Without fail, every vendor I speak with is always keen to inform me of their strategic nature for their clients, their role as a “valued partner” and how the client regardless of industry or function would not exist without their value, unique differentiation etc., etc.
To test this, I regularly like to ask customers this question. “Does your CEO know or care which vendor you choose?” The answer may upset, and be a surprise to many vendors who overstate their importance to the client. Regularly the CEO has absolutely no role, knowledge or insight into vendor choice, and definitely no engagement.
To be fair, there is some context to be considered. It is not for all IT investment.
Whilst the answer for the majority of technology investment is no, for ERP, core banking, production platform investments and other 1000% mission critical functions, the answer to the question has to be yes. The relationship must be real. If not, that creates more problems than any other issues.
For virtualisation, visualisation, performance management, CRM implementation, customer experience, network performance management, and a very long list of IT and business technology investments, in reality the answer is a clear no.
Don’t be under the illusion that every technology related investment is the same; in fact the examples such are core banking are the exceptions. IT vendors should not completely despair. If the same question is asked towards other business functions and third party providers, such as recruitment providers, marketing content agency etc., the answer will be equally as disappointing to those vendors.
It is perhaps a reflection on the failure of technology to communicate strategic value, that due to the nature of the investments, the answer for Operational Technology in comparison to IT is typically different story, and an area that as ever, traditional IT can learn from, but has a poor track record of doing so.
History, the lack of awareness of technology investments, organizational structure and the vendors themselves are all reasons for the disconnect.
There is more bad news for the mid-sized vendor who believes he has the ear of the CMO, COO, CFO etc., the reality is that for even this part of the organizational layer, there is a lack of awareness aside from signing the (virtual) Purchase Order.
The lack of visibility is not a minor issue. It impacts investments, marketing, and the entire relationship with the client. It can lead to inefficiency in investments as unrealistic expectations. The impacts on innovation are also important.
Is the client more detached from your innovation than you believe. The answer again may disappoint.
Questions that the vendor needs to consider in the light of the detachment from the senior executive include.
- What does that mean for your level of “strategic partnership” with the client? Is it real, is it strategic?
- Can you change this?
- Is it practical to change this?
- Does your business partner have a similar level of relationship, or more importantly a similar level of detachment from the actual client experience?
- Are you wasting your time and capital trying to engage executives who are aspirational, rather than focusing on those who are operational and real users.
Most vendors of services to enterprises and agencies fall into the trap of significantly overstating their strategic importance to the client. As an economist, it is clear that this leads to significant inefficiencies in the relationship.
A vendor has to consider the true level of engagement, and once this is considered the next task is to determine how to more realistically set expectations.