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IT Supplier Management:Top 5 Lessons Learned
IT SupplierManagement:Lessons LearnedContributedbyCIOofFortune1000companytotheITCentralStationcommunityCleansedbyITCentral...
Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comAgenda• Know Your Supp...
Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comKnow Your SupplierWhat...
5Industry Org Charts
Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comDo Your Prep workHave ...
Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comIncent Your Supplier• ...
Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comManage Your Supplier• ...
Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comSupplier Tier Classifi...
Supplier Performance Scorecard
Thisisa freeresourceprovidedbyITCentralStationMoretemplates,toolsandproductreviewsforfree:www.itcentralstation.comFormorei...
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IT Supplier Management Lessons Learned

Learn how to choose the best vendors and suppliers for IT. From a Fortune 500 CIO.

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IT Supplier Management Lessons Learned

  1. 1. IT Supplier Management:Top 5 Lessons Learned
  2. 2. IT SupplierManagement:Lessons LearnedContributedbyCIOofFortune1000companytotheITCentralStationcommunityCleansedbyITCentralStationstaffMoretemplates,toolsandproductreviewsforfree:www.itcentralstation.com
  3. 3. Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comAgenda• Know Your Supplier• Do Your Prep work• Incent Your Supplier• Manage Your Supplier3
  4. 4. Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comKnow Your SupplierWhat drives their organization’s performance?• Culture• Both nationality and industry• Software vs Services Provider• Compensation• Determine which internal organization “runs” the company, and how management,sales, and consultants are compensated• Do software sales rule? Recurring maintenance? New services?• Boundaries• Can you leverage the software division for deals on services?• Fiscal periods• Leverage their quarter and yearends for better deals• Check your sources• Gartner analysts and informal network• Review sites: www.itcentralstation.com• References (formal and informal)• Existing agreements• Public documents (10-K)• Org charts 4Both Tangible and Intangible facets are important
  5. 5. 5Industry Org Charts
  6. 6. Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comDo Your Prep workHave you read the MSA? SERIOUSLY – have you read the MSA?• Interesting sections to be aware of:• Negotiated discounts, rate & pricing caps• Allowable contract types (fixed, not to exceed)• Acceptance criteria (re-work)• Deliverable and intellectual property ownership• Cancellation & notification terms6Chances are, your supplier also hasn’t read the MSA, and youragreement may not be aligned with the MSA.
  7. 7. Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comIncent Your Supplier• Firm Fixed Price• What is both the explicit and implicit risk premium?• What are the Acceptance Criteria?• Firm Fixed Price by Object• Can work well when there is a high number of development objects(programs, reports, training courses)• Not to Exceed• What are the terms in the change order process which ensure the capdoesn’t keep changing?• Withholds/Risk sharing• This can work as an incentive for a cash-driven company – but doesn’twork for all cultures)• Performance Bonuses• Performance Penalties• Free software, free services, non-payment7
  8. 8. Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comManage Your Supplier• Assign your suppliers a Tier based on spend and risk level• Establish a recurring governance meeting for them to assesstheir performance and discuss with you• Use a standardized agenda or scorecard so that you canmeasure the progress period-to-period (they WILL try to varythe format, obfuscating progress!)8
  9. 9. Copyright IT Central Station. All Rights Reserved. For reuse, contact resources@itcentralstation.comSupplier Tier ClassificationSupplier Tier MatrixAnnual Spend Low Risk High Risk<$250k 3 2$250k>$2.5M 2 1<$2.5M 1 1Risk Factors: Size of company, Availability of replacement skills or products,Software maturity, Length & strength of existing relationship
  10. 10. Supplier Performance Scorecard
  11. 11. Thisisa freeresourceprovidedbyITCentralStationMoretemplates,toolsandproductreviewsforfree:www.itcentralstation.comFormoreinformationemail:resources@itcentralstation.com

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