6 Keys to Working with Vendors in a Next-Gen Enterprise IT World

As IT departments become "brokers" rather than single-service providers, vendor management skills are becoming paramount. Here's how two institutions deal with contracts, vendor relationships and more.

• By Dian Schaffhauser
• 05/25/17

When Educause called out "next-generation enterprise IT" as one of its top 10 IT issues in 2017, the higher education technology association also asked members of its advisory board to explain just what's meant by that. Michael Quiner, CIO at Oregon's Linn-Benton Community College, referenced the scene in Miracle on 34th Street, where Kris Kringle, working as a department store Santa, begins sending shoppers to other businesses that have what they can't get at Macy's. "The new baseline for enterprise IT is to anticipate the needs of the institution and look outside the services and systems traditionally found in the IT department," Quiner explained. "The new goal of enterprise IT is to make the college's 'Christmas list' a reality by looking beyond what our campus already has on our IT shelves and by becoming a broker instead of a single-service provider."

That role of "broker" is at the heart of adaptive vendor management, calling for skills in management of contracts, relationships and performance. During last year's Educause Annual Conference, representatives from two institutions — New York University and George Washington U — shared their approaches for working with vendors and laid out how they're embedding their brokering know-how into the deals their IT organizations cut.

1) Set Contract Management as the Baseline

Both Dana Gangemi, senior manager of contracts and vendors at NYU, and Bill Koffenberger, director of service and contract management in GW's division of IT, consider contract management a "leading strength."

"We started off filling a void," said Koffenberger. "We had a situation where nobody was actually reading the contracts." The general counsel philosophy at that time was, "If it's in the contract, it's not that risky." Although the university has specific policies regarding "delegated signatures," Koffenberger noted, the bottom line was that the policies weren't followed very well. Seven years ago, he "inherited" a box of agreements, and his team began sifting through those with a "paralegal approach" In fact, his first hire was somebody with a law degree who could understand the contract language. Gradually, a highly informal environment began to become "more formal."

Apparently, that effort didn't go unnoticed. Nearly three years ago, staff working for the chief financial officer, who acts as the signatory for the institution, began asking Koffenberger, "Have you seen this contract?" His response: "No, it's not a central IT contract." Their response: "Will you look it over? He won't sign it until you do." Now, the CIO's sign-off is required for all IT contracts in the university, and Koffenberger's group sees most them. "We're a victim of our own success," he added.

2) Establish Your Vision

Koffenberger and Gangemi place a premium on setting a vision for their work in IT vendor management, an uncommon endeavor for this function within the institution. And both their visions include trying to generate greater value.

In the case of NYU, the vision references a move away from a "processing house mentality" and instead serving as the experts in negotiation, which includes raising questions and holding "both clients and vendors accountable." For example, said Gangemi, her team will be proactive and reach out to business units before a contract needs renewal. While she doesn't want her work viewed as a "bottleneck," she also wants to help those business units understand what they're buying into. "My own personal mantra: No vendor should ever be comfortable. Whether you've been with our university for 20 years or you started 10 months ago, I don't care." The value-add comes when business units save money that they wouldn't have seen if they hadn't used her services.

In its vision, GW puts more of an emphasis on developing "consistent, efficient, repeatable" processes. That includes development of templates for statements of work (SOWs) that cover milestones, deliverables, checkpoints and structures for payment. "We started off being the document reviewers," noted Koffenberger. The idea of having university templates for SOWs proved amazingly hard to do, he said. One obstacle to overcome: The university procurement department "didn't like what we were doing for a long time. They didn't trust us." Once procurement realized Koffenberger's team was willing to do a lot of the heavy lifting, "they were more receptive. We provided our value by helping them do their job."

3) Build from Your Position of Strength

Once the core contract services have been baked into the purchase process and other groups on campus have begun buying into what the process is trying to accomplish, it's time to expand management areas.

NYU has two current areas of focus. The first item, relationship management, requires figuring out when to engage with vendors. "When do we share good information and bad information on their performance?" asked Gangemi. The approach her team has taken is to stay in a "regular cadence" with the vendors through phone calls and "constant touch points." Portfolio management, the second area of focus, goes back to the overall vision of adding value. As she pointed out, "Three hundred and eighty-six contracts is a lot to manage." Her team continually examines where there might be gaps and overlaps and where services are already provided by another vendor.

GW, on the other hand, places more attention on performance management and developing the skills of "vendor management leads." The first emphasizes performance metrics and negotiation. The second one is a bit trickier. As Koffenberger explained, the lead role is for somebody who can take the work from concept through fruition. "We have seven different sign-offs," he said. "Everybody and their uncle is suggesting language. There's lots of nuance and detail." Therefore, those leads are people who can move light and fast and manage "in our somewhat clandestine and archaic model [with no one] wanting to talk to each other."

4) Use Risk as the Lever

Gangemi and Koffenberger both view vendor risk management as an "improvement opportunity." While they want to get better at it, they also recognize that risk offers a route to greater campus collaboration.

GW already does a decent job on the information security side of risk management, said Koffenberger. What it wants to improve is figuring out how viable a given company is and how much it might be stretching the truth about its services. "We can't wait for you to figure out how you're going to provide that service," he said. "We want to be able to find another vendor with another solution." His motto: Trust but verify.

Vendor viability is also a concern at NYU, especially when the technology under consideration is a completely new category, which happens with increasing regularity. However, another area of risk is data usage — specifically, what happens to it when the contract is canceled. "I was looking at a contract a month ago, which said, 'When you want to cancel your contract, we'll blow away your data. Poof! It's gone.' That was the actual text," she recalled. When it comes to data, she encourages people to find out how it's being protected and how long it will take to get data back if the agreement is ended.

5) Earn Your Entry into the "Room"

Becoming an integral part of decision-making conversations regarding the use of vendors has been an ongoing process for Koffenberger and Gangemi. Their participation is important because it helps them to understand what's coming for their institutions.

Learning how to speak "intelligently" to the institution's business units has played into success at NYU. For instance, as part of its relationship-building work, Gangemi's team has spent a lot of time developing portfolios of contracts specific to each organization on campus. That way, team members can take those documents into meetings to say, "You have these contracts. Let's talk about how they relate [and] don't relate [and] where we can cut services or beef up services because the demand is there." Those conversations enable the university to squeeze greater value from its individual contracts.

Her overall goal is to be "at the table when new vendors are coming on board or giving a presentation about how great their services are," Gangemi noted.

"Vendors will take advantage of a decentralized university with the snap of a finger," she warned. "What the school of nursing paid for something is maybe not the same as what the school of medicine paid."

To counter those maneuvers, Gangemi's group participates in a technology procurement committee made up of representatives from various schools across campus. They use that monthly meeting to share what they're working on and learn what everybody else is working on — "so we're all on the same page," she said.

Those approaches wouldn't work at GW, suggested Koffenberger. "We've got to be more backbone [than muscle] and [stay] behind the scenes in helping folks. At present, we don't have ability to force ourselves to the table. I don't think it's necessarily a bad thing. It is something to be aware of."

That's where the contract skills come into play. "We really want to put ourselves out there as a group that can efficiently review these agreements and get to the point where contract reviews for legalese become very quick," he explained. One form of help that seems to be appreciated is to point out the "gotchas" in the contracts, such as helping people understand sneaky exit clauses: "You can cancel, but you agree to pay the rest of the term." Another form of help is suggesting clauses tied to HIPAA and FERPA. In those cases, Koffenberger often works with the IT security folks. But it's never a mandate. "We're more on the suggestive side," he asserted.

6) Believe in a "Buyer Power"

As these two universities build up their adaptive vendor management strength, they continue marketing and selling their groups throughout the organization by showcasing the savings they're helping generate as a way of proving their worth.

The best brokers on campus, observed Gangemi, are those who can "document what the vendor is doing great and not doing so great" — even if it's just maintained in "something as simple as a spreadsheet."

"We want [vendors] to be accountable. We're writing checks, and some of these are very big," added Koffenberger. The idea that contracts will be renewed again and again isn't an option anymore. When a school has two ERP systems running "and nobody can explain why," something needs to change and "somebody is going to lose out." And listening to him, one suspects it won't be the university.