Stop coddling or punishing vendors, or else they'll treat you badly

When you exhibit bad behavior with vendors, no one winds up happy. Discover the key to any successful vendor relationship.



I've spent most of my career as a service provider, but I've also been on the other side of the equation, helping IT leaders through vendor evaluations and selections. Being part of the IT procurement process has been interesting, especially as both parties to IT purchasing transactions often wax poetic about partnerships and "win-win" situations, then beat each other up over tiny minute pricing adjustments or esoteric contract terms.

Bullying yourself

Most companies that have been delivering IT services for more than a few years have been exposed to all manner of customers and can quickly determine how serious a potential customer is and how difficult they'll be to deal with should a contract be consummated. The worst customers seem to take a paradoxical pleasure in bullying their vendors during the procurement process, doing everything from demanding book-length request for proposal (RFP) responses to taking months to pay invoices while demanding instantaneous responses.

The problem with treating your vendors poorly is that it teaches them to assume the worst when dealing with you, the customer. An unreasonably complex procurement process brings in pages of legalese and lawyers lurking whenever something threatens to go wrong, and repeatedly beating up your vendors for every possible pricing break may trigger billing surcharges for every minor scope change or extra bit of help.

It's equally dangerous to treat vendors with kid gloves, glibly approving every change order and happily agreeing to the list price for every bit of software. While most vendors won't consciously take advantage of an overly agreeable customer, they may create a situation in which the consultants and vendors are effectively running the IT shop. Even the best vendors have interests that are sometimes divergent from your own. A software vendor sees many business problems through the lens of their software portfolio, and the average consultant sees each problem as a candidate for their favorite methodology or process improvement framework when the best solution may be neither of these. At the end of the day, punishing or coddling your vendors affects you and your organization.

The happy medium

The key to any successful vendor relationship is recognizing what type of partner you need for a particular problem and finding one who can operate successfully in that environment. While a procurement-driven process might be appropriate for a massive commodity purchase, it will be less successful if you're seeking coaching for your leadership team. Similarly, if you truly need to create a partnership-style relationship vs. a customer/vendor relationship, you'll ideally have very different payment structures and benchmarks that split risk and also share rewards.

Also realize that during the vendor selection process, the vendor is often evaluating you just as closely as you're evaluating them. Behaviors that you exhibit will be reflected in the offer presented by your vendor — in the most extreme cases causing some vendors to refuse to do business with you. Organizations that treat vendors fairly and respond to the commitments they expect vendors to follow are often treated respectfully (and given better offer terms).

At the end of the day, the best rule to apply to establishing relationships with vendors is the golden one: treat your vendors as you'd like them to treat you.

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By Patrick Gray

Patrick Gray works for a leading global professional services firm, where he helps companies rapidly invent and launch new businesses. He is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companio...