Getting to Know You

A healthy partnership with a technology vendor requires two-way information flow.

Pick up nearly any piece of technology product literature today, and it will proclaim not only the vendor's desire to sell you a "solution" but also the vendor's desire to become your "partner." But for veteran technology buyers, there is a fine distinction between a partner and a vendor.

"I use the word partner very carefully," says Jean Holley, senior vice president and CIO at Tellabs Inc., a telecommunications equipment maker in Naperville, Ill. "Of all the companies we do business with, only a handful are partners that we share our strategy with."

Little wonder: In order to establish a true partnership with a technology vendor, you need to get to know each other -- intimately. That means taking the time to pave a two-way street for information to flow freely in both directions. "A partnership is like a marriage, where it's only natural to know each other's dirty secrets," says Michael Mah, an analyst at Cutter Consortium in Arlington, Mass.

But some CIOs agree that rather than letting that depth of knowledge grow naturally over time, you need to ask lots of questions, ensure that you're getting honest answers and provide a high level of candor in return.

Skipping this due-diligence stage can bring about disastrous results, such as hiring a vendor that is all about the profit, says Jesus Arriaga, vice president and CIO at Keystone Automotive Industries Inc. in Pomona, Calif. "They know they can come in, charge you on an hourly basis, and if you're not careful, they're gone. You need to start an honest relationship from the beginning," he says.

Knowing what you're looking for is the first step. Here are 10 questions you should ask to determine whether you can trust a vendor as a partner.

1 Who are some of your customers? The point here isn't to check on official reference accounts, which are bound to be success stories, but to talk with customers who aren't prequalified. Holley gets account names from sales reps or someone even higher up a vendor's food chain. When she knows the CIO at the account, "I'll pick up the phone and ask what their experience has been," she says. This research yields hidden land mines, as well as out-and-out embellishments. "I've had vendors say, 'We've done business with such-and-such company for years,' and I'll place a phone call and [learn that] it isn't true," says Holley.

Even if you can't get the name of a nonreference account, try to get the vendor to divulge details on projects that went south. "We toss out negative questions to see what the response will be, like, 'What have you done when a customer had a downed system?'" says Arriaga. He also asks what happened, how the problem was resolved and how quickly it was resolved.

2 What is your previous experience in our industry? It's not always vital to choose a vendor with experience in your industry, but you want to know if it understands industry jargon, if it's just breaking into the market, if it can parlay experience from other industries and whether it's working with any of your competitors, says Holley.

In some cases, it might make sense to leverage the experience of a software vendor that provides applications to your competitors. But as Holley points out, if you want to differentiate yourself in a strategic area such as customer relationship management, the opposite would be true.

At St. Luke's Health System Inc. in Kansas City, Mo., CIO John Wade goes so far as to ask partners to not deal with companies in his region for a five-year period once he has divulged the health center's business plan. "It's human nature that if you're with one of our competitors and you're doing a planning engagement for them, you could blurt out, 'Well, St. Luke's is doing such and such,'" he says.

3 Can you provide data on recently completed projects? If you were building a house, you'd ask the contractor to tell you about previous projects. However, most technology providers don't keep this type of data at their fingertips, Mah says.

"When a vendor says it can do a job, there has to be a way to corroborate that it took this many people, it lasted this long, it cost this much, and here's how much functionality and reliability we delivered. You'd think that would be a reasonable set of questions," he says. If you can't get that information, there's no way to judge the legitimacy of the proposal, Mah says.

4 What is your fiscal calendar? Knowing the vendor's calendar can offer insight into what drives its pricing, sales compensation -- and even its level of customer service.

"We get a lot more customer attention the month or two when Microsoft is doing its customer-satisfaction surveys," Holley says. "I now hold them to that performance throughout that year."

But having this information and using it to your advantage means weighing the lower price against the business benefit. "If I stall the vendor into the fourth quarter, maybe I'll get a few more dollars shaved off the sale price, but what is the cost to my business to delay that decision?" Wade points out.

5 Can our CFO meet your CFO? When it comes to a vendor's financial status, call in the experts, Arriaga advises. "Ask for their full financials and set up a meeting between the CFOs," he says.

Don't wait too long to do this financial check, Holley says. At Tellabs, the financials group checks the vendor's numbers at the same time that her group is establishing the contractual agreement. "You need to lean on other departments in the company," she says.

And remember -- you're not looking for a company that will last forever. In reality, five years is enough, Wade says. "I can suffer not having the vendor around in the last year or so of the product cycle," he says.

6 How big is your workforce, and what portion is onshore vs. offshore? Clients need to know not only how many members of the project team are U.S.-based vs. foreign-based, but also how that affects components of the final price, Mah says. "You want to know the mix of people doing the engineering for you," he says. "If people are offshore, there's a higher risk of domain knowledge being absent." Mah refers to a health insurance company that decided not to go with a particular vendor because it was using a high ratio of offshore programmers, who might not understand the nuances of U.S. health insurance.

Another twist on this question is knowing what levels of staff are based in the U.S. vs. offshore. "If you heard the management people are all offshore but that they'll fly in once a month with a translator, that's probably not going to work," Wade says.

7 What's your corporate hierarchy? Knowing who reports to whom becomes important when you need to escalate a problem, Holley points out. It's also a useful perspective to have when you need to respond to calls from a variety of people in the organization, she says.

8 What if...? There may be no better way to see a vendor's true colors than to ask questions to which you already know the answers.

"We like throwing out concepts and infrastructure ideas we have and hearing either validation or new solutions," Arriaga says. "We also play devil's advocate -- even if we know something is not the right thing to do, we like to hear their response."

9 Who is our account manager? After a few instances of account managers changing midstream, Arriaga now asks the vendor to appoint an account manager at the onset of negotiations and guarantee that that individual will remain in that role.

To make sure it's a good fit, Arriaga drills the account manager about his skills and asks for customer references. "Once we find the right person, we're bulldogs about keeping him on the account," he says.

10 What is your business plan? An essential step is signing a nondisclosure agreement and viewing a five-year road map of the vendor's technology and strategic plan. This enables you to map the life cycle of what you're purchasing back to your business needs and IT strategy.

"Are you the first one to trial the product, or [are you] buying it at a fire-sale price?" Holley asks. "You should intentionally know that."

This is also the time to see if there's a healthy alignment between your two organizations. Does the vendor plan to continue focusing on your industry? Is it expanding into technology that will become important to you or your industry, such as electronic outpatient records in health care?

Wade says that one of his favorite tactics is to ask what the vendor sees on the horizon that will affect its business and what it plans to do about it. "You've got to be credible to stand up to this type of scrutiny," he says.

In one instance, Wade says, a major health care software vendor refused to share its business plan for fear the plans would change and thus be misleading. While there was pressure to simply trust the vendor based on its reputation, Wade decided to eliminate the vendor from the running. "You don't bankroll the shop on, 'Trust us,'" he says.

Brandel is a Computerworld contributing writer in Grand Rapids, Mich. Contact her at mary.brandel@comcast.net.

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