Friday, March 08, 2013

SOP Friday: Vendor Management and Coordination

One of the things you hear all the time with Managed Services is that you should manage the client's vendors. What exactly does that mean? What is "vendor management?" Well . . .

First, let's define what we mean by a vendor. By "vendor" we mean anyone that provides an important service or product to your clients, and that product or service is somehow related to the technology your support.

For example:
- QuickBooks, Business Works, MAS 90
- Line of Business applications (LOBs) such as IMIS, Dentrix, PC Law, Rent Manager, etc.
- Internet Service Providers
- Domain registrars
- Web developers
- Off site storage companies
- Product supplies such as Dell, HP, or CDW

The reality is: Most of the time, you will never deal with these folks. Except Dell. If you sell and support Dell hardware, being on the phone with Dell is a regular part of your job. If you sell HP or Lenovo, you need to make sure you really document the support process very well because you will use it so rarely that you won't remember the process.


Most of the time, you don't deal with these vendors. So taking over "management" of them is very easy, because there's no labor involved. But there are some key points at which it is critical that you manage these relationships.

Background posts.

Regarding LOBs, see the following blog posts:
- The Real Value of Managed Services (Line of Business applications)

- Managing LOBs Revisited

Regarding Third Party Tech Support, see the following blog posts:
- SOP Friday: Third Party Tech Support - Rules of Engagement

- SOP Friday: Third Party Tech Support - Documenting Calls

There are four important points at which you need to control or be involved in the vendor relationship. Most of this activity actually has to do with *documentation* and taking care of the little stuff that the client will never properly manage for themselves.

1. Buying and registering software
It is critically important that client software and products be properly registered to the client - and that you have access to this information and relationship. And, to be honest, it's important that you have standard processes so this information is available when there are personnel changes (including yourself). See the blog post "SOP Friday: Activating and Registering Client Software and Hardware".

But it is also important that you be involved in the purchasing decision whenever possible. There are products that work well together. There are products that have good cloud integrations and products with bad cloud integrations. Many LOBs appear to be reasonably priced but require hundreds - or thousands - of hours of customization. You need to be the client's advocate in making these decisions.

Unless you have a very tight niche, you can't be familiar with every line of business app out there. But your technical ability will allow you to ask some questions, and report the answers at a level that will help the client make better decisions than they could on their own.

2. Interpreting the language
We are a little flip when we tell clients that "we speak nerd-to-nerd" with vendors. But it's true. No matter how arcane the technology is, you are 100% more qualified to understand it and make good decisions than your client.

And vendors know this. Whether it's with sales or tech support, they can talk to you at a higher level regarding database structures, importing and exporting processes, file locations, permissions, etc. Vendors are used to walking end users through certain procedures, but it goes a LOT faster if you're involved.

3. When technical support is required
The earlier blog posts addressed many details of this. Obviously, the problem will be solved faster and more accurately with you on the phone rather than the end user. The key thing here is that YOU are in charge of their access to the client computers. You are in charge of when things are done. And you need to monitor it.

There's also the question of Rules of Engagement. Are you using a service contract paid for by the client (e.g., product warranty), or a contract paid for by you (e.g., an "incident" as a Microsoft Certified Partner [or whatever they call it now])? What is your procedure for each of these? Document it!

4. Managing important information
I can't count how many times we've had to straighten out documentation because no one knows the ISP, or the web hosting service, or the relevant passwords for these services. Or the code that gets you the platinum weekend service.

Or critical products and services are registered in the name of a former employee, or a former IT support company. It goes on and on. And the bad news is that this situation will get worse. Business owners (and their employees, and their tech support people), address a problem by finding some random product on the Internet, buy it, and never record any critical information. So when they need it again, they can't access it (even if they remember the product name). You people moving into the business world were raised with this approach to technology.

You need to have very standard procedures regarding documentation. It should be registered in the company's name with the administrator's email. That way, no matter what personnel changes occur, someone will still have access to the key information. Even if the owner dies. Even if a new tech support company comes in. Documentation, documentation, documentation.

Are You On The Clock?

One of the key questions in vendor management is the line you need to draw between "covered" and "billable" with regard to managed services. This is actually kind of a big picture question.

We include vendor management in our Platinum plan for one simple reason: When our goal is to cover everything AND reduce the cost of doing so, vendor management saves us more time (money) than it costs. That means that we almost never charge for anything related to vendors (tech support, service coordination, or monitoring work they have to do.).

As with all of our managed service plans, we do still charge for adds, move, and changes. That means that we can charge for labor related to major version upgrades and selecting new vendors. But we're very honest about giving away the hours related to supporting the existing setup.

Just as with any managed service, you need to draw the line as clearly as possible. You and your client both need to understand it. Luckily, unlike general tech support, most of your team will never have to make these decisions around vendor management. It is something for the owner and service manager to deal with.

For the most part, we give away the hours related to vendor management for two reasons. First, controlling all this stuff reduces our labor costs quite significantly. So we need to make it easy for the client to say yes to vendor management. It helps us support hardware, software, and services. In most cases we were going to have to engage 3rd party tech support for certain items anyway.

Second, we really want to "own" the relationship with the vendor. We want to know their processes, procedures, and tools. We want to know how they approach things. We want to gain knowledge that we can take to other clients, which makes us more valuable.

It's kind of interesting to contemplate: They client can never gain as much as we can from working with a vendor. We can solve things faster than the client because we understand geekspeak. And making the line of business apps work smoothly results in a happy client whose whole operation works better. If we're rigorous about documenting the process, the client has a better overall support system.

So everyone wins. There is no down side.

Do You Control Everything?

Some advisers say you should ultimate authority to choose vendors. They say you should literally be able to select which $150,000 line of business app the client will use.

I would never go that far.

Some decisions, like which anti-virus program we install, are pretty trivial. We've reached the point where 99% of the AV companies are 99% the same as all the others. So we install what we think makes sense for us. Our price list mentions spam filtering, anti-virus, and RMM (remote monitoring and management) without regard to specific brand names. And we have changed vendors as needed for OUR purposes without consulting the client.

But I would never presume to be the one to make a huge LOB decision on behalf of the client. I want to be involved. But I don't want to make that decision.

The biggest client we ever had paid us almost exactly $150,000 per year. (We fired them. Long story. Great decision.) But most of our clients pay somewhere around $1,000 to $8,000 per month. So I don't want to make decisions on their behalf that exceeds what they pay US in a year!

For us the line is pretty straight forward: In all areas where direct communication makes our job easier, we want to be involved. Where the client needs high level advice about a decision that will cost lots of money, we want to be the adviser and not the decision maker.

Obviously, in all of this you need to decide what's best for your company. And document it!

Comments welcome.

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