Managing suppliers: Get the best value from your legal technology providers

'Partnering' is what many technology buyers describe when entering a new relationship with a supplier of products and services. Too often, however, this relationship quickly descends into the classic supplier-customer scenario of complacency and disinterest. This is, in part, driven by the spectre of short-termism, fuelled by the need to show in-year commercial returns on IT investment. Such an approach is particularly true for large and mid-sized organisations, the worst being those underpinned by private equity.

What we need to do instead is to manage our own expectations and dig in for the long haul. Historically, IT teams have tended to develop an 'us and them' approach to supplier relationships, compromising what should be a collaborative relationship. Technology managers, directors and CIOs may well come from computer science and engineering backgrounds and therefore have a good knowledge of the technology. Procurement and supplier relations, however, will not have been taught, so
are largely acquired from the school of
hard knocks.

Over the years, I have worked with
many technology suppliers and have seen what works and what doesn't. What follows are a few things I've learned.

Manage your account

People have careers and move from job
to job. As the modern economy evolves,
it is getting rarer for a supplier's employees to stay in their roles for the entirety of a
firm's contract.

The dreaded account manager 'revolving-door syndrome' is not uncommon. You will, one day soon, get a call from a fresh-faced account manager declaring that they are your new account manager and asking if they can come and take up a couple of hours in your busy schedule to understand your 'journey'.

My advice here is to ensure these cosy one-to-one relationships with suppliers are spread a little wider and deeper - get your team involved and ensure your links to the supplier are with a number of individuals at both senior and junior levels. The relationship management needs to be well thought through, extending from your in-house IT team and business through to the supplier.

Internally, failure to properly sell a new supplier relationship to the business can derail the relationship before it has started. The business needs to understand the commercial rationale, particularly if there is likely to be any short-term deterioration in service (there is usually a period of uncertainty in the 'getting to know you' period). Additionally, your own IT team
may feel under threat if they are not adequately on board and could
undermine the supplier relationship.

Take the lead

Despite the initial warm feelings felt by both parties at the outset, the love can quickly fade. It takes discipline and ownership by the customer to bring all parties back to the table on a regular basis and to maintain the relationship so that it can develop and grow.

Of course, you might ask why you should be the one to put in the effort to build the relationship - shouldn't the supplier take
you by the hand through the garden of techno complexity and choice to a place of strategic harmony? While that dream may appeal, taking control is crucial to ensuring your expectations are met (see 'Lessons learned' below).

Pulling all parties together every quarter can be a chore, but has to be done. The agenda should review the last quarter's service level agreement (SLA) breaches and performance issues, cover corrective actions and garner insights into future developments from the supplier.

You also need to be prepared to be open with the supplier about your technology strategy. Proactive suppliers will cooperate with this approach; the savvy ones will view it as quality airtime with a buyer that should translate into more sales.

Get a good contract

Getting the contract right is vital. No doubt you will hope the punitive clauses will never get used but, by having an open conversation upfront, you will set the tenor of the relationship and be clear on your expectations.

Contracts drawn up by the supplier are inevitably stacked in their favour. This can be a point of immediate frustration and mistrust, as it demonstrates right from the get-go that they are prepared to inflict a bias on the relationship and usually not to your advantage. I've rarely seen a supplier contract which appears to treat the customer as an equal, so get your own contract drawn up by your firm's lawyers and get the supplier to adopt yours.

It's worth doing this for two reasons:

1. it gets all of the things important
   to your firm nailed down; and

2. it can reduce the effort on your part when embarking on future supplier relationships, saving you from having to negotiate an exit from the contract. Once you have a standard contract drafted, you can adapt it each time, rather than having to use theirs.

As part of the contract, it is worth trying to share the risks and rewards. While the supplier needs to make a good margin when things are working well, there should be punitive financial damages payable when it breaches an SLA. The mechanics are not easy to assemble, but it's a grown-up conversation worth having to make the supplier focus on the quality of its service and reduce complacency.

Avoid complacency

Supplier complacency is a frustration. For less critical services, this might not be such a problem but, clearly, this isn't acceptable for the most business-critical parts of the infrastructure and application mix.

One route forward from a procurement strategy perspective would be to bundle as many things as possible into one supplier - make it big enough for them to care because there's enough revenue in it to hurt them if you part company. The additional benefit to your firm of this approach is that, the fewer suppliers there are to manage,
the more attention can be dedicated to
the performance of each and the sharing
of experiences.

Having said that, the relative size of your business can also be a factor. If you are a small fish in a large pond, you may get overlooked when it comes to care and attention. Smaller specialist businesses (such as one of our suppliers, ConvergeTS, which hosts applications in the cloud and manages IT infrastructure for law firms) can be better than large faceless entities at providing personalised services.

Finding the right supplier is anything but an exact science and is driven largely by clarity upfront as to what you want the relationship to do. Is it about managing affairs for a lower predicable cost, adding innovation and value, covering the skills crisis or accessing technology? Maybe
your focus is on creating business flexibility and scale?

In these relationships, it is in you firm's interests to help the supplier be more successful. You want to be assured of longevity, investment and performance. Taking a proactive role in this can be worth the investment of your time. This may mean helping out with press articles, supporting their events or providing testimonials and case studies for their marketing collateral.

Two examples

At DWF, we have a scripted process for vendor management as part of our ISO 27001 accreditation for information security management. We have had mixed results and learned many lessons from these;
a couple of examples stand out.

1. Devolving services

During a period of rapid growth at our firm, it became abundantly clear that our internal IT group had finite capacity - the scale and logistics of what we needed to do was just not possible. Being plugged into firm strategy at an early stage meant a degree
of forward planning could be undertaken
to accommodate this rapid growth.

For part of our firm's infrastructure and telephony requirements, we entered into a managed service contract for the Mitel estate - switches and 2000+ handsets. Growth aside, telephony is not a skill set we had any interest in preserving, it being a service that just needed to be there and available 24/7, with little strategic content.

Our arrangement with the vendor and the maintenance of a close working relationship ultimately meant that we were able to forget about telephony during our merger and leave it to the supplier. The nature of mergers can be a little erratic, with limited ability to mobilise any practical activity until the deal is done, and then its go, go, go. The quality of the relationship
in this instance delivered results.

2. Unclear expectations

At the other end of the scale on another contract, a lack of care and attention delivered a shortfall in meeting our functional requirements, whilst costs
were disproportionately high.

While the relationship between us and the technology provider was extremely cordial, it was not very commercial. They were very polite and accommodating, but short on detail. We had made the assumption that our requirements, our strategy, our 'dream', were somehow
being read and translated into a solution.

Equally, the credentials of the supplier and our due diligence were not comprehensive enough for the scale of the service being designed. With hindsight, we recognised that references should have been taken to explore not just the supplier's credentials but also evidence
of the combination of services that made the solution.

We also found that our team was not adequately engaged or sufficiently empowered to work up the design to the necessary level, so the supplier's brief was unclear. This was my fault as chief technology officer.

Lastly, not enough time was spent on the details of the contract. Again, there was the mistaken expectation that the strength of the relationship was enough to ensure the contract adequately reflected the need. So, despite the relationship quality, be sure to read the small print.

An inescapable necessity

Brokering commercial relationships that are sustainable does not come naturally to IT teams. Traditionally, our focus is on the quality of the solution itself, with the soft, fuzzy subject of relationship building being a bit of an enigma.

However, the strength of the supplier relationship will buy you all kinds of latitude over the course of the contract. The value of this should not be underestimated, particularly since most businesses are adapting to change on a near daily basis.

A strong supplier relationship can develop into an extension of the IT team, giving you a flexible resource. It will give you expertise and insight into the future and see you through the rough patches without having to reach for the contract. To be honest, the day you reach for the contract is the day you know that the relationship is on the rocks.

Of all the disciplines required to build and deliver quality IT services to support a business, the vendor mix and the relationship management is as serious an issue as the IT solution itself. For the IT manager, director and CIO, dealing with vendors is an inescapable necessity. It is also one that needs to be taken very seriously indeed.

Richard Hodkinson is chief technology officer at DWF (www.dwf.co.uk)

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