In many cases the decision of buy versus build has been made and the firm has decided to buy technology. We've covered that in the past in "Buy versus build, a false dichotomy". Once the decision to buy technology is made there is often a gap in the strategy employed by many firms. The gap is that there is no-one who actually takes ownership of the relationship with the vendor and manages that relationship over the lifecycle of the contract.
- Who owns the relationship with the vendor?
- Who negotiates the economic details of the contract?
- Who negotiates the service level agreement part of the contract?
- Who monitors the delivery against the service level agreement?
- Who raises breaches in the SLA with the vendor?
- How are SLA penalty payments handled - as negative invoices, as credit notes, as discounts against future purchases?
- What happens in the event of the vendor changing ownership?
- What happens if the vendor reduces the size of the local office?
- What happens if the vendor tries to "end-of-life" the product you are using and replace with a broadly equivalent product at a higher price?
- What happens in the event of the vendor entering bankruptcy or equivalent?
Another simple one is to always retain plan B. So by all means implement the "one system to rule them all" in your front office. But retain formal, informal and contractual links to other vendors so you have a credible threat to present to a vendor - the fact that you can rip and replace without a great deal of trouble.
Vendor relationship management is often overlooked but when done properly it's very valuable in offering optionality and cost control to the firm.