Strategic Vendor Management - From Buyer to Partner

By Anne Zink

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The old adage really is true. The more things change, the more they stay the same. In 1997, my company conducted a series of interviews with CIOs in Global 500 companies. The goal was to find out how IT vendors could improve their relationships with their most important customers. The top 3 findings were:

  • Invest in understanding our business, not just our infrastructure;
  • Build relationships outside of IT; and
  • Include us in your strategy/product roadmap discussions.

    We recently repeated that research, expanding it to include Fortune 1000 companies. The findings, a full decade later, were the same.

    What’s interesting is when we share them with vendors they practically groan in frustration. “We would be more than happy to comply with the first two; ‘they’ (the clients) won’t let us.”

    Clearly, something was amiss, so we dug deeper.

    The first thing we discovered is vendors, with very few exceptions, don’t feel comfortable moving outside of the CIO’s department. Vendors are concerned their day-to-day contacts will feel they are going around them and undermining their authority. Our research found plenty of evidence backing up the concern.

    The second challenge is that, even if they felt empowered to move outside of IT, most weren’t sure where to go. In the Global 100, senior executives cultivated cross company relationships, but that practice was fairly limited. It’s simply not scalable. There are only so many senior executives to go around.

    The third challenge is that the average account executive has very little expertise or understanding of the world outside of IT. Most were hired for their technical savvy. They tend to be “geeks” hired to communicate with other geeks. Take them outside of their IT comfort zone and they are severely handicapped.

    It feels like this should be an easy challenge to solve. After all, both parties want the same thing so we dug some more.

    This time we searched for companies who feel good about their vendor relationships. We found fifty. They were spread out across multiple segments. Due to this wide distribution, the numbers are not statistically significant.

    They employed a variety of solutions to the challenges we uncovered. Every corporate culture is unique. What works in one, may not be the best solution for another. Therefore we are calling these solutions, "leading" practices.

    Getting to Know Us Sessions: This practice was found most often in Fortune 1000 companies. The CIO sponsored several informal sessions each year that would introduce internal stakeholders to key vendors.

    The sessions required careful planning to minimize any vendor conflict as well as ensure the appropriate stakeholders were present. Internal departments also took some convincing, but ultimately found the sessions valuable. The number one advantage to the CIO was that departments now felt heard.

    RFI/RFP Briefing Sessions: This practice was found in Fortune & Global 500 companies. When an RFI/RFP was ready for release, they conducted Web conferences to review the goals of the project and its expected impact on each stakeholder group.

  • These sessions tended to be outbound only. In a few instances there were anonymous question boards, but the real focus was giving vendors first-hand insight into the needs and expectations of the ultimate end user.

    Vendor Participation on Virtual Teams: This practice was found in companies of all sizes. However, vendor participation was limited to a few of the most strategic vendors. The teams were typically addressing very specific projects. However, we did find a half dozen companies where vendors were considered an extension of the IT department and participated in all appropriate meetings.

    These activities address the first two findings, but what of the third: Gaining insight into and contributing to a vendor’s long-term development strategies?

    This is the most frustrating challenge for the CIOs we interviewed. Most did not understand vendors’ reluctance to share their visions. We heard, in almost every conversation, “They want us to invest in building a business process around their solution yet they won’t tell us their five-year plan. We get marketing fluff, at best.”

    We only found five customers about of the 50 who participated in this research who felt they had a solution to this challenge. All five were Global 250 customers. In every case, they created leverage by engaging the entire executive team. These companies insisted on annual briefings by the executive leadership of their top 20 vendors. If vendors were unwilling to comply, they were phased out and eventually replaced. Needless to say, most vendors complied.

    We found three additional companies, classified as Fortune 1000, which were able to convince their top vendors to share their analyst briefings. In these instances, the Analyst Relations Team either visited the customer or conducted a web briefing.

    It is important to note, the focus of this article, is how customers took matters into their own hands to improve the strategic nature of their vendor relationships. Vendors are not idly standing by. Many are aggressively re-tooling their account management teams, investing in customer advisory boards and engaging customer in strategy discussions.

    It is clear, from our research, there is work yet to do. We hope these leading practices inspire more customers to take the initiative and invite their most important vendors to participate more fully in their business. After all, the ultimate goal is to move beyond the transactional buying relationship to a true partnership.

    Anne Zink is founder of AZtech Strategies and go-to-market strategy consultant for the high tech industry. AZtech is dedicated to developing multi-channel strategies based on customer expectations, channel input, and industry expertise. AZtech specializes in bringing emerging technologies and services to market.