9 principles to improve IT supplier relationship management

As with any other skill, focusing on specific principles and practices can improve your relationship management skills. This will create stronger alignment between both sides and a framework that results in true win-wins.

In a white paper I co-authored for the Haslam College of Business at the University of Tennessee, we cover nine design principles to improve IT supplier relationship management. Here are some key takeaways that can help with your own efforts.

1. Create a tiered management structure

The most successful supplier relationships operate under a tiered management structure. They deliver guidance at functional working levels, operational management levels, and the executive level, resulting in vertical alignment at all tiers. This creates opportunities for individuals at each level to be responsible for the relationship and its success through their specific lens and area of responsibility. In a relationship with an IT supplier, this means that while operational management teams would oversee operations on a daily basis, executive leadership maintains its focus on the overall vision and goals of the partnership in monthly or quarterly meetings.

2. Separate management roles

There are four key roles essential to successful agreements with IT suppliers — and each one should be filled by a different person to ensure they get the level of focus they need. The roles are service delivery management, which oversees customer service and effective service delivery; transformation management, which drives innovations and process changes; relationship management, which manages the overall relationship in light of each side’s objectives; and commercial management, which focuses on the contractual elements of your relationship with the IT supplier.

3. Enable peer-to-peer communications

As part of creating a tiered management system, organizations and their IT suppliers should strive to horizontally integrate their teams. This means rather than using a traditional hierarchal structure in which all communication runs through the program or account manager, there’s a model that pairs together peers in the two organizations. This decentralized approach to communication helps speed up decision making and issue resolution by ensuring people in both organizations have direct access to their respective peers. This reduces the burden on managers and executives, and can strengthen working relationships with the IT supplier.

4. Establish a cadence of communications

As implied in the first point, a formal communications cadence is an important part of relationship management. This cadence should be established at each tier of the relationship, such as operational teams collaborating daily while senior leadership meeting quarterly. For new relationships, more frequent communications will likely be needed at higher levels. The communications cadence should clearly outline both the timing and nature of these check-ins. Conference calls, formal reviews, and team meetings should all have their place in the communications schedule to keep everyone on track. Effective communication can increase productivity by up to 25%.

5. Develop a relationship management program

A relationship management program is a key part of working with IT suppliers to help keep your interests fully aligned. This could include measuring supplier performance based on agreed-upon KPIs and desired outcomes, or making budgeting part of the relationship’s governance so costs of the partnership stay within desired limits. Essentially, the idea is the most important elements of the relationship become integrated into your governance systems to create better accountability and alignment.

6. Maintain formal annual relationship health monitoring

A formal annual health check is essential for every supplier relationship. Some companies even conduct them quarterly. These checks aren’t just focused on performance, but also look at the relationship as a whole. This may include monitoring communication effectiveness, satisfaction of both parties, and trust and compatibility measurements. Checks can also help uncover possible sources of misalignment that negatively impact relationship outcomes. For example, McKinsey cites a tech company and consumer company’s partnership where there was a mismatch in how the they defined priority decision, or speed vs. process, which led to several misunderstandings. Relationship health checks offer a formal way to identify and address such challenges.

7. Develop a process to resolve issues

All too often, formal partnerships end because of issues or events that weren’t resolved before they escalated. This can be especially common in IT, where issue resolution is often limited to a focus on end-user complaints. Quite often, partnership issues fall outside this basic scope, and without a formal issue resolution process, it can be all too easy for these to escalate into major disputes. You should document a process for issues to be discussed in informal and formal settings, gradually scaling up to higher tiers of management as needed if issues and concerns can’t be resolved effectively. Allowing teams to address issues and concerns before they escalate into major conflicts will help team members implement corrective actions before they undermine the relationship.

8. Ensure resource continuity

One of the most common issues with IT supplier relationships and other partnerships is a lack of resource continuity, particularly when key individuals involved change. After all, with IT’s high turnover rate, personnel changes are inevitable in any supplier partnership. Provisions that ensure resource continuity, particularly regarding key personnel, will keep work flowing smoothly. “People will inevitably change over the course of your relationship with a supplier,” says George Nellist, director and CIO at Ascend Agency. “But if you have the right framework in place, these changes don’t have to disrupt your processes and outcomes, particularly when both sides are involved in coordinating the change. The right onboarding for new personnel and ensuring the partnership continues to get the same level of priority will keep everyone aligned and focused so your output doesn’t take a step back.”

9. Incorporate an onboarding plan

As an extension of ensuring resource continuity, businesses must also account for relationships with IT suppliers as part of their onboarding process with new hires. All team members and stakeholders involved with the supplier relationship should be onboarded to the partnership, with materials and guidance adapted to their roles. A consistent yet adaptable approach to onboarding that highlights the vision, guiding principles, required skills, desired outcomes, and mindset associated with the partnership will keep things running smoothly, even as new hires are onboarded.

Better relationship management, better IT outcomes

CIOs who improve their ability to manage relationships with IT suppliers can drastically improve outcomes for their business. With stronger relationship management, you can ensure full alignment between your organization and its IT suppliers, enhance productivity, and drive meaningful progress toward your IT goals. A framework that strengthens the relationship between both parties will create the necessary win-wins for lasting relationship success.