Cozy CIO-vendor relationships are more dangerous than ever

Tech innovation, speed, and flexibility -- and thus business success -- are at risk when IT and vendors become codependent

It's a well-established protocol: People buy from people, especially the ones they like and trust. CIOs are no exception, and many benefit greatly from long-established supplier relationships. But there's a fine line between healthy and unhealthy interactions, a risk that's exacerbated by a limited amount of love (and budget) to divide across a countless landscape of courters.

Today's best CIOs create value in large part through the introduction of innovative capabilities, speed, and flexibility -- all of which are completely shut down when supplier relationships dictate the IT strategy. Even worse, with so much future revenue and success relying on a solid foundation of technology for success, these situations jeopardize the viability of the entire organization.

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Yet so many IT leaders have fallen prey to inclusion in a portfolio of superspecial customers that receive extra attention or support. There are benefits, no doubt: The fast access to decision makers can expedite an opportunity, remedy a bad situation, or provide market intelligence, all of which can yield true business value.

But those benefits become liabilities when the relationship begins to look like much more than business -- and by "more," I'm not referring to a steak dinner or birthday cards. I'm referring to helping a client's teenager get accepted to a specific college, providing transportation on the company jet, or even "arranging" family vacations. It happens every day on many levels.

When it does happen, what's instantly broken is organizational and personal trust. In the end, these favors and others rarely stay a secret; they become the juicy chatter and fodder relayed at sales conferences, kickoff meetings, and industry events.

It's a shame that common sense can't win the day and temper potentially damaging behavior, but human nature is a strong pull -- and it's not restricted to CIOs. Very often, it's a direct-report manager or executive in the IT organization with signature and budget authority that steps over the line -- leaving the CIO both surprised and completely unprepared to face the issue when surfaced. This has massive repercussions when it's time to competitively bid services, make a transformational infrastructure move, or even secure a CIO position at another company.

Alternative paths

With so many disruptive suppliers and business models coming into focus for enterprise IT groups, and so much scrutiny on performance management, there is hope. Many CIOs are taking cues from their procurement, marketing, and financial peers, mitigating the "too close for comfort" situations through objective review -- and gaining the subsequent flexibility to explore alternatives.

First and foremost, smart CIOs are overhauling their approach to supplier performance management, both internally and externally. It may sound simple, but this is a great time to validate or rewrite the terms of partnership success and the focus of your investments by team members. Make sure the objectives, measures, and checkpoints associated with your suppliers are aligned to the business need.

More often than not, the intents and purposes defined at the beginning of a relationship are now dated and have changed. Poorly performing suppliers will find it hard to escape a conversation about business value, and good performers will be thrilled at the opportunity to add more. This strategy review will also help unearth any unnatural relationships.

Another way to ensure a healthier relationship is to diversify -- not just in terms of suppliers but also the relationships in your organization. For example, where possible, give your IT outsourcing vendors airtime with the leaders that represent key functions dependent on the solutions the vendors deliver. You'll get bonus points for this on both ends, and you eliminate some of the opportunity for the relationship to become insulated and far removed from broader governance. Most important, you'll gain insights and intelligence from peers that can raise a red flag early and often if needed.

Other CIOs are uplifting the governance game via committees of their peers -- again leveraging the supplier's service or product as the catalyst for a broader business review. Marketing can be a great friend in this endeavor; it's likely that most of your current IT suppliers affect the marketing staff substantially and warrant an investment of its time. Involving the procurement group is another easy decision, given its focus on cost performance and risk mitigation. Again, it's about diversifying the risk and putting extra eyes on the supplier and, indirectly, your internal decision makers.

Not all supplier relationships step over the line -- in fact, the majority doesn't. Business relationships should be more than numbers and include both a healthy level of social partnership and a strong model for mutual benefit. Perhaps Kurt Vonnegut gives us the best idea for guidance when he wrote, "The chief weapon of sea pirates, however, was their capacity to astonish. Nobody else could believe, until it was too late, how heartless and greedy they were."