How do Reg readers keep their vendors in line?
CIOs talk sticks, carrots and account managers
Do you think I’m sexy ?
On lucrative contracts, when too much of the benefit to the supplier is up front, suppliers they don’t try nearly so hard. This led to the first set of carrots the execs shared for improving their attitude. When they have beaten them down, they try very hard to find future upsides for both the supplier and the account manager and they understand that these have slightly different agendas. Their firm will have been pigeonholed into being “growth”, “maintenance”, “white space”, “competitive”, or if they’re really lucky “glamorous”. Knowing which is key to vendor relationships.
The smarter IT execs explicitly ask their account managers what goals and targets they need to meet, not just in raw cash terms but which products are being pushed and what dates are important in terms of internal incentives. This delivers a rich crop of carrots to help motivation as well as the occasional stick, especially if they see you as a seriously growing customer. They have to work harder if labelled as “maintenance”, either by changing that perception or offering to serve as reference sites and introducing them to their peers through their network. Often the vendor will have a blank where the future value of the relationship should be and so the execs spend effort filling that in.
Of course some of our execs lead IT for household names and leading firms which means they can join the ranks of David Beckham and Paris Hilton in endorsing products by talking at their events, taking part in webinars and generally giving comfort to outfits considering going with that vendor. In the days when “No one got fired for buying IBM”, part of that success was driven by making sure that people who endorsed of chose their products weren’t left out to hang if it wobbled a bit and if you do get in the loop of endorsers you can rely upon that vendor going above and beyond to make sure you look good back home.
The startups shared that they didn’t have that sort of pull in terms of glamour, but pushed the growth account angle as hard as they could. The big vendors spend a lot of time understanding both the formal and informal decision making processes within target accounts, enough that if you are a newly minted CTO it is worth pumping them a bit to find out some of the political issues you haven’t yet uncovered.
But in the end, a cold hard fact the execs knew was that your relationship with the vendor is largely driven by how much they value who you are working for, not how well you get on with the account manager. Your future value as an IT exec is far more driven by your ability to manage them than any goodwill they’d like you to believe you’ve earned. That means moving from a glamorous growth account to a more important role at a more staid organization can be a bit of a shock both in terms of what they pay and what they get in return. That’s not completely the story. Execs pointed out that their next hop will probably be back to the sexy accounts and that they drink with others at their level whose opinion they influence.
Also the vendor fragmentation we talked about earlier not only can be reduced. It provides a rich source of incentives, since what would otherwise be a boring maintenance account is transformed into a competitive situation, where the vendor sees both upside and downside driven by their quality of delivery.
What is the workload ?
Although the body count of people the execs assigned to project management and system integration is on the up, not only did they not really think their organisations were that good at it, they didn’t strongly feel that they should be as it isn’t their core business. So at the same time as they talked of reducing the overall number of suppliers, the idea of buying in system integration was popular in the larger outfits, although their performance was far from uniformly admired. A couple of the execs admitted that the next logical move for them would be outside their current industry and into the lucrative world of system integration that the cloud seems to have helped rather than destroyed.
Ultimately, this is what senior IT management is for. You can hire good DBAs, there are literally millions of Java developers etc and ever more business analysts, but the value that is added by senior IT management is in relationship management, not just with vendors but with internal stakeholders as well.
What we learned
The most important thing is to understand where your vendor has put you in their internal graph in terms of strategy and revenue so that you have realistic expectations of the effort they will put in. Then if that’s not where you need to be, try to find incentives.
A newly appointed IT exec needs to look rather harder at the contracts he’s been left by his predecessor so as to protect his position. It is one thing to say early on that there are issues that no one knew about before you came, but the longer it takes the worse it is. Even if it is not your fault, it is now your problem.
The execs made it clear that a strong backup network of your peers is important regardless of your scale, both to reality check what you are being told as in “no one else has this problem”, and also as a reputation gives you sticks and carrots that help them decide to try harder for you.
We shall reconvene on October 28 to discuss how to get IT execs more into strategic decision making and onto the board, if that sounds useful, register here.
Dominic Connor is chairman of the Register Round Tables having done very nearly every type of job in IT from coding to bossing around teams, often competently. ®