The IT Agenda: Protecting IT Budgets From Greedy Vendors

Face it, most vendors are 'in it' to make money, so here are some tips on how to save your hard-won budgets from being snarfed up by those money-hungry outsiders.

July 1, 2005

3 Min Read
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Actually, I worked for one of the "good guy" IT consultancies. But I'm not naive. I know there are plenty of vendors, VARs, consultants and service providers out there, all with a single goal: to separate you from your money. If they lose you as a future customer or can't count on you for referrals, they'll just move on to the next sucker. So here are some lessons from our Defense Against the Dark Arts course:

» If it sounds too good to be true, it is. In my previous IT management position, I was approached by a managed security provider so desperate for business that it offered the old "free initial consultation" come-on. After doing our due diligence, my colleagues and I discovered that the MSP hadn't worked for any companies our size; its references weren't exactly glowing; and, most unimpressive for a security company, it didn't run background checks on its employees. So beware if you think the shell game is history--it's just been reborn in different forms, all of which result in lost time, leaked business intelligence and, ultimately, wasted money. There really is no such thing as a free lunch--or even a free snack.

» Play it close to the vest. Don't ever, ever, ever let a vendor know your budget for a particular project. And if you do, don't be surprised when the vendor's quote comes in right at that number. The "bad guys" have learned, in Evil Marketing for Beginners, never to set pricing based on actual cost. They've been taught to find out exactly how much the client can spend--and to get every last dime. This makes for psycho-inflated profit margins, of which Voldemort, Sauron and Darth Vader would all approve.

In fact, Advanced Evil Marketing educates vendors on an even more dastardly approach: to base prices on predicted customer savings. If the customer can save $200,000 annually by using a particular product, for instance, who cares if that product costs only $10,000 to produce? Price it at $150,000, and the client still saves $250,000 over five years. By Grabthar's Hammer--what a savings! (Clearly, I've been watching too much sci-fi.)

Don't share management mandates with vendors either. If, for example, management decrees that you implement a helpdesk by year end or you're out of a job, and you let that information slip to a potential helpdesk vendor, you can bet the vendor will use that info to jack up prices or put some other premium on the product. It's evil ... er, human nature.» Manage your vendor relationships. There's not a vendor rep out there who won't tell you he or she is in it for you. "Keep the customer satisfied." "We aim to please." "The customer is always right."

Baloney! The vendors are in it to make money, though the good ones understand the benefits of providing quality service and developing solid, long-term relationships with their clients.

Take the lead in setting project deadlines and SLA standards and holding providers accountable for timely delivery of quality services. Expect to pay going rates, but build in penalties for poor performance. Finally, sign on only with vendors you wouldn't want to leave, and be prepared to switch if a deal goes south. There's nothing evil about that.

Jonathan Feldman is director of information services for the city of Asheville, N.C., and a contributing editor to Network Computing. Previously, he was director of professional services at Entre Solutions, an infrastructure consulting company based in Savannah, Ga. Write to him at [email protected].

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