CXO

What to do when a vendor relationship is headed south

Sometimes even the best vendors and consultants behave badly. Here's how to react and mitigate the situation.

VMware received the top rating in the 2014 Temkin Group Tech Vendor report.
Image: VMware

Vendors are critical to the modern IT organization. They provide the software and hardware we need to keep our operations running, people to augment or even replace internal staff, and the big ideas and strategic thinking that help us evolve and grow our organizations.

For most organizations, delivering IT would be impossible without the help of dozens or even hundreds of vendors. While the vast majority of these relationships are healthy and mutually beneficial, occasionally the relationship goes awry.

Look in the mirror

It's easy to assume that the fault for any bad behavior from a vendor is squarely in the vendor's court; however, this is often not the case. A poorly performing vendor may be trying to meet ill-defined objectives, or may lack oversight and management and therefore happily bills hours for irrelevant or unneeded work. In the worst case, a small army of vendors may stand by billing hours while your company vacillates between choices and fails to make decisions that allow the vendor to move forward.

While it can be painful to be the enabler of bad vendor behavior, effecting positive change is easier since it's internal. You can often gain consensus around a difficult decision when you arrive with a massive invoice for vendors in a holding pattern, and evaporating budgets often have a way of providing clarity and direction to an otherwise listless project.

Assess the relationship

It can be tempting to overbuy from external parties, whether it's tangible items like hardware, software, or cloud capacity, or services. Most vendors have full suites of compelling offerings, and "a few dollars more" can provide seemingly excellent deals on everything from processing capacity to a high-end, specialist advisor. These additions can add up, and that lean and mean project team you originally asked for can rapidly become a team of expensive experts, when all you really wanted was some staff augmentation.

Occasionally, what started as some quick advice or a small rollout can transition into a permanent expense without anyone giving it a second thought. Make sure the service you're receiving matches what you actually need, and what you can ultimately afford. Vendors are all too happy to add another rack full of servers or send a license key for some supporting applications, unexpectedly increasing costs until they're untenable.

Come up with a plan

If the relationship is going sour, or costs are orders of magnitude higher than you expected, sit down with your vendors and ask how you got to the current state and how to resolve the situation. The best vendors will provide an honest assessment of where things are, and take blame where appropriate. Perhaps both parties entered the relationship with unrealistic expectations, or an unknown technology was surprisingly difficult to implement. In the worst case, your vendor might provide little more than a shrug and a quip that they only delivered what you asked for.

Request a plan to get the relationship back on track, and ask what concrete changes will be implemented. If this plan doesn't pass the "sniff test," or the vendor sees no effective way to correct course, then it's time to consider ending the relationship or cancelling the project.

Call in a referee

Many large companies and larger vendors have internal organizations dedicated to assessing projects and relationships that are headed south. The best "referees" will take an impartial look at a project and provide a concrete plan of action to mitigate risk. In the worst case, you'll end up with a few PowerPoint slides with little actionable advice. Consider invoking one of these entities. If your organization or vendor lacks this capability, or cannot provide it effectively and impartially, there are hundreds of external companies that will gladly evaluate the relationship, cost structure, and what's been delivered.

Modern IT organizations could not succeed without the support of vendors, from basic cloud software to complex consulting engagements. However, this does not mean that vendors always have your best interests at heart, or that they will capably and efficiently deliver the product you've hired them to deliver — even the largest names in IT can vary wildly between projects and products.

The bottom line

When you sense a vendor relationship is headed south, investigate quickly and involve the vendor if you have a trusting relationship. Ultimately it's in everyone's best interest to be successful.

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About Patrick Gray

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

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