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Managing relationships with vendors

Any couple will tell you: Relationships take work. Vendors and suppliers are no different
Maintaining good relationships with vendors and suppliers requires constant communication and contact.

Maintaining good relationships with vendors and suppliers requires constant communication and contact.

It’s something of a truism these days to say that the choices a company makes regarding its IT can mean the difference between business success and failure. Whether it’s access to information, communications between staff, partners and customers, HR, inventory management, operation and monitoring of equipment and other and assets as well as business security, IT has managed to make itself indispensible at virtually every organisational level.

Yet it would seem that for many organisations, this awareness often fails to translate into properly thought out and well-executed strategies for managing the vendors that supply the technology.

According to Gartner, organisations should first attempt to categorise their vendors according to whether they are legacy, tactical and emerging, or strategic. Gartner Asia-Pacific vice-president of research, Jim Longwood, says that as organisations have come to rely increasingly on various types of software, the number of vendors that could be said to be of strategic importance has increased markedly.

Organisations should manage according to KPIs that reflect business performance, service and cost outcome
“The consequences of vendor vulnerability are now more glaring,” Longwood says. According to Gartner research, between 2005 and 2010 the average number of vendors that IT departments deal with has gone from 3.7 to 10.

Furthermore, the shifting emphasis from enterprise hardware to enterprise software has resulted in the concept of vendor management evolving from something almost perfunctory to a function of serious strategic importance. But with the increasingly sophisticated capabilities of business software applications, the job of assessing whether technology is actually performing is often quite complex. Longwood says the management of strategic vendors should be undertaken with three core objectives in mind.

“Organisations should manage according to KPIs that reflect business performance, service and cost outcomes,” he says.

Read Part 2 of managing relationships with vendors - Don’t outsource your systems architecture.

Practice Manager of east coast integrator and software developer Object Consulting, Kevin Francis, notes that the intrinsic value of IT to organisations means that, rather than seeking to manage vendors, they should be looking to forge strategic partnerships.

It means vendors and organisations must have clear lines of communication from the start, while having transparent access to each other’s systems and processes.

Francis recommends, for instance, that CIOs request access to the vendor’s own systems so as to gain some visibility into key aspects of projects such as testing, architecture development and even code reviews.

“Say you have an external software developer building a project for your organisation,” he explains. “Often they will provide a system within which they will develop the solution, but if you’re not able to access that system it might not be until the project is 99 per cent complete that you see something has gone horribly wrong.”

His advice is to take ownership of systems around source code repositories, defect management tools, project management tools and systems and methodology and require that the vendor uses your systems.

“It’s the only way that you can have a peek 30 per cent into the project and know whether you’re getting what you’re expecting. A lot of companies don’t do that, despite the fact that suppliers could be doing anything and they wouldn’t know.” Organisations ultimately need to have some sort of consistent methodology for managing vendor relationships.

His company provides its customers with a ‘project accelerator’ designed to allow customers to better manage their projects. “You need to have consistent tools your people know how to use and require the supplier use those tools and those processes.”

Read Part 2 of managing relationships with vendors.
Part 3 - Northline partners with Brennan for growth

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Tags: Gartner, Object Consulting, vendor management, processes, KPIs, client relationship, IT value, Kevin Francis
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