Managing relationships with vendors - Part 3
- 06 May, 2011 15:09
- Comments 1
Northline chief executive officer, Craige Whitton
For some organisations the hassle and uncertainty that can arise from multiple vendor relationships is best addressed by putting all of their eggs into the one carefully chosen basket. South Australian transport and logistics company, Northline, recently entered into a five year, $5 million contract with integrator Brennan, which will handle more than 300 portable and desktop computers in addition to servers, enterprise software and LAN communications. Basically, everything except telecommunications, which is provided by Optus.
Northline is a large, dispersed organisation with some 400 staff looking after a large national network of warehouses and transport terminals in every major distribution centre in Australia. The company’s transport network includes regular road and rail delivery services between all capitals and key regional centres. It relies on advanced Web-based freight management technology to provide electronic dispatch, tracking and performance measurement capabilities. Customers are also able to monitor their orders and other information online.
Northline chief executive officer, Craige Whitton, reports that the arrangement is working extremely well, largely due his company having been crystal clear about what it was looking to achieve.
“As we continue to grow, we wanted somebody who can grow with us, so we needed to get the strategy right from the start.” Brennan CEO, David Stevens, agrees that clear communications from the start was fundamental to ensuring that the project got off to what has been a very successful start. “They [Northline] came to us with their business requirement; we didn’t have to guess or wonder why they were doing this or that,” he says.
Read Part 1 of managing relationships with vendors.
Organisations often underestimate the importance of fully explaining what they are expecting to achieve from an IT project. While smaller companies are usually very good in this regard, larger companies are more likely to have been burned in the past, making them less trusting, or they have lost track of and therefore neglect to mention important details about their operations.
“For instance a company might say that it wants greater staff collaboration but without telling us why, or what it is that’s driving that requirement,” Stevens says. “It’s like going to the doctor and asking for this or that treatment without describing your symptoms.”
It’s this sort of detailed approach to communication that has led Brennan to identify areas of improvement in non-IT related areas of Northline’s operations, something that would be unlikely to happen with multiple vendors.
“Fewer vendors means more energy can be directed towards delivering actual business solutions,” Stevens says. “It removes the burden of juggling multiple SLAs, contracts and suppliers.” Service level agreements (SLAs) was another area in which both Northline and Brennan expended considerable time and effort.
Rather than spending time bargaining and negotiating the area of the contract, Brennan was immediately upfront in guaranteeing what it would deliver.
“This was very important to us as we had had bad experiences in the past where SLAs were poorly managed and sometimes even non-existent,” Northline’s Whitton recalls. Another box the organisation was careful to tick was the need to conduct a proof-of-concept trial to ensure that it knew what it was getting itself into and whether Brennan’s solution was the right fit for Northline’s existing systems, policies and procedures. “We made sure that we had an adequate proofof- concept,” Whitton says. “We weren’t prepared to be a guinea pig.”
Read Part 1 of managing relationships with vendors.
Part 2 - the importance of systems architecture
Recommended reading:
- Garter: CIOs must move from outsourcing manager to broker
- IBM set to lose megadeal with AstraZenica
- Why CIOs hate how you sell IT services
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Comments
Stephen Holland
As a Vendor Management Consultant I expected to find some CIO assistance in an set of Articles entitled "Managing relationships with vendors", the set talks to Contracts and a number of the more formal aspects of the relationship.
Almost all technology vendor relationships are managed at levels below the CIO. It is imperative that all personnel involved in managing or interacting with the vendor have the necessary skills to manage interpersonal and commercial relationships. Too often these skills are not considered in promoting technologists. My personal experience has highlighted that fewer than 10% of senior technologists have made the transition from being in the IT Business to managing the Business of IT.
In consultation with Clients and Business Partners I have developed a Capability Assessment and Tarining programme that addresses this Key Performance Gap.
I agree that all vendors should be under some form of relationship management and that the segmentation suggested by Gartner in Part 1 should be undertaken, especially if you spend more than $5M on Technology vendors p/a.
The focus of good vendor management should be on those vendors that if they fail have enormous impact on the customer or the cost of doing business regardless of spend. A company spending $5M on technology wil have 1 or 2 of these, whereas a company spending $1B on technology will have between 10-15 technology vendors that meet this criteria.
The capability to manage vendor relationships is a critical skill for all senior IT managers - as technologists we do not prepare our staff for this key activity with in their role.
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