Breakups are tough, be it business or personal. But there was a time when ending a business relationship was akin to a messy divorce. In the fourth season of Mad Men,Roger Sterling pleads with cigarette maker Lucky Strike to not leave his ad agency. “You just don’t end business with people after 25 years. We’re family,” he pleads. “I invited you to my daughter’s wedding!”
Just as the time of skinny ties and a drink and smoke office culture has passed, so has the time when decades long business relationships were the norm. Markets and the competition develop faster than ever. The Economist has dubbed it “the creed of speed.” And the message for IT firms is that to survive and thrive, relationships with vendors and suppliers must come under increased scrutiny.
Disloyalty? On the contrary. Remember that every relationship is a two-way street. If your supplier fails to meet clearly defined expectations, they are letting you down – not vice versa.
When do you need to consider severing ties? If the thought is even crossing your mind, it signals some level of discontent in the relationship. If that’s the case here are four steps to follow as you evaluate whether to call it quits.
1. Honey, we need to talk: If the supplier has been a steady performer that only recently has begun to disappoint, a frank discussion that resets expectations may suffice, says Tim Norton, director of vendor management at UPS. “You need people on both sides willing to look critically at the fundamental client/vendor relationship and not just the contract or metrics,” says Norton. “If you can work together to make adjustments, implement controls, and reset expectations, then saving the relationship may be the appropriate option.”
2. Are they really into you? In 2012, 69 per cent of UK businesses dropped IT suppliers due to poor performance. The number one reason the relationship breaks down is a failure by vendors to adapt to a company’s unique business processes. It may stem from redirecting attention to bigger, newer clients or that they are simply coasting on past business successes. Reduced hands-on support, having your account delegated to junior staff, or additional, unexpected charges not stipulated in your service level agreement are all major alarm bells. The old adage that you are only as good as your last game should be applied ruthlessly.
3. Play the field – before you breakup: While inadvisable personally, in business this strategy is a must. Make an honest assessment of what the supplier provides your business – then decide if their competition can exceed it. If you aren’t certain, then stay put for now, and avoid letting perfect be the enemy of the good. However, if you do decide to pull the plug, managing the transition will be key, especially if they are providing your firm with mission-critical services. Accept that you will need to remain with your subpar vendor while you train staff and quietly lay the groundwork for a seamless transition.
4. Embrace change: Chances are that there are competitors who can provide better, cheaper service to your firm. Learn from the breakdown of the relationship by putting in place new processes for how you evaluate your vendors moving forward. That starts with more clearly defined performance indicators and regular (at least annual) reviews. Your firm retains clients by offering superior service – it’s reasonable to expect the same from firms you employ.