Five Criterias How CIOs Evaluate Vendors

Thursday, August 9, 2012 | comments

Customer-vendor relationship at modern business is both art and science, complex also critical, but it’s worth the effort to craft such a good long term relationship, especially for IT vendors, how to delight customers takes both aptitude and attitude, how modern CIOs evaluate vendors also takes fair judgement and deep knowledge, here are some collective wisdoms from one of LinkIn discussions, and there're learning lessons for both CIOs and vendors:

1. Golden Rule:

Treat customers' problems as your own, do the best to take care of it;

·       Vendors should share the same vision and direction together with their clients.
       A successful relationship will still be as vibrant in 5 - 10 years as it was during the buying/selling cycle if all parties collaborate and share what they are really trying  At the end of the day,  all parties are trying to achieve the same thing - delivering business value based on their model. These can be mutually beneficial not mutually exclusive. 

·       Solve Customer-Vendor Conflict: The "Silver Bullet Foundation" is full of people who thought they were buying something that was going to fix everything. The "Vendor Presidents Clubs" are filled with many who have achieved selling the silver bullet promise. The people typically foisted with the blame are those charged with the change management and implementation.

·       Two-Way Communication: The successful customer-vendor relationship is for the customer and vendor to understand the problems need be solved via well described methodology and the effective communication vocabulary,  as the speed of change is accelerated, business need well define the requirement and specification clearly, but business dynamic may not allow them to get anything they need when they have them; vendors should make continuous communication & improvement with client;  

·       Knowing how to put together a complete solution that works in the best interest of all related constituencies in the business. Often understanding the dynamic change and growing complexities in supplier agreements comes secondary. First is understanding what is truly needed internally across business, IT, finance, procurement, supplier and contract management, legal, etc.

 2. Best Possible Solution – if it’s not Complete Solution

Everybody talks about customer experience these days, IT vendors are no exception, how to design, not necessary "complete solution", but customer-tailored, best possible solutions, help customers overcome real business obstacles or add value via well-defined KPIs, that's the key to build up win-win situation.

Both Customers & Software vendors have to walk into any major transformation projects with their eyes wide open, fully expecting to apply changes as they move forward - this flexibility has to be part of the transformation strategy

    1. The buyer's long term goals are accurately represented internally at the seller.
    2.  The seller's capabilities to fulfill said goals are also accurately stated.
    3. Other expectations are managed successfully.
    4.  The appropriate resources can be quickly marshaled on both sides in the event that something occurs requiring remediation
    5. A good IT vendor focus on processes, and there's always opportunity for improvement.
    6. "grade" or "range" solutions. by offering a range of solutions, each with different results and budgets and risk profile, vendor can actually help clients surface and resolve their internal conflicts, which can give you a leg up in the selection process 
    7. Being a Trust Advisor: The real win-win to this is when you couple the above with the ability to not only understand IT strategy at the buyer but also synthesize that with information gathered elsewhere to identify gaps in the strategy that were overlooked by the client.

 3. Attitude: Under-promise, Over-delivery:

Certainly some vendors will offer best possible solutions if complete solution impossible; It takes the great attitude, the product itself, the professional services to tailor the product to the client’s specific needs, and training to ensure the client and their team have the necessary skills to maintain/enhance the solution as they move forward. Do all vendors do this? Certainly not. Many are simply focused on providing a product they call a solution and then walking away. Some popular symptoms:

·       Over-Selling:  in order to sell, vendors are often presented with a solution which is so to speak "aligned" with customer’s problem. When in fact it wouldn't be. 

·       Under-Delivering: there are too many wants that are unfulfilled - either oversold at the point where they bought the software -- or missing or broken code that should have been there in the first place. Business needs keep evolving, and what we need today may no longer be valid a short time later.

·       Fear: The third problem is the fear, to make a mistake for the customer. Vendors are aware of costs and the risks. And it gets worse when you have a time pressure. And the fear not to be able to sell for the vendor

·       Not Coach Customer Well: Solutions continue to evolve (more releases) but the customer does not get couched in dynamic environments. New customer process changes, technology impacts, economic, and political policy trigger changes in the customers’ environment thus changing the need. At least this is how new releases should be pursued - ever improving upon the value delivered to the customer, and customers need be coached accordingly.

4. Play Trilogy Fairly

The relationship between the vendor and IT is echoed often, it's not always just the IT and vendor that are working towards a solution. The business is usually involved if it is a business application. Thus, its not just the customer-supplier engagement model that impacts but business-IT engagement model. Hence the unholy trilogy tends to be business-IT-vendor,  and quite often the vendor gets away with deal when they have a better alignment to the business than IT. However, that is usually when governance becomes the ultimate critical issue as scope management leads to budget blow out and then ultimately its becomes a $ driven project, it’s the root cause for shadow IT cropping up.

The trilogy also often happens after someone got an approved budget (estimated internally) which then is expected to cover the cost of the vendors’ deliverables. That is something that needs enhancement and requires serious gathering of requirements up front between business and IT for sending out RFQs before going through budget approvals. 

As Vendor, how to manage customer relationship properly, to help smoothen business-IT-vendor trilogy, not the other way around? Strategically speaking, what businesses expect from IT is also about what IT expects from the vendors, it's more about the speed, the scale, the value and the choices; is vendor up to the speed and delivers the values both parties agree on, does vendor provide choices for customers to fulfill the goals; is vendor both accountable when having problems or flexible enough to solve the issues.

5. No Negative Surprise

 With today's mega-integrated solutions and product catalogs, customers encounter holes and gaps of missing, untested, buggy workarounds or are 'stranded' because of requirements for this and that enhancement pack or maintenance upgrade that is additive to the original implementation. Sometime vendor-customer relationship becomes a 'captive' model, due to enormous customer investment and integration, suppliers are focused on acquisitions and integrating them within their product lines and never seem to be able to get the job 'done' before the next one. 

Customers’ other primary concern is the lag between the promise and the delivery. Or "its in the next release" syndrome is just a symptom of unmanaged expectations. Releases need to exist if not just for the sake of innovation and continuous improvement of the software.

Therefore, at today’s business dynamic, implementing new software requires companies to steer away from traditional contracting and focus on digging deep into how leveraging optimization and negotiation processes/methodologies can provide flexibility and protections to ensure that the software meets changing business requirements over the life of the investment.

Do not show customers too many such "surprises"--charging further without notice, increasing pricing without reason, or getting next release without improvement.

Instead of "complete solution", most of businesses will more appreciate Agile solutions, innovative vendors, with good attitude, not just treating customers as cash cow, but as long term partners, help solve business problems more radically, the value proposition between sellers and buyers is in balance. These are the right ways for mature vendors to delight CIO and customers.

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