Are your suppliers vendors or partners (and why it matters)?

In any relationship, it's important that all parties have the same expectations and understanding. Here's how to tell if your suppliers are vendors or partners, and why the distinction matters.

3 factors in choosing the right tech vendors As more functions get outsourced, vendor management has become a critical component of running a great IT department. Here's the conventional wisdom for doing it right.

Even the smallest IT shop likely has a complex roster of suppliers, including everything from the typical hardware and software providers, to services that might range from outsourced infrastructure to digital marketing and high-end strategy consulting.

These suppliers deliver services that range from commodity to highly specialized products and services that might even be unique to your company. Like any relationship, it can be difficult to manage your roster of suppliers, even more so if either party misunderstands the very essence of the relationship: Whether it's partners or a more straightforward vendor relationship.

SEE: Vendor relationship management checklist (Tech Pro Research)

When is a partner really a partner?

Peruse the marketing collateral of just about any service provider, from your plumber to your Board consultants, and you'll probably find a near-ubiquitous word: Partner. Just about anyone that hangs out a shingle will lay claim to being a "partner," but few pass a straightforward test: Will that organization act in your best interests even when it's financially detrimental to them in the near term? Happy talk about beautiful partnerships is easy when the supplier cashes in check after check; it's when there's a key business or strategic fork in the road that you'll quickly see where their interests lie.

A true partner might recommend another product than their own, or might bring you advice or market news that threatens their revenue from you, but is the right advice for your organization at the right time, free from ulterior motives. Contrast that with a supplier who may deliver exceptional service and go above and beyond to correct problems, but ultimately exists to provide a product or service.

When to partner

Seeking suppliers that act as partners on every front might sound like a great idea; however, it's both impractical and inefficient. Consider the raft of suppliers you employ in your personal life. You don't need strategic advice from your painter beyond his or her service offering, nor do you need a partner to change the oil in your car; rather, you need the right balance of competence, delivery ability, and cost. Identifying true partners is also a challenging process, and one that's likely based on extensive vetting, personal referrals, and hard-fought, occasionally painful experience.

SEE: IT leader's guide to optimizing vendor relationships (Tech Pro Research)

From a practical perspective, partnering is a bidirectional relationship by its very nature and a relationship that's unlikely to be built over a few days of RFPs and dog-and-pony shows. However, seeking a true partner relationship with a supplier is worthwhile when you're investing in a significant project within your organization. Such projects might include investments related to creating new products or entering new markets, acquisitions or divestments of parts of the organization, or highly complex technical endeavors, particularly those that have rarely or never been done before.

These types of endeavors require mutual trust. You need to trust the supplier to give you the right advice, come to you with both bad and good news, and of course, correct as the effort progresses. The organization on the other side of the relationship needs to know that you'll accept and act on bad news, even when it might implicate your company's leadership or culture, and also know it has the latitude to explore new ground without fear of retribution or overbearing levels of oversight. In short, both sides of the relationship need to trust that they have the objectives of the effort prioritized above individual interests.

Partnering well

As you consider suppliers for your various ongoing needs and projects, spend the time during the initial procurement discussions to determine whether a partnership relationship is required, or a standard vendor relationship will suffice. This discussion has the side benefit of forcing everyone involved with the decision to articulate their expectations for the effort under consideration. If you believe you're presenting a key strategic initiative, and the CFO or CEO is interested in the lowest cost provider, there's likely a fundamental disconnect that must be addressed before another party enters into the equation.

If you find yourself looking for a partner, consider sources outside the usual RFP process. Are there organizations you've partnered with before? Is there an entity that your other vendors respect and believe is the leading thinker in the space? Is there an organization that a Board member or executive has used in the past that's met the criteria of a true partner? A partner is usually identified through relationships, either the trust and rapport you develop with specific individuals during the solicitation process, or through leveraging your network.

SEE: Ethics Policy: Vendor Relationships (Tech Pro Research)

If your initial discussions determine that what you really need is an exceptionally qualified pair of hands, by all means follow the traditional procurement process of identifying key technical requirements and benchmarks, soliciting qualifications of where and how similar work has been performed, and consult your network for how the supplier has delivered versus how well they've formed a mutually trusting relationship.

A partner is often a poor fit where you merely need good work done at the right price, just as a vendor is unlikely to put the success of the project and relationship before questions about the next invoice. Understanding the difference, and finding the right supplier to fit the required role, can make your organization more effective at both execution and strategy.

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