CIOpedia

The words partner and vendor are thrown around a great deal in the IT environment, often with the word “strategic” attached (woe be unto you if you are only considered a “non-strategic vendor”). Its common to hear both words used in a single meeting between parties, or found within documents describing a business relationship on the drawing board. Are these words interchangeable in general use?

I would suggest that they should not be, and offer five traits of real business partnerships, a model that can pay great dividends to an organization.

(1) The Long-Term View – This is perhaps the key trait, and drives all the others. To take a long-term view, you must first have enough confidence in your new business partner that you plan for a multi-year business relationship from the outset. This includes the investment to create a comprehensive agreement that will support you well for several years, align incentives and rewards so that both parties benefit, and likely includes your personal involvement. At the start of the agreement, do you have enough confidence in this new partner that you can imagine working with them for many years, or would you swap them out at the first sign of trouble?

In practice this means that you will also have a longer view of the internal “score sheet” that we all keep for each partner, judging their performance but also the root cause of mistakes made, etc. Just as the stock market goes up and down but over time we (hope to) benefit from long-term appreciation, a partner tries to keep short-term blips in perspective, putting them in the context of the larger goals between the parties and the benefits that have been realized over time.

(2) Letting Them In – We’ve all had the calls from organizations we have never heard of, asking us for calendar time to discuss our strategy or goals for the next year, which is Sales-101 for “tell me what your plans are quickly so that I can sell you some services to match”. While it is easy to beg off these superficial invitations from parties who are not expected to fulfill any current need, a partnership would include this strategic planning activity as a matter of course, on a regular basis. This means a real investment of time on the part of you and your staff, but with the expectation that it will pay dividends.

A hardware systems vendor fulfills your orders in an efficient manner, at a competitive price, and calls it a day. A hardware systems partner learns your needs and is constantly proposing new and innovative ways to make your operation more efficient (pre-installed system images, custom financing to match your organization’s cost-of-money particulars, deep integration with your help desk and order systems, etc).

(3) Sharing Best Practices and Innovation – A partnership should include an expectation that you will have access to other relevant areas of the partner’s organization, and actively share information across organizations where appropriate. What policies and procedures do they have within their IT shop that your team may benefit from? How are they handling similar regulatory challenges? If you have been impressed enough to put your trust into the organization’s delivery of a particular service, perhaps there is something you can learn from other parts of their organization, and vice-versa.

Another key trait for a real partnership includes your being honest and up-front about missteps that you or your team have had in the business relationship, what you learned from them, and what you plan to do differently in the future. Be honest about successes and failures, with the primary goal of learning from the experience and moving the ball forward. This behavior will set you and your team apart from the great majority of customers, and may again pay dividends for you the next time you need that organization to come through on an aggressive timeline.

(4) Higher Level Linkages Across Organizations – As noted above, its probably not a partnership if you or your senior staff never intend to meet with the other party after the paper is signed. Regular senior-level contacts are not only critical for the care and maintenance of the agreement, they are important to ensure that this asset (the partnership) isn’t irreparably damaged in some way before you are even aware of an escalated issue, something that is all too easy in this world of management-by-email-threads.  This requires making clear to internal staff what your expectations for personal involvement are, and at what escalation level.

(5) Leave Some Money on the Table – One of the key duties of an IT leader is to get the most value for each dollar spent, and its easy to judge our success in a business negotiation on how far we “squeezed” a partner or the discount received on a particular product.  While this is all good, I’d suggest that you keep in mind that your partner will need to make some profit in order to continue providing services to you over time. Its becoming increasingly clear that many of the product quality and safety issues coming out of China’s manufacturing plants over the last few years started with “no-profit contracts”, where there was absolutely no profit planned for the partner from the moment the ink was signed.

What would one expect to happen in this situation?  A no-profit contract necessarily drives the partner to cut corners, skip steps, or otherwise push the work farther down the value chain until there is some small amount of margin there to enable them to continue operating.  So in this example you can be very proud of the number that you negotiated, but you will not be receiving the services promised.  What is a number that is aggressive, but also fair for value received?

What would you add to this list?  Do you have a similar list to differentiate vendors from partners in your organization, and does your leadership know who is who?