The Riverbed Blog (testing)

A blog in search of a tagline

Managing vendors-Now is the time to seize opportunities

Posted by riverbedtest on May 18, 2009

David Spark, reporting at CIO Boot Camp at Interop in Las Vegas.

The CIOs who spoke at CIO Boot Camp at Interop in Las Vegas gathered together on a panel to answer questions about managing vendors. Speaking on the panel were:

  • Moderator: Thornton May, Futurist, Executive Director and Dean, IT Leadership Academy
  • Bruce Barnes, CIO Emeritus, Nationwide Financial Services
  • Louis Gutierrez, CIO Emeritus – Commonwealth of Massachusetts and CIO Emeritus Harvard-Pilgrim Healthcare
  • Terry L. Conner, Senior Vice President and Chief Information Officer, retired – Liberty Mutual Group
  • Karlin Sue Bohnert, Chief Development Officer, VP Emeritus – Abercrombie & Fitch

Here’s a summary of the advice the CIOs gave the audience of soon-to-be CIOs:

  • Regarding data warehousing – First step is to simplify the problem. Start with the most critical need data areas first. Attack that one area so you can start showing value.
  • Think big, but deploy incrementally.
  • With data warehousing, you start accumulating data very quickly even though you have a small user base. You need to spend a lot of thoughtful effort on conceptual design and architecture.
  • Step far enough back so you have a clear view. What are the entities? What’s your interest in those entities and those relationships? You want them all in view, but you don’t want to try to bite it all off at the same time. It also gives you a full picture of potential risk.
  • Prices are rock bottom right now. Go back and renegotiate with your vendors. If you have management deals that are 20% of cost, negotiate down to 15%. They’ll tell you times are tough. You tell them times are tough with you too.
  • You have a responsibility to your organization to get as much as you possibly can get.
  • Ask for huge discounts.
  • You need to hire a skilled negotiating team. If you don’t have one, get one. It doesn’t have to be a full time position. You just need people who have experience negotiating. Keep giving them experience negotiating.
  • If you haven’t already, change your financials from net-30 to net-45. Just do it.
  • Put more effort into the statement of work with the vendor. Detail out how will it be implemented, not just procured.
  • Use flexible architecture as leverage. Turn each element into a component. Maintain your independence from a vendor. Ask yourself, “How do I make it easy as possible one day to rip this out and stick something else in?”
  • In your statement of work you can set up a series of deliverables with dates attached. If they miss those dates there are penalty clauses. Put that in your statement of work.
  • Don’t threaten unless you can follow through.
  • Don’t get stuck at one SLA level. You want things to improve. So build in an escalator clause.
  • If the vendor exceeds the SLA, you can offer a give back. And that give back could just mean more business.
  • Take into consideration the daunting economic times. This is a great time for you to get all your IT costs down. Seize this moment. It’s your responsibility.

For more, check out all of Riverbed’s Interop ’09 Las Vegas coverage.

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