The growth of digital technology is requiring more businesses to work with technology vendors and to deliver digital products and services to their customers.
Choosing a technology partner for your business can be challenging. The pace of change in the technology world is relentless and new vendors with seemingly innovative solutions are appearing all the time. It’s a full time job just to keep up with it.
Regardless of the sector, it’s increasingly important for all business leaders to be well versed in technology so they can make informed decisions about buying versus building technology solutions, choosing the right partners and realizing a positive outcome or return in a timely manner.
I’ve encountered all these concerns over the past two decades with clients, prospects and partners — and have learned a few things along the way. As a technology vendor, my success is tied to the success of my clients and business partners. With this in mind, I’ve gathered some key insights to help business leaders make better technology decisions for your company.
1. Big, stable vendors vs. small, nimble vendors
Should you partner with a large, well-established technology provider who will run a formal, structured project or a small, nimble firm with less structure but more ability to be agile? There’s no simple answer that applies to all situations.
Big technology vendors are often viewed as stable and safer choices (and, therefore, creating more job security) for decision-makers. Higher costs associated with larger firms may make your return on investment (ROI) more difficult, whereas smaller firms that are quicker and often less expensive — make a positive ROI easier to attain — but potentially add an additional element of risk.
In the end, ask yourself these questions: What type of firm will work best within your company culture and what are the key drivers to your project’s success? If having a process with formal milestones and reporting are important and you can afford higher costs and longer timelines, then go big. If, however, you want speed and agility, enjoy the constant flow of new ideas and lots of flexibility — and you can sleep at night knowing that there’s some risk — then go small.
2. Financial terms need to be win-win
Too often, businesses are so focused on cost that they negotiate the vendor down to the point where the vendor isn’t making any money. You couldn’t be making a bigger mistake.
You don’t want your vendor under financial pressure – you want them focused on creating your solution. Understand a vendor’s cash needs. If you can’t afford the deal, then don’t do it.
Aim to structure your financial model with your technology vendor as a win-win. Motivate the vendor so that if the project is successful then the vendor should also be successful. This can be achieved through some kind of variable compensation for the vendor on the measurable success of the project. For example, if the ROI results in cost savings, consider compensating the vendor on a portion of the cost savings, or if the ROI is new revenue consider giving the vendor a portion of that revenue.
3. Customized solutions vs. adapting business processes
I’ve never met a client that doesn’t think they are somehow unique – their culture, business processes and organizational structure. This leads many clients to assume that the vendor should customize their technology to meet their unique requirements.
In some cases, customization makes sense. But in many cases, it’s better in the long run for the client to examine their behavior and business processes, and seriously consider altering them to accommodate the technological solution being considered.
Business processes are fluid and tend to evolve according to a number of criteria; some internal to the business (e.g., leadership style, employee experience, culture) and others external to the business (e.g., market changes, regulations, technology). When a business is considering a technological solution, it’s typically a good time to review business processes and determine what’s necessary and what should be open for re-thinking and streamlining. This is an important part of the ROI for any technology upgrade.
4. Security is not a contest, it’s a process
Security is a key topic in virtually every technology-based business that handles private client data or financial information. There are a number of ways you should be managing potential and existing vendors to ensure effective security systems and procedures are in place.
Ask vendors to provide you with the results of their most recent third-party security assessments. Security self-assessments are less reliable by themselves because they lack objectivity, but they can still contain helpful information. Security policies should be reviewed and assessments conducted on a regular basis, so ask your vendor about their practices in this area.
Due diligence should also include the vendor’s privacy practices and employee training programs. Privacy policies should be in place and the vendor’s staff should be receiving training on privacy policies and procedures.
5. Tips for engaging your new technology partner
So, you’ve found a technology partner and want to get your project off on the right foot. Now what?
Define the objectives and success criteria for each phase of the project and make sure to meet with your vendor partner and review/reward them for success.
Ask your vendor to create a visual representation of the solution so that all parties can sit in a room and view it, discuss it and make changes, if necessary.
Set milestones that are well defined and that everyone understands. Keep them short, no longer than 45 days in duration, and ask the vendor to meet with you at each milestone date. As part of this process, the vendor should showcase the product and regularly demonstrate to you and your team what progress is being made. This approach will help keep the project on track.
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