Tip

Avoid complacency and minimize TCO

At some time most companies have a preferred vendor relationship accounting for the majority of their storage infrastructure. Maintaining this relationship will always be the cheapest and lowest risk option. But, how can you avoid the vendor becoming complacent? How do you ensure business requirements continue to be met?

The key to an ongoing relationship with your suppliers is to manage the contract with intent. This is especially true with a single-vendor contract. Putting in the effort in up-front, rather than try to patch things up later could save you lots of money.

Even if you have quarterly or even monthly account meetings with the vendor, how well are they really keeping up with your changing business? Ensure the contract and associated Service Level Agreements (SLA) are living documents and review them regularly. At the very least you should continually challenge the Key Performance Indicators (KPIs) to make sure they are still appropriate.

Plot the KPIs on a scorecard and enforce them. You might give more weight to some categories, but be sure that the vendor understands the penalties for not reaching the bar. Try not to get hung up on specific KPIs however; they are merely "indicators", so use them as that. KPIs are intended to simply give all parties advance warning of trouble.

What can you do if the contract looks like it's falling off the rails? Perhaps coach the vendor informally to start with. If that doesn't seem to work, as

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a last resort call a formal "contract review" meeting where you impress the severity of how you feel with the vendor. Create a meeting environment where all issues on both sides can be tabled (personal and procedural). Internally, consider role-playing this meeting beforehand to ensure you get what you want out of the real encounter and never be afraid to change tone and create doubt when appropriate. Position yourself to ensure options exist or can be created quickly.

Do not base the success of the contract on any personal relationships. Have documented procedures to save you from vendor personnel changes. Goodwill is fine, but there has to be an understood minimum service, regardless of whether people like each other (or not).

Use deliberate tactics to keep the vendor honest. Your contract should index prices against competitor's products, but attend generic industry briefings as well. Much of the saving with a single-vendor contract is in avoiding the distraction of others. But make sure to achieve a balance so you can have confidence in your decision and defend it well. Remember TCO is not just about discounts and KPIs and that your internal processes have an impact too.

But it's not all about bashing the vendor. It is your responsibility to give back value as well. Do you have a success story you are willing to share with the industry? Would you mind being a reference site for example? Such testimonials are inexpensive for you to give and can be invaluable for the vendor.

With storage products looking increasingly similar, often it is the contract relationship that distinguishes one vendor from another. Using intent to manage the contract is guaranteed to avoid vendor complacency and reduce your TCO.

For more TCO information:

  • Featured Topic: Top 10 ROI pitfalls
  • A look beyond TCO and ROI
  • Hard to pin down TCO numbers

    About Bill Johnson:
    Bill is an IT Architect for Woodside Energy Ltd. in Perth, Western Australia. Woodside is Australia's largest independent oil & gas exploration company by market capitalisation. Bill graduated with an honours degree in Computer Systems Engineering from the University of Bristol, England in 1989. He has 12 years experience in the IT industry, is a member of The Councils of Advisors, and has published several articles on Palm applications in Windows NT Magazine. He was featured in the April 2001 edition of the Woodside company magazine "Trunkline".

    This was first published in July 2002

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