Vendor Management Tips: Building Relationships

These IT managers offer advice for driving the best deal with vendors while ensuring a mutually successful relationship.

Don't be afraid to share your priorities with a vendor. If the vendor can help, they will find a way to provide the best solution. If they can't help, they know they are not part of the priorities at the time. Let them know you will continue to share with them what you need and how they may play a role down the road. -- M. Lewis Temares, dean of the College of Engineering and vice president for IT, University of Miami, Coral Gables, Fla.

Create a competitive environment (at least in the eyes of the vendor) by seeking credible alternatives. Vendors that know they have secured your business are better able to seize control of the negotiations. Be wary of "partnerships." They are vendor's way of making sure you are going to use them. -- Timothy C. O'Rourke, vice president for computer and information services, University of Miami, Coral Gables, Fla.

Use vendors to help you build a business case or persuade reluctant members of your team. Vendors often have white papers and ROI analyses that can help you build a business case and are very willing to help persuade your team. Using them to help you build support also helps them understand your business and refine their proposal so it better meets your needs. In the best cases, you become partners where success makes both parties look good. -- Pat Smith, corporate vice president, MIS, Stiefel Laboratories Inc., Coral Gables, Fla.

Treat your potential partners and partners as such -- not as vendors. There is a real need to drive contract terms and legal conditions, but in the end, no contract in the world will adequately cover your long-term goals and expectations. Build a solid, true collaborative partnership with your vendors. It will pay off in the long run. When things go bad, and they most certainly will, who would you rather have at the table? A vendor or a partner? -- Rick Hamilton, director, service delivery, Cisco Systems Inc.

Find a way to build a relationship. Price isn't the only aspect of the relationship. Find creative ways to go beyond the transaction. At the university, we involve vendors with the students via executive speaking events, scholarships, internships and recruitment. Further, the faculty seek sponsored research with the vendor. We have a person who works to manage all aspects of these relationships so dealing with the University of Miami is pleasant and easy to achieve. -- M. Lewis Temares

Ask for ongoing responsibility. To be a partner, both parties must act like partners, which means helping each other beyond the cash exchange. Will the vendor continue to help you succeed after the sale? How and where have they done this before? What can you do to help them be successful beyond just buying their products? If they cannot think of ways for you to help them, then the only value they will get is money, and this means you will spend more for their products or services. -- I.H. Tyler, Quaker Chemicals Corp., Conshohocken, Pa.

Always get competitive bids. From the outset, be clear that they have to put their best price on the table. No one will get a second chance to rebid. And never, ever give one vendor's bid to another to beat. -- Shahri Moin, Oscient Pharmaceuticals Corp., Waltham, Mass.

Be respectful to your vendors. If you have no intention of giving them your business, don't ask them to participate. -- Shahri Moin

Look to the long term. If the vendor staff at the table are here to stay, ensure that it is a win-win opportunity. If not, go for the max for your company. If they are here to stay, you'll just pay later for any aggressive short-term gains. -- Stephen R. Smith, entity CIO, Hospital of the University of Pennsylvania/chief technology officer, University of Pennsylvania Health Systems, Philadelphia

Negotiate with the top two. After evaluating a number of vendors, conduct contract negotiations with the final two, not just the final one. That enhances competition, and you may discover a deal-breaker with the top choice. -- David Lewis, CIO, Deseret Mutual Insurance Co., Salt Lake City

See the other side. Make sure you understand the value at the other side of the table of each negotiation point. Sometimes you'll learn that something you find of minimal value is of major value to the vendor, and often this learning comes away from the negotiating table. -- Stephen R. Smith

Make it a win-win. I have found that when technology vendors commit to a result rather than a sale, their success is directly tied to my organization's success. This improves the chemistry of the relationship. It's not just about selling me the best software or hardware, or about a vendor getting the best margin. It's about two organizations getting into a collaborative and mutually beneficial business outcome. If both partners cannot get value from the investment (no matter the scale), then it is the wrong investment or partner. For example, if I am buying an upgrade of software from a vendor, I may ask the vendor to participate in my payback. Instead of paying the reseller upfront, I have metrics of my ROI which I share with them; they get paid when certain targets are met. -- Eric Goldfarb, CIO and executive vice president, PRG-Schultz, Atlanta

Offer to help. If you don't buy from the vendor, help them build relationships with the people you know that may face the issues their products address. This also builds the relationship without a transaction involved. When you go to negotiate with them, they will be more amenable because of all the help you have provided in the past. -- M. Lewis Temares

Dollars & Cents

Don't pay for features you won't use. Offer to pay for them later, if and when you grow into them. -- Rod Traver, senior vice president, technology, Robert E. Nolan Co., Weatogue, Conn.

Start by defining what the "best deal" means. There are business objectives associated with every technology-related acquisition. There are lots of techniques for driving toward lowest cost, but you need other approaches when the requirements involve tight time frames, continued support or total value. In most cases, metrics with contractual remedies should be included to be sure the goals are clear and measurable and that the deal was, in fact, the right one. -- Joseph A. Puglisi, group CIO, Emcor Group Inc., Norwalk, Conn.

Tie guarantees to money. Guarantees aren't worth anything unless there are monetary penalties. They must be spelled out in the contract. -- David Lewis

Focus on value, not price. Before a negotiation, determine what is of value to your firm -- for example, the successful implementation of the system, with users gaining 20% improvement in time reductions. Use this value analysis to drive the discussions with the vendor -- can they deliver this value and then align their price to this? -- I.H. Tyler

Demand proof of concept. If you are seeking value, then you need to see it firsthand. So make the vendor prove it can be done, hopefully by implementing something at your location with your people and data. Often this works with appliance-type systems or infrastructure. If the situation is for something more complex, then you must meet with users of the firm's products and really do due diligence to see if they are getting the values you seek. -- I.H. Tyler

Special Report

Guide to Managing Vendors

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Copyright © 2005 IDG Communications, Inc.

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