Posted by: Linda Tucci
Leadership and strategic planning, vendor selection and management
An average 13.5% of your IT organization’s time is spent on vendor management and procurement. That’s based on Gartner Inc.’s recent polling of more than 1,300 organizations. It’s an activity, Gartner suggests, that takes too big a chunk of your staff’s time for you not to manage it strategically. And guess what? No matter how much of your time is devoted to managing the vendor relationship, it’s too much.
“Your time is very expensive. Your employees need that time. Your executives need that time — and vendors are consuming that time,” Gartner analyst William Snyder said. “Time is squandered.”
And it’s squandered on a relationship where data shows that the other party — your vendor — often has the upper hand. An average 50% of your vendors have key cards for access to your data center, according to Gartner’s research. Having a key card allows unfettered access to your staff, which means that these vendors almost certainly know more about your staff than you do, Snyder said. They have free rein to sell to your staff. “The key card is access into a sales goldmine,” he said.
As a way of regaining control of their environments, some CIOs have revoked all vendor key cards until they can determine which vendors need or deserve that access — a step Gartner does not necessarily recommend taking. What Gartner terms the dissymmetry in information in the vendor relationship, however, must be closed, or CIOs will be at a disadvantage in any dispute with vendors. Moreover, many vendors come into any disagreement knowing that switching vendors comes with risks and is not worth the hassle.
These cautions came up in a session at last week’s Gartner Symposium/ITxpo that was billed as a CIO guide to managing vendors. The session laid out the common mistakes CIOs make in managing vendor relationships, and offered what seemed to me a lot of practical advice for improving those relationships, for example, by:
- Using lightweight crowdsourcing to develop a more objective view of the vendor. Rather than rely on one manager’s opinion, find 10 staff members who deal with the vendor, and poll them regularly over a period of time to develop a vendor scorecard.
- Dealing with the vendors on their turf, not yours. You need to know as much about your vendors as they know about your organization. That means staying on top of how their companies are doing in the marketplace, changes in the executive ranks, and financial analyst ratings.
I’ll be looking at some of these mistakes and pointers in more depth in coming weeks, but here’s some food for thought in the meantime. Snyder’s big takeaway is that CIOs should not — repeat not — meet with all their vendors. It’s important that you meet with the vendors that make a difference to your organization. The CIO role carries weight. Use it effectively, he urged. “If you don’t use it selectively, what ends up happening is, you don’t have gravitas,” he added. “Reserve the power that is embedded in your role.”
Seems like wise advice.
Let us know what you think about this blog post; email Linda Tucci, Senior News Writer.