Thoughts on IT Vendor Management

Weird topic right? Well, I had an interesting conversation last week that turned to the topic of IT Vendor Management and having considerable experience in this, I shared my thoughts (as I am want to do in most cases!). It occurred to me later on that perhaps I didn't really express my thoughts on this subject accurately enough; meaning that there are many facets to managing vendors. So, I wanted to take a few hundred words to express my beliefs here and with any luck, many of you will agree. Or, if you disagree - please feel free to let me know; I am always looking to improve myself and my beliefs; every experience is a learning experience!

Vendor relationships are a tricky part of today's highly competitive business environment. Especially in IT, where often, you are striving to create a sustainable partnership that will benefit both parties. Generally speaking, I try to divide my vendors in two different ways. Those that supply me 'products': hardware/software/bandwidth and those that supply me 'services': 'development/support and the like.

Typically, for Vendors that supply me with 'products' or hard goods, the RFP process will cover the required needs of the business. Building a good solid relationship with the company representative will generally lead you to hidden savings and some nice 'perks' along the way. Here, open communications go a long way to a fruitful and profitable relationship for both parties. 

For my service providers, I treat these folks a little differently. Having a good, solid relationship with them is just as important. Open communications is just as important too; all that being said; you have to take a different approach when it comes to protecting your business. I like to boil it down to a simple thought; in general, service providers (a Network/Desktop Support company as an example) have the 'keys to the kingdom' so to speak. In other words, these are the individuals that are managing and controlling the flow of data throughout your organization. These are the organizations that are managing your firewalls, your Exchange Servers, your cloud based storage; so in that regard they must be treated with caution. Time to switch a vendor? Well, then I would advise caution. There is nothing more frightening than a disgruntled IT Vendor (or IT employee for that matter) who may know just how to cripple your business with the click of a mouse. Is that extreme? Perhaps. But it is not without merit.

IT Vendor Management (much like ANY Vendor Management) is not just about negotiating the best price. IT Vendor Management is about developing relationships and strategies that will mutually benefit all parties involved. It is about knowing the vendor and knowing how to manage that vendor. 

Here are some critical elements in my view to IT Vendor Management:

• It's Not Just An RFP - It is important to establish a relationship with your Vendors. While pricing is critical; it is important to set the tone of a mutually agreeable commitment. A good, competitive price is to be expected; commitment needs to be earned. Commitment is a two way street and it must be respected both ways.
• Share/Be Open, but PROTECT - The most critical thing you will do in forming a partnership with a vendor is sharing your priorities and critical information with them. But NOT up front! Share the priorities first; you will be amazed how a vendor can help you in establishing a solid plan and it will help them provide you a better quote. Once you have formed the partnership, then you can share more critical information; remember though, always leave yourself a safety net. Just because they are your front line for support, it doesn't mean you have to count on them 100%. Teach yourself or someone from your team their responsibilities. You may not need to know everything, but you will need to know just enough...just in case.
• Know/Understand Your Vendor - Just as your vendor needs to know and understand your business, you need to understand theirs as well. They, like you, are out to make money. It is in your best interest to understand that they are a profitable and growing company. It is not always about squeezing out costs. Understanding what makes them tick gives you an advantage when it not only comes to the negotiations, but to selecting the right vendor as well. For example, you never want to be the big fish in a small pond. If some or most of the pond dries up; you may be looking at a vendor that is gone before you know it.
• It's a Marathon, not a Sprint - Building a partnership with a vendor requires long term thinking. Constantly changing vendors to save a few pennies, in the long run, will cost you more than you save. Set up long term goals with your vendor; look at potential savings options down the road. Plan...plan..and plan some more.
• Win - Win, Benefits EVERYONE - When negotiating your contract with a vendor, make sure it benefits both parties. A Win - Win situation is always more valuable than squeezing the last dime out of the vendor. A Win - Win give you a PARTNER rather than just a vendor. Remember, the vendor is in business too and at some point they may just have to fire you as a client; especially if it is no longer profitable to business with you.
• Value is not just about $$$$ - A good value is not just about the money you squeeze from a vendor. Once you realize this, the savings will come faster than squeezing them. Quality has a price and there is value to this. For example, buying a t-shirt at a discount store may save you anywhere from $0.50 - $1.00 per shirt; but that same shirt, as a name brand, at an Outlet store, while maybe costing $0.50 more, will last you 2 or 3x as long after repeated washings. Again, you are thinking long term here. A quality service provider that will have you up and running 50% faster than the cut rate provider, will save you profit.

I know this is a short list but I have already exceeded my few hundred words promise! I will talk about this more in a future post! Do you have some thoughts on this? Please feel free to share them! I always want to learn more about being a better IT/Business Leader and I can only do that with the valuable insight of you, my trusted peers!