How To: Build Trust in IT Project Relationships
Byon May 1, 2018
If you have an IT Project that needs to get back on track, clear communication with your vendor is critical. For this to work, you need to build trust. Following the key steps below will help to ensure that both sides are clear about your expectations, that the system will be fit for purpose once implemented, and that your vendor knows how it will achieve this.
Executives who have not managed a complex IT project need to understand that when one goes off track, it’s tough to reach a successful conclusion while keeping a strong relationship with the vendor. Clients involved in a complex vendor relationship often assume that the vendor will attempt to class misunderstandings over their expectations as ‘chargeable scope creep’. Conversely, vendors often experience clients trying to class legitimately different requirements as ‘in scope’, to prevent further charges being levied. This can lead to distrust, creating the wrong environment and preventing the partnership from developing positively.
If your organisation is operating with low trust towards its vendor, and the vendor is reciprocating in the same low trust way towards you, then undertake a short survey to evidence where the relationship stands. The results will help you to understand which parts of the relationship need the greatest work, so you can start to build trust in the right areas.
What is commercial trust?
Commercial trust is about on-the-ground behaviours on both sides. It exists when someone does what they say they are going to do, when they say they are going to do it, in a reasonably consistent fashion. For the battle-scarred project and contract managers among you, who have been on the wrong side of a relationship with a manipulative vendor, the concept of trust will be hard to accept. Based on some of the vendor relationships that we’ve been involved with, we would agree. What is clear is that manipulative behaviour won’t help you or your vendor to get to the business outcomes you need to achieve. This means forcing yourself to take a step back,
particularly if you are more experienced in dealing with vendor relationships. Building trust works if it’s done correctly. It’s important to note, however, that commercial trust is not a substitute for expertise in contract management. The two go hand in hand. Commercial trust encourages the right behaviours, so you achieve the maximum value from a well-managed contract.
Why does commercial trust matter so much in IT vendor relationships?
In our experience, commercial trust powerfully affects an organisation’s reputation, its ability to partner and collaborate with others, its capacity to innovate, its ability to attract, retain and engage great people, and the speed at which it can execute all these aspects of success, plus many more.
Thought leaders that deal with complex vendor relationships now understand that implementing and practising commercial trust is a major currency in its own right. It is fast becoming a fundamental basis upon which people start, or continue, strategic relationships. For example, the Edelman Trust Barometer showed that:
77% of informed respondents refused to buy services from a company they distrusted.
72% criticised a distrusted company to a colleague.
55% of organisations say they are willing to pay a premium to buy from a company they trust.
76% recommended a trusted company to a colleague.
As Zinc research stated: “One day a company might be better off asking not what its margins are, but what its trust factor is.”
Strong commercial trust between the client and vendor drives the risk-taking that leads to progress in IT vendor relationships. When trust rises, the speed of achieving benefits goes up and costs go down. People are able to communicate faster, collaborate better and do business more quickly and efficiently. The Covey Leadership Center calls this the ‘high-trust dividend’.
How can you build commercial trust?
There are three key aspects to developing commercial trust with your vendor:
1. You need to start from an assumption that most people are basically good and therefore trustworthy. This will open up a world of possibilities in your vendor relationships.
2. Starting with a propensity to trust doesn’t mean you should trust everyone. You may conclude that someone shouldn’t be trusted. But if you lead with distrust, you won’t even see the possibilities.
3. Commercial trust is about your own judgment. It’s based on what your instincts and evidence tell you about someone’s motives. Commercial trust is therefore a competency and a process that enables you to operate with high trust in potentially low trust environments. It helps you to minimise risk and maximises possibilities.
Practical implementation of commercial trust
Behaviours that build trust aren’t complicated but they are challenging to implement consistently, every day. This is because a whole host of interruptions and competing priorities encroach on your time. Working with your strategic vendor to prioritise your business outcomes is an important first step in realigning your relationship. This very act shows you are taking its input seriously.
Internally, showing commercial trust towards your team will go a long way towards permeating trust in your organisation. You should expect resistance until people see consistent traits in your own behaviour. When they do, it will help your team to extend trust to your strategic partner, even if it is cautious trust at first.
Another practical point to be aware of is that CEOs and senior executives have a propensity to dip in and out to resolve issues, when the on-the-ground teams are not seeing eye-to-eye.
If this happens, be mindful that you need to cover four things from these high-level discussions and confirm them with the vendor at your own level:
1. Find out precisely what issues were discussed between your executives and the vendor’s.
2. Be clear on what they have agreed.
3. Ensure you see any letters, emails or memorandum of understanding that has been sent between them.
4. Ensure that as a matter of governance, the outcomes and actions from these are reflected in the schedules/contract terms, so everyone is clear as to the expected outcomes.
Does implementing commercial trust mean strong relationships flow naturally?
Not quite. Successful relationships don’t just happen.
Detailed design of how the relationship aspects of the contract will operate are critical. This design will ultimately be what drives on-the-ground behaviours and whether power-based or trust-based relationships emerge as victors.
It’s also important to remember that the day-to-day rebuilding of commercial trust is hard work, particularly in the early stages. Relationship challenges often far outweigh any technical delivery challenges. In your client-side project and contract management team, you need high performers with distinctive skills, capabilities and good orientation. You have to dedicate specific resources to managing the relationship with your vendor, if you are trying to reach an effective outcome.
In addition, people often confuse building commercial trust with relaxing terms and key performance indicators in the written contract. However, the only relationships that drive effective outcomes are those with an appropriate balance of power and trust. You need to be sure that you implement commercial trust in line with the contract terms, roles, responsibilities and escalation procedures. More often than not, your contract terms and schedules will need updating to reflect the changing ‘trust’ nature of your relationship and business outcomes. Building trust also requires some informal escalation processes, for less critical issues. Informal discussions are fine, as long as they don’t undermine the contractual terms, and should mainly be used to fine tune performance. You’ll usually find more is achieved over a coffee than in formal escalation, and far more quickly. Just remember that if discussions and processes being adopted on the ground are really effective, then update your contract terms and service schedules to reflect the ‘spirit’ of the agreement so that everyone is clear.
Ultimately, a key factor in building trust is spending time together. You need to have capacity within your organisation’s senior stakeholders and the Intelligent Client Function team, to build competence and business understanding. You need to invest time in the relationship.
Implementation issues can damage trust between you and your vendor. However, commercial trust – people doing what they said they would, on time – is vital for your project to succeed and for you to get the business benefits you want.
Commercial trust enables people to address shifting realities in mutually beneficial ways, and in the process produce significantly better results than power-based relationships, which rely on rigidly enforcing contracts.
Rebuilding commercial trust is not easy. It requires judgement about who deserves trust and it needs you to take the lead, by showing trust through your own behaviours. This will encourage others to behave in the same way, eventually resulting in a relationship where both sides trust the other to deliver what they promise.
Commercial trust is not a substitute for contract management. The two go hand in hand. More often than not, you will need to update the contract terms to drive the right trusting behaviours between you and your vendor.