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BLOG: The IT vendor paradox

Martha Heller | Jan. 3, 2014
To Margot Sharapova, CIO of Americas at AECOM, the vendor paradox is built into the fabric of partner relationships.

3. Our expectations of vendor capability does not align to our approved budget.

As CIO, you work hard to create a project budget that will get approved. "But then you are in a position of trying to strong arm your vendor to that they can retrofit the project to your budget," says Sharapova.  But the vendor is trying to make a margin, too. So, how do they make up the delta?  "They erode the caliber of resources so that their costs go down and they can maintain their margins," Sharapova says.  "That's why they bring in the big senior consultants to bait us, and then they switch those people out with junior people who actually do the work."

What do to?
This vendor paradox is a tough one, and it's expensive.  Sharapova has some suggestions for how to mitigate its impact.

1. Have one of your own employees be the program manager. "In many ways, project management is an art," says Sharapova.  "It's too tough to manage in an outsourced relationship. The minute you have 'contractor' on your email signature, you have limited ability to lead. 'Contract program manager' is an oxymoron."

To Sharapova, 'turnkey engagements' are a miss whether they are on or offshore; you cannot outsource accountability for that critical role.  "You end up doing the project management yourself anyway," she says. "So you are paying twice."

2. Don't hesitate to make a change. When you see that the resources a vendor assigns to your project are not qualified, you need to intervene at the highest level, and you need to do it quickly.  "The key is in your ability to navigate the talent base of your partners," says Sharapova. "If you can find an 'A' player in the vendor organization, your probability for success goes up."

3. Understand your vendor's employee incentives.  What are the metrics that motivate the vendor's staff?  What is driving their behavior?  "It is very important that you understand how are your vendor's bonuses are set up," says Sharapova.  "You understand the metrics-based drivers of your own team; just because you outsource a role doesn't mean you don't have to have the same level of understanding of what drives the person doing it."

According to Sharapova, the fact that customers and vendors don't work better together reflects poorly on us on a profession. "I don't have the  perfect remedy," she says. "But we should aspire for something better."

Source: CIO


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