The CIO supplier relationship: How to get the best from your suppliers

Professor Merlin Stone offers some insights to help CIOs manage their suppliers while avoiding potential pitfalls

In my last article, I explored the idea of IT suppliers as animals, encouraging you to consider what drives them and how to manage them. Now it's time to get serious.

Most marketing and sales research and teaching that focuses on the business-to-business area identifies the need for a partnership approach between suppliers and buyers, particularly in situations of high mutual dependence.

Of course, some IT purchases are commodity purchases, ones in which the same product is available from many suppliers. Some are ones in which once the purchase is made, there is little need for interaction between supplier and buyer.

However, many purchases are not like this. They are ones that start or continue a relationship of dependence.

That is, dependence of the buyer on the supplier for continued, reliable use of the hardware, software or services, and of the supplier on the buyer for continued payment and for continued sensible use of their products or services, quick notification of problem and reasonable co-operation in any solution to problems.

So, how can you ensure the relationship is a good one, stays good, and delivers the results you want?

Back to the nature of the beast

The first step is to follow the lesson of the first article - understand the nature of the beast. There is a big difference between the large, broad-range supplier and the specialist, between the new kid on the block and the established player, between the innovator and the follower.

There is of course the visible difference in products and services and in company history. However, there is also a difference beneath the surface, in the type of people different suppliers hire, the type who rise to the top and the type that survives and prospers, given the way the company manages, motivates and pays its people.

As someone who has worked for and with my suppliers, I can assure you that the difference is great. Of course, it differs by role as well as company. Salesmen are different from pre-sales consultants and services implementers, for example. Never has the naive repairman's question "Who sold you this then?" been more important.

There are also big cultural differences between companies. One is in whether the company aims to attract high-performing, star salesmen who know how to sell big deals, how to get round you and exploit divisions between you and your senior colleagues.

These sales people want to focus on benefits to other senior managers. They want to talk to your senior colleagues and – having sold the ideas to them and the deal to you – move on after a couple of years or less, leaving a trail of disasters behind them.

In contrast, some companies attract salesmen who want to ensure that what is sold is right for the customer, and who want to build strong relationships with the customer that see supplier and customer through good and bad times.

This will be visible in how they compensate their sales people. Low salaries and big bonuses tend to attract the former, middle to high salaries and bonuses that grow steadily based upon the overall value of the relationship tend to attract the latter.

As the financial sector has so admirably taught us, how you pay reflects your ethics, and sadly in some cases your ethics are determined solely by how you are paid.

When you are evaluating their publicity, their statements about what drives their company, what its pedigree is, bear all these points in mind.

Whose relationship?

Relationships between companies are not just corporate. They are relationships between individuals.

The senior sales or marketing person who has been assigned the task of "managing the CIO" will have been trained in all the skills of influencing you, negotiating with you, becoming involved in your relationships with your fellow directors, in order to win your business.

Studies of innovation show that being at the "bleeding edge" of fashion is not always the nicest place to be

That's not wrong, nor is it unproductive. In many cases these senior sales or marketing people are useful in helping your organisation see its way to making the correct decision.

However, you must remember that your objectives are rarely the same as these people's. Usually, though not always, your personal objectives and the objectives of your company, in terms of the strategies, policies and processes that it needs to be supported by IT, will be longer term than those of your suppliers' senior sales and marketing staff.

So you must insist on them marching to your timelines, whether in reducing costs or in achieving greater effectiveness.

Are they pushing fashion at you?

Today, one of the most popular phrases in business and personal conversations is "To be honest". It's said with such frequency that it is almost as if it's the norm is to be dishonest.

Of course, for most people, it's just what is called a "filler", bridging to another topic or filling an awkward gap. However, when it comes to your buying decisions, particularly ones where you are changing the nature or scale of what you have bought in the past, honesty is not only the best but the only policy. 

It must be applied severely when it comes to answering the question, "Is what I am proposing to buy, or what they are proposing to sell to me, just the latest fashion?"

As Gartner has shown with its famous hype cycle, IT buyers and sellers can be as fashion-conscious as their peers in the clothing market, and the cycles may not last much longer. Studies of innovation show that being at the "bleeding edge" of fashion is not always the nicest place to be; it is expensive and has dubious results. However, being at the trailing edge can mean lots of unhappy users and customers.

IT suppliers tend to communicate the wrong thought at the wrong time

This is where your network of fellow CIOs is important. But be careful! Some CIOs like to be seen to be innovators, so you must be discerning and build a network of trusted colleagues whose attitudes and actual buying decisions, particularly those relating to innovative products and services, are not too dissimilar from your own.

If you are a "fast follower", one who relies on others to shed the blood and teach you what minefields to avoid, build yourself a network of fast followers, not of laggards, nor of innovators with burnt fingers.

Communication basics

As TechTarget research has shown, many IT suppliers tend to communicate the wrong thought at the wrong time, through the wrong media.

They tend to focus on features when you are interested in benefits, and vice versa. They tend to email you when you want to talk to them, and vice versa.

More seriously, as my own investigations have identified, they often work through or with partners, and they are not in control of what their partners say to you.

So you must set the communications agenda with them, tell them when they are going wrong, and what you need to know from them, when, and through which channels.

Supplier's partners and allies

Many larger deals are based upon alliances. If you are in negotiations about a product or service supplied by or through an alliance, you must be fully informed about the nature of the alliance.

Is it just a marriage of convenience, for short term benefit with no true alignment of objectives, incentives, cultures, strategies, tactics and resources and dogged by conflict, perhaps even legal actions between the partners or between clients and partners?

You want your colleagues to be educated by suppliers in what is possible

Or is it a true alliance, one that has lasted years and with a strong track record of professional organisation, successful delivery and satisfied customers? What does your network tell you about the alliance or partnership?

Involve your board colleagues

A final piece of advice. One theme of this series of articles is how the onus for successful IT deployment has been placed on CIOs who are subsequently berated by consultants, analysts and even their own boards for not being in touch with and influencing the organisation's strategy.

This is one reason why big suppliers like to go around you, as it gives them control of decision-making, perhaps taking it out of your hands.

If your stance on this is reactive, you are playing into these suppliers' hands. Particularly for major new projects, involve your board colleagues as early as possible in structured discussions with suppliers, but under your control.

You do want your colleagues to be educated by suppliers in what is possible, but you also want to work with them as a team to determine with what kind of suppliers they would like your organization to be in a relationship, what that relationship should be, and what role they should play in it.

This is the first in a series of articles from Merlin Stone looking at how CIOs can view the world, deal with the pressures imposed on them by the business, and share the burden of change with their peers instead of feeling that they are the one that need to change.

Merlin Stone is an experienced manager, consultant and academic who has advised many systems suppliers and clients.

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