The Supply and Demand Split
The split of sales and delivery is well understood in traditional services organizations. The Sales team reaches out to customers, understands requirements, gets the order and then manages the customer relationship on an ongoing basis. On the other hand, the Delivery team is responsible for ensuring services are provisioned, as agreed in the Statement of Work. In some cases the Delivery team is dedicated for customers, in many cases it might be shared.
This concept is being adapted by quite a few IT organizations too where a split is created between a Demand organization which manages client relationships and a Supply organization which is a factory delivering the “goods”. David Mark and Diogo Rau of McKinsey talk about this on cio.com in this article.
Earlier last year, I was helping a large wealth management organization re-design their Production Support organization structure. The exercise was driven by two key challenges they were facing – a) Their organization being perceived as largely being reactive and unresponsive both by the Business and Application Development teams, and b) Inadequate focus of the team on quality and process improvement. The Production Support organization was split up into six teams as per Lines of Businesses (LoBs), Each team was headed by a person designated a “Function Head”, and All Function Heads managed their respective teams which were spread across geographies in their own unique ways.
We performed an in-depth analysis based on interviews and workshops across the Production Support organization, Business stakeholders and also the Application Development owners. What were the learnings? -
1.The group’s face-off with Business and Application Development teams was not well structured and consistent
2.Given they were always in a fire-fighting mode, Function Heads were limited in their capacity to do relationship management work such as joint planning, regular reporting and communication
3.Role clarity issues were reflected in multiple levels participating together in the same meetings
4.Quality issues due to inadequate process standardization across teams
While what came out as findings was not entirely new, putting the analysis in perspective did help us quickly zero in on possible solution options. For one, there was a clear case to separate out a relationship management (a.k.a. Demand organization) layer which would be responsible for liaisoning with the Business and Application Development teams and specifying requirements and specifications to the core delivery organization (a.k.a. Supply organization). The charter of this team was defined to include – Participating in strategic and tactical planning for the LoB, Managing the Service Level Management process based on Business expectations and delivery costs/ capabilities, Managing funding and budgeting, Conducting periodic service reviews and Managing client issues and complaints.
In my next blog, I will talk more about how structure issues impact quality and process improvements.
