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ISSUES AT LARGE - 20 tips for picking partners

ISSUES AT LARGE - 20 tips for picking partners

Feeling bombarded by vendors that want your business and will stop at nothing to catch your eye and win you over? Don't get annoyed with all those calls, letters and invitations. Start dancing.

With every request for your attention comes a new opportunity to scope out the best offers on the floor. What's more, the mad rush to win your favor couldn't have come at a better time -- without those hungry-eyed, technology-partner wannabes, you'd have an awful hard time keeping current with the latest steps.

Besides, every great vendor relationship begins with smart vendor selection.

Our only advice to those entertaining pitches: Cavort away, but don't say yes to any proposals for a more permanent relationship before you've considered the wisdom of several CIOs who have heard every line in the book and learned the hard way not to fall for each enticing promise.

It doesn't matter what wares are before you -- there are certain principles that ought to guide every vendor choice, say the experts. "Obviously a network-outsouring purchase requires much more front-end deliberation than the purchase of a $300 software package," says Mark Belk, director of IT marketing for Kimball International of Jasper, Indiana, the erstwhile package and home and office furniture manufacturer.

"[But] it's all financial exposure," adds Jack Dowling, CIO of CompuCom Systems Inc., a Dallas-based supplier of desktop computers and technical services. "I don't really delineate between a 'commodity' purchase and a major or 'strategic' purchase. I'm tough on everyone who wants to sell me something." And it goes without saying that no matter what the prospective product or service -- or who breaks the ice, you or them -- you need to size up every potential supplier, partner and peddler for things like financial health, availability and reputation. But beyond the basics, what can you ask of every hopeful vendor to ensure that you consistently buy the right products and services at the best prices from the most qualified people?Begin by conducting the kind of interrogation through which a discriminating debutante puts her cotillion date.

There must be 50,000 ways to pick your partner -- in fact, that's about how many questions suitors could have thrown at them by vendor-selection software from Decision Drivers Inc. in Stamford, Connecticut, the GartnerGroup Inc. subsidiary that helps IT managers make good technology buys. Space restrictions keep us from reaching for that kind of thoroughness in these pages, but we do offer 20 indispensable queries and comments, culled from conversations with IT executives and vendor-market analysts, to run past all your potential partners.

You may want to change the wording to suit your situation, but you donít want to skip these points -- unless you're satisfied with second-rate. After all, when the music stops, you don't want to be left standing with aching feet and wilting expectations.

1. You wouldn't happen to have your competitors' phone numbers handy, would you?No matter how impressive a product, person or presentation, be sure to look at others for comparison's sake -- or you set yourself up to be taken on price, shortchanged on perks or blinded to even better alternatives. "The rule of three tends to apply for me," says Sue Kozik, chief technology officer for Penn Mutual Life Insurance Co. in Philadelphia. "There are exceptions. I may get a good indication as to who the players are in a given category and narrow the field to just two before even sending out an RFP. Or with outsourcing a data center, I want to look at even more than three." Another benefit of shopping around: If your favorite falls through, youíve got a backup waiting in the wings.

2. Are you merger-minded?

Things could change in a hurry should your prospective vendor be gobbled up by another company during the course of your relationship. "We went through a conversion of all of our literature, installation documentation and advertisements to a digital format. At first the vendor came in and did a great job, but then, after a year or so, they seemed to forget about us," says Belk.

"It was pretty obvious that these people weren't interested in doing business with us. It turned out they were distracted by the process of being acquired by a larger firm." In the end, Kimball exchanged the vendor for a more attentive partner.

3. Can't you read the sign? Blowing smoke isn't allowed here.

Adjust your antennae for overstatement-of-capabilities detection. "If theyíre not willing to share with you a step-by-step approach to the work they want to do for you, then they probably haven't thought it through yet," says Scott Heintzeman, vice president of knowledge technologies for Carlson Hospitality Corp. of Minneapolis, one of the countryís largest providers of leisure-travel services. "They may have a concept, but they probably haven't got a solution for you." Look for vendors that present a clear road map of the project under consideration. "Never trust a secret recipe; when the project ends, it will be hard to figure out if they delivered," adds Heintzeman. Another sure sign of puffery: grand plans for tomorrow juxtaposed with an unexceptional product set today.

4. This is a big project, but donít get any big ideas: You won't own it.

If you're accepting bids for a large project, budget it and parse it off one phase at a time. "I don't like any project to have more than a six- to nine-month life to it," says Heintzeman, who thinks multiyear projects tend to expand infinitely and never reach completion. "No matter what kind of project you've got, chunk it down so you can deliver pieces in short windows, where everyone can stay focused and engaged. Then launch and fund another phase of the project, if needed."Sounds like milestones in the contract, no? Not quite, says Heintzeman. "With milestones, you still have one contract; the vendor knows you're on the hook with them for the whole project. Then milestones tend to slip, along with motivation levels. When the contract has a finite budget -- a defined beginning and end -- and they have to satisfy you to get the next contract, that puts a very different light on the project."5. Looking to advance your bleeding edge? Don't look at us.

If the vendor hasn't provided you with the name and number of a reference whose size and situation resemble yours, you're being asked to serve as a test subject. Don't do it.

6. If you're not prepared, I will beóto prevent you from wasting my time, that is.

It's not hard to spot the vendors that didnít do their homework on you, your company and your industry prior to making their presentation. They're the ones with more questions than answers. Open the trap door and let them fall.

7. Nice bells and whistles, but where is what I asked for?Have a clear idea what you're looking for before entertaining pitches. If you don't know what it is you want and you're not able to communicate specific ideas of what you're looking to accomplish, vendors will often interpret your hazy ways as an invitation to pad the pitch with unnecessary trimmings. "It's fine to be open to new possibilities you hadn't considered and ask for a recommendation," says Belk. "But why court confusion?"8. Where are you headed and how are you going to get there?Mission and vision matter. Beyond the vendor's current position vis-a-vis its competitors, what are the signs it'll be in good shape three to five years from now? Along with the standard financial-health checking you need to do, ask about staff turnover and, for product suppliers, investment in R&D as a percentage of overall budget. In the case of a potential long-term partnership, ask to see the vendor's business plan.

9. Will you stick to the sheet music or sit in on extended jam sessions?In other words, what's the vendor's interest in you and your company? "When a vendor comes in to do a particular piece of work, I'm interested in their insights and observations as they talk to people and collect data," says Kozik.

"Inevitably, they've got a fresh set of eyes. They can see things in ways I can't. If they see something in the course of their travels that they'd be willing to share, that can really help me validate or refute our internal processes." Team spirit alone may not be enough to determine who gets the contract and who gets left behind, but it can be all that separates two or more identically qualified vendors.

10. This is delicious, but I don't make decisions over dinner.

"Friendly phone calls, e-mails and lunches with executives are pleasant, but frankly I don't have time," says Kozik. "The sooner the firm introduces me to those people who will actually be working with me, the more likely I am to go with them." Also, beware baiting and switching -- introductions to superstar staffers who could fade from sight once the work is underway. There's no sure way to ensure that you won't be set up for that little scam, which may well be unintentional in today's staff-short environment, but you can ask to meet several layers of talent to make sure the firm has sufficient depth -- to which you can demand access later.

11. Ve haf vays...

See how vendors' stories hold up under pressure. "Grilling can be as simple as playing devil's advocate," says Dowling. "Make it as difficult for them as possible without being uncivil. Ask a lot of hard questions. If they're good, they'll appreciate the opportunity to show just how prepared they really are.""Tell them, 'We don't think you do a good job in this area; how are you going to commit to us that you will?'" adds Angelo Privetera, vice president of information and technologies for HDR Inc., an Omaha, Nebraska-based architecture and engineering design firm. "Then sit back and watch their response."12. Who says?A few pointers on checking references. First, do it. "One company soliciting work with us gave us their list of so-called 'satisfied customers,'" says Heintzeman. "I called and got an earful." Which is to say, he got the insight he needed to drop them out of contention. "A lot of people just glance at the list and say, 'They've done all this work; I guess they're good.' You really have to call those references."Second, don't rely on the vendor's own references. Usually they'll give you only screened customers. "If someone is a player in the area, some member of my peer group will have had some dealings with them," says Kozik. "And I find that peer group very willing to share, even if we're in the same industry. It's not like we're trading industry secrets. We are trading perceptions of support."Finally, be as tough with the references as you are with the vendors. "You'd be surprised how many vendors can't put me in touch with someone theyíve absolutely delighted," says Joseph M. Treese, Atlanta-based director of worldwide information technology for the packaging division of Mead Corp. "Or they can't do it quickly -- and speed can be very telling in this area."13. It's very nice to grill you virtually.

If you can't make it to the presentation, make sure to compile your questions and give them to a manager who can. "I have to live with the results, whether I was present for the presentation or not," says Dowling.

14. Shiny baubles are always tempting, but we'll pass for now.

Shy away from technologies in their first "model" year. "Every now and then, some hot technology comes along and you have to deal with a new guy," says Frank Barbee, manager of IT for Phillips Petroleum Co. of Bartlesville, Oklahoma. "One of the things we do, especially if it's a software package, is force the firm to put the software in escrow. So if it goes belly up we still have the software. The way things are moving, so many of these little companies pop up today and you just don't know if they're going to be around tomorrow."15. Slow down or you'll oversell me.

If you're buying instead of building, and you probably are, look past the claims of off-the-shelf capabilities to what you will need to do to glean competitive advantage from the purchase. "In these days of common functionality, your enterprise differentiates itself not with the latest technology, but with the business processes you wrap around it," says Kozik.

16. How well do you play with others?

"There can be a lot of finger-pointing as you try to integrate parts, especially with operational products and services," says Kozik. "And that's what IT is today, a parts-integration process." This process is a tough one to gauge upfront -- be sure to lay out the ground rules for the communications practices you expect. "You have to be ready to take responsibility to define clearly where their work ends and someone else's begins, where they may need to stretch, and what role they can expect you as the general contractor to play."17. How happy are your employees?"Make sure vendors are not just throwing bodies at projects and letting them learn on your time," says Heintzeman. "They need to hire qualified people and train them through their own methodologies and processes before they ever show up at your doorstep." Make sure your project team has a mix of senior people with long track records of on-time, on-budget projects, plus some junior people to keep costs down and provide turnover insurance.

In addition, ask every potential vendor to explain how the employees in the project will be compensated for doing a good job. Heintzeman remembers one project where he took one of the employees aside and asked about incentives and bonus arrangements. More candid than discreet, the employee replied that they were based on the size of the project. When Heintzeman asked what happened in the instance of an overrun, the employee gleefully replied, "We get paid more!" Moral: Find out the compensation structure of both the line staff and the senior management of the project. If they won't tell you, move on to someone who will.

18. No company is an island. Is yours?

"The Internet has changed everything," says Dowling. "Today more than ever, vendors must have the ability to extend their infrastructure -- not only to us, but also to our other vendors and customers." Make sure all software and hardware products are interoperable with most other vendorsí products and the vendor has a solid strategy to enable further interoperability via the Internet.

19. Mind if we stop by?

"I can't remember a single vendor we've bought anything from in the last three years that we haven't gone to visit," says Belk. A tour of the vendor's plants and operations will give you a lot more insight than even the slickest presentation in your office. If at all possible, observe them in their natural habitat prior to letting them into your company.

20. Ever fired a 12-gauge shotgun?

"We have a lodge up on the Great Lakes where we take high-level people with the major vendors," says Phillipsís Barbee. "Take them hunting or fishing -- it helps to establish the relationship. We work hard at this, though it may not sound like hard work to go on a hunting trip." Not everyone has access to a screening tool on that scale, but anyone can feel a person out for compatibility in personal styles and values. After a formal presentation, replay the session in your mind and ask yourself if the dialogue seemed to develop into a natural rapport.

In most cases it doesnít take a weekend in the woods to get people to ease out of their professional roles and show their true colors. Your aim is to figure out if a prospective vendor would make a good match for you over the long haul.

And you'll be able to start doing that after you've said yes to the simple proposition, "May we have this dance?" Just make sure you get all your questions answered before the music stops.

(Senior Writer David Pearson can be reached at dpearson@cio.com.)

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