How to keep tabs on powerhouse vendors

Dealing with your network’s predominant vendors requires a relationship deeper than occasional face time with a sales rep. The relationship’s architecture, service levels and business objective need constant monitoring and review.

Dealing with your network’s one or two predominant vendors requires a relationship deeper than occasional face time with a sales rep. The relationship’s architecture, service levels and business objective need constant monitoring and review.

Vendors often claim that they partner with their IT customers, but most vendor-customer partnerships are one-way: The customer pays a vendor for goods and services. Once opportunities for new revenue wane, so does the partnership.

Research and consulting firm Gartner recommends companies adopt an “ecosystem” approach to their relationships with powerhouse vendors. This ecosystem is made up of the user and the product, service or technology vendor in a “mutually beneficial, self-sustaining and symbiotic relationship.”

“Organizations need to do an evaluation and understand what their dependency is on a large, powerhouse vendor, and how much do they trust that powerhouse vendor and what does that powerhouse vendor mean to them,” says Betsy Burton, vice president and distinguished analyst at Gartner. “Based on that self-assessment, organizations need to decide what sort of relationship management they’re going to do.”

Proactive management of such vendor relationships is key to ensuring mutually beneficial rights and responsibilities, Burton says. She recommends appointing a full-time IT person to manage the relationship and track service levels and deliverables. The vendor-management team should include people from other parts of the company to provide different views of the customer experience.

Users also need to balance a vendor relationship with the degree of lock-in that could come with the vendor’s product. Vendors are always looking to foist their vision or architecture on IT organizations. Those charged with managing a vendor ecosystem need to understand how their overall corporate strategy and culture relate to or differ from the strategy and culture of a vendor; evaluate how well their business model – strategy, priorities and revenue stream – fits with a vendor’s business model; and consider the products, services, architecture, configuration and licensing terms and conditions a vendor is offering.

Gartner suggests conducting vendor overviews on a six- or 12-month cycle, depending on the level of investment your organization is making. A six-month cycle is appropriate for vendors that are providers of a broad base of IT infrastructure or services, usually those supporting business-critical applications. This overview should consider product announcements, strategies and statements of direction, as well as analyst assessments.

This need for oversight might be the reason some companies outsource the management of their major vendors to third-party companies such as CDW, a $5.7 billion reseller of computer and networking products. CDW also provides customized and standardized integration and contract-management services as part of the product procurement contract.

“Many companies like to have a company like CDW relieve some of the hassles that come up from time to time,” says Brian Schwartz, a CDW technology specialist. “There’s always that one throat to choke, where, from a customer’s point of view, they are so busy they really want to focus their energies on serving their users. The last thing they want is to have to [deal with] pricing issues, return issues, etc.”

Schwartz says one hassle network departments deal with is software licensing. Keeping track of software versions and licensing terms can be so confusing and time-consuming that a company may purchase more software than it needs or the wrong versions or end up paying too much.

“There was a customer who needed to renew some Microsoft licensing, and she thought that she needed to pay something like $80,000,” Schwartz says. “When she came to us and we looked at her agreements, she didn’t realize she had some upgrade credits. The total renewal price was about $80 instead of $80,000.”

Coast Capital Savings, the second-largest credit union in Canada, channels its vendor management through resellers. Coast Capital’s relationships with its resellers is like the relationships enterprises have dealing directly with their predominant vendors.

“We look for resellers that are capable of sustaining a long-term relationship, because in the end we’ll both benefit from that,” says Luis Henriques, senior network engineer at the credit union, which is based in Vancouver, British Columbia. “The longer they stick around, the better they are capable of understanding who we are, how we operate, what our infrastructure looks like from Layer 1 to 7, what our road maps are, and what our upcoming needs might be.”

Henriques says Coast Capital looks for resellers that can think outside the box and have multivendor alliances and in-house creative experts to help the credit union come up with cost-saving, timely solutions. Another Coast Capital criterion is that resellers have a geographic scope and business and human philosophies that align with its own, he says.

“We look for resellers that are small enough to care, strong enough to grow with us, yet large enough to offer competitive pricing and services,” Henriques says.

That’s not to say Coast Capital leaves everything up to its resellers. Henriques prefers to deal directly with network vendors on software-configuration issues.

“I . . . stay away from value-added reseller support contracts that look cheaper upfront, but [where] often the number of brains available to work on your problem is limited, their certification levels [are] lower, and access to vendor in-house engineering and software-developer experts [is] nonexistent,” he says. “So when your network data centers have to be up 24/7/365, buying that more expensive contract from the experts is definitely worth it.”