Squeezing Vendors Isn't a Good Idea

Ann All

Pushing too hard for steep discounts in outsourcing contracts is a no-no, as we at IT Business Edge point out time and time again. It often gets you fewer services or ones of lower quality, as several outsourcing experts noted earlier this week in a New York Times article. The same is true for hardware and software contracts.

 

But that doesn't mean folks won't try to squeeze their vendors.

 

That dynamic is illustrated in a laugh-out-loud funny way on this YouTube video spotlighted by CIO.com blogger Thomas Wailgum. It shows folks trying to negotiate with service providers for everyday purchases (meal, video, hair cut and color). My favorite moment comes in the last few seconds. A restaurant's chef is summoned to speak to a couple trying to lower the price for a sumptuous spread. The guy says, "We'll pay for it this time, but we'll need you to show us how you made it so we can do it ourselves in-house from now on."

 

If you must renegotiate contracts (and many folks will in the current economy), there are certainly smarter ways of doing it, as I mention in this blog post from October that includes tips from David Patzwald, CIO of Schneider Electric North America, and Ben Trowbridge, CEO Americas for Alsbridge. Several contract-related savings ideas are also included in this TechRepublic piece about shaving IT budgets, written by Scott Lowe, the CIO of Westminster College in Fulton, Mo.



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Jun 4, 2009 5:24 AM Dennis Stevenson Dennis Stevenson  says:

Ann,

This is SO true!  I think many people think vendor = someone to abuse.  Personally I try to think of vendors as "partners" - especially when they are service providers (i.e. I couldn't do it without them).

Just got off the Skype with my key offshore vendor talking about what I could do to go out and visit them again this year.  Invest in them... that's what pays dividends.

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Jun 11, 2009 1:30 AM Sonal Maheshwari Sonal Maheshwari  says:

Hey

That is so very true in this world. Clients more often then not think vendors are chiseling them with heavy price tags. No matter how much reasonable and genuine a vendor is, it's very hard for client to trust him.

This only leads to lower quality in output and ruining of relationship between the two. Instead what can be a possible solution to this is a long term partnership between the two with renegotiating of contract after small periods. Anyhow Client vendor relationship is very subjective and may vary at the different ends of the world.

@Ann: another good topic initiated.

Sonal Maheshwari

USourceIT

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