Choose Vendors Wisely

By Aaron Goldberg  |  Posted 2005-04-18 Print this article Print

Opinion: Managing vendor relationships effectively can save time and money.

As an IT professional, you have no more important task than vendor selection.

The choice of vendors—which ones and how many—affects your staffs ability to manage vendors without wasting time and money, as well as your ability to integrate disparate components into complete systems.

IT organizations with too many vendors, or poor vendor management practices, spend too much of their precious staff resources in vendor dog-and-pony shows, adjudicating interoperability conflicts among vendors and trying to herd all the vendors into a cohesive IT resource.

The drive to increase the efficiency of IT organizations has largely ignored the tax that is exacted from the staff each time a new vendor is added to the roster.

One CIO I know quantified the cost in man-hours of dealing with a vendor. She estimated that a one-product vendor requires more than 80 hours of staff time each year in a best-case scenario. And some vendors can chew up 150 to 200 hours with their demands for meetings, nondisclosure events and other activities that may be less than valuable from the perspective of getting things done.

Quantifying the cost of using a vendor can be a very important counter-weight to decisions, often made by the purchasing group, that might save you $12 on a product but cost you thousands of dollars in staff time.

A good way to get a handle on things is to place vendors in three tiers according to how much time and how many resources you commit to each. The top-tier vendors are your strategic partners in software, hardware and services. Smaller companies may choose only two top-tier vendors, and even the largest businesses may have only four.

The middle tier is where the trouble can start. This tier comprises vendors that have a product or service that is essential to your organization but may not have the product range to be a top-tier supplier. Too often, there is a great push to add best-of-breed vendors to this middle tier. However, the investment you make in time to support these middle-tier vendors can be substantial.

Then there are the lowest-tier vendors, those that supply standard products or services. These vendors usually require little interaction. Such vendors may wish to become more important, but you should try to keep interactions with them as infrequent as possible.

IT staffs have decreased, but the demands on them have expanded to include far more involvement with line-of-business staff and a myriad of new compliance issues. Its not possible to spend as much time as you once did with IT vendors. Streamlining and managing your vendor relationships with a documented structure is an excellent way to generate substantial efficiencies without adversely impacting IT operations.

Aaron Goldberg is a vice president of Ziff Davis Market Experts. Free Spectrum is a forum for the IT community and welcomes contributions. Send submissions to

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Mr. Goldberg is a renowned analyst, columnist, and strategic visionary covering the computer and Internet industries. His point of view is well known for its succinct, realistic, and down to earth style. His ability to integrate the technology, market and human factors in forecasting high technology is legendary.

He has more than 22 years experience in understanding the product/channel/customer equation in these industries and has the unique ability to understand the inter-relationships among these factors. This allows Mr. Goldberg to uniquely present scenarios on industry and vendor directions that are uncannily accurate.

In his current role at Ziff-Davis, Mr. Goldberg is charged with developing comprehensive market analyses and building integrated marketing programs and customer development programs for Information Technology vendors. His ability to understand the dynamic between customers, products, services, and their usage trends enables him to build hard hitting, unique programs that deliver the results for tactical and strategic marketing programs. This position demands the ability to work with senior executives in these IT firms as well as key partners in the media world.

Mr. Goldberg is also charged with presenting key industry trends and research findings at major industry events and in various web sites and publications.

At the present time he is a regular contributor to ZDNet, and contributor for Upside Magazine, Wall Street Journal, Marketing Computers, and eWEEK.

Prior to his current role, Mr. Goldberg was Executive Vice President at Ziff-Davis Market Intelligence, building state of the art go-to-market systems for high tech vendors. He has also served as Chief Executive Officer of InfoCorp. Prior to Ziff-Davis, Mr. Goldberg was employed at International Data Corporation for 15 years. He worked in a number of positions, and ended his employment there as Senior Vice President of the Desktop Computing Group.

Mr. Goldberg received a BS degree from Bentley College in Marketing/Management, with directed studies in statistics and organizational behavior. He resides in Massachusetts with his family.

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