Lockstep

Our tech-driven world requires the “dance” to shift away from the individual and into the collective. The tech capability of any single organisation is governed by a collection of players who must now be in lockstep with each other. Sadly, many of these players are not. They dance to their own tune, flooding organisations with technology and services that are not compatible with the organisation’s overall strategy or systems.

Technology must be deeply integrated with an organisation’s people and processes. This fundamental need not being met has seen many organisations want to move away from existing vendor contracts in favour of more flexible service agreements, which align more closely to their strategic goals. Some organisations act on this desire by converting License contracts into Service Agreements, but for most it is not that easy.

In this context, relationships are crucial and reciprocal. When a vendor refers to an organisation as a customer, the organisation can only rightly refer to the vendor as a supplier. Between a customer and a supplier there can be no true partnership or long-term collaboration in the relationship. Each dances to their own tune and moves to their own rhythm, often out of step with each other.

Yes, vendors cannot – and should not – change their tune to suit every organisation. But, they should be transparent about their technology and services and its compatibility with the overall strategy and road map of the organisation. This is achieved through a genuine commitment to the relationship, by responding to aspirations, becoming more flexible and aligning technology more closely to an organisation’s processes and strategic goals.

Risk Vs Exposure                                                                                 

One way to do this is for organisations to implement a flexible approach to what I refer to as “Risk Vs Exposure”. This is the balance between the risk posed by a vendor, or “Vendor Risk”, versus the “Business Exposure” of removing the dependent technology. The diagram below illustrates how the dilemma occurs.

The diagram shows that during initial stages of a contract an organisation adopts technology to fuel business growth. At this stage, the organisation gains more from the technology than what it’s paid for it. Midway through a contract the organisation becomes technology saturated, however the dependency on the technology has set in. Replacing the technology may cause business exposure.

At this stage of the contract, if the rate of adoption of the dependent technology is unregulated or the technology becomes incompatible with any new organisational strategy AND the vendor relationship (or contract) is inflexible, it leads to Technology Dependency, or Vendor Risk.

Unable to negotiate themselves out of this vendor risk, or replace the technology, Organisations’ chalk it down as sunken costs, and begin to limit the use of the technology or its functions, leading to the build-up of “shadow” technology. Over time shadow technology has limited use within an organisation but nevertheless needs to be managed and maintained.

Technology as a Service, Code as a Service, Management Tools as a Service…

These are scarce commodities in the ‘on demand’ models of Cloud, As a Services, or Pay-as-you-go schemes. To use the Hotel California metaphor: “You can check out any time you like but you can never leave”, the clause is the commitment to the technology not the contract. In other words, you can have any contract you want as long as you are locked into my technology.

Take away

The industry solution to the Risk Vs Exposure challenge is Portfolio Optimisation. This comprises of flexible, on-demand agreements and carefully regulated technology adoption that aligns with an organisation’s business roadmap. It’s implemented using vendor certified “Programs”, bringing the organisation and vendor’s dance in lockstep with each other.

Vendors, particularly Big Tech companies, need to respond to an organisation’s aspirations. They need to become more flexible and align more closely to the organisation’s strategic goals. It is not enough for each individual to do their own dance well. Each participant must contribute to the effectiveness of the overall system.

About the Author

Chris Fosberry is a senior management consultant, strong and experienced relationship builder and CIO advisor with a bachelor’s degree in computer science and an MBA in International Business. As an International dealmaker Chris has relationship managed several large ($10Mln to $100Mln) bids within A/NZ and across the APAC region.