I've been thinking a lot lately about "the vendor problem" in IT and how every time I want to elicit a grimace from a room full of CIOs, I just have to say the word, "Consultant."
In fact, I was talking recently with Margot Sharapova, CIO of the Americas at AECOM, the $8B professional technical and management services company, and she brought up "the vendor paradox." She wondered why I haven't spent more time on it.
"But what is the vendor paradox?" I asked her. Her response was so rich, that I had to write it as a blog.
The IT Vendor Paradox
According to Sharapova, we can break down the IT vendor paradox into a few parts.
1. Vendor capability as sold is not the same as vendor capability as delivered.
"Vendors will tell us, 'No problem. We can have resources with a depth of capability in SAP on the ground in the UK on this date,'" says Sharapova. "But then the vendor has no idea how to get the visas necessary to send resources to the UK. So they ask us if we would consider sub-optimal resources that they can get approved. So, you have to make a tradeoff: less capability, but at least they're approved and can be on the ground sooner."
Sharapova recounted a story about a vendor who told her they would supply her with a program manager to lead a major implementation for them. But in the first week, her IT team realized that the person did not even know how to create a project plan. They had to replace the program manager twice, which set the project back by quite a bit. "This situation is not unique," says Sharapova. "It is embedded into the fabric of vendor relationships; you have to build these scenarios into your time line." Sharapova likens vendor relationships to a marriage that is doomed from the start. "It's like you are planning to get divorced before you've even exchanged rings," she says.
2. Fear of transition costs outweighs your ability to address major issues.
In some situations, says Sharapova, you find that the replacement project manager is as unqualified as the one he replaced, so you wind up making the most out of sub-par talent. "I'm paying for the vendor to PM, but I'm paying my PM to PM their PM, who can't PM," she says.
Once you've invested significant time in the vendor project manager, you've diminished the advantage of switching him out. The cost of knowledge transfer is too high. "Once you're married, you have to stay together for the sake of the children," says Sharapova.
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