CIO's and their IT leadership teams should focus more time on a strategic IT vendor management program. After doing this for 8 years by conducting annual IT vendor days and implementing World Class IT principles, I decided to share what has worked and why it is important in the transition to becoming strategic business partners.

1. HOW TO TRANSITION FROM VENDOR
MANAGEMENT TO PARTNER MANAGEMENT
JEFF KUBACKI
SENIOR VICE PRESIDENT & CIO

2. • Implement a World Class IT framework and focus on external partnerships
• Vendor segmentation
• Procurement
• Vendor management
• Implement a supplier performance management program
• Conduct an annual IT partner day
ROADMAP TO SUCCESS

3. Sources: Metis Strategy & High, Peter. World Class IT: Why Businesses Succeed When IT
Triumphs. Wiley Press/Jossey-Bass. San Francisco, 2009.
1. Recruit,
Train, and
Retain World
Class IT
Employees
2. Build and
Maintain a
Robust IT
Infrastructure
3. Manage
Projects and
Portfolios
Effectively
4. Ensure
Partnerships
within the
Department
and with the
Business
5. Develop a
Collaborative
Relationship
with External
Partners Sustainable
IT
Excellence
STARTING POINT – WORLD CLASS IT FRAMEWORK
World Class IT principles are used to develop an actionable scorecard

4. PRINCIPLE 5 – EXTERNAL PARTNERSHIPS
Sub-Principle Description
Vendor Segmentation It is important first to understand which vendors can provide what sort of
services for the company. The first breakdown is likely to be strategic vendors
vs. staff augmentation vendors vs. commoditized vendors. In all cases, cultural
fit between vendors and the company should be assessed
Procurement The procurement process should involve not only the procurement department
and the legal department, but IT needs to remain very involved to ensure that
the value of the contract is not lost during the negotiation process. The
procurement process should consider the company’s interests first, but should
strive for “win-win” scenarios for company and vendor, and well-defined SLAs
should be established
Vendor Management Once the vendor has been selected, they should be reviewed at regular intervals,
and those reviews should be transparent to the vendor. They should be
apprised of whether they are maintaining their standing with the company or
falling short based on the SLAs and other criteria that were defined during the
procurement process
Sources: Metis Strategy & High, Peter. World Class IT: Why Businesses Succeed When IT Triumphs. Wiley Press/Jossey-Bass. San Francisco, 2009.

5. VENDOR SEGMENTATION
Critical Preferred Approved
•Quarterly performance review –
Executive level sponsorship
annually
•Solicit vendor feedback quarterly
•Monthly Summary Performance
Scorecard results
•Quality Reports as needed
(weekly or monthly depending
on business area)
•Create annual goals
•Attend annual IT partner day
•Bi-annual performance review
•Solicit vendor feedback bi-annually
•Quarterly Summary Performance
Scorecard results
•Attend annual IT partner day
•Case-by-case basis determined by
supplier needs – could possibly
include:
- Annual scorecards
- Annual performance review
- No review or scorecard
•May attend annual IT partner day
• The frequency of supplier performance management activities should be driven by the supplier
segmentation criteria (e.g., spend, importance to the business, geographic coverage, etc.)
• Suppliers should be classified in 3 primary buckets:

6. • Consolidate contracts where multiple contracts with the same vendor exist to better leverage
economies of scale
• Coordinate with Enterprise IT to determine what should be procured enterprise wide, as opposed to
what should be procured locally
• Define a standardized procurement process
• Create an IT Service Catalog that details what tools and services are available; this will prevent
procurement of extraneous tools
• Where possible, negotiate deals at the corporate level and execute them at the local levels to leverage
economies of scale and optimize responsiveness
• Have distributed IT personnel provide input to Enterprise and the Procurement group in the
procurement process
• Define SLAs
• Survey vendors on what went well and what did not go well throughout the procurement process
PROCUREMENT

7. Key Objectives
Develop a standardized process for supplier assessment of company
as a business partner
Improve understanding of our suppliers “cost to serve” the company
Support identification of opportunities to reduce cost and improve
efficiencies through better understanding of our supplier interactions
and management approach
Serve as a platform for supplier driven thought leadership and
innovation
PROCUREMENT – VOICE OF THE SUPPLIER SURVEY

8. Operational Performance
• Adherence to contractual commitments/obligations
• Remediation efforts and timeliness for missed
SLAs/remedies
• Responsiveness
• Effectiveness communicating planning/project timelines
• Effectiveness in escalated problem handling
• Demonstrated process improvements
Relationship and Account Management
• Talent knowledge
• Problem management
• Integrity
• Continuity of staff
• Effectiveness and access to executives
• Effectiveness and timeliness of communications
• Overall satisfaction with relationship management
• Negotiating flexibility
Financials
• Timely payment of accurate invoices
• Effective utilization of purchased solutions/resources
• Interest and ability to execute cost improvements
• Strategic approach and communication of cost
reduction/savings strategies
• Ongoing management of assets and investments
Strategy
• Discussions and inquiry into new products/innovations
• Robustness of technical road maps
• Level of innovation
• Engagement in technology collaboration
VOICE OF THE SUPPLIER SURVEY CATEGORIES

9. 1. Retain executive sponsorship and assign Business Relationship Managers that have
accountability for providing regular communication on business strategy
2. Implement Annual Business Plans with key Strategic Suppliers; drive joint accountability
and results
3. Implement quarterly cadence of Business Management Reviews; incorporate best practice
discussions and allow for supplier generated innovation proposals
4. Broaden involvement in technology briefings that will allow company to be
better informed on options to support longer term strategies
5. Drive standardization and consolidation
6. Seek opportunities to use technology across other areas of the enterprise
VOICE OF THE SUPPLIER SURVEY – SAMPLE FEEDBACK

10. • Altman Z Score - This model combines five different financial ratios to determine the likelihood of
bankruptcy amongst companies.
• Frisk Score - This index utilized by Credit Risk Monitor assists in predicting the probability of
default within 12 months based upon industry credit information.
• D&B Financial Stress Score - This tool categorizes the potential for financial risk into specific
categories and predicts the probability of failure based upon specific characteristics.
• Paydex Score - A D&B credit score which reflects promptness of payment to creditors.
VENDOR MANAGEMENT – MONITOR HEALTH

11. Why an enterprise-wide supplier performance management program?
Connect Coordinate Monitor Control Improve
• Rationalize
supply base
and connect
with the best
suppliers
• Integrate with
suppliers to
exchange
information
• Synchronize
requirements
with suppliers
• Identify
suppliers’ core
competencies
• Link core
competencies
with business
requirements
• Use scorecards
to measure
supplier
performance to
ensure service
level
agreements and
business
objectives are
being met
• Prevention:
Insert control
points at
suppliers to
mitigate risk
and increase
reliability
• Identify gaps
and develop
improvement
plans
SUPPLIER PERFORMANCE MANAGEMENT PROGRAM

12. SPMP – KEY OBJECTIVES
• Standardize the method used to evaluate performance of suppliers
• Expend resource time with those suppliers deemed most important to the business
• Drive a disciplined approach that enables business/supplier bi-lateral communication
• Drive continuous improvement and innovation with supplier programs
• Improve supplier performance through consistent measurement and communication process
• Sustain and grow business with the highest performing suppliers
• Increase supplier accountability and reliability; ensure receipt of high products and services
• Align with business enterprise risk management program; proactive risk mitigation planning
• Assign focused accountability
• Create a company-wide standard of excellence

13. SPMP – SAMPLE SURVEY
PERFORMANCE AGAINST CONTRACT TERMS AND CONDITIONS
SUPPLIER FLEXIBILITY AND ABILITY TO MEET ESTABLISHED SERVICE LEVELS
1) Select a score that best represents the supplier's performance as it relates to
supplier's flexibility to meet our changing business needs and performance against
established service levels per the agreement.
 1 - Supplier is significantly below expectations (many issues).
 2 - Supplier is below expectations (multiple issues).
 3 - Meets expectations for addressing business needs and performance against
established service levels.
 4 - Sometimes exceeds expectations for addressing business needs and
performance against established service levels
 5 - Consistently exceeds expectations for addressing business needs and
performance against established service levels
 N/A - This question does not apply to me.
QUALITY
2) Select the score which best represents supplier's ability to produce quality
products and/or quality services.
 1 - Does not meet expectations for quality.
 2 - Rarely meets expectations for quality.
 3 - Meets expectations for quality of the products/services ordered.
 4 - Consistently meets expectations for quality of the products/services ordered.
 5 – Significantly exceeds expectations for quality the majority of the time.
 N/A - This question does not apply to me.
DELIVERY
3) Product orders or service delivery is within the delivery and performance
guidelines in the contract.
 1 - Does not meet expectations for delivery.
 2 - Rarely meets expectations for delivery.
 3 - Meets expectations for delivery of the products/services ordered.
 4 - Consistently meets expectations for delivery of the products/services ordered.
 5 - Significantly exceeds expectations for delivery the majority of the time.
 N/A - This question does not apply to me.

14. SPMP – SAMPLE SURVEY
ACCOUNT MANAGEMENT AND OPERATIONAL PERFORMANCE
4) Overall satisfaction with this supplier.
 1 - Not satisfied with supplier.
 2 - Dissatisfied with supplier.
 3 - Supplier meets expectations.
 4 - Very satisfied with supplier.
 5 - Extremely satisfied with supplier.
 N/A - This question does not apply to me.
HOW RESPONSIVE IS THE SUPPLIER TO COMPANY'S NEEDS?
5) Delivers consistently against expectations.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.
6) Escalates issues responsively to appropriate representatives within our respective
organizations.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.
7) Demonstrates continuous improvement and works toward improvement goals and
metrics.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.

15. SPMP – SAMPLE SURVEY
8) Responds effectively to ad hoc needs and requests that fall outside contract parameters.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.
9) Provides stable sales force and account representation.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.
10) Demonstrably understands COMPANY's business and is invested in continuing to learn
COMPANY's business.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.

16. SPMP – SAMPLE SURVEY 10) Demonstrably understands COMPANY's business and is invested in continuing to learn
COMPANY's business.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.
FINANCIAL VALUE
11) Recommends effective products, services and solutions/aligns with strategic objectives.
 1 - Does not offer recommendations for products, services or solutions to meet
COMPANY's needs.
 2 - Rarely recommends products, services or solutions to meet COMPANY's needs.
 3 - Sometimes recommends products, services or solutions to meet COMPANY's needs.
 4 - Often recommends products, services or solutions to meet COMPANY's needs.
 5 - Consistently and proactively recommends products, services or solutions to
anticipate COMPANY's needs.
 N/A - This question does not apply to me.
12) Please rate this supplier's ability to maximize savings for COMPANY.
 1 - Supplier does not maximize savings for COMPANY.
 2 - Supplier rarely offers opportunities to maximize savings for COMPANY or findings
didn't lead to execution.
 3 - Supplier sometimes finds opportunities to maximize savings for COMPANY.
 4 - Supplier often finds opportunities to maximize savings for COMPANY that lead to
execution most of the time.
 5 - Supplier frequently and proactively finds opportunities to maximize savings for
COMPANY that lead to execution the majority of the time.
 N/A - This question does not apply to me.

17. SPMP – SAMPLE SURVEY
13) How well does the supplier demonstrate interest and execution to improve the
partnership and identify areas for improvement?
 1 - No interest
 2 - Limited interest, below average execution.
 3 - Adequate interest, average execution.
 4 - Strong interest, appropriate execution.
 5 - Exceptional interest, strong execution
 N/A - This question does not apply to me.
14) Aligns pricing with our specific situation/condition transparently and logically.
 1 - Never.
 2 - Rarely.
 3 - Sometimes.
 4 - Most of the time.
 5 - Always.
 N/A - This question does not apply to me.
COMMENTS
15) Please provide any additional comments.
____________________________________________________________________________________
____________________________________________________________________________________
_____________________________________________________________________
Your ratings and comments will be used to establish an ongoing review process with our suppliers.
Thank you very much for taking time out of your busy schedule to complete this survey!

18. Gold 4.5 - 5.0
Silver 3.5 - 4.49
Bronze 2.5 - 3.49
Yellow 1.5 - 2.49
Red 0 - 1.49
Supplier SPMP Score
Current SPMP
Rating
Contract
Ts & Cs
Acct Mgmt/
Op
Performance
Financial
Value
4.34 Silver 4.28 4.52 4.18
4.34 Silver 3.93 4.49 4.4
3.51 Silver 3.5 3.69 3.33
3.39 Bronze 3.31 3.52 3.3
4.61 Gold 4.78 4.88 4.25
2.97 Bronze 2.88 3.27 2.71
4.24 Silver 3.77 4.47 4.24
2.86 Bronze 2.67 3.05 2.76
3.12 Bronze 3.29 3.2 2.96
3.60 Silver 3.53 3.76 3.48
3.25 Bronze 3.44 3.41 3
3.91 Silver 3.59 4.04 3.94
3.61 Silver 3.33 3.77 3.58
2.62 Bronze 2.33 3.14 2.25
3.80 Silver 3.67 4.27 3.39
4.23 Silver 4.33 4.25 4.17
3.70 Silver 3.44 3.61 3.25
SPMP – SAMPLE SURVEY RESULTS

19. SPMP SURVEY RESULTS TEMPLATE
Supplier Performance Management Date: 3/26/2013
Indirect Suppliers Ranking 3.55 Gold 4.5 - 5.0
Silver 3.5 - 4.49
Supplier EXAMPLE Bronze 2.5 - 3.49
Yellow 1.5 - 2.49
Sourcing Manager BUYER Red 0 - 1.49
Purchasing Category IT HARDWARE
Surveys Sent 9 Response Rate 44.44%
Surveys Returned 4
AVG Score Weight
1.) Performance Against Contract Terms and Conditions 3.44 20%
5 Exceptional knowledge of contract terms and conditions, strong execution, exhibits flexibility in support of the contract
4 Strong knowledge of the contract terms and conditions, appropriate execution
3 Meets expectations for supporting terms and conditions of the contract
2 Supplier is below expectations (multiple issues)
1 Supplier is significantly below expectations (many issues)
AVG Score Weight
2.) Account Management and
Operational Performance 3.78 40%
5 Extremely satisfied with supplier's account management capabilites and administrative focus
4 Supplier delivers above expectations through proactive account management and quality administrative skills
3 Supplier provides satisfactory account management and administration
2 Dissatisfied with supplier
1 Not satisfied with supplier
AVG Score Weight
3.) Financial Value 3.38 40%
5 Exceptional accuracy, no errors, exceptional timeliness on
4 Strong accuracy, very few errors, strong timeliness on delivery of service/product
3 Adequate accuracy, few invoice errors during review period, adequate timeliness on delivery of service/product
2 Limited accuracy, many invoice errors during review period, limited timliness on delivery of service/product
1 Inaccurate invoices received the majority of the time, poor timeliness on delivery of service/product
Comments:
Please provide any additional comments.
Participating suppliers
will be assigned one of
five performance level
ratings:
• Gold
• Silver
• Bronze
• Yellow
• Red

20. ANNUAL IT PARTNER DAY OBJECTIVES
• Gain an understanding of Business & IT objectives
• Learn more about the business and what we do
• Review IT account plans, conditions of satisfaction and IT Account Executives
• Announce the Partner of the Year & Account Executive of the Year

21. ANNUAL IT PARTNER DAY – WHAT DOES THE CIO NEED?
• Transition from vendor to partner; don’t just be an order taker
• Help us think out of the box – stop conventional thinking
• The project is not over until the product is fully implemented, the benefits have been
realized and the IT staff has been properly trained
• Continue helping us move from tactical KTLO to strategic business partners
• Help us become a World Class IT organization

22. ANNUAL IT PARTNER DAY – WHAT IS ON THE CIO RADAR?
IT Security
Integrated Supply Chain Management
Execution on our ERP Projects
Enabling Innovation
World Class IT
Acquisition Integration
Communications

23. ANNUAL IT PARTNER DAY – SAMPLE OBJECTIVES
• Implement a World Class IT operating model that ensures the effective and efficient use of IT in
enabling the company to achieve short and long term business goals
• Drive increased automation and integration across the supply chain, and identify corresponding
opportunities for cost avoidance/removal to improve EBIT performance
• Leverage IT infrastructure and services to drive increased employee performance and
productivity, and in the process identify and realize opportunities to improve EBIT performance
• Achieve increased cost discipline across the IT infrastructure to drive future reductions in IT
budget requirements
• Develop a comprehensive IT risk management framework with a focus on reducing IT risks and
strengthening security
• Leverage technologies such as social computing, mobile computing, analytics and MES to enable
breakthrough innovation that supports growth initiatives

24. ANNUAL IT PARTNER DAY - CONDITIONS OF SATISFACTION
• Don’t try to sell us more products or services until you have completely helped us
implement the products or services we already acquired
• Learn our business and understand our objectives and priorities so that you
transition from a vendor to a partner
• Demonstrate that you are in this for the long run; not just using our company to
meet a quarterly objective
• Demonstrate consistent performance as measured by the Supplier Performance
Measurement Program (SPMP)

25. ANNUAL IT PARTNER DAY – ACTION STEPS
• Review the account plans and conditions of satisfaction with your teams
• Schedule a follow-up meeting with your IT Account Executive to discuss your
capabilities and potential pursuit opportunities
• Identify and document active projects
• Meet at least quarterly with your IT Account executive to update the plan and review
YTD performance