ITIL-SOA practice question 10 of 10

Scenario A financial services organization has undergone a period of rapid expansion. From its operating base it has expanded to serve customers in…

Full set: 14 questions
Scenario A financial services organization has undergone a period of rapid expansion. From its operating base it has expanded to serve customers in over 25 countries spread around the globe. There are plans to enter more markets in the next 12 months. The key stakeholders involved in the global expansion project have briefed the chief information officer (CIO) on the plans. They have identified IT service performance as one of the major threats to the plan. The CIO has been under pressure from the board due to poor IT service performance in the previous six months. The chief concern has been significant performance variations in network connectivity and communications. The organization currently has three contracts with different local external suppliers in operating markets supporting three IT network hubs. Whilst the suppliers are all happy to follow local internal IT processes, getting the three to work together on incidents or changes has proved increasingly difficult. A number of outages have resulted in a blame culture where even the local internal IT departments have been sympathetic to their service providers, resulting in strained relationships between these internal departments at an operational level. Other issues encountered at one or more locations have included: • Long-term service improvements have been sacrificed in favour of short-term fixes that avoid the payment of contract penalties by the suppliers • Changes in ownership of the customer relationship by the suppliers The CIO believes that a lack of communication between suppliers has been the key cause of failures. All three supplier contracts are due for renewal in the next 12 months. After consultation, a decision to re-tender for network services has been taken by IT, and approved by the CIO and the board of directors. Refer to the Scenario. When considering suppliers, which one of the following options would BEST ensure that network issues are addressed in order to meet the needs of the financial services organization?
Answer options
A: Consideration should be given to entering into a partnership with three local suppliers who have worked together before in similar circumstances. This will ensure both communication and local cultural differences are addressed. Supplier management should have a single, defined local point of ownership with responsibility granted for operational management of issues. The threat of contractual penalties should be removed to encourage suppliers to think longer term about sustainable service improvements. Suppliers will commit to the use of local IT processes to ensure compliance and good communication. Suppliers are to ensure that staff engaged in the contract (in particular the account managers and customer service managers) are fully ITIL trained so they understand and can implement service management best practice disciplines.
B: Consideration should be given to entering into a partnership with a single supplier where mutual trust and a good relationship can be established. Supplier management should have a single, defined point of ownership within each country to manage all local operational issues. A risk-reward framework should be mapped out as an incentive for the supplier to solve local issues. A strategic alignment should be sought with the supplier where values, goals and cultural fit are similar to that of the financial services organization. The supplier should set up its own dedicated global account management team to deal with transition and on-going issues by working with local IT support teams.
C: Consideration should be given to entering into a partnership with a single supplier where mutual trust and a good relationship can be established. Supplier management should have a single, defined point of ownership with local responsibility granted for operational management of issues. A long-term, risk-reward framework should be mapped out to encourage the supplier to work towards sustainable service improvements instead of shorter-term quick fixes. A strategic alignment should be sought with the supplier where values, goals and cultural fit are similar to that of the financial services organization. Implementation of a joint partnership team to initially ensure a smooth transition of the service to the new supplier and to subsequently manage on-going service improvement. Correct answer
D: Consideration should be given to re-contracting with the three current local suppliers. There is no suggestion that they are technically incompetent; it appears to be communication and local cultural differences that cause problems. Supplier management should have a single, defined local point of ownership with responsibility granted for operational management of issues. The threat of contractual penalties should be removed to encourage suppliers to think longer term about sustainable service improvements. Communication issues should be addressed by ensuring all incidents are reported to a single global service desk that the financial institution should implement. Suppliers are to ensure that staff engaged in the contract (in particular the account managers and customer service managers) are fully ITIL trained so they understand and can implement service management best practice disciplines.
Correct Answer:
C. Consideration should be given to entering into a partnership with a single supplier where mutual trust and a good relationship can be established. Supplier management should have a single, defined point of ownership with local responsibility granted for operational management of issues. A long-term, risk-reward framework should be mapped out to encourage the supplier to work towards sustainable service improvements instead of shorter-term quick fixes. A strategic alignment should be sought with the supplier where values, goals and cultural fit are similar to that of the financial services organization. Implementation of a joint partnership team to initially ensure a smooth transition of the service to the new supplier and to subsequently manage on-going service improvement.
Explanation

This option provides the most comprehensive and strategic solution to the problems outlined in the scenario. Moving to a single supplier directly addresses the core issues of poor communication, lack of coordination, and the "blame culture" that arose from managing three separate suppliers. A long-term, risk-reward framework is the best approach to counteract the current supplier behavior of implementing short-term fixes to avoid penalties, encouraging sustainable improvements instead. Seeking strategic alignment and establishing a joint partnership team fosters a collaborative relationship built on mutual trust and shared goals, which is essential for supporting the organization's global expansion.

Why Incorrect

A: This option retains the complex and problematic multi-supplier structure. Simply choosing suppliers who have worked together before does not guarantee future collaboration under a new contract. B: While advocating for a single supplier is correct, its focus on a risk-reward framework for "local issues" is less strategic than C's focus on long-term, sustainable improvements. D: This is the weakest option as it recommends re-contracting with the current suppliers who are the source of the existing problems, failing to address the root cause of the issues.

References

1. AXELOS, ITIL® Service Strategy, 2011 Edition (ISBN: 9780113313044):

Section 3.6.3, Sourcing Models: Discusses the benefits of a single-source or prime contractor model in reducing the complexity of supplier management and providing a single point of accountability, which directly supports the move to a single supplier.

Section 4.6.5.2, Sourcing options: Highlights that single sourcing "simplifies the relationship and provides a single point of contact," which is the primary need identified in the scenario to overcome the blame culture and coordination failures.

2. AXELOS, ITIL® Service Design, 2011 Edition (ISBN: 9780113313051):

Section 4.7.2, Supplier management purpose and objectives: Emphasizes obtaining value for money from suppliers and ensuring they meet their commitments. A risk-reward framework, as suggested in option C, is a mechanism to align supplier performance with business value, moving beyond simple penalty avoidance.

Section 4.7.4.3, Supplier and contract evaluation and selection: States that evaluation should include the supplier's "willingness to be flexible and form a partnership," supporting the call for strategic alignment and a joint partnership team.

3. AXELOS, ITIL Practitioner Guidance, 2016 (ISBN: 9780113314874):

Section 3.3.3, Guiding principle: Collaborate and promote visibility: This principle advocates for working together across boundaries. The creation of a "joint partnership team" as described in option C is a direct application of this principle to overcome the communication silos described in the scenario.

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