Everyone thinks their own baby is the most perfect, handsome being ever to have come into the world, but the truth is that newborns often look rather squashed-up and, not to put too fine a point on it, a little bit ugly. Most of us just don’t have the courage to tell the parents.
Anthony Abbattista, though, is not one to shrink from telling it like it is. The VP of technology solutions at Allstate, North America’s largest publicly held personal insurance company, used this analogy recently when describing his firm’s collaboration with Tibco Software on the integration of its ActiveMatrix product with Microsoft’s .NET environment.
“We’d been having listen-to-each-other days and that had led to Tibco’s collaboration with Microsoft,“ he said. “When they showed us what they’d got, their first question was: ‘Isn’t our baby beautiful?’, and we said: ‘Actually no, it’s wrinkly and quite ugly’.”
Abbattista was using the point to illustrate why his company had been working with Tibco for the past four years, when the vendor didn’t have a track record yet in the insurance sector. In short, he likes the firm’s willingness to change. “Tibco has the eagerness of a start-up and the follow-through of a partner,” he told the vendor’s user conference in San Francisco in May this year. “They’re long on vision; they’ll listen, collaborate and make changes.”
For an IT shop like Allstate which is 50 per cent Java and 50 per cent .NET, that was important, as Tibco technology was forming the basis of Allstate’s enterprise service bus. Of course, as one of the largest IT users in the US with nearly 40,000 employees, Allstate can perhaps expect partners to design their products with it in mind.
But not all vendors are so open to this kind of collaboration. One former senior technology director of a large oil company recalls going to SAP’s European headquarters in Walldorf, Germany with his fellow executives early on in their relationship and telling the enterprise applications vendor its demands. “We expected to have direct input into their product strategy. The answer came back quite clearly: ‘No’. We were just another customer to them,” he says.
So what can you do to get vendors to listen to your point of view and incorporate your designs into their product specs, and what are the barriers that sometimes stand between a collaborative relationship between supplier and buyer?
Tricks of the trade
Whether you’re timing negotiations to coincide with a vendor’s quarter-end, doing a little deep reconnaissance to find out the real price of software or doing a deal on bundling services, there are some good tactics that can make a buyer’s position stronger. The most important thing to remember is that you’re in control.
Doug Mitchell, author of Confessions of an Ex-Enterprise Salesperson, says: “Buyers have absolute control of the purchasing process because enterprise software companies aren’t only competing against each other for your dollars, they’re competing against agile hosted solutions that are picking off their potential markets piece by piece. The enterprise software wars are no longer about features and superior technology.”
While it’s not all about price, understanding where the vendor is coming from can put you in a position of power. For example, Andy Hayler, author of the Andy on Enterprise Software blog, recommends waiting until quarter-end when salespeople are keener to secure a deal. “People will be a lot more flexible on 31 March than on 1 April,” he says.
“The main thing people don’t always do cleverly is create an open competition between vendors,” Haylor adds. This means acting early. If you’ve already made your choice and ask your procurement department to go through a token competitive tender, with the purchasing chief looking for a 20 per cent discount, you’ll be disappointed.”
Ambiguity also comes from the fact that software has no set price. For smaller vendors, Doug Mitchell suggests a senior executive can make a decision to give away the software wholesale, so play on this fact. For larger vendors, he recommends finding ‘fluff factors’ in the price. “If pieces of the software have been broken out into modules, find a way to lump in what you need and demand a discount.”
However, Hayler points out it can be difficult to discover prices for software. “You never really know what the list price is. A typical vendor contract contains a confidentiality clause that says you can never disclose price terms to anyone else. So it’s an individual negotiation.”
“First of all, you’ve got to have a degree of realism about the scale of the vendor and the amount of business you’re providing to it,” says Andy Hayler, former senior technology consultant at Shell International and now CEO at master data management consultancy The Information Difference.
“If it’s a huge vendor, you’re going to have very little input but that’s not the case with smaller companies. If you’re customer three versus customer 300, you can have a significant amount of clout,” says Hayler.
Hayler spun data warehousing vendor Kalido out of Shell in 1997 and he recalls that in those early days the influence that its first flagship accounts like BP, Unilever and Philips had was huge. “At the user group each year we would stack up all the potential things we might do and get people to vote on them. That was genuinely not just window dressing. Later, those key accounts became our customer council,” he recalls.
However, it’s not smaller vendors that are the problem but the top tier, where the building up of sheer scale and the dwindling influence of independent user groups has resulted in little sanction on the giants’ actions. At this level, according to David Roberts, head of blue-chip user group the Corporate IT Forum, even the biggest users can struggle to have an influence.
“It’s still the case that certain organisations can talk to vendors on a one-to-one basis and make it work a particular way but you’ve got to be a truly global organisation with a massive spend,” Roberts says.
Paul Simmonds, chief information security officer at AstraZeneca and a co-founder of security industry pressure group The Jericho Forum, agrees with the downbeat assessment: “The reality is there are not many out there than can influence the big boys,” he says.
U-turns of our time
Chancellor Alistair Darling may have perpetrated one of the most spectacular U-turns of our time in trying to claw back ground after abolishing the lower rate of income tax, but IT vendors have done their fair share of voltes-face, from Microsoft’s rapid support of the worldwide web after Bill Gates had decided everyone would be using MSN, to IBM’s transformation into a software and services company from being the original supplier of ‘big tin’. Here are three notable recent U-turns.
Microsoft’s Software Assurance Programme
In 2001, the Corporate IT Forum had a question in one of its standard Q&A sessions about Microsoft’s new Software Assurance programme. Analyst Gartner had already put out a note saying there had been “not much change” in the firm’s licensing but the questioner couldn’t work out how it had reached this conclusion. Three months and several user workshops later, the Corporate IT Forum found that members would experience a massive rise in their licence costs of as much as 255 per cent. The Forum’s membership asked its management to take the information public and articles appeared in worldwide media, including the FT and the New York Times. The Forum’s chief executive David Roberts says: “Microsoft didn’t like what we were doing, but as a result they recognised our numbers and they extended the time period and changed the rules so it was more tolerable.”
The Jericho Forum and security
Fed up with the outdated ‘big fence’ attitude of the security vendors, a bunch of companies including ICI, Standard Chartered Bank and the Royal Mail formed the Jericho Forum. “Big corporates said we don’t want this. We’d been told by the business we needed to collaborate and that kickstarted a whole discussion about how we would operate in a perimeter-less environment,” says Paul Simmonds, one of the founders.
Windows Vista bundling
You could fill an entire magazine with Microsoft U-turns but one of the most dramatic was over Windows Vista. Microsoft perhaps expected it to be a run-of-the-mill upgrade cycle, but there was such resistance to it that Dell, HP and others that had switched their whole lines over to Vista reintroduced XP machines last year.
However, even if you can’t directly influence a vendor, the membership -organisation offers a good fallback position for creating collaborative pressure, argues Allen Brown, president and CEO of vendor and technology-neutral consortium The Open Group.
“At The Open Group you are part of a membership forum with over 300 members, whereas on your own you are just one voice out of dozens of people,” says Brown.
In his 10 years at the helm, Brown says that The Open Group has changed considerably from a primarily Unix-focused group with “a lot of vendors sitting on the board to make sure we didn’t screw around with a $30bn market” to an architecture-focused group that considers the bigger themes of interoperability, information flow and enterprise architecture.
The Open Group’s Architecture Framework (TOGAF) for developing IT systems has been gaining in popularity, with pressure being brought to bear on vendors from its adopters. “Although vendors prefer to use their own proprietary frameworks, more and more their customers are asking for TOGAF in RFPs as it’s an open architecture framework,” Brown says.
Brown contends that TOGAF has “changed an entire industry”, pointing to an American SAP user group survey that found that 70 per cent of respondents -using architectural frameworks saw TOGAF as number one. SAP’s New Leaf project is an effort to build an enterprise methodology based on TOGAF while a survey by Indian offshoring giant Infosys recently concluded that TOGAF was a de facto standard.
Then there are the specifically targeted organisations such as the Jericho Forum, described by Paul Simmonds as “a one-issue pressure group, driven by the users – although it’s a very large issue”.
Breaking down walls
The Jericho Forum was formed by a group of large organisations four and a half years ago in response to vendors constantly pitching perimeter firewalls, when secur-ity chiefs were being told by their businesses that they needed to collaborate beyond the firewall. Suppliers weren’t listening and Jericho decided the industry had to react. Simmonds says vendors would say “you’ve got a problem – we have the solution” which usually ended up being “really nasty”. In contrast, Jericho “spent a year in purdah defining the problem”.
“In the early days, when we were trying to describe the problem, we’d describe it in our own industry terms,” says Simmonds. “Standard Chartered had one take on it, Royal Mail another, and at [Simmonds’ former employer] ICI we had another. So we talked about it and chunked it up to the point where we were defining it as a genericised business problem. Not only would it then bump up our buying power, but when we talked with one voice we’d already done the hard work stripping out the business part of it.”
Lots of hard work and several positioning papers later, Jericho’s 11 Commandments are widely accepted as a key security product evaluation guide. Simmonds says several startups are developing -directly to Jericho specifications – and he even attributes the change in focus from Symantec Norton AntiVirus versions 10 to 11 to Jericho. “You just have to look around and see what is being built to work in a collaborative environment outside of the perimeters. They are all in some shape or form influenced by Jericho,” he says.
Jericho had to take positive action to make suppliers sit up and take note. So what is it about supplier/buyer relationships that act as a barrier to greater collaboration? According to the Corporate IT Forum’s Roberts, it’s the lack of information and the difference in expectations.
“The supply side of the business works on the basis of treating each customer as an individual and keeping them away from each other,” he argues. “That leads to each contract being unique. Another problem is the disparity between the supplier and the user community in the way individuals are incentivised and rewarded.”
As a result, he says, suppliers are very protective of the relationship with particular customers. “Most customers know one or two others, but once you know 25 you realise you all have strengths and weaknesses with the supplier. Then you can define a reasonable best expectation.”
The Corporate IT Forum has a set of strategic supplier relationship groups for major vendors like Microsoft, Oracle, BT, Dell, IBM and EDS although these groups are more about sharing experiences than directly influencing vendors. “For me, the most best way to improve your position with suppliers is by talking to people like yourself in similar organisations and sharing what you understand to be the way the supplier works,” says Roberts.
Whatever method you choose to get through to your vendor, the consensus suggests that open warfare is not a good option. Some organisations, for example, have attempted to use the press and public forums to air grievances with suppliers. The London Borough of Newham famously made Microsoft sit up and take notice when it publicly threatened to switch from Windows and Office to open source operating systems and application software for its 5000 desktops, but its current CIO Geoff Connell now admits that, on its own, the council is not big enough to influence its suppliers.
In a recent campaign to improve Vista application compatibility among its line-of-business vendors ahead of the council’s rollout of the Microsoft operating system, Connell admits that it hit some difficulties. “It’s a chicken-and-egg situation. Suppliers will not tune in until a significant proportion of their user base is pushing them,” he says.
Connell eventually had success working through Microsoft with other suppliers and cites the example of public-sector vendor Anite Systems. “It was very tardy in making its applications compatible, even in producing a roadmap. Now it’s catching up rapidly, telling us what’s compatible now, what it is testing and what’s on the roadmap,” he says.
Andy Hayler agrees working with vendors can have an impact. “If you’re an active reference customer, doing reference calls and talking about your experiences, then you’re listened to more than others. But it takes time to build up that kind of relationship.”
Others see these kinds of public engagements as a symptom of a good relationship, rather than a contributory factor. “At the end of the day, working with innovative partners and showing up together is a two-way street,” says Allstate’s Abbattista.
“Done right, it helps us both build our reputations. I don’t think speaking at events is the basis for a great relationship; I do however think it is affirmation of a great relationship.”
Abbattista’s advice to others looking to make the most of a vendor relationship is typically forthright: be up front. “Just be honest and have the fierce conversations that all good relationships need to survive,” he says.
“We are very clear about our needs, desires and issues. We expect our partners to listen and either act or offer suitable alternatives.” Vendors take note.