There are deals... and then there are ISG deals!

IT systems have been deeply and extensively integrated in companies' businesses for a few decades now, especially in the more developed world. Many companies who were early adopters often end up with multitude of applications and infrastructure components with lot of redundancy, many unused apps, scanty documentation and lost knowledge. Over the past several years, "rationalizing" such IT has been a prominent pitch from system integrators.

As IT systems became huge and complex, services around those also had to be well structured. And since they are most commonly outsourced now, the contracting of such 'support & maintenance' services also demands careful and comprehensive detailing. Finding the right IT services partner is a mammoth task fraught with risks hard to foresee.

There's also considerable amount of risk for a service provider entering into such engagements, as they base their offers, proposals and contractual agreements on very little information and lots of assumptions. Even due diligence exercises don't reveal many details. The competitive selection process forces them to paint lot of rosy pictures. And pricing is extremely tight these days because of the constant pressure to reduce, be more productive, automate, invoke AI, and so on. So they end up squeezing wherever they can - effort, cost, margin, price - while committing the moon and the stars in addition to the earth - all in a couple of years' time.

Often times, large companies engage consultants - third party advisers (TPA's) - to facilitate the whole vendor selection process. It does make sense as TPA's bring in relevant experience and understanding of the vendor landscape. They also claim to specialize in such selection processes such that the best vendor is chosen to serve the client interests perfectly.

In an effort to position and differentiate themselves, TPA's have developed different approaches to go about the whole process of IT services vendor selection. In very broad terms, the TPA's offer on three dimensions

• Documentation
• RFP package creation
• Contract documents
• ...
• Process
• Managing the prospective vendors including communication and information sharing
• Defining the process and timelines, e.g.,
• Pre-RFP interactions
• RFP release
• Vendor briefing
• Q&A - from vendors on the RFP and responses back from the customer
• Pre-submission presentation(s) by vendors - sometimes called CAS (Customer Alignment Session)
• Submission of the responses by vendors
• Defense presentations by vendors to customers
• Short-listing for subsequent stages
• Due-diligence by short-listed vendors through meetings with customer SME's
• Further information sharing for response refinement
• Revised submission by short-listed vendors
• Defense of revised proposals, discussions, agreements - disagreements
• Commercial negotiations
• Best and final offer (BAFO) from the vendors
• Final selection
• Contract drafting
• Negotiations on clauses, redlining, agreements
• Contract signing
• ...
• Facilitating the whole process
• Experience
• Offering advice, suggestions and recommendations

Having worked on IT services deals from service providers' sides for a long time, there is one TPA whose deals / RFP's presales folks on this side hate to work on although they might fake being excited - it's ISG.

I must mention that there are many other TPA's which follow approach similar to ISG's. I am taking ISG as an example as it seems to be the most prominent TPA with this kind of approach and sets the standard for TPA-led deals.

Here are some interesting characteristics of those deals:

• Excessive documentation just for proposals: ISG develops the RFP package for clients, each package composed of hundreds of documents, each in a certain standard 'ISG' format which they love. The package would be composed of a large number of these documents which are sort of draft contract documents - say exhibits and appendices - in addition to a few which provide information needed to respond to the RFP. Each vendor participating in the race has to review the entire set of documents, enter their responses wherever required and agree to each word written in those documents. A lot of these documents have relevance when the vendor is close to contracting. Contract, though, is generally an item for discussion much later, once the technical clutter is overcome, and just a couple of vendors remain in race. However, ISG makes every vendor devote resources to work on all the documents and in the process leads to hundreds of person hours of wasted effort in multiple companies.
• Rigid Templates: ISG swears by its templates for everything. Some of those are needlessly confusing or over-engineered to sound scientific. An example is their pricing template.
• Process rigor: In the name of making the process rigorous ISG often does 2 things
• Share information in lots or share updates to info already shared. This not only creates anxiety among the poor vendor architects working on developing response to the RFP, but also often makes a lot of expended work redundant when key data points change or come later, assumptions get invalidated, etc.
• Tight timelines. For all the extra work that needs to be done by large teams at each vendor company, ISG would allot extremely tight timelines. For example, a large $100 Mn worth of RFP which would typically have 150-200 page core technical proposal and another 200-300 pages of documentation covering all aspects of the potential contract. A typical IT services vendor would have a core team of 20-30 people actively contributing to this response. Then there will be 20-30 leaders over multiple levels who'd be making all the noises, asking questions and reviewing. Then there will be many many meetings daily just for all these guys to sync up on various things, leaving almost no time to work for those who are supposed to put their heads together and create the solution for the customer ask. It just becomes a boiler room on vendors' side, with the additional pressure of aligning all stakeholders, getting everyone's blessings, redoing many things coz new information came in, and turning it all over to ISG in 30 days - the typical timeline.
• Insane milestones: In addition to deliverables that are voluminous and detailed to the point of redundancy, they often seem to enjoy setting milestones that make it impossible to work with. E.g., a presentation just 1-2 days after the proposal submission, final Q&A responses 2-3 days before the proposal submission, etc.
• Large volume of repetitive and visibly redundant work: This has been highlighted before in several ways but needs a separate mention as well. Instead of boiling the ocean with each vendor, most of whom would not even reach close to contracting, it would make more sense to go ahead in steps. Contractual clauses agreed in haste in the proposal stages would be discussed later in detail between the right personnel anyway, and can therefore be taken up at a more appropriate stage. For example, while core technical elements and commercials are fluid, what's the point of agreeing about change control up front?
• Extremely limited facetime with clients: During various stages of the deal, vendors are allowed very limited interaction with clients. It is hard to figure out whether the proposals address client objectives. And depending on the kind of due-diligence offered, there are chances that a lot of critical information is discovered even by the 'winner' while taking over the actual work, the so called 'transition'.

ISG is a very high profile TPA for IT outsourcing deals. Their method really saves lot of effort for themselves and their clients when finalizing vendors, and in the contractual formalities. Their templates, especially, make it easy for them to assemble, communicate and consume information from vendors and to present it in the most insightful ways, given that these templates have been used repeatedly and have become their standard, which helps in working faster with all the information. Such a templatized and well-defined process-centric approach definitely derisks vendor selection process for their clients. And over time they have built a vast portfolio of deals executed based on the same template, and am sure, incorporated learnings to make it better. And perhaps that's the very reason ISG, and the like, are hired.

However, the job of a consultant or TPA is to make the overall process efficient and the outcome successful 'for all parties', not just the party that's paying them. For all the vendors participating in such selection processes, the wastage in terms of resources and the impact in terms of stress on all of the personnel engaged is tremendous.

I must add that all large and traditional IT services companies - Indian or non-Indian - have become bulky and inefficient. There is more leadership than necessary, more reviewers than doers, more talkers than hands-on executors. And even among the doers, the skillset per person is extremely limited and bounded. So, for large deals they end up with a large team with lots of people bringing in tiny chunks of capability. Then there are 'leaders' who pretty much just review and comment, and there are multiple levels of those - pushing up the review and trickling down the comments as the deal approaches submission. And at the lowest level are a small set of people who actually understand, define and write. They are pushed and crushed to the point of break down.

Have you worked on ISG deals? Or others with similar approach? What's your take?