IT Vendor Management: Four Secrets Revealed
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Over the several decades that I have been involved with information and communication technologies, I've come to recognize that there are dozens -- or even hundred -- of choices about how to do almost anything. That's great if you like the choosing process, but it's not so great if your objective is to have a relatively simple life--and to manage the operational costs and consequences of your choices.
Choosing is complicated by the tendency of vendors to sell you their capabilities on the basis of what they will do soon, rather than what they can do now -- and by our tendency as buyers to base decisions on just such future promises. This has always seemed to me to be the essence of foolishness. We are, essentially, two sets of well-intentioned liars:
- We ask for more than we know we need or that a vendor can deliver because we want to at least get some of what we do need.
- Vendors claim to have whatever capability we seem to want because, if they don't, their product won't generate enough revenue for them to actually finish it. So we're both maneuvering around a set of artificial deadlines driven by budget cycles and compensation models. Crazy.
How do we navigate an overabundance of technology capabilities, future promises and really neat features we will probably never use?
Start with standards. As much of a pain as it is to establish and maintain sets of standards for technology selection and vendor sourcing relationships, it's the best way to start cutting through the clutter. Eliminating options before the debate on selection starts can simplify life.
This is true even when heat gets generated every time an executive (usually new) arrives with a different set of preferences that exceed your established standards. And a standardized infrastructure and set of platforms is much more cost-effective to operate and support. That said, keep in mind that freezing standards forever is just as dangerous as allowing a capability free-for-all. Standards have to be flexible enough to evolve as technology changes, or you'll get trapped in obsolete technology sets that can't stay competitive. Standards aren't the whole answer, but they are important tools if used intelligently.
Real, strategic relationships with a few vendors can be valuable, but only if the vendors can look past this quarter's order book and work with you to get the best results from their products and services at a price you can afford. In all my years of advising on and procuring technology, I've seen this happen only a handful of times.
It takes a really enlightened account relationship (and a smart and determined buyer) to make it work over any length of time. And I've never seen it happen when all procurement flows through a corporate function that is only focused on buying at the lowest possible cost
Learn to Say No
Saying "No" firmly but politely helps. I probably get a dozen calls a week from vendors I don't currently deal with who either:
- assume I don't yet have anything like their product; or
- want to supplant what I do have.
A lot of these calls are unsolicited follow-ups to the market scans and research we do to ensure that our standards are still appropriate. We only make vendor-impacting changes a couple of times a year. The rest of what we do is just noise.
Everyone wants a piece of my time, but I don't have the capacity to listen to all the pitches. So I just say "no" as politely as I can. (Oh, and by the way, dear vendor, stop expecting me to tell you how I do it today. I'm not going to give you free competitive information over the phone.
Finally, consider doing all technology procurement through a couple of the better distributors. I used to avoid this and dealt with the vendors directly, but I've changed my mind over the past couple of years.
The major vendors don't want to deal with you if your budget is less than $20 million a year in orders. Their account teams below the global account level are generally mediocre and constantly changing.
It's better to deal with a local or national distributor who is willing to learn what you need, cover all the vendors you use, provide added-value services and generally treat you like you are more than transactional cash flow.
John Parkinson is the head of the Global Program Management Office at AXIS Capital. He has been a technology executive, strategist, consultant and author for 25 years. Send your comments to firstname.lastname@example.org.
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