Juggling vendor relationships

Today's IT leaders juggle many dozens of vendors. Managing them is a new core competency in IT, often more akin to general contracting than technology. No wonder vendor management tops many IT to-lists in 2003.

Today’s IT leaders juggle many dozens of vendors. Managing them is a new core competency in IT, often more akin to general contracting than technology. No wonder vendor management tops many IT to-lists in 2003.

While methods differ in who handles which vendor, common themes emerge in their selection. There is more to it than getting the cheapest quote.

Capital & Coast DHB has five major direct vendor relationships. Andre Snoxall, director of information management and planning, says vendors must understand the health business, its technology and systems strategy, and he even insists vendor representatives read the board’s strategic information management plan. Some vendors, he says, are still trying to sell the DHB “the same archaic technologies they were selling in 1998”.

“Vendors cost us dearly. We spend hundreds of hours every year speaking to them, reiterating strategy and trying to guide their thinking. Unfortunately much of this effort is wasted, but occasionally a break-through occurs,” Snoxall says.

Snoxall is sceptical of talk about "strategic relationships", saying New Zealand has no companies large enough for US firms to give particularly special care. But he claims “some success” with Canadian and Australian companies, believing they are more willing to deal with small centres of innovation and excellence.

Fisher & Paykel Healthcare has seven major vendors, with group systems manager Angela Whittle claiming some reductions “as we have built what I call business partner relationships with the current vendors”.

F&P looks for vendors that are “proactive” on its behalf, expecting to be told of special deals before they are advertised. Quality and after sales service is important; it demands quick turnaround for repairs and likes products that have international warranties, as many F&P Healthcare staff travel overseas, Whittle says.

The New Zealand Defence Force has six to eight key vendors, including a strong relationship with Hewlett-Packard, whose Unix operating system it relies on. CIO Ron Hooton says the defence force does not enter into long-term fixed strategic relationships, preferring open and contestable tenders.

“We can get into long-term supply, but they are tendered. Most business is tendered and subjected to contestable supply,” he says.

Hooton says many factors are considered before a vendor is chosen.

“I’m looking for reliability from suppliers, consistency of support, quality staff. We want certainty of supply. We want the company to be there tomorrow,” he says.

Hooton often uses his own past dealings as a guide, both with businesses and individuals. The CIO says he won’t deal with some vendors, though he doesn’t identify them, on account of past poor performance and arrogance. When he has joined new organisations, he says, some vendors have taken long-term contracts for granted and were not doing their best.

Because the NZDF deals with just a few vendors, he says relationships can be managed individually, giving the force much greater governance and control and allowing it to tightly manage contracting arrangements.

“We are very focused about what our requirements are, what’s expected to be delivered, [using] scope management,” Hooton says.

Christchurch City Council selected its nine "primary" vendors or major suppliers through an RFP process. First and foremost, IS manager John Edmonds says, the vendors' products and services must need the council’s business needs.

“We want to build a good business partnership. That comes with the stability of the company, the integrity of the people and professionalism, their handle on industry trends and their ability to assist us with strategic planning and innovation,” he says.

“We do follow quite rigorous processes. We put much effort into getting things spelt out clearly. We have clear processes for evaluating proposals. That will involve itemising each requirement on the RFP. Before we get in proposals or see new proposals, we put weights against each of these requirements. Once we get these proposals, we will score them and apply the weighting. This gives the answer and the proposals are then reasonably straightforward,” Edmonds says.

Snoxall offers the parting shot that it is a tough world out there, and if an organisation has something to offer, then consider it a part trade and drive a hard bargain.

“If you are a big organisation with a brand, even a government organisation, understand that your custom may be important, even if just so a vendor can say you are a customer,” he says.

Greenwood is Computerworld's human resources reporter. Send letters for publication to Computerworld Letters.

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