"One Throat to Choke" - most CIOs want lead vendors to manage their sub-contractors. Most big vendors will say the right things about it. But when it comes to pricing and negotiations, the concept often falls apart. Too many vendors treat each others like partners and forget they are responsible to the customer, not to each other.
Let me give you 2 examples
a) on an ERP negotiation last year I added up proposed training costs across vendors
- The software vendor proposal called for a third of the customer project team to be
in classroom training for months at various locations across the country.
- The software vendor packaged a third-party end user documentation and training
tool. So there was additional license and annual maintenance costs
- The SI's budget included coaching the project team on a "train the trainer" basis, which in turn would was expected to train the end users
- SI's change management budget which included several executive training sessions about the system.
- Travel expenses on many of the categories above.
We could not get the software vendor or the SI to step up and take sole responsibility for the proposed multi-million dollar training budget and remove redundancies. In the end, the client decided to become the training "integrator" and spent one third of the original, fragmented budget.
b) I did a budget review for a software vendor. I was shocked at the size of the quality/testing staff size being budgeted. Turns out there was a large customer contract with significant modifications where the software vendor was expected to do a lot of testing, but which the SI was duplicating. By looking at testing (acceptance, integration etc) as a more seamless process across the software vendor and the SI, we were able to recommend savings to both companies - and hopefully to the end customer.
On the other hand here is an example where it worked. We gave leeway to a hosting vendor on the hardware platform they could propose and to also obtain a run-time, database license. The hardware, labor and database deal together was far better than what we could have done individually.
As the technology industry moves to automobile industry like tiering, vendors will have to get used to the concept of one wallet to share. The Tier 1 vendor will be given a defined budget and will have to parcel it out to the Tier 2s and so on. And then hold them responsible for performance across the supply chain for that unit. In some cases the customer may find it more efficient to contract directly with the Tier 2 vendors, or do it by itself. One throat to choke, one wallet to squeeze.
