I still have a very vivid memory of years ago when I has brought into a meeting to interview a potential vendor who was selling us a development product. I was a lead developer at a startup healthcare software company. Apparently this product was being pushed onto our development team because our project managers were told that it could write code for us just by entering in business requirements and with a few clicks of the button *poof* it could produce all of our business logic code for us. Since this was my first time being brought into these meetings and I was still pretty green from college, I was all ears. It did not take long for me to start throwing darts at the concepts though. I then proceeded to completely blow holes in the idea and was pretty proud to have saved the company twenty grand on this tool that basically just stubbed out code for our developers, but did not actually write any code like the sales guys lead the project managers to believe.
From that point I began to develop a chip on my shoulder towards vendors. I honestly believed that they were all snake oil salesman and that the faster I could poke holes in their scheme to part our company with money the better. Over the years, my attitude has matured a little and I have had the pleasure to use vendors for software development, hosting, office maintenance, concierge services, crating/shipping, catering, and data center management, among a few. Although I often still have a healthy dose of skepticism and love to drive a hard bargain, here are a few beliefs I have now when dealing with vendors:
1. The use of vendors should at least be considered for every process in your organization.
That’s a bold statement so let me clarify. Its not that you should actually use vendors for every process or even for most of your processes; Its that you should consider the use of them. You need to ask if using an outside resource saves money, saves resources to work on more critical items, or fills a temporary need. One of my biggest criteria for not using a vendor is when intellectual capital is involved that walks out the door at the end of the engagement.
2. Don’t let skepticism ruin the relationship
Sales people are famous for bringing that rosy picture of how great life will be with their product. They are trained well to stay away from the drawbacks. When you discover the glitches and point them out it is very reasonable to work through each issue to decide if they are deal breakers. What you do not want to do is embarrass the presenters in front of your peers and beat them up during the demonstration. If you do, and you still choose to go with this vendor after weighing out the pros and cons, you will still need to work with them. The person you just threw under the bus might the same resource that you will need to reach out to later to help save a sticky situation. I learned this first hand in a Microsoft engagement I was involved with a few years ago. Microsoft had some developers they were charging our company top dollar for, to help us solve some web service management issues. I can recall the first meeting with their area manager on this initiative. We went out to lunch with our management team and I recall taking on the role of drilling the manager on whether he thought the team had the expertise to solve our issue. I feared that they were going to just fly the team down in order to learn on the job and that this was a huge waste of funds. He never gave me a straight answer so I harped on this point the whole lunch knowing that we were going to spend a five grand a day ramping these developers up. I was really wanting to get resources elsewhere who already understood our issue. It turned out that the staff they sent were excellent and ramped up very fast. The engagement was no doubt a win-win for us all, but I never did feel that I fully recovered from drilling the area manager the way that I did. Looking back there were much more tactful ways I could have went about conveying my concerns.
3. Your primary goal should not just be to see how little you can pay them.
What? Let me get this straight. You are suggesting that I don’t look for the best deal possible? What kind of advice is that? For longer term relationships you want to insure that you have a win-win situation for both parties. If you have beat them up so bad on price you will either be put at the bottom of their priority list or there will be a resentful relationship at some point that does not help anyone. Get to really know the market for the services you are asking for. Be weary of vendors that are way lower than everyone else. Just don’t put yourself in a situation where you get a great deal only later to have to pay top dollar to fix what this great-priced vendor has done. This reminds me of that story of the barber with the sign galring on the side of the road that says “Haircuts $5″, then you drive another block down the road and see another barber shop’s sign that says, “We fix $5 haircuts”.
4. Don’t always feel that a vendor owes you.
The usual drill is that the vendor rep comes to visit, he takes you out to lunch and there is never a question when he picks up the tab. I have some vendors that I use, though, that I feel compelled to get their lunch sometimes. I know that sounds crazy but on more than one occasion I feel like I have the better end of the deal than they do. I mean occasionally you will get the vendors that go over the top. One recent experience I have like this is with our company’s use of a new hosting provider for our production servers. The day we began outsourcing the maintenance and uptime to the folks that specialize in this service was the day I realized that for a bargain of a price we basically gained the value of a few resources in house who were managing this before. So at a fraction of the cost of one resource I gained increased uptime, better best practices, better security, and much less headaches. That’s value! I show my appreciation all the time to this vendor by insuring that their management knows how good their team is and always thanking them for their hard work.
5. Give some slack on the occasional slip ups
Your will start to get to know your vendors well. After a while they will earn their badge as being a reputable honest hard working asset to your company or not. If you feel they are in your corner and have your best interest at heart, give them some slack when they slip up. First evaluate if the slip up is in their work or is it administrative. I have been overcharged by vendors many times. When I point it out they almost always acknowledge their error, and bend over backwards to make up for the mistake. If you have been using them for 10 months and see a billing overage of $500 relax. Don’t escalate the issues to the top of the food chain for something so insignificant. The more history I have with vendor the more I give them the benefit of the doubt when something of issue comes up.
I hope these points can help you in your vendor relationships. There are a lot of good vendors out there and I believe that most genuinely want to bring a healthy ROI to the sevices that they bring your organization. Start treating them like partners when they earn your trust and as a result you might even find more value from that relationship.
If you have other vendor managment tips, please share them in the comments below.
