E-Commerce

Managing the vendor relationship: Pricing static, but more support help is available

Some tech leaders say that the economy has lead vendors to freeze pricing and to downgrade services. But many vendors are compensating for that loss with increased presales support. Here are some changes you should expect in your vendor relationships.


Due to the downturn in IT spending, CIOs are seeking better pricing and more support (both before and after a sale) from their vendors.

But, unfortunately, vendors don’t seem willing to give much when it comes to pricing, although they're more forthcoming with support help. We talked to CIOs and other tech leaders about their recent dealings with vendors and the changes they've witnessed in those relationships, which should help you be more aware of what you'll be up against in future vendor negotiations.

Managing the vendor relationship: Who’s got the upper hand?
The final installment of this three-part series will focus on how some vendors may still have the upper hand despite a tough economy, especially in specific segments of the product/service market, including security products and services and Web site content management. The first part, "Managing the vendor relationship: Tough economy means give-and-take," examined general IT industry spending trends and suggested some ways to get more from a vendor, even in difficult economic times.

Putting the squeeze on pays off
Some industry analysts believe putting pressure on vendors to reduce prices can yield a 20 to 50 percent reduction in equipment prices.

But many tech buyers report that vendors are holding firm.

“There’s only so much pressure you can bring to bear when you use a lot of one vendor’s products,” said Albert Cook, a network administrator at an environmental and industrial chemical testing service company. “The vendor knows we’re not going to introduce products from another company into our network.”

However, Cook did mention that his main vendors are very accommodating when it comes to presales help. “We used to see a systems engineer only for major purchases,” explained Cook. “Now the systems engineer seems to be surgically attached to the sales rep's hip.”

Tech leaders also report that vendors are offering more training classes and courses after the sale is complete to teach staff how to use and manage products.

More help up front
If there's one strong trend emerging from today's changing vendor-CIO relationship, it's that vendors are willing to lend tech buyers a hand before a sale is made and are providing more up-front knowledge than before.

Today, CIOs can attend seminars and product introductions before they've even considered a product or technology. In the past, this type of customer service was reserved for the serious and committed buyers.

For example, most large companies, including Cisco and Oracle, now offer a mix of in-person seminars in multiple cities, Web-based interactive seminars where participants can ask questions in a chat-like window, and on-demand seminars where a CIO can view a previous seminar at his or her convenience.

These seminars cover a wide range of topics, including Voice over IP, VPNs, e-commerce, network management, security, and content networking. And presales educational seminars are not just the purview of large vendors. Many smaller companies are also offering seminars on a narrower range of topics.

Many of these seminars are well worth the time. Yes, the vendors are obviously pushing their own solutions, but most give a good overview of the current market research, insight to the challenges of deploying the technology, and examples of how to calculate ROI on the product.

The lone downside to these seminars is the time commitment. But because many are now Web-based, even the time commitment is less of a deterrent than before.

Vendors sometimes can't keep promises
While vendors appear to be promising more support all around these days, it doesn't mean that delivery is guaranteed. Vendors are grappling with budget and staff issues stemming from the economic downturn just like everyone else.

One CIO reported that he recently lost a vendor support person he had been working with for several years. While a replacement was assigned, the new person was not as familiar with the CIO's networking situation, issues, concerns, and history of problems. Others say that they simply are not being given the same level of support that they were receiving just a year ago.

While the criticisms are aimed across the board at many companies, Web hosting companies, in general, seem to be doing a worse job than most. Part of the problem is due to the poor financial state of many Web hosting companies.

“I used to call up my [technical support] contact and get action within the day,” said Andrew Goldstone, CIO for a medical-supply company in Pennsylvania. “Now, even though I get the support person on the phone quickly, it takes longer to execute my order.”

In the past, when Goldstone needed more bandwidth for servers in the hosting company's data center, the additional capacity was provisioned almost on the spot. Today, it takes at least 24 hours, he said.

Others complain about a lack of continuity of support staffs at the hosting companies. “For five years, I had the same support person for my MCI frame relay service,” said one manager, who requested anonymity. “But I feel like I’ve never gotten the same person twice with calling my hosting company.”

Service sometimes depends on tech purchase
According to some CIOs, the support level varies with the type of service. For example, customers using a hosting company’s facilities to colocate equipment say the company provides adequate support.

Yet one CIO said that when he's contracting lower-end services, simple needs are not given much attention by the provider. “I used one registry service to renew all of our corporate domain names,” explained Cook. “When I needed to transfer the hosting of a particular name to a different service provider, there were complications.”

He explained that in the past, the process was automatic—he would just fill out and submit an electronic form and the transfer would take place within 24 hours. When he recently tried to transfer a domain name, he had to make three attempts, and after that third time, he went in and manually made the changes in the provider's database.

Coming up next
For some CIOs, managing the vendor relationship has become even trickier, as the economy and recent hot-button issues like security have given some services providers and manufacturers the upper hand. In the next and final part of this series, we’ll examine how IT buyers are grappling with vendors and lessons learned that could prove useful in your future negotiations.

How do you manage your vendor relationship?
Do you have a set approach for working with vendors? If you have a method that seems to work, tell us about it in an e-mail and we’ll share it with other TechRepublic members.

 

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