Provider or partner? IT leaders rethink vendor relationships for value

Shane McDaniel was nearly a year into a modernization effort when he and his IT team for the City of Seguin, Texas, cut over from the city’s legacy network to the upgraded version.

On hand for much of the work that Saturday in June 2019 was the rep from Extreme Networks, a Morrisville, N.C.-headquartered company that McDaniel had selected as the provider on the project.

“The rep was there just in case,” McDaniel says.

And he had brought breakfast tacos for the crew.

The rep’s presence that day wasn’t part of the deal with Extreme Networks, neither was the food, so they made a lasting impression on McDaniel, the city’s CIO.

McDaniel says the move — “the fact that he showed up on a Saturday, that he drove an hour to be here, that he took the time out of his day” — demonstrated the company’s commitment to not just the project’s success but the city’s as well.

“It’s not just a transactional relationship. I know I can rely on the company. It’s a true partner,” McDaniel says.

Many vendors position themselves as partners in sales pitches. Yet, experienced IT leaders say few vendors move from a provider of goods and services to partnership status. Nor do they all have to do so. But those vendors who become partners provide value that goes well beyond contractual deliverables by helping CIOs identify and achieve strategic outcomes.

“A partner is someone the CIO can trust, someone who looks after the long-term interests of the CIO and the long-term interests of the CIO’s organization. It’s someone who can make a long-term difference,” says Ed Bouryng, president and founder of Meta, a technology and change management consultancy.

‘The above and beyond’

Like all CIOs, McDaniel relies on his own workers, contractors, and multiple outside suppliers to deliver the IT services that enable his organization — the government of Seguin, a city of about 33,000 residents.

He estimates that he has worked with about 400 vendors during his six years in the role, has a recurring relationship with about 100 of them, and considers only 5% of those as partners.

Vendors achieve partner status in McDaniel’s eyes by consistently demonstrating accountability and integrity; getting ahead of potential issues to ensure there’s no interruptions or problems with the provided products or services; and understanding his operations and objectives.

“They become a partner through good communication, proactiveness, showing that I can rely on them and trust them, by cultivating a relationship,” he says.

That was the case with Extreme Networks.

McDaniel recognized early in his tenure that the city needed to retire its flat network and move to a modernized one. He researched vendors and contracted with Extreme, noting that the reliability and the quality of the company’s solutions as well as early interactions with the company’s team sealed the deal. The city’s IT team and Extreme reps worked together for nearly a year before the 2019 cutover — a year that required the teams to touch every computer and device, change IP addresses, label cables, and more.

McDaniel acknowledges that any vendor worth its salt would do the contractual work. But what moved Extreme from provider to partner was its workers commitment to making sure that the city achieved its strategic goals with the project, not just that the new equipment worked technically.

“That’s the above and beyond,” McDaniel says, adding that Extreme and its reps have consistently demonstrated that capacity over the years as it and the city continue to work together.

McDaniel, like others, say such vendors also benefit from building partnerships. McDaniel recommends Extreme to other CIOs and shares his story at conferences, for example — which McDaniel says he knows has helped Extreme land work.

“At the end of the day, if we can both be successful and get what we need to get done on behalf of both our organizations and have fun, too, that’s cool,” McDaniel says.

Cultivating partnerships

McDaniel, other CIOs, and CIO consultants agree that IT leaders don’t need to cultivate partnerships with every vendor; many, if not most, can remain as straight-out suppliers, where the relationship is strictly transactional, fixed-fee, or fee-for-service based.

That’s not to suggest those relationships can’t be chummy, but a good personal rapport between the IT team and the supplier’s team is not what partnership is about.

A provider-turned-partner is one that gets to know the CIO’s vision and brings to the table ways to get there together, Bouryng says. “They know the CIO’s vision and they’re looking to help the CIO achieve it,” he says.

Bouryng says a partner brings more than technical expertise to the table; they bring insights and the ability to pair those insights with the organization’s own to set a path forward that will succeed.

As such, a true partner is also willing to say no to proposed work that could take the pair down an unproductive path. It’s a sign, Bouryng says, that the vendor is more interested in reaching a successful outcome than merely scheduling work to do.

“That’s probably the most valuable vendor you can have,” he says. “That vendor is looking after the long-term interests of the organization, and not just looking to get the next contract.”

Anthony Moisant, CIO and chief security officer at Indeed, a job matching and hiring platform, brings that perspective to his vendor management practices.

“In my mind we have big important strategic opportunities and things we rely on for the core of the business, so if [a vendor is] critical to those, we want them as a partner,” he says.

Moisant points to his relationship with Salesforce as an example.

“We helped them understand what we needed, and they showed up as part of my team and helped us identify what stood in the way of us doing better,” he says, explaining that Salesforce “took the time to intimately understand and adapt to the ways we work through building products internally” and adopted Indeed’s objectives as its own.

Moisant credits that level of collaboration for some significant gains, such as a 90% improvement in Indeed’s sales-forecasting productivity.

Byproduct of IT’s evolution

Gayatri Shenai, senior partner at management consulting firm McKinsey & Co., says this provider-partnership dynamic is a byproduct of IT’s evolution. Years ago, when IT infrastructure and the services it provided were way less complex, CIOs typically had a few vendors. Now CIOs typically work with hundreds of suppliers for hardware, software, cloud services, consulting, and staffing.

“This ecosystem of vendors means CIOs increasingly need to build alliances,” Shenai says.

These partnerships have a deeper level of collaboration between the IT department and the vendor, where the two share roadmaps and data as well as co-create, she explains. They also share in outcomes and risks, with the two parties monitoring performance and devising contracts that reflect that sharing, she adds.

“It should be, ‘If I lose, you lose; if I win, you win,’” Shenai says. “There’s a shared sense of success and accountability, and creating a scorecard that reflects that.”

According to Shenai, CIOs should be prepared to have contracts with and compensation for partners that allow for flexibility; fixed fees, rigid timelines, and highly specific deliverables won’t work well here.

Shenai encourages CIOs to consider which vendors provide the products and services that matter most to their organization’s day-to-day successes and its vision so they can cultivate partnerships with those suppliers.

She also advises CIOs to not be too narrow in their picks. For example, a small company working with an emerging technology could be a valuable partner to a CIO, offering insights into evolving risks and opportunities that the CIO may not get from others.

She also notes that some vendors sit between the two extremes — a provider only offering commodities and a true strategic partner. There’s a spectrum, Shenai says.

Craig Richardville, chief digital and information officer at Salt Lake City-headquartered not-for-profit Intermountain Healthcare, says he has found through experience that partnerships evolve based on what the vendor as a company offers as well as based on the individuals they assign to work with his organization.

“Sometimes you have someone with a good product or service but the account rep doesn’t have an interest, and sometimes that person spends time with you and your team to create a relationship,” he explains.

Richardson says building a partnership also requires work from him and his team, such as a willingness to schedule regular meetings, share quarterly business reviews, and discuss planned updates to the vendor’s products and services.

He notes that both sides also need to be open about where work is needed in the partnership. “We know the sky isn’t always blue, so [we talk about] the places where we need to intervene,” he says.

Like other CIOs, Richardville has seen the strong ROI of all this work.

He points to the partnership he built with one vendor, which he first hired during the COVID pandemic to automate communication and scheduling with people waiting for vaccines. The company built a voice bot within days and then worked with IT leaders to understand and solve other pain points.

“They were able to take the best of services they were offering and chat with us, and the partnership naturally evolved from there,” Richardville says. “Now we share in each other’s successes and we share in each other’s learnings.”