Chapter 10: Understanding and Managing Vendors

1 Chapter 10 Understanding and Managing VendorsVendors can be significant partners in your information technology (IT)project. They may create, deliver, install, maintain, or support critical com-ponents of your target state. That being the case, implicit in your relianceon the Vendors are one or more of the following: High-performance hardware, software, resources, or support On-time delivery Technical expertise Fast and thorough fault resolution Training Professional relations with your team, customers, and beneficiariesThis Chapter has been written to address these expectations. As great asthey are, they may be unrealistic. Having served on both sides of the fencein these relationships, it is my observation that vendor management froma project perspective is generally clumsy and haphazard.

2 If true, that tendsto make these relationships less beneficial and rewarding to both on the assumption that we, as customers, cannot fix any vendorproblems, we can still be aware of them and leverage that knowledge to ouradvantage. We can also acknowledge that large corporations generallymake for lousy customers, whether through arrogance, incompetence,carelessness, or sheer size. The same faults can be attributed to many ofour Vendors , by the ABOUT VENDORSOnce you plug a vendor s name into the plan against a major deliverable,you are assigning responsibility to them and designating them as a criticalfacilitator of success. Whether they are writing code, delivering systems,or cobbling technology together in your computer rooms, you expect themto perform on time and up to your specifications.

3 Unless you manage themproperly, however, there is plenty of history that suggests their success inthis regard is not a sure thing. 2004 by CRC Press LLCWhy is that? Your company may already have paid this particular ven-dor millions, based on a longstanding partnership. Or, you have selected avendor new to your firm a vendor who now has the opportunity to getwonderful references from you after this project is done, and thus achievegreater penetration within your company with future would think either scenario would provide the vendor with enoughsensitivity to your requirements that the vendor marching with you in lockstep to the finish line is assured, right? It would probably not happen thatway. Honestly, though, one wonders why these relationships cause somuch hand wringing and gnashing of teeth on both sides, grouse about Vendors , who, in turn, mutter among themselvesabout the unreasonableness of the customer set.

4 Exhibit 1 offers a dispas-sionate look at client vendor relationships in this that we have set the table for the discussion of Managing Vendors ,let us look at the key EXISTING VENDORSMany projects require the participation of Vendors that your corporationor agency already has under contract. Vendors whose behavior is gener-ally proscribed by this process typically provide commoditized productsor services such as: Network transport voice or data circuits and services Hardware routers, switches, computers, and servers Shrink-wrapped software spreadsheets, accounts payable Operating systems desktop and network Support help desk, fault management, break fix Procurement resellers who deliver equipment and software Staff augmentation short-term help or technical consultantsA formalized relationship management team tasked with Managing ven-dor relationships is probably in place in your shop.

5 vendor , product set, orservice type may align the team. The focal point may be in a product man-Exhibit vendor Relationship Disconnects The vendor may lack the logistical infrastructure or resource that can meet your needs precisely while servicing other, equally demanding customers. How many superstars in their employ can be dedicated to your Does your view of their deliverables, roles, and responsibilities match theirs? Vendors generally see the customer squeezing relentlessly on price, while demanding scope creep for free. Customers generally see Vendors cherry picking ( , performing easy, profitable work while avoiding the tough, low-margin work that you really need them to produce). aWhile you are at it, take the same look at your own team. 2004 by CRC Press LLCagement group, or within the purchasing department.

6 The degree of con-trol they exercise over the relationship may be quite strong. Likewise, suchmechanisms can be extremely political, particularly if you approach thevendor without Understanding your vendor management s mission andprocess. In other words, circumventing their process, either willfully orthrough unfamiliarity, can be hazardous to your project calendar s , if you intend to leverage existing relationships to buy prod-ucts or services, make it your business to hook up with your internal ven-dor or product management team before you get too far into the process ofengaging that vendor . This includes requesting budgetary pricing or initi-ating exploratory conversations regarding services they offer that appealto you from a project 2 highlights preferred behavior when engaged with the people inyour organization who are charged with overseeing vendor have seen cases where it is okay to go directly to the vendor withoutvendor management tagging along.

7 I have also seen the opposite, where Icould talk to a vendor about approved products or services ( , technicalthings), but was definitely prohibited from discussing pricing or other busi-ness-related topics. The bottom line is that you need to gauge, as early onas possible, how your company does business with this vendor andwhether or not that meets your needs. I have had as many pleasant sur-prises in this area as disappointments. For instance, I learned that existingcontracts with two big Vendors provided certain project services at pricesfar lower than an internal group I was told to use would charge, with thesame or better service the other hand, I have been told that vendor X could not provide aproduct or service I felt quite certain they could, or that their pricing, ser-vice levels, or availability was disadvantageous to our initiative.

8 Equallydistressing is the discovery that vendor management can exercise vetopower over certain kinds of purchases, particularly based on technologystandards. Please refer back to Chapter 2, where additional detail on thistopic was provided under the tag of standards police. You may find thatExhibit of Engagement for Your vendor Management Team Make them aware of your project and your interest in leveraging an existing relationship. Provide detailed requirements you look for the vendor to provide. Determine if any requirements are provided, or precluded, by existing contracts between your organization and the vendor . Ask what specific benefits may accrue to the project ( , discounts, free services, etc.) by using this incumbent vendor . Understand how you can, and cannot, communicate with the vendor .

9 2004 by CRC Press LLCvendor management appears to have more input about how you can imple-ment your requirements than you do. Not that this happens all the time,but when it does, technology and calendar issues are usually too pressingto allow you the luxury of working your way through this without intenseescalation and only can the process not necessarily be tailored to meet your needs,but there is a chance that the vendor is unaware of you and your project. Ionce had to escalate a technical issue with a vendor with whom we weresoon planning to place a multimillion-dollar order based on corporate stan-dards. I chose to go to the senior account manager to get our problemresolved. Fortunately, he knew about our project. Unfortunately, my namewas unknown to him. As a result, his initial response back to me was a tadmore lackadaisical and pompous than I was comfortable with.

10 We workedour way past that glitch and resolved the real issue to my complete andtotal satisfaction and rather quickly at is lesson one in vendor management for project managers. We mayhave been forced to buy through this person. He, in turn, may have felt Iwas just another yippy customer not in his cell phone speed dialer, at leastuntil I took it upon myself to impress him with my importance! Some folksshy away from this scenario, while others enjoy thumping the table. Theapproach I prefer is to inform the vendor that I am responsible for makingthis project fly right, and I need his or her help to ensure that no one isembarrassed by the results. It turns out that this vendor rep was ade-quately conscientious once I pushed the right button is likely to be that these individuals have strategic goalswithin your organization goals upon which their commissions arebased, perhaps as much as those quotas related to sales volume.