IT Departments use external people regularly. While definitions can vary, here is what I use:
We use contractors for staff augmentation. This can be situations where we need more developers or where we need a skill part time, like a DBA.
We use consultants for deep technical expertise. Examples include a major new software product or the learning to use a new ERP module.
Let’s look at how we can be smart about using these types of resources.
Vendors have to make money to stay in business. Like it or not, it is in our best interest for our strategic vendors to make a profit off of our business. After all, win/win is the best way to sustain a long term strategic relationship.
If they don’t make a profit off of us over time, they will fire us. Yes, vendors do that — mainly by acting like a bad vendor until we go away. Or just tell us no the next time we want to place an order. Or dramatically raise prices.
If we understand how a vendor makes their profit, we also can understand where we have negotiation leverage. Just because we are ok with them making a profit, doesn’t mean we can’t negotiate to our benefit.
Let’s look at a few ways vendors can make money off us.
Dear IT Director,
I’m getting pressure for my team to turn around new employee requests faster. Our service level says five days, but often requests come inside that window. How can I get them respect the window?
Hopeful in Hoboken
Sorry, I don’t have good news for you. I’m afraid that your 5 day window is a relic of the past. You and your team are the ones that need to change, not the rest of the organization. Let’s look at why and what you can do.
By necessity, IT works with vendors. Some vendors are transactional and can easily be replaced. Some are strategic and are more critical to your organization. Ask these questions to build a good understanding of your strategic vendors. The answers won’t be easy to get and you may need to do some digging, but having them will definitely be beneficial.
Are you working with the vendor’s strengths?
As vendors grow, they add different products and services. Some will be major investments and will be implemented well. Some will be new and won’t have much depth or capabilities. A classic example is a new service that has just one or two people behind it. “Yeah, we do SharePoint consulting” may mean they have one person who knows a bit of SharePoint.
If a vendor has multiple products and services, take the time to learn which ones are strengths and which ones aren’t. The more important your need, the more important it is to work with the vendor’s strength. This will reduce the risk of vendor problems down the road.
Where does the vendor make their most profit?
This can be tough to figure out, as vendors aren’t always willing to share this. But it is important to your negotiation position to know this. A classic example is a services vendor. They likely make a good profit from consulting or contracting. They will protect that in any negotiations. Once you know that, you can work in other areas to get what you need. Sure, you can, and should, have discussions about cost, but there is more you are interested in. You can negotiate on topics such as support, specific personnel, add-ins, faster response and more if you respect their profit. There is a caveat on the size of the vendor. Once you get into Microsoft, Amazon, and Apple size vendors, we are dust mites on a flea on the tail and we have no influence over the dog.
How big is the development team?
For software companies, find out how big their developer team is. This tells you how many features they are planning on adding in the future. A small team may indicate that they believe the product is mature (startups are an exception, of course). Companies with multiple software products will move developers to the one needed the most new features. Putting it perhaps too simply, you don’t want to be on a product with a small maintenance team until you are winding down your own usage.
When was the last major rewrite?
Also related to software companies, understand that all major software products need to be re-architected and rewritten at least once in their lifecycle. I’m talking about ERPs, CRMs, Client Billing, etc. Ask questions about how long the product has been on the market and when the last rewrite was. Technology changes fast enough that if you get into the 5-7 year range, there should be a rewrite in the pipeline. For these large systems, it will take a few years to get the new product to replacement quality.
I’ve always been a fan of moving to the new product as soon as practical for my organization. The vendor will put most of the developer resources on the rewrite and their response will be much faster than the older version.
What investments have they made in the last two years?
Technology is a tough business and vendors need to be making investments and partnerships with others to be successful. Check out the News section on their website and see what they are doing. Especially for larger companies, those that go it alone will not last long.
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Interns in the IT department are great. They bring energy and enthusiasm. I have had success using interns in two areas: Help Desk and Business Analysts. There are some challenges, but the rewards are great. Let’s look closer.
Dear IT Director,
When we have a major outage, my team jumps into action quickly, but sometimes they get in each other’s way or try the same thing multiple times
– Impatient in Indianapolis
Been there, done that, got the t-shirt. Even if we do everything right to prevent outages, they will happen. Let’s look at a few ways to improve your team’s response.
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Leaders in management positions hire people. It’s part of the job. To hire, we must read resumes. I haven’t met many that enjoy this part. If you are fortunate enough to have an HR department screening out those that don’t meet basic requirements, you may only have dozens of resumes. If not, you may have hundreds.
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