Partnerships between you and your vendors need a whole new take to create rich value in the digital age.

Having spent the greater part of my career as a client executive, there have been a plethora of opportunities for me and my teams to evaluate, negotiate, and manage suppliers of all shapes and sizes. It’s likely that you have also been a participant in the sourcing process.

If so, you’ve examined products, researched the seller, evaluated the price, agreed or disagreed on the stated value, and negotiated until you were satisfied you had won the best deal you could. You then spent the next several years locked in a contract and left to manage the relationship with your selected merchant. Perhaps you have found this to be less than fulfilling — particularly if the sales team is hard to locate just when you need them.

You may have gotten a “steal of a deal,” but how often do you find yourself facing buyer’s remorse?

Wrangling the best price on hardware and software has long been a part of the procurement process, along with the expectation that the customer is always right. But this one-dimensional approach won’t work in the digital age.

Today, successful vendor management needs more than the face paint of attractive upfront costs; the marriage needs a deeper commitment than what is written in the contract.

You Pay for What You Get

A recent article on vendor relationships from thebalance.com1 argues that there is negative financial impact from choosing quick savings over long-term and more expensive relationships, noting: “Vendor management seeks long term relationships over short term gains and marginal cost savings. Constantly changing vendors in order to save a penny here or there will cost more money in the long run and will impact quality. “

IT is pressed to deliver more impactful business value, and whether that is product or services, the transformation of IT from a back room engine to a customer-first enabler requires a fundamental shift in both approach and skills from the IT team.

This shift has squarely placed IT in the position of needing more support, talents, off-script innovating and extended resources from every quarter. This is in part because keeping the back office business running smoothly is a parallel requirement alongside the push to deliver differently and quickly.

Vendors are one of the best places to tap into pooled and diverse ideas and skills in order to shore up your already stretched team. Deepening your vendor relationships to leverage their resources effectively to meet this need means that vendor management practices must be more layered than merchant service relationships of the past.

A New Program

It’s time to look at the vendor management program anew. There are three key areas that should be part of the program in the digital age:

  • Business strategy partnership. Your vendors should work with you to understand your business’ strategic priorities. Vendors should have an intimate knowledge of your enterprise’s mission and strategic direction — not just the objectives of the technology team. This means you will have to be comfortable sharing these corporate details with your vendors. Business strategy planning sessions between you and your vendors should occur at least annually. In turn, your vendors should expect to help plot an intertwined alignment of vendor services to those business strategies.
  • Defined objectives and targets. Once there is a clear understanding of priorities, and vendor services are matched and in play, you have to measure if they’re working. While this may seem obvious, when was the last time you sat down with your vendors to define what you’re measuring? Other than what is in the contract, do you have these objectives itemized and communicated clearly between your IT team and the vendors? All parties should succinctly understand their respective responsibilities. To complete the process, transparent reporting on the progress and success of these objectives across the internal and external teams should happen regularly.
  • A team posture. Vendors as an extension of your staff may seem like management 101, but do you truly cultivate that environment? If there is a service delivery issue, is there a quick reaction to blame the supplier before the facts are in? Encouraging fair and objective root cause analysis is needed to bring trust between all levels of the larger team. If a vendor is a good partner, they should be comfortable sharing hard truth when warranted. Likewise, encouraging your team to honestly assess issues (even if they may own a part in the incident) can push forward authentic and productive relationships across groups.

Vendors can bring additive strength to your IT organization in the solutions, energy, and fresh ideas they offer. This, in turn, can help you achieve meaningful and winning business project delivery. Interactive connections between you and your vendors, approached with a genuine team mentality, can foster a sense of ownership and accountability that blurs the client-vendor lines. But this means letting your vendors deeper into the strategic planning circle. It requires an openness of your team to objectively work incident resolution without looking to assign blame before understanding facts.

Vendor management is as old as IT itself, but just as your internal team is amidst a metamorphosis, a new look at vendor relationships should be a part of the transformation program. Vendors worth their salt should be in tune with this, and help guide and support you in the re-painting of a newly elevated client-vendor partnership.

Sources:

1 Bucki, By James. “8 Ways to Create a Winning Vendor Relationship.” The Balance. N.p., n.d. Web. 11 Nov. 2016. https://www.thebalance.com/vendor-management-success-tips-2533810

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