When trying to determine whether the firms that supply your IT organizations with goods and services should be “vendors” or “partners,” you’ve got to understand your needs. If you just want a firm that can reliably supply the lowest-cost product, you want a vendor. On the other hand, if you want a firm that will be willing to take some risk and expand its skill sets to meet your needs on the chance that your success will bring success to them, then you need a partner.
In this column, I’ll give you some questions you can ask yourself to determine what kind of relationship you want with each firm. I’ll also give you some suggestions on how to build the loyalty needed for a true partnership.
Making the call
While the vendor vs. partner distinction is a useful way to think about the companies you do business with, it has its limits. Think of a continuum, with “vendor” on one end and “partner” on the other. The firms you purchase goods and services from will all fall somewhere on that continuum, and not necessarily neatly onto either end.
Further, don’t forget that I’m not making judgments here. There isn’t inherently anything “good” about being a partner, or “bad” about being a vendor. It’s a statement of fact, not an instrument of praise or scorn.
For example, if you run a data center that still uses offsite storage for tape or disk backups, you may use a courier service to pick up and retrieve those daily and weekly backups. Now, you probably don’t think of that courier service as a strategic partner whose collaboration is necessary for ultimate success. The courier service is a vendor.
Does that mean you don’t need the courier service to be competent and reliable? Of course not. It provides a valuable service to you, but not one that is irreplaceable. The courier service is a good vendor, but not a partner.
So how do you decide who falls into that partner category? While no two IT departments have the same needs, there are some basic questions that you can ask yourself about each of the firms with which you do business:
Do they do business with your competitors?
Of course, you can’t expect whoever you contract with to forsake the chance to work for other firms. On the other hand, most firms wouldn’t feel comfortable getting too close to a company that does a huge amount of business with your closest competitors. Ironically, in some ways it’s easier to do business directly with your closest competitor, because you can set up a joint venture or some other organizational device to limit the risk to such an arrangement. It’s harder to get that kind of protection when working with a company that works with a competitor.
Would you sign a non-compete?
Believe it or not, this is more of an emotional question than a rational question. Would you feel comfortable executing a non-compete agreement with this company? A true partnership involves risk, both for you and the partner. Would you feel comfortable letting a vendor “under the hood,” so to speak, learning detailed information about your plans?
Do you get along with the company contact?
Again, to be someone’s partner, you have to be comfortable with him or her. While two firms can become partners, at the execution level it comes down to the working relationships between the men and women of both organizations. Take a moment and examine the people you work with as would-be partners. If you trust them, that will go a long way toward building the trust necessary for a true partnership.
Is the company fiscally sound?
If the two previous questions seem a little “touchy-feely,” this one is brutally practical. Before entering into a partnership with a firm, do some due diligence. Run a credit report, and (if the company is publicly traded), review the firm’s financial results. If you’re truly counting on them for strategic services, you need to make sure they’ll be there at the finish.
Do they have unique skills or exceptional service?
As I said earlier, there’s nothing wrong with being a vendor. However, to make the jump from vendor to partner, the firm has to offer outstanding skills or services. Otherwise, it is just not worth the aggravation.
How badly would you be hurt if they went belly up?
This is another way of showing you how to triage your vendor relationships. One way to judge the value of such vendors is to speculate on how you could cope, should one of them disappear.
Building partner loyalty
At this point, let’s assume you’ve examined all the companies you buy IT goods or services from, and you’ve decided that you want to build a deeper business relationship with one or two of them. What’s next?
If you’ve ever negotiated and implemented an outsourcing agreement, you probably already understand how this kind of partnership works. After all, when it comes to money issues, most of us are given pretty clear directions by the organizations for which we work.
So let’s assume you understand how to bid out a project, define its scope, and negotiate the contract. How do you build the loyalty you need from a partner? Here are some suggestions that have worked for others.
- Execute an NDA: While a Non-Disclosure Agreement (NDA) may seem overly formal or legalistic, it will also make clear to your partner that your firm trusts them with important information, and that they will be providing critical support to your organization.
- Have regular nonissue communication: This is just a fancy way of saying that you should have regular talks with your business partner that aren’t tied to a specific issue. Otherwise, the only time you end up picking up the phone and talking to them is when you’re having a problem with the partner’s performance. The result could be that your partner never wants to take your calls. A regularly scheduled lunch is a good way to avoid that kind of difficulty.
- Don’t be afraid to praise: One of the more unfortunate byproducts of our overly litigious society is that we are sometimes reluctant to praise firms with which we do business. We fear that if something later goes wrong with the business relationship, that the former partner will point to your letter or e-mail as evidence of your satisfaction. Don’t let that fear blind you to the good will that you can gain from telling your partners when they’ve done a good job. If nothing else, they deserve it.
- When prudent, reward your partners: Most organizations require that all contracts above a certain threshold be sent out for some type of competitive bid. While you can’t go around your accounting restrictions (and shouldn’t want to), you should try to reward your partners whenever possible with new business or extensions of current agreements. After all, your partners need to have an incentive for the business relationship.
- Work the next level of contact: By this I mean that in addition to maintaining a good relationship with the designated contact at your partner’s firm, you should also try to build a relationship with the contact’s supervisor. After all, turnover among account executives can be pretty high, and you don’t want to have to start from zero every time your rep leaves.