Many CTOs or CIOs have championed the “buy it, don’t build it mantra” (including yours truly). But the implication of buying things is effective vendor management. Vendor management – choosing which ones and how many – affects our core ability to deliver service to the businesses we serve.
If we have too many vendors, or poor vendor management practices, we will spend too much of our precious time and resources in vendor dog-and-pony shows, playing golf, managing interoperability conflicts among vendors and trying to herd all the vendors into cohesive IT services.
I believe there is a very real “tax” each time a new vendor is added to the roster. One CIO in an article I read quantified the cost in man-hours of dealing with a vendor. He estimated that a one-product vendor requires more than 80 hours of staff time each year in a best-case scenario. And some vendors can chew up MANY hours with demands for meetings, nondisclosure events and other activities that may be less than valuable from the perspective of getting things done.
Quantifying the cost of using a vendor can be a very important counter-weight to decisions, often made by the purchasing group, that might save us $12 on a product but cost us thousands of dollars in staff time. (BTW, I have seen many examples of this in “real life”)
One way I have seen to get a handle on things is to place vendors in three tiers according to how much time and how many resources you commit to each.
- The top-tier vendors are your strategic partners in software, hardware and services. Spend all the time necessary with them. Examples for us include Cisco, HP, Microsoft, NetApp, etc.
- The middle tier is where the trouble can start. This tier comprises vendors that have a product or service that is essential to our organization. Often, there is a great push to add best-of-breed vendors to this middle tier. However, the investment you make in time to support these middle-tier vendors can be substantial.
- Then there are the lowest-tier vendors, those that supply standard products or services. These vendors usually require little interaction. Such vendors may wish to become more important, but you should try to keep interactions with them as infrequent as possible.
Other thoughts:
- What IS our complete list of vendors? Where is it maintained? Who has the rights to add or remove vendors?
- Where is the “relationship” housed? In the National Service teams or in purchasing? Seems to me there is a difference by tier.
- There should be a formal feedback process to our top-tier vendors at least annually on how we think they are doing and what we have coming in the next 12 months that they could possibly help with.
How do you mange your vendors?
