Tips on how to deal with vendors

As simple as it sounds, end users just don't get it but vendors are there to make a profit. At the Gartner Symposium in Sydney last week, analyst Craig Baty said users are from Pluto and vendors are from Mercury.

"Mercury is a metal, not even a planet so they aren't even in the same solar system," Baty said.

"They both view the IT ecosystem very differently. Users think about their own environments, but vendors live in a much more complex world of shifting partnerships where they have to supply and meet a customer's needs."

Delivering seven tips on how to deal with vendors, Baty said both users and vendors have a very different world view but the end goal is the same. It is all about profits, so there really aren't any great discounts.

In a good climate, he said, customers will get a good deal on software licences, but vendors have to make up the difference somewhere.

"Sure you will get the discount, but then the vendor will put in onerous agreements to make up the difference by introducing some very complex maintenance clauses to cover their costs," Baty said.

"Make sure you get them to map out any discounts, don't fall for any arbitrary models. They are not trying to rip you off, but they have to make a profit." Put simply, users want agility as the business changes while vendors want predictable returns.

Baty said customers need to understand the vendor's business model, his first tip was to allow the vendor to make enough money. He also suggests finding the right balance between trust and control so that long-term deals are based on solid relationships.

Also, when putting out a tender make sure it is attractive to a broad range of vendors and includes the incumbent.

"Vendor relationships are like marriages; once you are married you must keep talking and communicating," Baty said.

"Often you find out more about the vendors you are not using, because they are pitching for business, than you do about your current supplier. "Keep up the dinners, the dialogue and get to know people behind the scenes; keep the marriage working."

Baty said it's important to involve the vendor in planning cycles.

"Create an opportunity for the vendor to be dependent on you. They love reference sites so volunteer to become one as this is worth gold," he said.

"They are not going to let you down once you're a reference site, they will make sure you are looked after."

Dealing successfully with vendors:

  1. Allow the vendor to make enough money.
  2. Understand the vendor's business model
  3. Balance trust and control.
  4. Agree in advance what 'successful installation,delivery and service' looks like.
  5. Understand the vendor's request for proposal (RFP) process.
  6. Establish strong communication protocols.
  7. Involve the vendor in your planning cycles and business review.

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