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From IT vendor management to strategic partnerships

Brendan McGowan | June 2, 2016
According to the 2016 Strategic Partner Index Survey (produced by the CIO Executive Council and IDC), IT buyers and vendors need to forge relationships of trust and collaboration. Failure to partner puts both groups in peril.

To IT buyers, strategic partners are vendors that have gone beyond effective delivery of systems and services to become consistently transparent, responsive and trusted collaborators in creating value for the enterprise. Vendors that do not meet this mark face commoditization and, ultimately, become an afterthought at renewal time — while competing primarily on price in a race to the bottom.

Buyers need to pick strategic partners and develop them for mutual wins. The risks of not pursuing the most strategic vendor relationships possible are profound: Buyers will be slow to market; will miss project and implementation deadlines; and will be denied potential business opportunities due to a lack of transparency and trust on both sides. Ultimately, buyers are accountable to their internal stakeholders across their respective organizations. Failure to execute on strategic partnerships represents a potential failure to execute on business objectives, with attendant professional and financial risks.

Seven out of 10 (71 percent) IT leaders state they spend up to half of their total budget on external/service providers (see Figure 1). The scale of this capital investment alone — not to mention the time, attention, and focus involved — underscores how important it is for buyers and vendors to rise above the transactional and embrace true strategic partnership.

figure 1

The CIO Executive Council (CEC) and IDC 2016 Strategic Partner Index (SPI) Survey captures the traits and behaviors of strategic partners. The criteria for the survey questions were based on a previous CEC effort, in which criteria were evaluated and refined based on the direct feedback from a Research Advisory Board comprised of thirty global CIOs. For this first CEC/IDC joint effort, the questions were updated based on interviews with CIOs and sales executives alike.

Defining Behaviors: Vendors as Strategic Partners

The Research Advisory Board revealed key attributes and behaviors conducive to strategic partnerships, which were subsequently separated into five discrete categories:

  • Client and market knowledge: This category reflects a vendor’s aptitude when it comes to navigating a client’s organization with relevant, informed guidance — on both market- and business-specific levels. Strategic partners do not appear only when there is a problem or when it is time to pay a bill; they are active, engaged, and market-savvy advisors who can speak confidently about the forces disrupting a buyer’s industry, and provide actionable and consultative guidance.
  • Collaboration: The collaboration category reflects the extent to which a vendor is willing and able, within all ethical and legal boundaries, to blur the lines between buyer and seller, bringing in third-party niche players or directly involving buyer senior executives in the development of new offerings, products, or updates/features.
  • Communication: Communication is the bedrock of any vendor relationship, and the business-enabling quality that helps drive the success of all other categories. This criteria category gauges honesty and integrity in strategic and project-specific discussions; communication continuity through change; and roadmap alignment.
  • Flexible pricing and interest in shared risk/reward: Pricing is both a leading and lagging indicator of a strategic partnership: There can be no partnership at all, much less a strategic one, if a vendor prices their services outside of a buyers’ potential budget — and, once a vendor has established itself as a true strategic partner, price becomes an established cost to demonstrated value. This category focuses, then, on the specific behaviors related to pricing and joint ventures — outcome-based pricing, scope flexibility, and co-innovation — that are the hallmarks of an increasingly fluid and collaborative strategic partnership.
  • Responsiveness: This category reflects a vendor’s ability to respond quickly and effectively to evolving client needs — framed by an account management structure conducive to rapid execution, and defined by an ability to eliminate ambiguity and initiate tough, but effective, conversations.

 

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