John McKenna is chief strategy and services officer for CompuCom, a $1.7 billion IT service provider based in Dallas, Texas. The company currently manages more than 2.3 million seats and 120,000 servers and monitors more than 80,000 devices. Its help desk agents answer almost three million calls a year. In this interview, McKenna discusses how to select an IT provider and create a successful ITO relationship.
Q: What is CompuCom’s strategy in today’s crowded IT services market?
A: CompuCom provides Tier-1 service quality at a Tier-2 cost, which we believe allows us to deliver superior IT value to our clients. We provide quality IT services at a price point that the Tier-1 providers can’t sustain and the smaller providers can’t match. Our main goal is to partner with our buyers to facilitate change to drive greater value from their IT infrastructure.
Q: Why is quality so important?
A: We believe that quality is the only long-term method for keeping buyers happy. We are passionate about quality; it is in our DNA. We measure and evaluate our performance using dozens of formal metrics to ensure we stay dedicated to our mission. We have been early adopters of ITIL best practices and gaining ISO 20000 registration, which are disciplines and frameworks all focused on delivering the highest quality.
We also use third-party analysts to benchmark and audit our processes. For example, SCP audits our help desk and examines 120 different processes. We’ve been doing this for many years and we continue to raise the bar every year. This is the only way to keep each function at its peak. We have achieved above industry average client satisfaction levels for seven consecutive years and received numerous industry awards
Q: What is the best way for companies to lower IT outsourcing (ITO) costs in today’s challenging economic climate?
A: The mantra “better, cheaper, faster” is probably more applicable in a down economy than in a growing one. But there is a caveat. In downturns, economic pressures can force some organizations to move too fast. Agility and speed are extremely important, but it is also our job to make sure our buyers have a comprehensive roadmap in order to reach their goals without making foolish mistakes. We are experts in integration and IT alignment. By leveraging our best practices and introducing the right automation, we help eliminate siloed processes, duplication of efforts, and inefficiencies to lower costs while enhancing service quality.
The key to success is the initial benchmarking of various parameters such as delivery, cost, and quality. A prospective buyer and the service provider can then ascertain relatively easily if there is a viable solution. The core competence message really comes under the microscope in a recession.
Q: Did you observe any common ingredients for a successful IT implementation?
A: First, the buyer and the provider were able to communicate effectively, i.e., there’s a good cultural fit. Second, the IT provider did a good job of explaining the business value of outsourcing. Third, the provider did a great job of managing client expectations; they were clear and crisp. Fourth, everyone has to clearly understand the scope and end goals. There can be no surprises.
Q: Can you define a successful ITO strategy for today?
A: Utilizing formal open-book metrics is the way to achieve a successful ITO strategy. At CompuCom, we use third-party buyer satisfaction metrics as a benchmark against industry average and compensate our teams based on that performance. We strive to be a company that is easy to do business with. We also have a comprehensive internal process review with our CEO monthly gathering clients’ perceptions, as well as SLA performance. At the end of the day, a satisfied buyer who gets results is what it is all about.
Q: When does IIM (integrated infrastructure management) provide the greatest impact?
A: In my opinion, IIM can provide value and impact even to a mature and well-run IT infrastructure. We typically see the most significant impact upon an organization that has not yet realized that IT can drive significant business value. Our IIM approach enables us to formally benchmark results so buyers can make informed decisions. As an example, we have several buyers who have seen costs cut in half and productivity improvements increase twofold as a result of partnering with CompuCom in an IIM engagement.
Q: How can buyers improve their ITO experience?
A: First, find a partner you can trust. Then, be completely open with them and share all the facts. Be sure to clearly define benchmarks and improvement objectives. Make sure you align incentives; you have to be on the same page. Then together you can overcome every hurdle.
Q: How have ITO deals changed?
A: Contracts are no longer just about cost. Buyers now view infrastructure as a process and manage it as a service. This allows buyers to reap rewards such as a one-time cash return from outsourcing capital expense items and more importantly, ongoing increased variability in IT resource consumption. Buyers no longer have to view infrastructure management as a fixed capital expense; they can manage it as a variable operating expense.
Second, there is a logical progression of merging of BPO and ITO engagements. I think that it is virtually impossible to successfully achieve the business potential of BPO deals without IT. This, of course, also brings to bear the global delivery model, which is much more of a reality today.
Q: Are current outsourcing contracts structured for innovation?
A: Yes and no. Historically contracts simply aim to reduce costs. But increasingly some contracts do include agility/innovation. We think it is important to have innovation as an integral part of every contract and engagement.
Innovation includes a change management program to help the client adopt technology drivers.
Infrastructure is driving business innovation through new technologies such as autonomics, Internet, and mobility. We see and welcome a continued focus on innovation.
Q: How has offshoring impacted ITO?
A: No doubt, offshoring has redefined the cost model and introduced a renewed focus on the global delivery model. However, we see a normal adoption curve. While some early adopters experienced great success, others rushed into offshoring too quickly. They experienced poor processes and received inadequate quality, which caused them to pull back and return these services to North American-based delivery models.
There is no doubt in my mind that there is business value in offshoring; however, as with most things technological, it’s all about setting and managing expectations. CompuCom believes the offshore market will continue to grow significantly for the foreseeable future. Then, as with many other trends, it should find its own level.
Q: How important is ITO to CompuCom?
A: Essentially ITO is a critical component of CompuCom’s overall offering. With a heritage rich in the hardware and software reselling business, we have developed strong and deep relationships with various hardware OEMs and software publishers that allow us to lead by example in terms of how we work together. ITO today is a combination of driving business value through delivering high-quality hardware, software, and services to our clients with guaranteed quality and service level metrics. Our high renewal and buyer retention rates demonstrate our buyers’ satisfaction with our offerings.
Q: How did you wander into outsourcing?
A: I worked for a large UK manufacturer that became SAP’s first client. I handled SAP’s first client/server implementation in the United States and ended up becoming one of SAP’s early employees. After SAP, I co-founded International Consulting Solutions, which focused on consulting and implementing SAP software. In 1995 Deloitte & Touche purchased the company. I later became a partner and then joined CompuCom 10 years ago.
Q: How did you develop a focus on strategy?
A: One buyer at a time. I’ve lived through hundreds of business and infrastructure management engagements at some of the biggest companies across many continents. You learn how to distill information and take a long-term perspective while delivering business value.
Q: What’s been the most valuable business lesson you learned? How did you learn it?
A: I founded my own company and learned the difference between profit and cash flow. I obviously knew sales and IT but had to quickly refine my skills around finance, legal, HR, etc. Starting my own company was certainly a baptism by fire, perhaps not for everyone, but it worked for me.
Q: What’s your favorite book?
A: Most recently I read “How Soccer Explains the World: An Unlikely Theory of Globalization,” by Franklin Foer. The book provides a different outlook on soccer’s global impact outside of sport.
Q: Where did you grow up?
A: I was born in Glasgow, Scotland, and have a degree in computer science from Heriot-Watt University in Edinburgh.