Vendor Management Skills

Vendor Management Skills vs. Team Management Skills

Many IT leaders struggle with the transition from managing internal delivery teams to managing an external service provider. They can hamstring the vendor and limit their effectiveness by micromanaging, meddling, or nitpicking the way the service is delivered.

Managed services agreements include the “Management of the Service.” Duplicating those management costs is counterproductive. If you can’t trust the vendor to manage their own delivery, they are probably the wrong vendor.

In theory managing a managed service provider is as simple as monitoring the SLAs and KPIs, but in practice, a successful client/vendor relationship requires collaboration and a willingness by both sides to help the other out.

The challenge is in finding the right balance: not duplicating management- but being active enough to show the vendor that you’re paying attention and that you’re willing to collaborate.

Here are 3 tips in translating team management skills into vendor management skills.

Avoid personnel management

In one awkward meeting a few years ago, one of my old clients volunteered their approval for one of my team members to take a vacation day. Personnel management is well outside of the purview of a client, and they clearly overstepped.

Some part of managing internal teams includes helping them develop soft skills and hard skills to progress their career. While that kind of development can happen naturally between an external team and an internal client leader, it isn’t the responsibility of the leader to make those investments.

A few clients over the years have acted as mentors to me, and they’ve been impactful for my development and for my career, but I wouldn’t have expected or appreciated any efforts to manage me.

Avoid Burning Platform Management

Threatening to terminate a contract with an external provider is equivalent to threatening to fire an internal employee.  You can say it once or twice, but by the third time, the threat has lost its impact and just serves to burn out the team.

Similarly, hissy fits, temper tantrums, and melt-downs do more to undermine the client’s credibility and expose a low emotional intelligence than actually inspire a renewed effort to improve. Vendors (and people in general) do their best work when they feel loyal and collaborative with the client, not when their job has been threatened.

Artificial deadlines and non-priority priorities have the same effect. For example, demanding some minor piece of documentation be complete by some random day creates a distraction from more pressing and important work.

Understand the vendor’s cost model

While an internal employee doesn’t bare any kind of extra cost when you ask them to do something outside of their job description, a vendor very much does.

Requests to exceed the agreement eat away at profitability, which affects bonuses for everyone on the team and probably a number of people you’ve never met. These requests put the vendor between a rock and a hard place.  On the one side, the vendor needs profitability and bonuses, and on the other, they need to please the client.

When vendors present an extra statement of work or upcharge, they are trying to cover costs that weren’t anticipated in the cost model. These fees, however, can also feel like nickel and diming. In some cases, the extra effort should have been included in the cost model, and the oversight isn’t the client’s fault.  Fairness in negotiating unanticipated costs will grow the relationship and pay returns in the long run.

Use empathy and leadership

A managed services vendor is an extension of your team. Invest in these relationships with empathy and leadership for the best results.

Published by Steven A Nichols

I am the founder of Banyan Business Outcomes LLC. I've spent my career helping technology companies get closer to their clients, and helping clients leverage technology companies to create value.

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