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Promises, Promises

Promises, Promises

Ansett Australia CIO Ron Chambers was on his way to deliver a major serve to a seriously under-performing vendor, and he was not a happy man. The message Chambers had to deliver was clear and unequivocal: Ansett wants strategic partnerships with its vendors, and this one was not delivering.

For CIO magazine's benefit (since we happened to call just as Chambers was on his way to the meeting), he rehearsed the simple message he planned to deliver loud and clear to the vendor in question. "You continue to treat every engagement as a distinct profit and loss effort, and you're not considering the overall relationship. You're promising long and delivering short, you're not pricing in a way that really has market relativity, and we're not happy."

Chambers is not alone. While the first words uttered by almost every salesman crossing the threshold of the CIO's office seem to be about partnership and total solutions, CIOs have learned to suspect that at least some fingers are firmly crossed behind backs.

Sure, vendors and integrators have become so practised at a spiel that's all about sharing risk, co-developing and working hand-in-glove with the client until all the wrinkles are ironed out, you'd swear they could spout it in their sleep. It's conceivable many even believe every word they say. But while some make a fair stab at keeping that promise, and some CIOs are largely happy with the partnerships they've got, long, hard experience has taught many CIOs to take their words with a mountain of salt.

Ears Wide Shut

"I've sounded off to a couple of our vendors face to face in very strong terms," says Southcorp CIO Wayne Saunders. "Overall I find the whole vendor community really seems to struggle to understand who its customer is and to listen to its customer. As a generalisation that's almost right across the board - I've found it incredibly frustrating and disappointing."

Saunders, who himself spent 16 years in the service industry, says he's been underwhelmed by the service offered, and in many cases the arrogance displayed, by some vendors. Point out any weakness in their service delivery, he says, and it's as if a blind comes down. "They wait for you to stop talking, then the lights come on again," Saunders says. "They just simply don't listen to the customer. You have one meeting with them where you might beat them up, and they'll come back two weeks later as if you'd never even had the meeting. It just staggers me."

A similar message comes out of IDC's influential executive forums, hosted by Peter Hind. "The message I hear is that CIOs are annoyed that vendors glibly talk about partnerships and all that guff, when in reality all they want to do is just flog boxes or products or services and take the money and run, so to speak," Hind says. "What customers want are basically people who have a strategic view of where they're at, and who want to work with them on getting there."

Likewise at a recent CIO magazine executive board meeting the frustration was palpable when the subject of vendors came up. One main complaint was a general lack of high-level contact from vendor organisations.

CIOs who spend up big with a vendor expect to be kept well abreast of that vendor's strategic directions. They think it's reasonable that the managing director of the vendor company should pay them the occasional courtesy visit. Yet many CIOs complain they've never even met the MDs of some of their leading vendor companies.

Mind you, notes Australian Guarantee Corp CIO John Dunne, some vendor company MDs are better at getting out and meeting clients than others. "We've spent a lot of money with people like Oracle and Hewlett-Packard, and they haven't made the connection at the very highest level within our parent company, which is Westpac, while others like IBM are putting those connections in place.

"Yet I think the managing director of Westpac gains advantage from talking to IBM CEO Lou Gerstner, because he then gets a global view of what's happening with technology."

Moving on Up

Dunne says in his experience it's only the potential for business that moves you up the hierarchy. At the bottom level you might deal with a sales representative from the vendor organisation. Once you get past a certain level of spend, the vendor might appoint a relationship manager. But it's only if the vendor can see the promise of really big dollars that you'll attract the attention of the executive, who in turn will get buy-in from international parent companies.

That makes it especially hard for smaller organisations to develop partnerships with their vendors. It's maddening enough when vendors treat their big spending customers poorly - even with the massive buying power, and hence serious muscle, those big spenders can bring to bear. It's just plain frustrating for smaller corporations which don't have the buying power to carry so much influence.

Yet even smaller companies think it's not unreasonable to want to be schmoozed a little sometimes, admits Hoyts CIO Patrick Teh. He would like vendors to occasionally take the effort to make him and his organisation feel special, Teh says. What he gets - with some vendors at least - is almost the exact opposite. "I would like to be made to feel special and not be made to feel like a second-class or a third-class customer. And sometimes, with some vendors, you are made to feel that way, unfortunately," Teh says.

By way of illustration he cites the time a vendor re-routed a clutch of notebooks, which Hoyts had on back order, to another customer. Although Hoyts had established that vendor's hardware as a standard, the treachery enraged Teh so much that he decided to sacrifice that standardised environment. "I made the decision to say: ‘You didn't treat me well and, therefore - much as I hate it - I'm going to say goodbye to you, even though now I don't have a standard operating environment'," he says.

All Mouth

ANZ Banking Group CIO David Boyles says overall his company's relationships with its vendors are "dramatically better" than a couple of years ago, partly because ANZ has taken steps to greatly improve its own communications with its suppliers. But if Boyles is rather pleased, particularly with those companies he sees as strategic vendors, he still complains of fairly inconsistent performance, even from fairly major suppliers.

"On one project or one particular initiative we might get their A team, and we get a very good or even outstanding outcome; and with the same vendor a few months later on a different initiative we sometimes get the B or C team and pretty poor outcomes. Inconsistency would be my primary complaint," Boyles says.

For Chambers, too, who says confronting vendors usually reaps a positive result, it's not an issue of ill-will between customer and vendor. Rather, he accepts that vendor companies are, like every other organisation, facing a new commercial reality.

"I think it's got a lot to do with companies who might be at the forefront of the new e-commerce in a talk sense, but the reality is that back in their own organisations they're still old economy companies and they have the same problems we have."

That being the case, and given that some vendors are managing to deliver world's best practice, Chambers is optimistic that things for under-performing vendors can only improve (see "How to Influence Vendors", page 40).

Teh, after 12 years in the industry, also accepts that vendors are facing many of the same problems as other businesses, but blames strategy as much as new commercial realities for the problems. "Of late there's been so much change in the IT industry that it's very difficult for a vendor to keep up; and because they have to remain nimble and flexible, I think sometimes they communicate so many different messages that the real message is lost," The says.

"That being said, I think organisations must always focus on two or three key directions and hammer that message through to their clients. I find a lot of vendors nowadays are after every single dollar, as opposed to focusing on the 20 per cent of the customers that give them 80 per cent of the business."

Stand By Your Customer

CIOs expect their vendors to stand by them through the inevitable complexities and difficulties that come with implementing, maintaining and integrating IT systems. They become frustrated when vendors turn out to be all mouth and no trousers. And it's often the little things that count.

"I would say our hardware vendors are too quick to offer . . . the long-term strategy and to want to come in and understand the direction our business is going in and what we want to do next," says one leading CIO. "I've got a bit of an issue with that, when the actual day-to-day service delivery isn't actually delivering either the quality or response that we want."

This CIO says she frequently has trouble following the processes of some vendor organisations. For instance, when she orders product from Telstra, which quotes a nine-week delivery period but then doesn't start processing the order until six weeks after it was filed, then delays the order further because it claims some information is missing.

Vendors whose processes are lacking should realise how much insult they add to injury when their executives then want to come in and talk about long-term strategy, spouting words like "partnership", she says. "I'm afraid my attitude is, you get the service delivery right to start with, and then I might want to talk about it. When you're not delivering on the day-to-day service, I don't want to talk about long-term strategy. I say: ‘I'm not sure there is a longer-term strategy unless you can support what we have now'."

An Englishwoman who has been in Australia for some 18 months, the CIO says she's finding that too many software vendors, which provide good local support and a strong local and national presence in the US and European markets, are letting their Australian customers down. "Here, too, many of these things are sold to you second-hand through agents and vendors who are not necessarily part of the mainstream business but second tier. And what I think one misses here is the national presence these software houses have elsewhere."

But when push comes to shove, many Australian CIOs are finding their vendors too often let them down when it really counts.

In a Perfect World

With consultation from a number of IT executives, CIO in conjunction with sister company IDC in the US developed a list of expectations that we believe a true partner should meet.

A partner should:

* make an effort to understand its customer's critical business issues and opportunities;* help shoulder the risk and responsibility of joint implementations and initiatives;* exceed obligations, going beyond the strict interpretation of the contract;* ensure that its products and services deliver real business benefits;* work collaboratively with other vendors and business partners to ensure project success; and* follow through after the sale to ensure satisfaction.

How to Influence your Vendors

CIOs usually have so much on their plate they tend to have little time to spare on under-performing vendors - and even less patience with vendor hype. Here are five ways CIOs can influence vendors.

1. Sound Off

When your vendors are letting you down, giving them a verbal blast can sometimes be brilliantly effective, says Southcorp CIO Wayne Saunders - but it isn't a sure-fire recipe for success. Saunders suspects that how well reading the riot act works depends largely on what motivates the vendor organisation, and how it measures its success. "The more ethical the organisation the more response you get from them when you do have a concern or an issue."

Advantra procurement executive John Jones recently pulled a leading vendor into line after receiving numerous complaints from an engineering group and customer service help desk areas about inordinate service and support delays. Afterwards he found the vendor "lifted their game tremendously".

"I brought them in and their senior management noted the concerns and did some management restructuring," Jones says. "As a result they provided us with a single point of contact. That single point of contact has been very responsive for the last four or five weeks and the issues have now been resolved."

2. Conduct Regular Reviews

Jones says one of the best ways to get vendors to lift their game is to hold formal reviews on a regular basis, whether that's monthly, quarterly or every six months. "Quite often it comes down to sitting with these vendors on a regular basis and saying: ‘Okay, here's our performance over the last month, here's the amount of business we've done with you, here's what we are doing'.

"We talk about their key performance levels and about their service levels and how they've been performing, as well as the new developments coming out of companies. We have quarterly meetings where their chief engineer will meet our chief engineer, and we have six monthly reviews where their MD meets our MD."

Axa CIO Ian Campbell holds regular face-to face meetings with about five key vendors, and delegates meetings with the rest. "Of those five, some are better than others," Campbell says. "But I think it's also up to you - if you're spending a lot of money with a vendor, you've got to have a client manager and you've got to start to discuss some of these things."

3. Give them Guidance

Unless you give your vendors clear guidance and direction about your requirements and expectations, they'll be working in a vacuum and you'll only have yourself to blame if things go wrong, Jones says. Good vendor relationship management is very much a two-way street, he says, and a significant cause of problems between companies and vendors is the so-called "arm's length" way they deal with each other.

"We say at times that we have strategic alliances and partnerships, but it only comes to a certain point and then [the vendors] are left to find their own way," says Jones. "If you're going to be serious about partnerships and strategic alliances, you've both got to have trust in each other and you've both got to share your business plans and your strategic directions."

Jones says too often vendors are left to work in the dark because buyers focus over-much on squeezing every possible dollar out of them, rather than adopting a win-win approach where both companies can obtain new business, grow new business, and both can make money out of the deal.

4. Head for the Top

Heading straight for the top can be the most effective way to resolve disputes that might otherwise get bogged in the contentious quagmire of the operational nether levels. Tough schedules and continual pressures make friction and fights inevitable on the front lines. To rise above all that, "you need a way to escalate issues so they don't boil over and cause an ‘I'm-going-to-get-my-lawyer' reaction", one CIO says.

5. Spell Out the Rules of Engagement

Make it clear from the start that you won't accept anything less than the best. ANZ Banking Group CIO David Boyles tells suppliers and vendors not to bother proposing anything, unless they can get a top-notch team together or have a first-class product to offer. Vendors who don't deliver know in advance that they'll quickly drop down Boyle's preferred list of suppliers.

"We're very serious about this," Boyles says. "I've had reasonably major companies come in and say they can do just about everything under the sun. I and my executive team listen to this and say: ‘You know what? We happen to know that your best people doing some of these things you're talking about are in Europe or the US, they're not here. Are you planning on bringing them in and keeping them here so you can complete this?'"We're very specific with these companies: that if they can't assure us that they're getting top-notch folks in, or top notch product in, we don't want to deal with them on that particular initiative."

Experts agree that information is the best weapon in a CIO's arsenal of influence.

The most influential customers are those who not only can present to the vendor a clear picture of the problems they are trying to solve, but also can show how those problems affect others in the same industry or, even better, in other industries. CIOs who can accomplish that feat find it easier to get a supplier's attention.

- S Bushell

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More about AdvantraAnsettANZ Banking GroupAXA Asia Pacific HoldingsHewlett-Packard AustraliaHoyts CorporationIBM AustraliaIDC AustraliaOracleSouthcorpTelstra CorporationWestpacWestpac

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