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Your Vendor, Friend or Foe?

By Drew Robb (Send Email)
Posted Aug 9, 2006


Vendors ... can't live with them, can't live without them. While you hear plenty of user grumbles, there are also an abundance of companies that have created successful vendor relationships that translate into good service and great deals. A healthy vendor relationship leads to good service and great deals for the user enterprise. How do you develop one without losing your shirt? Storage users share tips on getting the most out of a vendor relationship -- in storage and beyond.

So what separates the good deals from those paying at or near list price? Part of the reason may be a simple matter of time investment. Most storage managers and CIOs are busy people. They don't want to spend a lot of time being wooed by salespeople. And if that last deal left a bad taste, they may curtail their vendor face time even further.

As a result, Robert Stevenson, managing director of the storage practice at TheInfoPro(TIP), reports that only 4 percent of total time spend on storage is actually allocated to vendor negotiation and purchasing. That may not be enough to cement lasting relationships.

How Many Is Enough?

Before rushing off to merrily spend the week speaking to every vendor under the sun, moon and stars, however, Stevenson points out there may be an optimum number of relationships. According to TIP research, 50 percent of companies have between one and three vendors. Another 30 percent have four to six. About a quarter have seven to 10 storage vendors. Only 5 percent admit to having more than 10.

"There are only so many relationships you can manage," says Stevenson.

Tom Lindblom of CKE Restaurants agrees. As CTO, he oversees an IT backbone that supports a network of 3300 restaurants, including Carl's Junior and Green Burrito.

"We have one principal vendor, but we also have a secondary one to keep the main vendor on its toes," he says. "In addition, we use another company for hierarchical storage management."

The same holds true at Houston-based Stewart Transaction Solutions (STS), where the IT department serves Stewart Information Services' efforts to market and deliver property title and other services to realtors across North America.

"We typically have one big vendor plus a couple of minor ones," says Charles Curtis, enterprise storage team leader at STS.

The company has thousands of Fibre Channel ports in its SAN, and its data center is composed of thousands of servers. Curtis points out that having the vast majority of storage eggs in one basket isn't as bad a strategy as the old saying might lead you to believe.

"We can leverage our sheer size to frighten our vendor, as they don't want to lose us," he says.

Playing the Game

Most end users concur it is better to learn the rules and procedures of your vendors than to fight them. But they each have different ways of achieving that goal.

Lindblom, for example, noticed that the sales staff at his top vendor exhibited a definite preference to have his orders showing more software than hardware. He didn't know if that was related to commissions, incentives or company profit margins. But he took advantage of the fact and allowed sales some flexibility in how the final order was represented in paper. This led to higher discounts and more bang per buck.

"They seem to prefer more of our money to be allocated to software than hardware and it really makes no difference to us," says Lindblom.

In addition, he recommends paying close attention to the sales cycle itself. Perhaps things become frantic at the end of the quarter or year. Use these events to gain the best possible deal.

"If you buy on your time line not the vendors, you can gain big discounts," he says. "It makes sense to be flexible enough to time purchases for the end of the quarter or end of the fiscal year."

Curtis stresses the importance of managing existing storage capacity and planning well in advance so you always have plenty of space. This makes it a buyer's rather than a seller's market.

"If you have to tell a vendor, 'I have to have storage now,' you are not doing your job," he says. "We are never caught short."

Competitive Advantage

Brand awareness is another strategy that can pay big dividends. But instead of the end user being aware of vendor brands, make your vendors very aware of their competitors.

"Wear a competitor's T-shirt during negotiations to gain more savings," says Stevenson.

Lindblom takes this a step further. Whenever his main vendor pays a visit, he ensures they can always clearly see a SAN from a rival every time they visit.

"Make it shiny and the very latest and greatest model," says Lindblom. "That puts the vendor on best behavior, as they want to keep the other guy out of our data center."

Curtis, too, is an advocate of this approach. He gives an example of setting up a NAS test bed with SATA drives and the very latest technology. By showing it to his principal vendor, he got them to work hard in order to match it in terms of both performance and cost.

However, if a big vendor is obviously sagging in the market and is gradually being displaced by others, being upfront might not be the best strategy.

Patrick Copeland, senior technical systems specialist with the Integrated Waste Management Department of Orange County, Calif., prefers to keep his cards close to his vest. He characterizes his vendor mix as having one that is perhaps past its best and another that is up and coming. He keeps the new guy quietly in the background, ready to move in if the incumbent doesn't meet his needs or his budget.

"It's like we have another company in the batter's box," says Copeland. "Only time will tell whether they get a chance to bat or not."

Make Love, Not War

But for all the hard-nosed negotiation tactics, everyone stressed that at the end of the day, the vendors should be treated as friends, not adversaries. A softer touch at the close of the deal, for example, can pay off later in vendor goodwill. After all, that vendor may not be so understanding about your latest SAN glitch if you beat up the rep up over every line item. A little give and take is probably the best policy.

"You have to work with, not against, the vendors," says Curtis. "And if you have one really solid vendor relationship, it can save you during a crisis."

Such an approach can also lead to plenty of bonuses. Becoming a reference customer is a sure route to free goodies, says Lindblom.

"Another good strategy is to be a reference customer," he says. "You can gain expensive products for free or next to nothing."

Curtis sums things up by confiding that he has plenty of work experience on the vendor side of the ledger. He's been employed by such companies as HP, Dell and IBM. He knows how these companies work and what you can get away with.

"You really do have a lot of leeway to negotiate," concludes Curtis. "You can trade off purchases for additional valuables such as training. And lastly, never ever buy at list price."

The article originally appeared on Enterprise Storage Forum.

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