There was a time when you could pick up the phone, order computer equipment and it showed up with an IBM logo on it. Everybody was satisfied and returned to talking about the new ‘84 Chevy Camero.
Needless to say, the technology industry has changed a bit since the days of the Camero. There are so many options and choices for products and services. Part of running an IT department today is managing your vendors, for everything from phones to servers and of course security.
Managing vendors is probably not what you signed up for as an IT manager. But even small to medium sized companies need to develop a vendor management strategy.
Before you charge ahead and buy your next IT solution, we have developed a list of ten best practices for vendor management and IT procurement. Armed with these tips they can save you money, frustration and time as well as help you build a more productive relationship with your vendors.
-
Focus on Value, Not Price
If price is your primary factor for purchasing a solution or service, then it is very likely you will end up paying a lot more in the long run. Over-emphasizing price is one of the most common and detrimental mistakes made in IT departments.
Instead, consider the value a solution offers, vs. the bottom line cost. What pain points will the solution resolve? What efficiencies can you gain? How will the solution make your business better? How will the solution help you achieve your goals? The goal is to create a comparison between the cost of a solution and the value it can deliver (a.k.a. cost-benefit analysis.)
Price is important, but its one factor among many. If you negotiate exclusively based on price, you may create an adversarial relationship with your vendor. A good sales person respects your budgetary limitations. However, no sales person is going to invest a lot of effort or go the extra mile if they have no incentive to do so. Be honest about your budgetary situation and work with sales professionals you can trust to put your needs first.
-
Cultivate Trusted Advisors
A good sales person wants to help. However, they cannot help you, if you leave them in the dark. It is important that vendors understand your pain points and your expectations. The goal is to cultivate a network of sales professionals and consultants who can provide guidance, so you can make informed decisions on technologies and services.
Recently we had a customer who was ready spend $40,000 on some weird protection appliance they simply did not need. When they explained their concerns to us, we were able to show them an alternative solution that would provide more capability at a lower cost.
The more your vendors understand your unique situation, the better equipped they will be to guide you to the right solutions. Of course, always remember to keep sensitive information confidential.
-
Beware of the Naked Man Who Wants to Sell You His Shirt
Desperation is bad. And desperate sales people or companies do desperate things. Anybody taking a loss to sell you something is not going to be around much longer. A business cannot keep losing money and stay in business. This is an immutable law of business that cannot be circumvented with any kind of accounting trickery. Current events in the banking and mortgage industry are ample proof of this.
If you have a reseller or partner who offers a substantially lower price or you know they are losing money just win your business, this should be a red flag. Likewise, if you expect a partner to lose money to earn your business, do not expect a loyal, long-term relationship.
I am reminded of a company that purchased an expensive firewall at a really low price from some sketchy reseller who worked out of his garage. Six months later they discovered that the product was refurbished and had no support contract. They called the reseller and unsurprisingly, he had gone out of business. They had to purchase all new equipment, which ended up costing a lot more than if they had worked with a reputable reseller from the beginning.
-
Do Not Put Sales People in the Driver’s Seat
For every good sales person, there are hundreds of bad ones. Sales people are a necessity in business. A good sales person should work collaboratively with you to get you the information and pricing you need. However, always remain in control of the process. It is your business and your money.
It is unfortunate, but a lot of unprofessional sales people will tell you anything you want to hear. They may steer you toward solutions you do not need or mislead you with pricing or quoting services. Mistakes and errors on quotes and proposals can happen. However, beware of any organization that has a habit of misquoting items; only "fix" them (usually at a higher cost) at the time of purchase.
A professional sales person is always thinking about your needs and expectations. They take the time to listen, respond accordingly and deliver accurate quotes and proposals. Mostly, good sales people work to earn your business and respect. Keep it that way.
-
Hedge Your Bets
Each vendor and consulting firm is different. Some may have strengths in multiple areas while others may be exclusively focused in one area (like Anitian). The goal is to develop a pool of vendors that you can draw upon for guidance and competitive quotes. Ideally, you should have two or more vendors for the same services, so you can solicit a range of opinions on key investments.
The important detail is to avoid becoming overly dependent on any one vendor or consulting firm, even a large one. If you buy everything through a single vendor, they will lose the incentive to earn your business. Moreover, new vendors may be reluctant to go the extra mile for you if they know you give another vendor preferential treatment.
This is especially important when you consider consultants (including security consultants.) Using the same consultants over and over again can lead to complacency. Moreover, a consultant with a long-term contract is likely to focus on prolonging problems rather than solving them. It is vital to get a fresh perspective.
-
Do Not Go to the Store Hungry
Ever go grocery shopping hungry? If you are like most people, you bought food you did not need. If you do not know what you are looking for, there is a good chance you will not find it. This is more than a riddle; it is a fact of human nature.
Before you evaluate products and setup meetings with vendors, draft a set of requirements. Clearly outline what you expect this new solution or service to provide. Outline the issues you are looking to resolve and establish a set of success criteria. Most importantly, share these requirements with your resellers and vendors.
A set of requirements will help you and your solutions providers narrow down the field of options much quicker. It will also help hone your search and force you to focus on what you need, not what you think you might need.
-
Apples to Apples
When you are considering solutions from multiple providers, make sure you are comparing similar products or services. Sales people, particularly those of the slimy variety, are very good at misdirecting you into making unfair comparisons. For example, network access control (NAC) systems are not the same as intrusion prevention systems (IPS). However, with the right linguistic tweaks, a NAC box and an IPS can seem like the same product.
A good source of information is an independent industry advisor like Gartner. They often conduct market analysis and can provide a clear list of what products fit into what categories. Their IPS report, for example, does not contain any NAC products.
-
Do Not Expect a Mercedes for the Price of Kia
You cannot overcome basic mathematics and the realities of the marketplace. Luxury cars cost more than economy cars; feature-rich, enterprise-class technologies cost more than entry level products.
There are always ways to save money such as using open source products, refurbished equipment, or outsourcing services. However, you are not going to get an enterprise-class product or service, at some bargain basement price. Be realistic when you begin evaluating goods and services. If you do not have a large budget for a solution, then size your search accordingly.
If you engage a vendor with unrealistic expectations, then you are likely to receive unsatisfactory results.
-
Help Navigate the Maze
If you have a tangled procurement process, bring your vendors into that process early. It is very unfair to engage a vendor, utilize their resources and then cut them loose at the 11th hour to an unsympathetic procurement department.
Approved vendor lists can also be a problem, especially if you are considering emerging technologies or products. Big, commodity resellers are not likely to carry those products or have the consulting staff to support them. Make sure there is a mechanism for new vendors to get added to your approved lists. Mostly, be honest with your vendors about such lists. Nothing builds animosity among resellers than companies who take advantage of their vendors.
It is vital you work proactively with vendors to include them in the procurement process and make it so they can earn your business. Furthermore, if your procurement department works slowly, then make sure your vendors know this. Quotes and proposals may expire while your procurement people grind their gears.
-
Manage Expectations
Vendors, resellers and consultants are a vital part of your IT department. They can extend your capabilities, deliver value and help you meet goals. However, like any relationship, you must manage expectations and communicate effectively.
A vendor relationship should not be antagonistic or combative. If it is, then there is likely a break down in communication. A consultant or reseller cannot read your mind. You must help them help you. Mostly, you need to be very clear what you expect.
For example, if you expect your consultants to issue weekly status reports, make sure this is spelled out in the very beginning of the engagement. If a vendor is not delivering satisfactory services, then make sure you explain why you are unsatisfied and what can be done to remedy the situation.
Also, avoid the silent treatment. Silence solves nothing. It can only frustrate your vendors and make them hesitant to work with you in the future. If you are unhappy about a project or you chose a different vendor for a project, then communicate the reasons why.
If you want vendors to improve and deliver what you want, you need to help them understand how to meet your needs. Communicating effectively with vendors means fair, honest and open conversations.
Your relationship with solution providers and resellers can often seem like a marriage. There are times when things are really good, and times when they are really bad. They key to any good relationship is communication. It does not take a PhD in counseling to know that.
Communicate with your partners and help them help you. The more proactive and honest you are, the more they can help you. Eventually, you can build a network of partners that can support you and extend your capabilities.
