10 Things You Should Know About IT and Service Provider Relationships
Byon May 21, 2012
Although I only joined Best Practice Group recently, I have already been well-exposed to the grim reality of faltering and failing supplier/vendor relationships. As a Sales Director and Managing Director of IT vendors during my career, I used to think that I knew a great deal about the topic. But in spite of that, I have learnt an enormous amount in my relatively short tenure here.
The simple fact is this – a huge number of projects fail, and so many senior executives simply don’t know what to do about it. We consider that a crying shame, given that out focus is on helping IT buyers negotiate and administrate healthy relationships with suppliers. In short, help is available!
Given that I am pretty new to this scene, I have been asked to write about the key things that I have learnt in the last few months. The fact is, my experience so far at Best Practice Group has been something of a revelation, and I am delighted to have this opportunity to pass on what I consider to be some valuable understandings.
1. You Can Leverage “Expert” Suppliers
If you have run a project of any scale, you will understand that scope creep is a budget killer. But did you know that one of the key causes of scope creep can be eliminated overnight?
It goes like this – your supplier claims to be an expert in your sector and the type of systems you want to purchase. That simple admission means that they are unable to charge you for many common types of scope creep.
This alone can often halve cost overruns. You cannot underestimate the power of eliminating the following phrase from your supplier’s vocabulary: “You didn’t ask for it – it’ll cost extra”.
2. Scope Creep Isn’t a Forgone Conclusion
Let’s stay on the theme of scope creep for a moment, which can also be controlled when you are not working with an expert supplier.
The key is to open your mind to thinking that you might consider wildly “out of the box”. Here’s an example – you might instinctively feel that delegating decisions to a supplier opens you up to risk, but you can actually employ specific methods that transfer the potential risk and cost to the supplier.
3. Understanding Your Risk Levels is Vital
The way in which you approach a project can have huge consequences on its implementation and administration. In most walks of life, the best cure is prevention, and that is no different when it comes to vendor/supplier relationships.
You must expose yourself to the harsh reality of project management. Events can occur which delay start dates and/or blow budgets. But certain project management techniques can actually absolve the vendor of responsibility for mistakes that they make.
4. Concise Documentation is the Best Kind
There is an enormous difference between effective documentation and the more common, time-consuming, tedious and rarely-read type prevalent in the IT industry.
However, if you understand the five points that make documentation contractually meaningful, the hassle of keeping too much, especially when it is so rarely referred to, can be hugely reduced.
5. Traversing the Joins Can Be a Smooth Experience
The steps between each stage of a project (from invitation to tender, to pilot, to consecutive parts of a multipart project, to sign-off and evaluation) do not, contrary to most expectations in the IT industry, have to be fraught with stress and risk that seemingly appears out of nowhere.
Given the right forms of management, there should be no surprises.
6. Antagonism Doesn’t Lead to Improved Performance
Best Practice Group argues the opposite, in fact.
Many failed projects are the result of buyers not knowing how to balance “tough” with “fair”, or “discipline” with “motivation”. Or there may be poor financial controls at the buyer end, with the vendor doing the best they can to resolve an untenable situation. The result is a disaster – when all the vendor and buyer really want is a calm and successful long-term partnership.
7. Hidden Obligations
Did you know that vendors have little-known responsibilities that are separate to any contracts you might sign? They are critical to allowing you to delegate efficiently, as well as ensure that projects are only signed off when you are 100% happy.
8. Good Due Diligence is Vital
We’re not just talking about reference sites, but also their liability insurance, history (or not) of lawsuits, customer relationships, and partnerships with other vendors key to your IT buy.
Carrying out solid due diligence upfront can make all the difference to establishing a long and mutually agreeable relationship.
9. Pilot Projects are Critical
A well-administrated pilot can make it impossible for vendors to claim that their initial scope was too narrow and ask for expensive additional work at the end of a project.
10. The Brink is Often Farther Away Than You Think
Even the most disastrous of projects can often be pulled back to financial stability. This alone can save most IT buyers several times the cost of a coaching workshop.
We’re Just Scratching the Surface
We are of course dealing with an incredibly complex topic – not one that can be boiled down into a simple blog post. But what the above should tell you is that there are many ways in which supplier/vendor relationships can be better planned, better administrated, and even better rescued.
At Best Practice Group, we have a great deal of expertise and experience relating to every single one of the items discussed above. If you would like to know more about any of them, please do not hesitate to get in touch for further advice with absolutely no obligation.
Creative Commons image courtesy of opensourceway