Building Bridges and Driving Results

How Vendor Management Offers Leadership Opportunities

More and more organizations are using third-party vendors for scalability, cost savings, and risk management.  When your organization has third-party vendors, does the product management team need to do anything about vendor management?  Don't the alliances and procurement teams take care of the vendors used in the organization?  When it comes to products, the vendors that touch the product are key to the success of the product.  Managing vendor relationships is a crucial product leadership opportunity.

Let's discuss your leadership opportunities in managing vendor relationships.  Vendor relationship management provides opportunities for product leadership in these ways:

• Strategic alignment in selecting vendors that are a good fit for your product goals Vendor Management Part 1

• Innovation from working with the vendor on a business arrangement Vendor Management Part 2

• Relationship building that drives positive outcomes (Vendor Management Part 3 - this article)

• Risk management in anticipating issues and mitigation (Vendor Management Part 3 - this article)

Once you have completed an agreement with a vendor, it is time to build an organizational relationship and begin risk management. 

Relationship Building with a Vendor

After a new agreement or a change in the existing agreement, your leadership is critical in building cross-functional relationships with the vendor. You have likely been with a small team of legal and procurement experts in negotiating an agreement with the vendor.  Most of the product team is uncomfortable stepping in to lead activities with the vendor.

You realize that you need to lead the team in building the relationship.  At this time most of the contact with the vendor is going through you.  How can you inspire the whole team to collaborate with the vendor?

There are a few steps to lead your organization to mainstream the new vendor arrangement:

1. Walk through the arrangement with your team:

   • Review the business, operations, and key information - do not expect the team to read the legal agreement!

   • This means pictures, workflows, and business forecast

   • Make key introductions and enable peer-to-peer relationships

2. Define a transition plan that hands over the day-to-day operations to your product team:

   • Make it a slow transition in which the responsible teams pull the work out of your hands

   • Clear roles and responsibilities defined that highlight the benefits of the transition

   • Agree on the improvements from transitioning

3. Let the team run with the new arrangement

   • Your focus is on product leadership and not operational leadership

   • Let go of preventing problems - the operations team and the vendor can handle things

   • Wait until you are asked to help - stay close enough to help when asked

Example: Building a Vendor Relationship

Suppose you are a product manager on a SaaS product and you have a new agreement with an analytics provider.  The analytics provider sells access to their platform based on your usage.  Your new agreement has you paying the analytics provider monthly based on the number of customers using the feature.

Your product team is aware of the new arrangement and supports your work with the analytics provider.  However, your team and the vendor team are only working together when you schedule a meeting or get involved.  You take these steps:

• Walk through the agreement and operational dependences of using the analytics platform

• Review the business forecast and pipeline of customers that need the new analytics features

• Walk through the roles and responsibilities of your team and the analytics provider

• Agree on a transition plan starting with a joint meeting cadence

• Step out of the way to let your team work directly with the analytics provider

By taking the time to review the benefits and the arrangement with the analytics provider, your product team begins taking over the relationship.  You are consulted for help.  Before long you are celebrating first sales and then sales growth. 

Risk Management and Building Vendor Relationships

It’s the early days after transitioning a new agreement to your operations team.  They are becoming comfortable with working with the new vendor and you are slowly adding customers to the new arrangement. You've let go of day-to-day management.  However, your vendor has come to you with a problem that is being ignored by your operations team.  Even worse, according to your contract, your operations team is supposed to respond to compliance issues immediately.

After you investigate the issue, you learn the vendor is also not complying with the service level agreement in the contract.   Your alliance team and legal team are not comfortable getting involved in a nuanced compliance issue.  This is the type of case in which you do need to step in and lead the joint team to a solution.  You need to be careful and not undo your transition plan!  While a contract compliance issue is very sensitive and needs to be addressed swiftly, you can take steps to resolve the issue without taking over.  What to do:

• Document the compliance parts of your agreement for the responsible parties

• Document the agreed escalation paths for technical and business issues

• Compel the 2 teams to discuss the compliance issue in one of their cadence meetings - avoid leading the meeting to discuss it!

• Congratulate the 2 teams on resolving the issue

Conclusion

Leading your team to integrate a vendor relationship into your products has many benefits:

• Cost savings from the vendor's expertise

• Scaling your operations through the vendor

• Providing access to innovative technology and best practices

Your focus on building a  relationship between your team and the vendor is a leadership challenge that has huge rewards.  Your skills in risk management are valuable for anticipating issues and communicating about issue mitigation.   Vendor management exercises key leadership skills in relationship building and risk management.  You can build bridges for your team and drive big results!

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