By the Computerworld Philippines Staff
May 1, 2008

For three IT managers that recently participated in Computerworld Philippine’s monthly CIO Roundtable, the perfect IT vendor is one that can effectively act as an extension of the company’s IT department; is willing to share the risks; and can keep an open line of communication.

“Keeping a very open and healthy line of communication between the users and the suppliers is the key to understanding between both parties,” says Arlan C. Dimalanta, IT Manager of Philusa Corporation, and one of the three roundtable participants.

The other two participants were Christopher V. Eslava, IT manager of the SYSU Group of Companies and James Guiab, chief technology officer of Digital Paradise Inc. (Netopia)

Describing the performance of suppliers nowadays, Eslava says that while the quality of after-sales service has likewise improved in terms of timeliness and in the technical training of its after-sales support team, the sales people should be trained not only on how to sell but on what they are selling. “They lack the technical background on the products they are selling,” says Eslava. “So what happens is we have to learn about the technical specifications ourselves. When it comes to hardware, they should be the first to know about the trends or be the ones who have the technical expertise.”

When asked about the qualities they look for in selecting a vendor, Netopia’s Guiab says that an ideal vendor is one that’s willing to share risks with him. “I’m looking for vendors who are willing to share the risk with me. I’m looking for vendors who understand my business; that is, of course, over and above the typical customer service and customer satisfaction.”

While the three IT experts discussed about their frustrations when it comes to their IT suppliers, they also talked about the positive side of their suppliers, such as offering a broad range of products and services that suit client requirements.

Read more about their candid opinions in the excerpts that follow:

CWP: Based on your experience, is the gap between user expectation and supplier or vendor performance widening or narrowing? To what do you attribute this?

Dimalanta: The gap is actually narrowing; I attribute this to two key ingredients: communication and education. When the people in our organization are educated about what is now available and possible, their minds open up to possibilities for solving problems and improving processes. Keeping a very open and healthy line of communication between the users (what the organization expects) and the suppliers (what it can impart and deliver) is the key to understanding between both parties. Solutions, whether they are services, products or a combination, are thereafter implemented and delivered better.

Education happens, and it happens well if there’s good communication. So I believe the gap has definitely narrowed; probably 10 years ago, people would have been scared of what technology can bring or the price of technology scares them, but this is really changing.

Eslava: The gap between user expectation and supplier performance has generally narrowed. Suppliers now provide a greater variety of products suitable to the client’s requirement. The quality of after-sales service has likewise improved in terms of timeliness and the technical training of its after-sales support team. Also, while before we largely rely on suppliers for technical support, now the dependence on the supplier has decreased because end-users today are more IT-savvy or have the basic knowledge about computers.

Guiab: I used to be on the supplier side at one time. You buy from me, I deliver it, and if it’s busted, I’ll fix it. When I joined IBM, I was the only one selling services and that’s where, I believe, the supplier and vendor relationship started to grow as it moved toward partnering. When I was on the supplier side, I thought it would only benefit the supplier to have a relationship with the end-user; now that I am on the end-user side, I realized that there are also advantages in maintaining a good relationship with my supplier. Today, there are fewer suppliers who plainly sell, and these people end up getting fewer customers than those who have relationships with their vendors.

CWP: Are you saying that the building of relationships is driven by competition?

Guiab: Partly, yes, but I think it is also a win-win thing. You see, a supplier will not be able to sell if he does not build relationships with his clients while I, as the user, may not get the right technical support or the information I may need if I don’t have a good relationship with my vendor. So if I have good relations with the vendor, he will tell me what product is good for me, what I can gain from it, and how it could work for me—he will go beyond telling me what he wants to sell me. What I would like to see less of is us worrying about IT. Sometimes we, as IT managers, are guilty of specifying our technical requirements. I don’t think we should do that; what we should do is bridge business and IT and let the suppliers worry about IT. Why do I say that? I do not know what their product is and I do not know what is best for me; for all I know, there may be a product that better fits my requirements. So what I want to see more of is, when I go to the vendor, they would be the one to tell me what technical solutions would best fit my business requirements. Then, as IT manager, I would then evaluate the technical solutions that they think would suit my needs.

CWP: But do you think the suppliers today are capable of doing that?

Guiab: That’s a very good observation. I think in the same way that the IT manager should concentrate on understanding their business and what the business requires, so should suppliers understand their product, every little detail about it. What I see happen in the industry is that the IT managers end up being more knowledgeable about the product than the vendors themselves. Since they are the ones who created the product, they should have better understanding of it and be able to tell me about how it would work for me and not wait for me to find out.

CWP: How would you describe the way you manage your company’s relationship with a supplier? How do you measure their performance?

Dimalanta: There is no mathematical measurement for supplier performance at this point; we just base it on the meeting of the objectives and deliverables set forth.

Eslava: We try to measure their performance in terms of timeliness in delivery, after-sales service, and, of course, the quality and price of the product. Continuous communication—even when I do not have any requirements to purchase yet—is also a plus. James (Guiab) also mentioned the performance of suppliers in terms of their technical know-how and I agree with him, because in order to be able to provide efficient after-sales support they should know their product well.

CWP: If this is the reality and some vendors actually do not know the product that they are selling, how do you address this?

Eslava: We end up providing the information that they cannot give us, we look at trends, what new technologies could work for us, and so we have to do the research.

Guiab: That’s a reality also on the vendor side, what they should have is a good organizational and communication structure; so that when I ask him a question—he may not be able to get back to me upfront but he should have an “egg head” behind him who can answer my questions. The problem is the “egg heads” in the US do not care too much about the salesmen in the Philippines because they only sell something smaller. So, I think that’s where the problem lies—the link between the salesman here and the egg head there; if it would be impossible to have the egg heads here, the link should at least be good, so the salesman could also get the right support.

CWP: Say if I were to buy an accounting system and there is a locally-developed software, are you saying it would be better to buy from the local developer because the “egg heads” are here unlike the big ones?

Dimalanta: Not necessarily. Say with us at Philusa we are using SAP; the egg heads are, of course, not here but how it works is we find a good local partner. So we did not engage directly with SAP but maintaining a good relationship with their partner and their team helps us in the implementation and support.

CWP: Are good local partners always available?

Dimalanta: For some products, yes.

CWP: Is that a major criterion in choosing suppliers?

Dimalanta: Yes, because it all boils down to customer service and satisfaction.

Guiab: It’s important because you can’t buy what you don’t understand.

Dimalanta: It’s the same thing when we purchased a number of IBM machines; the support we are getting from IBM is the standard support, but the “real” support that we want out of a relationship, we get from a partner.

Guiab: That’s because partners can focus on a product line, while the vendors spread themselves too thin. When a vendor partners with a distributor or a reseller, one of the things that they expect from the reseller is that they have to brush up and do technical support, but the problem is they sometimes fall back into the same hole because they have 101 products that they distribute. So if you are a distributor who supports one or two products, I would rather get you than partner with a supplier who has 101 products that he knows little about.

CWP: Apart from the traditional issues of meeting the conditions in the contract and delivering a product that will actually work, what are the top three qualities you look for when selecting a supplier?

Dimalanta: Customer service, customer satisfaction, and customer relation.

Guiab: I’m looking for somebody who’s willing to share the risk with me. That is the type of vendor I’m looking for, somebody to whom I can say, “OK, I will buy your system and pay you if it works or, if not, I can take money out of it.” If you look at my vendors now, I encourage them to take some of the risk so instead of say, selling me a printer I say, “instead of you pricing it per printer, price it by the number of pages that comes out of your printer,” because if your product is really good, many would want to print out of your printer. So I’m looking for vendors who are willing to share the risk with me. I’m looking for vendors who understand my business; that is, of course, over and above the typical customer service and customer satisfaction.

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