Getting Your IT Vendor to Innovate for You - CXOtoday.com

The industry is at a saturation point and most of the established IT vendors come with required capabilities for the market. Hence, during a contract negotiation the focus often relies on price. While trying for competitive price advantage the focus shifts away from aspects of differentiated services, innovation and building long-term relationships. In such engagements what a client receives is only the service that they pay for.?

This in turn is leading to a growing trend of various business organizations wanting to retain niche expertise, high-end R&D and thought leadership in-house and rely on IT vendors for ?keep-the-light-on? type services. These, they say, give organizations more control over their strategic initiatives and reduce their time to market. Such outlook has triggered various business organizations to build their own capabilities within, or do in-sourcing.

However, a strategy like the above can only throw up multiple challenges for a client:

Organizations are compelled to attend to areas outside of their core competence It is difficult to find the right-skilled resources from the market and retain them There is an increased cost on CAPEX? The ability to adopt new technologies and stay current is constrained

Such a strategy may not be sustainable in the long run. Every organization needs to create an equilibrium in their business operations when they outsource their work to IT vendors.? To bring in such transformation and innovation in client-vendor relationships in the IT services business, the following will be mutually beneficial.

Vendor Assessment ?Assess differentiated experiences that you have received from your vendors and do a vendor rating. Raise assessment standards annually.

Vendor Credentials - While awarding a contract to a vendor check whether they have executed differentiated approaches, innovation, and thought leadership in the area of the specific work they are asked to do. Comprehensive or cross checkable references will be the key.

Consolidate Vendors - Optimize vendors based on your assessment and organization strategy.

KPI?s for innovation - Always keep KPI expectation for innovation with your vendor, build your contract to clearly articulate this expectation.

Engage with resources - Talk to key vendor resources who worked with you during the engagement phase. Understand if they have an innovative mindset; this can give a good perspective of the culture that an organization had built in.

Long Term Contract - Award long term contracts, so that you can reap the benefit of optimization and knowledge base developed within

Benefit sharing - Vendorinnovation should be met with client incentives. This will enhance vendor motivation.

Community & Collaboration - Create a community to collaborate with your vendor and teams, this will enable you to drive your thoughts and generate ideas within your contract purview. More ideas and thoughts for innovation will come from the team who are working on the ground.

Initial buffer on budget - Expect that there will be cost overrun in some cases for complex engagements, but will get the rewards later in the engagement.

If an organization tries to build a lasting relationship with a vendor, the impact will be much better from the perspective of innovation, cost and benefits.? Yes, there will hiccups and challenges during that lifecycle but living through that as a collaborative unit will create a win-win situation for all.

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Source: http://www.cxotoday.com/story/getting-your-it-vendor-to-innovate-for-you/

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