dollars every time I do call the help desk, [for] major system outages, they sort of go 'yes, we've made another million!'."
Deeper industry issues would have to be addressed before the problem could be solved, according to Talbot.
"The industry I think in a lot of respects has themselves to blame. Because we've put them in that position where we talk about consumption-based services, so we need to rethink that bit."
In government, moves were afoot at the federal level to have service management requirements of vendors, according to Branko Milenovic, ITSM project manager at Centrelink.
Currently, government suppliers had no ITIL compliance or certification, he said.
"We do have to follow a government procurement process, which I guess in simple terms means you have to be an endorsed government supplier, but it doesn't necessarily mean that you have to be ITSM compliant or ITIL compliant."