CXO

Follow these guides on the road to a valuable vendor relationship

Selecting a vendor can be a difficult task. Here are three strategies IT managers can use to help make the right decision and then keep a project on track after the decision has been made.


The road you follow to select a vendor can be full of twists and turns. If you make the right decisions, you will be on your way to a profitable vendor relationship. Make a wrong turn, and you could be headed down the road to ruin.

You can increase your chances of finding a vendor that best fits your needs if you heed these warnings as you begin your journey.

One: Be wary of salespeople
Once you begin your quest for a new product, salespeople won’t be far behind.

Remember that the market is tight and salespeople are eager for your business, so take what they say with a grain of salt.

It’s important to keep your eyes and ears open to accurately decipher what the sales team is really saying about the product. If product claims sound outrageous, they probably are.

Don’t feel pressured to select a vendor because you’ve established a relationship with the vendor’s salespeople. The vendor wants your business and should accommodate you through the entire sales process and should not be pushy. "Always let them know that there are hundreds of other vendors out there in this market," said IT manager Robert Cartright.

Try a subjective approach and trust your gut feelings when analyzing a sales pitch. Howard Highsmith, an independent consultant and president of the Sales Methods Corporation, uses his instincts to think through a pitch before he selects a vendor for one of his clients.

“I get a sense of trust, or I call it vibes, that this person is not trying to hoodwink me,” Highsmith said. “And that’s a very hard thing to do. It’s very subjective. It’s not measurable.”

Trusting your instincts can work, but if you’d rather use a more concrete method of interpreting a salesperson’s pitch, check the vendor’s references.

“I cannot tell you the number of clients that I have that make vendor choices [but] don’t bother to check references,” Highsmith said. “And in checking references, it is incredible what people will tell you about the company or the person.”

Remember to ask a reference this key question: How accessible was the vendor during the project? The answer to this question can tell you a lot about how the vendor will treat your project and your business after the deal is signed.

Two: The devil is in the details
Don’t jump headfirst into a relationship with a vendor. Start slowly and devise a thorough plan for how the vendor will approach and complete your project.

Many people think that once the deal is signed, work can begin. But according to Highsmith, “the devil is in the details.”

“If you don’t have details, chances are you’re going to have a project that’s going to go bad,” he added.

A rigid plan is critical. It is the way you will measure the vendor’s performance during the life of the project, so it’s important to construct a plan with detailed measurable goals and benchmarks.

“You’ve got to have clear measurable objectives with specific time frames to complete them. You’ve got to look at this as a project, and you’ve got to have an endgame. You have to know what your endgame is,” Highsmith said.

When a vendor does not meet the goals described in the plan, you can use the plan to show the vendor where they need to be and what they should accomplish at each stage of the project.

It’s also important to include an open line of communication about the plan with the vendor. Having access to a vendor during a project is critical to ensure that you will be heard when a goal or benchmark is not met, according to network administrator Kimberly Kamsickas.

“One of the most beneficial things I have been able to get a hold of is getting a full chain of command from each of my vendors,” Kamsickas said. “That way when a problem hits, I know exactly who I have to escalate to.”

Also keep a log of what happens during the project. Productivity numbers, timelines, and other recorded information can help you if the project is not finished on time. “Keeping everything in writing is also one of my best resources later if other managers ask me about referrals or if the same [vendor] asks again for my business,” Kamsickas said.

Three: Keep the vendor in line
Protecting yourself from vendor maneuvers is also important. Be aware that vendors may suggest extra consulting or support fees that add to the project’s overall cost.

You should track the detailed project plan, but you have an alternative if the project goes off track and referring to the plan doesn’t help: Don’t pay the vendor until the project is finished to your satisfaction.

You can follow Highsmith’s 40-30-30 Rule. For example, when Highsmith embarks on a relationship with a vendor he might pay them 40 percent of their fee up front, 30 percent when the middle of the project is complete, and another 30 percent after the project is finished.

“The (middle) 30 percent is paid at the event of some outcome that is decided by the organization and the vendor beforehand,” said Highsmith. Pay when your benchmarks are reached.

It’s also a good idea to create confidentiality and nondisclosure agreements with vendors before a project begins. Portions of your organization’s proprietary information can be released to the vendor after a project is launched, and if your project goes well, the vendor may want to use it as an example of their work or use your organization as a reference.

“It’s important to establish and nail down exactly what level of information that you are willing to have revealed in the open marketplace,” said Highsmith.

The key is to avoid misunderstandings and confusion. Effective communication, attention to details, and controlling project progress are all signs that you are moving in the right direction.

Share your vendor stories with us
Do you have a nightmare you’d like to get off your chest? Or tell us about a successful vendor relationship that you have developed. Let us know! (It’s not important that you tell us the name of the vendor.) Drop us a line or start a discussion below.

 

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