Does your business have a partner or vendor relationship with your IT Service provider? Let me provide my opinion why it matters and what it can mean for your business. It is based on my experience as a customer of numerous IT Service providers and my experience managing P&Ls for global IT Service providers.
A vendor relationship is an “us and them” relationship that uses the written terms of a contract to react to issues. The key players in a vendor relationship are the customer sourcing function and a single point of contact from the vendor. The Key Performance Indicator (KPI) is cost, often measured in labor rates. The threat of replacing one vendor with another is used to motivate the vendor to reduce rates.
A partner relationship is based on trust where both parties are focused, committed to, and invested in delivering what is promised. Total Cost of Ownership (TCO) and Return on Investment (ROI) are the main KPIs. The legal contract is there to handle worst case scenarios; not to manage the relationship.
So why is it important to have a partner relationship versus a vendor relationship? The obvious is that you have a partner who is committed to your success as a business owner, a CxO or whatever your position is. This vested interest in your success is motivated by the desire for a long-term relationship, not a “won and done”. Specifically, the following are advantages of a partner relationship that seldom are found in a vendor relationship:
- Trust – Confidence that each party will do what is right and deliver on their promises
- Leverage – Customer takes advantage of partner processes and artifacts where they are more mature and effective than their own
- Accountability – Transparency and ownership replaces alternative finger-pointing.
- Risk – Both parties proactively manage and share risks
- Term – Focus is on growing, extending and improving the relationship over time rather than “squeezing the vendor” each year, or at contract renewal
- Respect – Collaboration, understanding and good faith replace the alternative vendor servant
Go ahead, reap the rewards of a partner-based relationship!